Document:

<PAGE>
                                                                   Exhibit 4.42

                          CAPROCK COMMUNICATIONS CORP.,

                                    AS ISSUER

                                       AND

              CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION,

                                   AS TRUSTEE

--------------------------------------------------------------------------------

                          FIRST SUPPLEMENTAL INDENTURE

                        DATED AS OF ___________ __, 2000

                                  TO INDENTURE

                            DATED AS OF MAY 18, 1999,

--------------------------------------------------------------------------------

                                  $210,000,000

                          11 1/2% SENIOR NOTES DUE 2009

<PAGE>

        FIRST SUPPLEMENTAL INDENTURE, dated as of _________ __, 2000, by and
between CAPROCK COMMUNICATIONS CORP., a Texas corporation, (the "Issuer"), and
CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee, (the
"Trustee").

                                   WITNESSETH

        WHEREAS the Issuer has heretofore executed and delivered to the Trustee
an Indenture dated as of May 18, 1999, (the "Indenture"), providing for the
issuance of an aggregate principal amount of up to $210,000,000 of 11 1/2%
Senior Notes due 2009 (the "Notes");

        WHEREAS, the Issuer has commenced a solicitation of consents (the
"Consent Solicitation") from the Holders to certain amendments to the Indenture
as set forth in the Consent Solicitation Statement of the Issuer dated October
11, 2000, (the "Proposed Amendment");

        WHEREAS, pursuant to the Consent Solicitation, the Holders of at least a
majority in aggregate principal amount of the Notes outstanding have consented
(the "Requisite Consents") to the amendments effected by this First Supplemental
Indenture in accordance with the provisions of the Indenture;

        WHEREAS, this First Supplemental Indenture evidences the Proposed
Amendments described in the Consent Solicitation Statement;

        WHEREAS, Section 9.02 of the Indenture provides, among other things,
that with the written consent of Holders holding not less than a majority of the
aggregate principal amount of the Notes then outstanding, the Issuer may from
time to time amend or supplement the Indenture, subject to certain exceptions
specified in Section 9.02 of the Indenture;

        WHEREAS, on October 11, 2000, the Issuer mailed or otherwise delivered a
Consent Solicitation Statement to each Holder of record as of October 6, 2000,
and has obtained the Requisite Consents;

        WHEREAS, this First Supplemental Indenture has been duly authorized by
all necessary corporate action on the part of the Issuer; and

        WHEREAS, the Issuer has delivered, or caused to be delivered, to the
Trustee an Officers' Certificate and an Opinion of Counsel meeting the
requirements of Sections 1.04 and 10.09 of the Indenture and stating that all
conditions precedent (including any covenants compliance with which constitutes
a condition precedent), if any, provided for in the Indenture relating to this
First Supplemental Indenture have been satisfied.

                                       1
<PAGE>

        NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Issuer, and
the Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Notes as follows:

                                    ARTICLE I

                                   DEFINITIONS

        SECTION 1.01. DEFINITIONS. When used herein, the following terms will
have the respective meanings set forth below.

        "Covenant Amendments" means the amendments to the Indenture listed in
Article III of this First Supplemental Indenture.

        "McLeodUSA" means McLeodUSA Incorporated, a Delaware corporation.

        "McLeodUSA Merger" means any merger of the Issuer with McLeodUSA or any
wholly-owned subsidiary of McLeodUSA pursuant to, or any other transaction
contemplated by, that certain Agreement and Plan of Merger dated as of October
2, 2000 by and among McLeodUSA, Cactus Acquisition Corp., a Delaware
corporation, and the Issuer, or any amendment thereto and any related
agreements.

        "Merger Amendments" means the amendments to the Indenture listed in
Article II of this First Supplemental Indenture.

                                   ARTICLE II

                                MERGER AMENDMENTS

        SECTION 2.01. EFFECTIVE TIME OF MERGER AMENDMENTS. The Merger Amendments
shall become effective upon execution of this First Supplemental Indenture by
the Trustee and the Issuer.

                                       2
<PAGE>

        SECTION 2.02. AMENDMENT AND RESTATEMENT OF THE DEFINITION OF "CHANGE OF
CONTROL". The definition of "Change of Control" in Section 1.01 of the Indenture
is hereby amended and restated in its entirety to read as set forth below:

               " "Change of Control" shall be deemed to occur if:

               (i) the sale, conveyance, transfer or lease of all or
        substantially all of the assets of the Issuer to any Person or "group"
        (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
        Act, including any group acting for the purpose of acquiring, holding or
        disposing of securities within the meaning of Rule 13d-5(b)(1) under the
        Exchange Act), other than to one or more Permitted Holders and/or one or
        more Restricted Subsidiaries, shall have occurred,

               (ii) any Person or "group" (as such term is used in Sections
        13(d)(3) and 14(d)(2) of the Exchange Act including any group acting for
        the purpose of acquiring, holding or disposing of securities within the
        meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any
        Permitted Holder (or group that includes a Permitted Holder), becomes
        the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
        of more than 50% of the total voting power of all classes of the Voting
        Stock of the Issuer (including any warrants, options or rights to
        acquire such Voting Stock), calculated on a fully diluted basis,

               (iii) during any period of two consecutive years, individuals
        (OTHER THAN THOSE APPOINTED BY MCLEODUSA) who at the beginning of such
        period constituted the Board of Directors of the Issuer (together with
        any directors whose election or appointment by the Board of Directors of
        the Issuer or whose nomination for election by the stockholders of the
        Issuer was approved by a vote of a majority of the directors then still
        in office who were either directors at the beginning of such period or
        whose election or nomination for election was previously so approved)
        cease for any reason to constitute a majority of the Board of Directors
        of the Issuer then in office or

               (iv) EXCEPT FOR THE MCLEODUSA MERGER, the merger, amalgamation or
        consolidation of the Issuer with or into another Person or the merger of
        another Person with or into the Issuer shall have occurred, and the
        securities of the Issuer that are outstanding immediately prior to such
        transaction and which represent 100% of the aggregate voting power of
        the Voting Stock of the Issuer are changed into or exchanged for cash,
        securities or property, unless pursuant to such transaction such
        securities are changed into or exchanged for, in addition to any other
        consideration, securities of the surviving Person that represent,
        immediately after giving effect to such transaction, at least a majority
        of the aggregate voting power of the Voting Stock of the surviving
        Person."

        SECTION 2.03. AMENDMENT AND RESTATEMENT OF THE DEFINITION OF "PERMITTED
HOLDERS". The definition of "Permitted Holders" in Section 1.01 of the Indenture
is hereby amended and restated in its entirety to read as set forth below:

                                       3
<PAGE>

                " "Permitted Holders" means MCLEODUSA, Jere W. Thompson, Sr.,
        Jere W. Thompson, Jr., Mark Langdale, Timothy W. Rogers, Scott L.
        Roberts, Timothy M. Terrell and Ignatius W. Leonards and any
        corporation, limited liability company, partnership, joint venture or
        other entity controlled by any one or more of them."

        SECTION 2.04. AMENDMENT AND RESTATEMENT OF SECTION 8.01. Section 8.01 of
the Indenture is hereby amended and restated in its entirety to read as set
forth below:

                "Section 8.01.ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
        TERMS.

                The Issuer will not consolidate with, or merge with or into or
        sell, convey, transfer, lease or otherwise dispose of all or
        substantially all of its property and assets (as an entirety or
        substantially an entirety in one transaction or a series of related
        transactions) to any Person or permit any Person to merge with or into
        the Issuer OTHER THAN IN CONNECTION WITH THE MCLEODUSA MERGER (WHICH IS
        HEREBY EXPRESSLY PERMITTED), unless:

                (a) the Issuer shall be the continuing Person, or the Person (if
        other than the Issuer) formed by such consolidation or into which the
        Issuer is merged or that acquired or leased such property and assets of
        the Issuer shall be a corporation organized and validly existing under
        the laws of the United States of America or any jurisdiction thereof,
        and shall expressly assume, by a supplemental indenture, executed and
        delivered to the Trustee, all of the obligations of the Issuer on all of
        the Notes and under the Indenture;

                (b) immediately after giving effect to such transaction, no
        Default or Event of Default shall have occurred and be continuing;

                (c) immediately after giving effect to such transaction on a PRO
        FORMA basis, the Issuer, or any Person becoming the successor obligor of
        the Notes, as the case may be, could Incur at least $1.00 of
        Indebtedness under clause (i) of Section 10.11(a) hereof; PROVIDED,
        HOWEVER, that this clause (c) shall not apply to a consolidation or
        merger with or into a Wholly Owned Restricted Subsidiary with a positive
        net worth, PROVIDED that in connection with any such merger or
        consolidation, no consideration (except Capital Stock (other than
        Redeemable Stock) in the surviving Person or the Issuer (or a Person
        that owns directly or indirectly all of the Capital Stock of the
        surviving Person or the Issuer immediately following such transaction)
        or cash paid to satisfy dissenter or appraisal rights; PROVIDED that
        such rights are exercised with respect to no more than 5% of the
        outstanding Capital Stock of the Issuer or other Person) shall be issued
        or distributed to the stockholders of the Issuer; and

                (d) the Issuer delivers to the Trustee an Officers' Certificate
        (attaching the arithmetic computations to demonstrate compliance with
        clause (c) above) and an Opinion of Counsel, in each case stating that
        such consolidation, merger or transfer and such supplemental indenture
        comply with this provision and that all conditions precedent provided
        for herein relating to such transaction have been complied with;
        PROVIDED, HOWEVER, that clauses (b) and (c) above do not apply if, in
        the good faith determination of the Board of Directors of the Issuer,
        whose determination shall be evidenced by a Board

                                       4
<PAGE>

        Resolution, the principal purpose of such transaction is to change the
        state of incorporation of the Issuer; and PROVIDED FURTHER that any such
        transaction shall not have as one of its purposes the evasion of the
        foregoing limitations."

                                   ARTICLE III

                               COVENANT AMENDMENTS

        SECTION 3.01. DELETION AND ADDITION OF CERTAIN DEFINITIONS. Upon the
occurrence of (i) the execution of this First Supplemental Indenture by the
Trustee and the Issuer and (ii) the later of (a) the effective time of the
McLeodUSA Merger and (b) twenty (20) business days following commencement by
McLeodUSA of an exchange offer to acquire all of the outstanding Notes in
exchange for notes of McLeodUSA having the same interest rate, payment, maturity
and redemption terms as the Notes but otherwise having terms substantially
similar to the 8 1/8% Senior Notes due 2009 of McLeodUSA ("Covenant Amendment
Effective Time"), Sections 1.01 and 1.02 of the Indenture shall be amended by
deleting the definition of each term that is used in the Indenture only in the
Articles, Sections or Subsections thereof that are deleted pursuant to Section
3.02 hereof, and by adding the following to Section 1.01:

        " "Covenant Amendment Effective Time" shall have the meaning set forth
in Section 3.01 of the First Supplemental Indenture."

        SECTION 3.02. DELETION OF CERTAIN SECTIONS. Upon the occurrence of the
Covenant Amendment Effective Time, the text of each of the following Articles,
Sections or Subsections of the Indenture shall be deleted in its entirety and
replaced, in each case, by the words "Intentionally Omitted":

        Section 5.01(c)      Events of Default

        Section 7.04.        Reports by Issuer

        Article 8            Consolidation, Merger, Sale of Assets, etc.

        Section 10.04.       Corporate Existence

        Section 10.05.       Payment of Taxes and Other Claims

        Section 10.06.       Maintenance of Properties

        Section 10.07.       Insurance

        Section 10.10.       Repurchase of Notes Upon a Change of Control

        Section 10.11.       Limitation on Indebtedness

        Section 10.13.       Limitation on Restricted Payments

                                       5

<PAGE>
        Section 10.14.       Limitation on Transactions with Stockholders and
                             Affiliates

        Section 10.15.       Limitation on Asset Sales

        Section 10.16.       Limitation on Liens

        Section 10.18.       Limitation on the Issuance and Sale of Capital
                             Stock of Restricted Subsidiaries

        Section 10.19.       Limitation on Dividend and Other Payment
                             Restrictions Affecting Restricted Subsidiaries

        Section 10.20.       Limitation on Sale-Leaseback Transactions

        Section 10.21.       Limitation on Restrictive Covenants

        Section 10.22.       Commission Reports and Reports to Holders

        Section 10.23.       Limitation on Issuances of Guarantees by
                             Restricted Subsidiaries

                                   ARTICLE IV

                                  MISCELLANEOUS

        SECTION 4.01. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF
INDENTURE. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. Upon the execution and delivery of this
First Supplemental Indenture by the Issuer and the Trustee, this First
Supplemental Indenture shall form a part of the Indenture for all purposes, and
every holder of Notes heretofore or hereafter authenticated and delivered shall
be bound hereby. Any and all references, whether within the Indenture or in any
notice, certificate or other instrument or document, shall be deemed to include
a reference to this First Supplemental Indenture (whether or not made), unless
the context shall otherwise require.

        SECTION 4.02. GOVERNING LAW; GOVERNANCE, ETC. THIS FIRST SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY. This First Supplemental Indenture shall
be governed and construed in accordance with the applicable terms and provisions
of the Indenture as amended hereby, which terms and provisions are incorporated
herein by reference, as if this First Supplemental Indenture were the
"Indenture" referred to therein.

        SECTION 4.03. TRUSTEE MAKES NO REPRESENTATION. The recitals contained
herein shall be taken as the statements of the Issuer and the Trustee assumes no
responsibility for their

                                       6
<PAGE>

correctness. The Trustee makes no representation as to the validity or
sufficiency of this First Supplemental Indenture.

        SECTION 4.04. COUNTERPARTS. The parties may sign any number of copies of
this First Supplemental Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.

        SECTION 4.05. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction thereof.

        SECTION 4.06. TERMS. Certain capitalized terms used but not defined
herein have the meanings assigned to them in the Indenture.

        SECTION 4.07. ENTIRE AGREEMENT. This First Supplemental Indenture,
together with the Indenture as amended hereby and the Notes, contains the entire
agreement of the parties, and supersedes all other representations, warranties,
agreements and understandings between the parties, oral or otherwise, with
respect to the matters contained herein and therein.

        SECTION 4.08. BENEFITS OF FIRST SUPPLEMENTAL INDENTURE. Nothing in this
First Supplemental Indenture, the Indenture, or the Notes, express or implied,
shall give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder, and the Holders, any benefit of any legal
or equitable right, remedy or claim under the Indenture, the First Supplemental
Indenture or the Notes.

        SECTION 4.09. NOTATION ON NOTES. Pursuant to Section 9.06 of the
Indenture, new Notes reflecting the amendments to the Indenture made hereby
shall not be issued; however, corresponding changes to the Notes to reflect the
amendments made hereby shall be deemed to be made to the Notes as of the date of
this First Supplemental Indenture. The Trustee may, but shall not be required
to, place an appropriate notation as to this First Supplemental Indenture on any
Note hereafter authenticated in accordance with Section 9.06 of the Indenture.

                                       7
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the date first above written.

                                          CAPROCK COMMUNICATIONS CORP.

                                          By
                                            -----------------------------------

                                          Name:   Jere W. Thompson, Jr.

                                          Title:  Chairman of the Board and
                                                  Chief Executive Officer

                                          CHASE MANHATTAN TRUST COMPANY,
                                          NATIONAL ASSOCIATION,
                                          as Trustee

                                          By
                                            ------------------------------------

                                          Name:

                                          Title:

                                       8<PAGE>

                                                                    Exhibit 4.43
================================================================================

                             McLeodUSA Incorporated

                                  $150,000,000

                            12% SENIOR NOTES DUE 2008

                                ----------------

                                    INDENTURE

                        Dated as of [__________ __], 2000

                                ----------------

                    United States Trust Company of New York,

                                     Trustee

================================================================================

<PAGE>

                              CROSS-REFERENCE TABLE

Reconciliation and tie between the Trust Indenture Act of 1939, as amended, and
the Indenture, dated as of [______________ __], 2000

<TABLE>
<CAPTION>
  Trust
Indenture
   Act                                                              Indenture
 Section                                                             Section
 -------                                                            --------
<S>                                                          <C>
Section310(a)(1).........................................................7.10
        (a)(2)...........................................................7.10
        (a)(3)...........................................................N.A.
        (a)(4)...........................................................N.A.
        (a)(5)...........................................................7.10
        (b)........................................................7.08; 7.10
        (c)..............................................................N.A.
Section311(a)............................................................7.11
        (b)..............................................................7.11
        (c)..............................................................N.A.
Section312(a)................................................7.06(a); 7.06(b)
        (b)...........................................................7.06(c)
        (c)...........................................................7.06(d)
Section313(a).........................................................7.06(e)
        (b)..............................................................N.A.
        (c)..................................................7.06(e); 7.06(f)
        (d)..............................................................7.06
Section314(a)......................................................4.18; 4.19
        (b)..............................................................N.A.
        (c)(1)..........................................................10.03
        (c)(2)..........................................................10.03
        (c)(3)...........................................................N.A.
        (d)..............................................................N.A.
        (e).............................................................10.04
        (f)..............................................................4.19
Section315(a).........................................................7.01(b)
        (b)...........................................................7.05(a)
        (c)...........................................................7.01(a)
        (d)...........................................................7.01(c)
        (e)..............................................................6.10
Section316(a)............................................................2.10
        (a)(1)(A)........................................................6.05
        (a)(1)(B)........................................................6.04
        (a)(2)...........................................................N.A.
        (b)..............................................................6.07
        (c)..............................................................9.05
Section317(a)(1).........................................................N.A.
        (a)(2)...........................................................6.08
        (b)..............................................................2.07
Section318(a)...........................................................10.01
</TABLE>

        Note:     This reconciliation and tie shall not, for any purpose, be
                  deemed to be part of the Indenture.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 PAGE
<S>                                                                                              <C>
ARTICLE I.        DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION                           1
   SECTION 1.01.  DEFINITIONS                                                                       1
   SECTION 1.02.  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT                                21
   SECTION 1.03.  RULES OF CONSTRUCTION                                                            21
   SECTION 1.04.  FORM OF DOCUMENTS DELIVERED TO TRUSTEE                                           22
   SECTION 1.05.  ACTS OF HOLDERS                                                                  22
   SECTION 1.06.  SATISFACTION AND DISCHARGE                                                       23

ARTICLE II.       THE NOTES                                                                        24
   SECTION 2.01.  FORM AND DATING                                                                  24
   SECTION 2.02.  FORM OF FACE OF NOTE                                                             24
   SECTION 2.03.  FORM OF REVERSE OF NOTE                                                          26
   SECTION 2.04.  FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION                                  30

SECTION 2.05.     EXECUTION AND AUTHENTICATION                                                     30
   SECTION 2.06.  NOTE REGISTRAR AND PAYING AGENT                                                  31
   SECTION 2.07.  PAYING AGENT TO HOLD MONEY IN TRUST                                              32
   SECTION 2.08.  REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE                              32
   SECTION 2.09.  REPLACEMENT NOTES                                                                35
   SECTION 2.10.  OUTSTANDING NOTES                                                                36
   SECTION 2.11.  TEMPORARY NOTES                                                                  36
   SECTION 2.12.  CANCELLATION                                                                     37
   SECTION 2.13.  PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED                                   37
   SECTION 2.14.  AUTHORIZED DENOMINATIONS                                                         38
   SECTION 2.15.  COMPUTATION OF INTEREST                                                          38
   SECTION 2.16.  PERSONS DEEMED OWNERS                                                            38
   SECTION 2.17.  CUSIP NUMBERS                                                                    38
   SECTION 2.18.  HOLDER LISTS                                                                     38

ARTICLE III.      REDEMPTION                                                                       39
   SECTION 3.01.  NOTICE TO TRUSTEE                                                                39
   SECTION 3.02.  SELECTION OF NOTES TO BE REDEEMED                                                39
   SECTION 3.03.  NOTICE OF REDEMPTION                                                             39
   SECTION 3.04.  EFFECT OF NOTICE OF REDEMPTION                                                   40
   SECTION 3.05.  DEPOSIT OF REDEMPTION PRICE                                                      40
   SECTION 3.06.  NOTES REDEEMED IN PART                                                           41

ARTICLE IV.       COVENANTS                                                                        41
   SECTION 4.01.  PAYMENT OF NOTES                                                                 41
   SECTION 4.02.  MAINTENANCE OF OFFICE OR AGENCY                                                  41
   SECTION 4.03.  MONEY FOR THE NOTE PAYMENTS TO BE HELD IN TRUST                                  42
   SECTION 4.04.  CORPORATE EXISTENCE                                                              42
   SECTION 4.05.  MAINTENANCE OF PROPERTY                                                          42
   SECTION 4.06.  PAYMENT OF TAXES AND OTHER CLAIMS                                                43
   SECTION 4.07.  REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL                     43

                                       i
<PAGE>

   SECTION 4.08.  LIMITATION ON ASSET SALES                                                        45
   SECTION 4.09.  LIMITATION ON CONSOLIDATED INDEBTEDNESS                                          48
   SECTION 4.10.  LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF RESTRICTED SUBSIDIARIES        51
   SECTION 4.11.  LIMITATION ON RESTRICTED PAYMENTS                                                53
   SECTION 4.12.  LIMITATION ON LIENS                                                              56
   SECTION 4.13.  LIMITATION ON SALE AND LEASEBACK TRANSACTIONS                                    57
   SECTION 4.14.  LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES    58
   SECTION 4.15.  LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES      59
   SECTION 4.16.  TRANSACTIONS WITH AFFILIATES                                                     60
   SECTION 4.17.  RESTRICTED AND UNRESTRICTED SUBSIDIARIES.                                        61
   SECTION 4.18.  REPORTS                                                                          62
   SECTION 4.19.  COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT OR EVENT OF DEFAULT                    62

ARTICLE V.        CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER                             62
   SECTION 5.01.  MERGER, CONSOLIDATION OR SALE OF ASSETS                                          63
   SECTION 5.02.  SUCCESSOR CORPORATION SUBSTITUTED                                                64

ARTICLE VI.       DEFAULTS AND REMEDIES                                                            64
   SECTION 6.01.  EVENTS OF DEFAULT                                                                64
   SECTION 6.02.  ACCELERATION                                                                     66
   SECTION 6.03.  OTHER REMEDIES                                                                   67
   SECTION 6.04.  WAIVER OF PAST DEFAULTS                                                          68
   SECTION 6.05.  CONTROL BY MAJORITY                                                              68
   SECTION 6.06.  LIMITATION ON SUITS                                                              69
   SECTION 6.07.  RIGHTS OF HOLDERS TO RECEIVE PAYMENT                                             69
   SECTION 6.08.  TRUSTEE MAY FILE PROOFS OF CLAIM                                                 69
   SECTION 6.09.  PRIORITIES                                                                       70
   SECTION 6.10.  UNDERTAKING FOR COSTS                                                            71
   SECTION 6.11.  WAIVER OF STAY OR EXTENSION LAWS                                                 71
   SECTION 6.12.  TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF THE NOTES                       71
   SECTION 6.13.  RESTORATION OF RIGHTS AND REMEDIES                                               71
   SECTION 6.14.  RIGHTS AND REMEDIES CUMULATIVE                                                   72
   SECTION 6.15.  DELAY OR OMISSION NOT WAIVER                                                     72

ARTICLE VII.      TRUSTEE                                                                          72
   SECTION 7.01.  DUTIES OF TRUSTEE                                                                72
   SECTION 7.02.  RIGHTS OF TRUSTEE                                                                73
   SECTION 7.03.  INDIVIDUAL RIGHTS OF TRUSTEE                                                     74
   SECTION 7.04.  TRUSTEE'S DISCLAIMER                                                             74
   SECTION 7.05.  NOTICE OF DEFAULTS                                                               74
   SECTION 7.06.  PRESERVATION OF INFORMATION; REPORTS BY TRUSTEE TO HOLDERS                       74
   SECTION 7.07.  COMPENSATION AND INDEMNITY                                                       75
   SECTION 7.08.  REPLACEMENT OF TRUSTEE                                                           76
   SECTION 7.09.  SUCCESSOR TRUSTEE BY MERGER                                                      78
   SECTION 7.10.  ELIGIBILITY; DISQUALIFICATION                                                    79
   SECTION 7.11.  PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY                                79

                                       ii
<PAGE>

ARTICLE VIII.     DEFEASANCE                                                                       80
   SECTION 8.01.  COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE               80
   SECTION 8.02.  LEGAL DEFEASANCE AND DISCHARGE                                                   80
   SECTION 8.03.  COVENANT DEFEASANCE                                                              81
   SECTION 8.04.  CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE                                  81
   SECTION 8.05.  DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
   MISCELLANEOUS PROVISIONS                                                                        82

SECTION 8.06.     REINSTATEMENT                                                                    83

ARTICLE IX.       AMENDMENTS                                                                       84
   SECTION 9.01.  WITHOUT CONSENT OF HOLDERS                                                       84
   SECTION 9.02.  WITH CONSENT OF HOLDERS                                                          84
   SECTION 9.03.  EFFECT OF SUPPLEMENTAL INDENTURES                                                85
   SECTION 9.04.  COMPLIANCE WITH TRUST INDENTURE ACT                                              85
   SECTION 9.05.  REVOCATION AND EFFECT OF CONSENTS AND WAIVERS                                    85
   SECTION 9.06.  NOTATION ON OR EXCHANGE OF NOTES                                                 86
   SECTION 9.07.  TRUSTEE TO EXECUTE SUPPLEMENTAL INDENTURES                                       86

ARTICLE X.         MISCELLANEOUS                                                                   87
   SECTION 10.01.  TRUST INDENTURE ACT CONTROLS                                                    87
   SECTION 10.02.  NOTICES                                                                         87
   SECTION 10.03.  CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT                              87
   SECTION 10.04.  STATEMENTS REQUIRED IN CERTIFICATE OR OPINION                                   87
   SECTION 10.05.  RULES BY TRUSTEE, PAYING AGENT AND NOTE REGISTRAR                               88
   SECTION 10.06.  PAYMENTS ON BUSINESS DAYS                                                       88
   SECTION 10.07.  GOVERNING LAW                                                                   88
   SECTION 10.08.  NO RECOURSE AGAINST OTHERS                                                      88
   SECTION 10.09.  SUCCESSORS                                                                      88
   SECTION 10.10.  COUNTERPARTS                                                                    88
   SECTION 10.11.  TABLE OF CONTENTS; HEADINGS                                                     88
   SECTION 10.12.  SEVERABILITY                                                                    89
   SECTION 10.13.  FURTHER INSTRUMENTS AND ACTS                                                    89
</TABLE>

                                      iii
<PAGE>

         INDENTURE, dated as of [___________ __], 2000, between MCLEODUSA
INCORPORATED, a Delaware corporation (the "Company"), having its principal
office at 6400 C Street, S.W., Cedar Rapids, Iowa 52406, and UNITED STATES TRUST
COMPANY OF NEW YORK, a bank and trust company organized under the New York
banking law, as trustee hereunder (the "Trustee"), having its Corporate Trust
Office at 114 West 47th Street, New York, New York 10036.

                             RECITALS OF THE COMPANY

         The Company has duly authorized the creation and issue of its 12%
Senior Notes Due 2008 (the "Notes") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.

         All things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid instrument of the Company, in accordance with their respective terms, have
been done.

         NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in
consideration of the premises and the acquisition of the Notes by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:

                                   ARTICLE I.

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

         SECTION 1.01. DEFINITIONS. For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:

                  (a) the terms defined in this Article have the meanings
         assigned to them in this Article, and include the plural as well as the
         singular; and

                  (b) all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with GAAP.

         "ACQUIRED INDEBTEDNESS" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person; PROVIDED that such
Indebtedness was not incurred in connection with, or in anticipation or
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, but excluding Indebtedness which is
extinguished, retired or repaid in connection with such other Person merging
with or into or becoming a Subsidiary of such specified Person.

<PAGE>

         "ACT" when used with respect to any Holder, has the meaning set forth
in Section 1.05 hereof.

         "AFFILIATE" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person; PROVIDED that each Unrestricted Subsidiary shall be deemed to be an
Affiliate of the Company and of each other Subsidiary of the Company; PROVIDED,
FURTHER, that neither the Company nor any of its Restricted Subsidiaries shall
be deemed to be Affiliates of each other. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling," "under
common control with" and "controlled by"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.

         "AFFILIATE TRANSACTION" has the meaning set forth in Section 4.16
hereof.

         "AGENT MEMBER" means any member of, or participant in, the Depositary.

         "APPLICABLE PROCEDURES" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Note to the extent applicable to
such transaction and as in effect from time to time.

         "ASSET SALE" by any Person means any transfer, conveyance, sale, lease
or other disposition by such Person or any of its Restricted Subsidiaries
(including a consolidation or merger or other sale of any such Restricted
Subsidiary with, into or to another Person in a transaction in which such
Restricted Subsidiary ceases to be a Restricted Subsidiary of the specified
Person, but excluding a disposition by a Restricted Subsidiary of such Person to
such Person or a Wholly-Owned Restricted Subsidiary of such Person or by such
Person to a Wholly-Owned Restricted Subsidiary of such Person) of (i) shares of
Capital Stock or other ownership interests of a Restricted Subsidiary of such
Person (other than as permitted by the provisions of Section 4.10 hereof), (ii)
substantially all of the assets of such Person or any of its Restricted
Subsidiaries representing a division or line of business (other than as part of
a Permitted Investment) or (iii) other assets or rights of such Person or any of
its Restricted Subsidiaries outside of the ordinary course of business and, in
each case, that is not governed by Article V hereof; PROVIDED that "Asset Sale"
shall not include (i) sales or other dispositions of inventory, receivables and
other current assets in the ordinary course of business, (ii) simultaneous
exchanges by the Company or any Restricted Subsidiary of Telecommunications
Assets for other Telecommunications Assets in the ordinary course of business;
PROVIDED that the applicable Telecommunications Assets received by the Company
or such Restricted Subsidiary have at least substantially equal Fair Market
Value to the Company or such Restricted Subsidiary (as determined by the Board
of Directors whose good faith determination shall be conclusive and evidenced by
a Board Resolution), and (iii) sales or other dispositions

<PAGE>

of assets with a Fair Market Value (as certified in an Officers' Certificate)
not in excess of $1 million.

         "ASSET SALE OFFER" has the meaning set forth in Section 4.08(c) hereof.

         "ASSET SALE PAYMENT DATE" has the meaning set forth in Section
4.08(d)(ii) hereof.

         "ASSET SALE PURCHASE PRICE" has the meaning set forth in Section
4.08(c) hereof.

         "ATTRIBUTABLE INDEBTEDNESS" means, with respect to any Sale and
Leaseback Transaction of any Person, as at the time of determination, the
greater of (i) the capitalized amount in respect of such transaction that would
appear on the balance sheet of such Person in accordance with GAAP and (ii) the
present value (discounted at a rate consistent with accounting guidelines, as
determined in good faith by the responsible accounting officer of such Person)
of the payments during the remaining term of the lease (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended) or until the earliest date on which the lessee may terminate such
lease without penalty or upon payment of a penalty (in which case the rental
payments shall include such penalty).

         "AVERAGE LIFE" means, as of any date, with respect to any debt security
or Disqualified Stock, the quotient obtained by dividing (i) the sum of the
products of (x) the number of years from such date to the dates of each
scheduled principal payment or redemption payment (including any sinking fund or
mandatory redemption payment requirements) of such debt security or Disqualified
Stock multiplied in each case by (y) the amount of such principal or redemption
payment, by (ii) the sum of all such principal or redemption payments.

         "BOARD OF DIRECTORS" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board of Directors.

         "BOARD RESOLUTION" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination.

         "BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law, executive order or regulation to close.

         "CAPITAL LEASE OBLIGATION" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Indebtedness
arrangement conveying the right to use) real or personal property of such Person
which is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person prepared in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.

                                       3
<PAGE>

         "CAPITAL STOCK" in any Person means any and all shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than Indebtedness convertible into an
equity interest), warrants or options to subscribe for or acquire an equity
interest in such Person.

         "CASH PROCEEDS" means, with respect to any Asset Sale or issuance or
sale of Capital Stock by any Person, the aggregate consideration received in
respect of such sale or issuance by such Person in the form of cash and Eligible
Cash Equivalents.

         "CHANGE OF CONTROL" shall be deemed to occur if (i) the sale,
conveyance, transfer or lease of all or substantially all of the assets of the
Company to any "Person" or "group" (within the meaning of Sections 13(d)(3) and
14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(i) under the
Exchange Act), other than any Permitted Holder or any Restricted Subsidiary of
the Company, shall have occurred; or (ii) any "Person" or "group" (within the
meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing, including any group acting for the purpose
of acquiring, holding or disposing of securities within the meaning of Rule
13d-5(b)(i) under the Exchange Act), other than any Permitted Holder, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 35 percent of the total voting power of all classes of the Voting Stock of
the Company (including any warrants, options or rights to acquire such Voting
Stock), calculated on a fully diluted basis, and such voting power percentage is
greater than or equal to the total voting power percentage then beneficially
owned by the Permitted Holders in the aggregate; or (iii) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (together with any directors whose election
or appointment by the Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.

         "CHANGE OF CONTROL OFFER" has the meaning set forth in Section 4.07(a)
hereof.

         "CHANGE OF CONTROL PAYMENT DATE" has the meaning set forth in Section
4.07(b)(ii) hereof.

         "CHANGE OF CONTROL PURCHASE PRICE" has the meaning set forth in Section
4.07(a) hereof.

         "CLEARING AGENCY" has the meaning set forth in Section 3(a)(23) of the
Exchange Act.

                                       4
<PAGE>

         "CODE" means the Internal Revenue Code of 1986, as amended.

         "COMMISSION" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this Indenture such commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, the body performing such duties at such time.

         "COMMON STOCK" means Capital Stock other than Preferred Stock.

         "COMPANY" means the party named as such in the preamble to this
Indenture until a successor replaces it pursuant to the applicable provisions
hereof and, thereafter, means such successor.

         "COMPANY ORDER" means a written order signed in the name of the Company
by (i) its Chairman of the Board, President, a Vice Chairman or a Vice
President, and (ii) its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.

         "CONSOLIDATED CAPITAL RATIO" of any Person as of any date means the
ratio of (i) the aggregate consolidated principal amount of Indebtedness of such
Person then outstanding to (ii) the aggregate consolidated paid-in capital of
such Person as of such date.

         "CONSOLIDATED CASH FLOW AVAILABLE FOR FIXED CHARGES" for any period
means the Consolidated Net Income of the Company and its Restricted Subsidiaries
for such period increased by the sum of (i) Consolidated Interest Expense of the
Company and its Restricted Subsidiaries for such period, plus (ii) Consolidated
Income Tax Expense of the Company and its Restricted Subsidiaries for such
period, plus (iii) the consolidated depreciation and amortization expense
included in the income statement of the Company and its Restricted Subsidiaries
for such period, plus (iv) any non-cash expense related to the issuance to
employees of the Company or any Restricted Subsidiary of the Company of options
to purchase Capital Stock of the Company or such Restricted Subsidiary, plus (v)
any charge related to any premium or penalty paid in connection with redeeming
or retiring any Indebtedness prior to its stated maturity; and plus (vi) any
non-cash expense related to a purchase accounting adjustment not requiring an
accrual or reserve and separately disclosed in the Company's Consolidated Income
Statement, and decreased by the amount of any non-cash item that increases such
Consolidated Net Income, all as determined on a consolidated basis in accordance
with GAAP; PROVIDED that there shall be excluded therefrom the Consolidated Cash
Flow Available for Fixed Charges (if positive) of any Restricted Subsidiary of
the Company (calculated separately for such Restricted Subsidiary in the same
manner as provided above for the Company) that is subject to a restriction which
prevents the payment of dividends or the making of distributions to the Company
or another Restricted Subsidiary of the Company to the extent of such
restriction.

                                       5
<PAGE>

         "CONSOLIDATED INCOME TAX EXPENSE" for any period means the aggregate
amounts of the provisions for income taxes of the Company and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.

         "CONSOLIDATED INTEREST EXPENSE" means for any period the interest
expense included in a consolidated income statement (excluding interest income)
of the Company and its Restricted Subsidiaries for such period in accordance
with GAAP, including without limitation or duplication (or, to the extent not so
included, with the addition of), (i) the amortization of Indebtedness discount;
(ii) any payments or fees with respect to letters of credit, bankers'
acceptances or similar facilities; (iii) fees with respect to interest rate swap
or similar agreements or foreign currency hedge, exchange or similar agreements;
(iv) Preferred Stock dividends of the Company and its Restricted Subsidiaries
(other than dividends paid in shares of Preferred Stock that is not Disqualified
Stock) declared and paid or payable; (v) accrued Disqualified Stock dividends of
the Company and its Restricted Subsidiaries, whether or not declared or paid;
(vi) interest on Indebtedness guaranteed by the Company and its Restricted
Subsidiaries; and (vii) the portion of any Capital Lease Obligation paid during
such period that is allocable to interest expense in accordance with GAAP.

         "CONSOLIDATED NET INCOME" of any Person means, for any period, the
aggregate net income (or net loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis determined in accordance
with GAAP; PROVIDED that there shall be excluded therefrom, without duplication
(i) all items classified as extraordinary, (ii) any net income (or net loss) of
any Person other than such Person and its Restricted Subsidiaries, except to the
extent of the amount of dividends or other distributions actually paid to such
Person or its Restricted Subsidiaries by such other Person during such period,
(iii) the net income of any Person acquired by such Person or any of its
Restricted Subsidiaries in a pooling-of-interests transaction for any period
prior to the date of the related acquisition, (iv) any gain or loss, net of
taxes, realized on the termination of any employee pension benefit plan, (v) net
gains (or net losses) in respect of Asset Sales by such Person or its Restricted
Subsidiaries, (vi) the net income (or net loss) of any Restricted Subsidiary of
such Person to the extent that the payment of dividends or other distributions
to such Person is restricted by the terms of its charter or any agreement,
instrument, contract, judgment, order, decree, statute, rule, governmental
regulation or otherwise, except for any dividends or distributions actually paid
by such Restricted Subsidiary to such Person, (vii) with regard to a non-wholly
owned Restricted Subsidiary, any aggregate net income (or loss) in excess of
such Person's or such Restricted Subsidiary's PRO RATA share of such non-wholly
owned Restricted Subsidiary's net income (or loss) and (viii) the cumulative
effect of changes in accounting principles.

         "CONSOLIDATED NET WORTH" of any Person means, at any date of
determination, the consolidated stockholders' equity or partners' capital
(excluding Disqualified Stock) of such Person and its subsidiaries, as
determined in accordance with GAAP.

                                       6
<PAGE>

         "CONSOLIDATED TANGIBLE ASSETS" of any Person means the total amount of
assets (less applicable reserves and other properly deductible items) which
under GAAP would be included on a consolidated balance sheet of such Person and
its Subsidiaries after deducting therefrom all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, which in each case under GAAP would be included on such
consolidated balance sheet.

         "CORPORATE TRUST OFFICE" means the principal office of the Trustee in
the Borough of Manhattan, The City of New York, New York which at any particular
time its corporate trust business shall be principally administered, which at
the date hereof is located at 114 West 47th Street, New York, New York 10036.

         "COVENANT DEFEASANCE" has the meaning set forth in Section 8.03 hereof.

         "DEFAULT" means any event, act or condition, the occurrence of which
is, or after notice or the passage of time or both would be, an Event of
Default.

         "DEFAULT AMOUNT" means an amount equal to one hundred percent (100%) of
the originally issued principal amount of the Notes.

         "DEFAULTED INTEREST" has the meaning set forth in Section 2.13 hereof.

         "DEFEASANCE" has the meaning set forth in Section 8.02 hereof.

         "DEPOSITARY" means, with respect to the Notes issuable or issued in
whole or in part in the form of one or more Global Securities, The Depository
Trust Company for so long as it shall be a clearing agency registered under the
Exchange Act, or such successor as the Company shall designate from time to time
in an Officers' Certificate delivered to the Trustee.

         "DISQUALIFIED STOCK" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, or otherwise, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the Stated
Maturity of the Notes.

         "ELIGIBLE CASH EQUIVALENTS" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof, PROVIDED that the full faith and credit of the United
States of America is pledged in support thereof; (ii) time deposits and
certificates of deposit of any commercial bank organized in the United States
having capital and surplus in excess of $500,000,000 with a maturity date not
more than one year from the date of acquisition; (iii) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with

                                       7
<PAGE>

any bank meeting the qualifications specified in clause (ii) above; (iv) direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing, or
subject to tender at the option of the holder thereof within 270 calendar days
after the date of acquisition thereof and, at the time of acquisition, having a
rating of A or better from Standard & Poor's or A-2 or better from Moody's; (v)
commercial paper issued by the parent corporation of any commercial bank
organized in the United States having capital and surplus in excess of
$500,000,000 and commercial paper issued by others having one of the two highest
ratings obtainable from either Standard & Poor's or Moody's and in each case
maturing within 270 calendar days after the date of acquisition; (vi) overnight
bank deposits and bankers' acceptances at any commercial bank organized in the
United States having capital and surplus in excess of $500,000,000; (vii)
deposits available for withdrawal on demand with a commercial bank organized in
the United States having capital and surplus in excess of $500,000,000; and
(viii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) through (vi).

         "EVENT OF DEFAULT" has the meaning set forth in Section 6.01 hereof.

         "EXCESS PROCEEDS" has the meaning set forth in Section 4.08(b) hereof.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

         "EXISTING INDEBTEDNESS" means Indebtedness outstanding on the date of
this Indenture (other than under any Senior Credit Facility).

         "FAIR MARKET VALUE" means, with respect to any asset or Property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy, as determined in good faith by the
Board of Directors.

         "GAAP" means United States generally accepted accounting principles,
consistently applied, as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States, that are applicable to the circumstances as of the date of
determination; PROVIDED that, except as otherwise specifically provided herein,
all calculations made for purposes of determining compliance with Article IV or
Section 5.01 hereof shall utilize GAAP as in effect on the Issue Date.

         "GLOBAL SECURITY" or "GLOBAL SECURITIES" means the Note or Notes that
evidences all or part of the Notes and bears the legend set forth in Section
2.02 hereof.

                                       8
<PAGE>

         "GUARANTEE" means any direct or indirect obligation, contingent or
otherwise, of a Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner. The terms
"Guaranteed," "Guaranteeing" and "Guarantor" shall have correlative meanings.

         "HOLDER" means (i) in the case of any certificated Note, the Person in
whose name such certificated Note is registered in the Note Register and (ii) in
the case of any Global Security, the Depositary.

         "INCUR" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Indebtedness or
other obligation including by acquisition of Subsidiaries or the recording, as
required pursuant to GAAP or otherwise, of any such Indebtedness or other
obligation on the balance sheet of such Person (and "Incurrence," "Incurred,"
"Incurrable" and "Incurring" shall have meanings correlative to the foregoing);
provided that a change in GAAP that results in an obligation of such Person that
exists at such time becoming Indebtedness shall not be deemed an Incurrence of
such Indebtedness and that neither the accrual of interest nor the accretion of
original issue discount shall be deemed an Incurrence of Indebtedness.
Indebtedness otherwise incurred by a Person before it becomes a Subsidiary of
the Company (whether by merger, consolidation, acquisition or otherwise) shall
be deemed to have been incurred at the time at which such Person becomes a
Subsidiary of the Company.

         "INDEBTEDNESS" means, at any time (without duplication), with respect
to any Person, whether recourse as to all or a portion of the assets of such
Person, and whether or not contingent, (i) any obligation of such Person for
money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, Guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with the acquisition of
Property, assets or businesses, excluding trade accounts payable made in the
ordinary course of business, (iii) any reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) any obligation of such Person issued
or assumed as the deferred purchase price of Property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business, which in either case are not more than 60 days overdue or which are
being contested in good faith), (v) any Capital Lease Obligation of such Person,
(vi) the maximum fixed redemption or repurchase price of Disqualified Stock of
such Person and, to the extent held by Persons other than such Person or its
Restricted Subsidiaries, the maximum fixed redemption or repurchase price of
Disqualified Stock of such Person's Restricted Subsidiaries, at the time of
determination, (vii) every obligation under Interest Rate and Currency
Protection Agreements of such Person, (viii) any Attributable Indebtedness with
respect to any Sale and Leaseback Transaction to which such Person is a party
and (ix) any obligation of the type referred to in clauses (i) through (viii) of
this definition of another Person and all dividends and

                                       9
<PAGE>

distributions of another Person the payment of which, in either case, such
Person has Guaranteed or is responsible or liable, directly or indirectly, as
obligor, Guarantor or otherwise. For purposes of the preceding sentence, the
maximum fixed repurchase price of any Disqualified Stock that does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Indenture; PROVIDED that, if such Disqualified Stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Disqualified
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; PROVIDED that
the amount outstanding at any time of any Indebtedness issued with original
issue discount (including, without limitation, the Senior Discount Notes) is the
face amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP.

         "INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument, and any such supplemental indenture,
respectively.

         "INTEREST PAYMENT DATE" means the Stated Maturity of an installment of
interest on the Notes.

         "INTEREST RATE OR CURRENCY PROTECTION AGREEMENT" of any Person means
any forward contract, futures contract, swap, option, future option or other
financial agreement or arrangement (including, without limitation, caps, floors,
collars and similar agreements) relating to, or the value of which is dependent
upon, interest rates or currency exchange rates or indices.

         "INVESTMENT" in any Person means any direct, indirect or contingent (i)
advance or loan to, Guarantee of any Indebtedness of, extension of credit or
capital contribution to such Person, (ii) the acquisition of any shares of
Capital Stock, bonds, notes, debentures or other securities of such Person, or
(iii) the acquisition, by purchase or otherwise, of all or substantially all of
the business, assets or stock or other evidence of beneficial ownership of such
Person; PROVIDED that Investments shall exclude commercially reasonable
extensions of trade credit. The amount of any Investment shall be the original
cost of such Investment, PLUS the cost of all additions thereto and MINUS the
amount of any portion of such Investment repaid to such Person in cash as a
repayment of principal or a return of capital, as the case may be, but without
any other adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment. In determining the
amount of any

                                       10
<PAGE>

Investment involving a transfer of any Property other than cash, such Property
or asset shall be valued at its Fair Market Value at the time of such transfer.

         "ISSUE DATE" means the date on which the Notes are first authenticated
and delivered under this Indenture.

         "LIEN" means, with respect to any Property or other asset, any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien (statutory or other), charge, easement, encumbrance,
preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to such Property
or other asset (including, without limitation, any conditional sale or title
retention agreement having substantially the same economic effect as any of the
foregoing).

         "MATURITY" means, when used with respect to a Note, the date on which
the principal of such Note becomes due and payable as provided therein or in
this Indenture, whether on the date specified in such Note as the fixed date on
which the principal of such Note is due and payable, on a Change of Control
Payment Date or an Asset Sale Payment Date, or by declaration of acceleration,
call for redemption or otherwise.

         "MOODY'S" means Moody's Investors Service, Inc., or, if Moody's
Investors Service, Inc. shall cease rating the specified debt securities and
such ratings business with respect thereto shall have been transferred to a
successor Person, such successor Person; PROVIDED that if Moody's Investors
Service, Inc. ceases rating the specified debt securities and its ratings
business with respect thereto shall not have been transferred to any successor
Person or such successor Person is Standard & Poor's, then "Moody's" shall mean
any other nationally recognized rating agency (other than Standard & Poor's)
that rates the specified debt securities and that shall have been designated by
the Company in an Officers' Certificate.

         "NASD" means the National Association of Securities Dealers, Inc.

         "NET CASH PROCEEDS" means, with respect to the sale of any Property or
assets by any Person or any of its Restricted Subsidiaries, Cash Proceeds
received net of (i) all reasonable out-of-pocket expenses of such Person or such
Restricted Subsidiary incurred in connection with such sale, including, without
limitation, all legal, title and recording tax expenses, commissions and other
fees and expenses incurred (but excluding any finder's fee or broker's fee
payable to any Affiliate of such Person) and all federal, state, foreign and
local taxes arising in connection with such sale that are paid or required to be
accrued as a liability under GAAP by such Person or its Restricted Subsidiaries;
(ii) all payments made or required to be made by such Person or its Restricted
Subsidiaries on any Indebtedness which is secured by such Properties or other
assets in accordance with the terms of any Lien upon or with respect to such
Properties or other assets or which must, by the terms of such Lien, or in order
to obtain a necessary consent to such transaction or by applicable law, be
repaid in connection with such sale; (iii) all contractually required
distributions and other payments made to

                                       11
<PAGE>

minority interest holders (but excluding distributions and payments to
Affiliates of such Person) in Restricted Subsidiaries of such Person as a result
of such transaction; and (iv) appropriate amounts to be provided by such Person
or any Restricted Subsidiary thereof, as the case may be, as a reserve in
accordance with GAAP against any liabilities associated with such assets and
retained by such Person or any Restricted Subsidiary thereof, as the case may
be, after such transaction, including, without limitation, liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such transaction, in each case as determined by the Board of
Directors of such Person, in its reasonable good faith judgment evidenced by a
resolution of the Board of Directors filed with the Trustee; PROVIDED that, in
the event that any consideration for a transaction (which would otherwise
constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Cash Proceeds only at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow; and PROVIDED, FURTHER, that any non-cash consideration received in
connection with any transaction, which is subsequently converted to cash, shall
be deemed to be Net Cash Proceeds at such time, and shall thereafter be applied
in accordance with the applicable provisions of this Indenture.

         "NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.06 hereof.

         "NOTES" has the meaning set forth in the Recitals of the Company and
more particularly means any of the Notes authenticated and delivered under this
Indenture.

         "OFFICER" means the Chairman of the Board of Directors, a Vice Chairman
of the Board of Directors, the President, the Chief Executive Officer, a Vice
President, the Chief Financial Officer, the Chief Accounting Officer, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.

         "OFFICERS' CERTIFICATE" means a certificate signed by (i) the Chairman
of the Board of Directors, a Vice Chairman of the Board of Directors, the
President, the Chief Executive Officer or a Vice President, and (ii) the Chief
Financial Officer, the Chief Accounting Officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, and delivered to the
Trustee, which certificate shall comply with the provisions of Section 10.04
hereof; PROVIDED that any Officers' Certificate delivered pursuant to the first
paragraph of Section 4.19 hereof shall be signed by the Chief Executive Officer,
the Chief Financial Officer or the Chief Accounting Officer.

         "OPINION OF COUNSEL" means a written opinion from legal counsel (who
may be counsel to the Company or the Trustee) who is acceptable to the Trustee,
which opinion shall comply with the provisions of Section 10.04 hereof.

                                       12
<PAGE>

         "PAYING AGENT" means any Person authorized by the Company to make
payments of principal, premium or interest with respect to the Notes on behalf
of the Company.

         "PERMITTED HOLDERS" means Alliant Energy Corp., Media/Communications
Partners III Limited Partnership and Forstmann Little & Co. and their respective
successors and assigns, and Clark E. and Mary E. McLeod, Richard A. Lumpkin and
Kwok Li and foundations and trusts controlled by any of them, and Affiliates
(other than the Company and the Restricted Subsidiaries) of each of the
foregoing.

         "PERMITTED INTEREST RATE OR CURRENCY PROTECTION AGREEMENT" of any
Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Indebtedness Incurred and which shall
have a notional amount no greater than the payments due with respect to the
Indebtedness being hedged thereby and not for purposes of speculation.

         "PERMITTED INVESTMENTS" means:

                  (i) Eligible Cash Equivalents;

                  (ii) Investments in Property used in the ordinary course of
         business;

                  (iii) Investments in any Person as a result of which such
         Person becomes a Restricted Subsidiary in compliance with Section 4.17
         hereof;

                  (iv) Investments pursuant to agreements or obligations of the
         Company or a Restricted Subsidiary, in effect on the Issue Date, to
         make such Investments;

                  (v) Investments in prepaid expenses, negotiable instruments
         held for collection and lease, utility and workers' compensation,
         performance and other similar deposits;

                  (vi) Permitted Interest Rate or Currency Protection Agreements
         with respect to any floating rate Indebtedness that is permitted under
         Section 4.09 or Section 4.10 hereof to be outstanding;

                  (vii) bonds, notes, debentures or other debt securities
         received as a result of Asset Sales permitted under Section 4.08
         hereof;

                  (viii) Investments in existence at the Issue Date;

                                       13
<PAGE>

                  (ix) commission, payroll, travel and similar advances to
         employees in the ordinary course of business to cover matters that are
         expected at the time of such advances ultimately to be treated as
         expenses in accordance with GAAP;

                  (x) stock, obligations or securities received in satisfaction
         of judgments; and

                  (xi) Investments made pursuant to any deferred-compensation
         plan, including any Investments made through a trust (including a
         grantor trust) established in connection with any such plan, for the
         benefit of employees of the Company or of any Restricted Subsidiary.

         "PERMITTED LIENS" means (i) Liens for taxes, assessments, governmental
charges or claims which are not yet delinquent or which are being contested in
good faith by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor; (ii) other Liens incidental to the conduct of the Company's and
its Restricted Subsidiaries' business or the ownership of its property and
assets not securing any Indebtedness, and which do not in the aggregate
materially detract from the value of the Company's and its Restricted
Subsidiaries' property or assets when taken as a whole, or materially impair the
use thereof in the operation of its business; (iii) Liens with respect to assets
of a Restricted Subsidiary granted by such Restricted Subsidiary to the Company
to secure Indebtedness owing to the Company; (iv) pledges and deposits made in
the ordinary course of business in connection with workers' compensation and
unemployment insurance, statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen, repairmen and other types of statutory obligations; (v)
deposits made to secure the performance of tenders, bids, leases, and other
obligations of like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (vi) zoning
restrictions, servitudes, easements, rights-of-way, restrictions and other
similar charges or encumbrances incurred in the ordinary course of business
which, in the aggregate, do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of the Company or its Restricted Subsidiaries; (vii) Liens arising out of
judgments or awards against the Company or any Restricted Subsidiary with
respect to which the Company or such Restricted Subsidiary is prosecuting an
appeal or proceeding for review and the Company or such Restricted Subsidiary is
maintaining adequate reserves in accordance with GAAP; (viii) any interest or
title of a lessor in the property subject to any lease other than a Capital
Lease; (ix) Liens (including extensions and renewals thereof) upon real or
personal property acquired after the Issue Date; PROVIDED that (a) such Lien is
created solely for the purpose of securing Indebtedness Incurred, in accordance
with Section 4.09 hereof, (1) to finance the cost (including the cost of
improvement or construction) of the item of property or assets subject thereto
and such Lien is created prior to, at the time of or within six months after the
later of the acquisition, the completion of construction or the commencement of
full operation of such property or (2) to refinance any Indebtedness previously
so secured, (b) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of such cost and (c) any such Lien shall not extend to or
cover any property

                                       14
<PAGE>

or assets other than such item of property or assets and any improvements on
such item; (x) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the Company and its Restricted
Subsidiaries; (xi) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of the Company or its
Restricted Subsidiaries relating to such property or assets; (xii) Liens arising
from filing precautionary Uniform Commercial Code financing statements regarding
leases; (xiii) Liens on property of, or on shares of stock or Indebtedness of,
any corporation existing at the time such corporation becomes, or becomes a part
of, any Restricted Subsidiary; PROVIDED that such Liens do not extend to or
cover any property or assets of the Company or any Restricted Subsidiary other
than the property or assets acquired; (xiv) Liens in favor of the Company or any
Restricted Subsidiary; (xv) Liens securing reimbursement obligations with
respect to letters of credit that encumber documents and other property relating
to such letters of credit and the products and proceeds thereof; (xvi) Liens in
favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods; (xvii)
Liens encumbering customary initial deposits and margin deposits, and other
Liens that are either within the general parameters customary in the industry
and incurred in the ordinary course of business, in each case, securing
Indebtedness under Permitted Interest Rate Agreements and Currency Agreements;
and (xviii) Liens arising out of conditional sale, title retention, consignment
or similar arrangements for the sale of goods entered into by the Company or any
of its Restricted Subsidiaries in the ordinary course of business in accordance
with the past practices of the Company and its Restricted Subsidiaries prior to
the Issue Date.

         "PERSON" means any individual, corporation, limited liability company,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof.

         "PREDECESSOR NOTE" of any particular Note means every previous Note
evidencing all or a portion of the same Indebtedness as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.09 hereof in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Note.

         "PREFERRED STOCK" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.

         "PRO FORMA" means, with respect to any calculation made or required to
be made pursuant to the terms hereof, a calculation in accordance with Article
11 of Regulation S-X promulgated under the Securities Act (to the extent
applicable), as interpreted in good faith by the Board of Directors, or
otherwise, a calculation made in good faith by the Board of Directors, as the
case may be.

                                       15
<PAGE>

         "PROPERTY" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, excluding Capital Stock in any other Person.

         "PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company
(including Acquired Indebtedness and Capital Lease Obligations, mortgage
financings and purchase money obligations) incurred for the purpose of financing
all or any part of the cost of construction, acquisition, development or
improvement by the Company or any Restricted Subsidiary of any
Telecommunications Assets of the Company or any Restricted Subsidiary and
including any related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, as the same may be amended,
supplemented, modified or restated from time to time.

         "QUALIFIED RECEIVABLE FACILITY" means Indebtedness of the Company or
any Subsidiary Incurred from time to time pursuant to either (x) credit
facilities secured by Receivables or (y) receivable purchase facilities, and
including any related notes, Guarantees, collateral documents, instruments and
agreements executed in connection therewith, as the same may be amended,
supplemented, modified or restated from time to time.

         "QUALIFIED RECEIVABLE SUBSIDIARY" means a Restricted Subsidiary formed
solely for the purpose of obtaining a Qualified Receivable Facility and
substantially all of the Property of which is Receivables.

         "QUALIFIED STOCK" of any Person means a class of Capital Stock other
than Disqualified Stock.

         "RECEIVABLES" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money and
proceeds and products thereof in each case generated in the ordinary course of
business.

         "REDEMPTION DATE" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the date fixed for redemption of such Notes
pursuant to the terms of the Notes and this Indenture.

         "REDEMPTION PRICE" means, when used with respect to any Note or part
thereof to be redeemed hereunder, the price fixed for redemption of such Note
pursuant to the terms of the Notes and this Indenture, plus accrued and unpaid
interest thereon, if any, to the Redemption Date.

         "REGULAR RECORD DATE" means, for the interest payable on any Interest
Payment Date, the date specified in Section 2.13 hereof.

                                       16
<PAGE>

         "RESTRICTED PAYMENT" means (i) a dividend or other distribution
declared or paid on the Capital Stock of the Company or to the Company's
stockholders (in their capacity as such), or declared or paid to any Person
other than the Company or a Restricted Subsidiary of the Company on the Capital
Stock of any Restricted Subsidiary, in each case, other than dividends,
distributions or payments made solely in Qualified Stock of the Company or such
Restricted Subsidiary, (ii) a payment made by the Company or any of its
Restricted Subsidiaries (other than to the Company or any Restricted Subsidiary)
to purchase, redeem, acquire or retire any Capital Stock of the Company or of a
Restricted Subsidiary, (iii) a payment made by the Company or any of its
Restricted Subsidiaries (other than a payment made solely in Qualified Stock of
the Company) to redeem, repurchase, defease (including an in-substance or legal
defeasance) or otherwise acquire or retire for value (including pursuant to
mandatory repurchase covenants), prior to any scheduled maturity, scheduled
sinking fund or mandatory redemption payment, Indebtedness of the Company or
such Restricted Subsidiary which is subordinate (whether pursuant to its terms
or by operation of law) in right of payment to the Notes and which was scheduled
to mature on or after the maturity of the Notes or (iv) an Investment in any
Person, including an Unrestricted Subsidiary or the designation of a Subsidiary
as an Unrestricted Subsidiary, other than (a) a Permitted Investment, (b) an
Investment by the Company in a Wholly-Owned Restricted Subsidiary of the Company
or (c) an Investment by a Restricted Subsidiary in the Company or a Wholly-Owned
Restricted Subsidiary of the Company.

         "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that has
not been designated as an Unrestricted Subsidiary pursuant to Section 4.17
hereof.

         "SALE AND LEASEBACK TRANSACTION" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a Restricted Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Restricted Subsidiaries.

         "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

         "SENIOR CREDIT FACILITY" means Indebtedness of the Company and its
Subsidiaries Incurred from time to time pursuant to one or more credit
agreements or similar facilities made available from time to time to the Company
and its Subsidiaries, whether or not secured, and including any related notes,
Guarantees, collateral documents, instruments and agreements executed in
connection therewith, as the same may be amended, supplemented, modified or
restated from time to time.

         "SENIOR DISCOUNT NOTES" means the Company's 10 1/2% Senior Discount
Notes due March 1, 2007.

                                       17
<PAGE>

         "SPECIAL RECORD DATE" means a date fixed by the Trustee pursuant to
Section 2.13 hereof for the payment of Defaulted Interest.

         "STANDARD & POOR'S" means Standard & Poor's Ratings Group, a division
of McGraw Hill Corporation, or, if Standard & Poor's Ratings Group shall cease
rating the specified debt securities and such ratings business with respect
thereto shall have been transferred to a successor Person, such successor
Person; PROVIDED that if Standard & Poor's Ratings Group ceases rating the
specified debt securities and its ratings business with respect thereto shall
not have been transferred to any successor Person or such successor Person is
Moody's, then "Standard & Poor's" shall mean any other nationally recognized
rating agency (other than Moody's) that rates the specified debt securities and
that shall have been designated by the Company in an Officers' Certificate.

         "STATED MATURITY" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred), and, when used with respect
to any installment of interest on such security, the fixed date on which such
installment of interest is due and payable.

         "SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company as to
which the payment of principal of (and premium, if any) and interest and other
payment obligations in respect of such Indebtedness shall be subordinate to the
prior payment in full of the Notes to at least the following extent: (i) no
payments of principal of (or premium, if any) or interest on or otherwise due in
respect of such Indebtedness may be permitted for so long as any default in the
payment of principal (or premium, if any) or interest on the Notes exists; (ii)
in the event that any other default that with the passing of time or the giving
of notice, or both, would constitute an event of default exists with respect to
the Notes, upon notice by 25% or more in principal amount of the Notes to the
Trustee, the Trustee shall give notice to the Company and the holders of such
Indebtedness (or trustees or agents therefor) of a payment blockage, and
thereafter no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Indebtedness may be made for a period of 179
days from the date of such notice; and (iii) such Indebtedness may not (x)
provide for payments of principal of such Indebtedness at the stated maturity
thereof or by way of a sinking fund applicable thereto or by way of any
mandatory redemption, defeasance, retirement or repurchase thereof by the
Company (including any redemption, retirement or repurchase which is contingent
upon events or circumstances, but excluding any retirement required by virtue of
acceleration of such Indebtedness upon an event of default thereunder), in each
case prior to the final Stated Maturity of the Notes or (y) permit redemption or
other retirement (including pursuant to an offer to purchase made by the
Company) of such other Indebtedness at the option of the holder thereof prior to
the final Stated Maturity of the Notes, other than a redemption or other
retirement at the option of the holder of such Indebtedness (including pursuant
to an offer to

                                       18
<PAGE>

purchase made by the Company) which is conditioned upon a change of control of
the Company pursuant to provisions substantially similar to those contained in
Section 4.07 hereof (and which shall provide that such Indebtedness will not be
repurchased pursuant to such provisions prior to the Company's repurchase of the
Notes required to be repurchased by the Company pursuant to Section 4.07
hereof).

         "SUBSIDIARY" means, with respect to any Person, (i) any corporation
more than 50 percent of the outstanding shares of Voting Stock of which is
owned, directly or indirectly, by such Person, or by one of more other
Subsidiaries of such Person, or by such Person and one or more other
Subsidiaries of such Person, (ii) any general partnership, limited liability
company, joint venture or similar entity, more than 50 percent of the
outstanding partnership, membership or similar interests of which are owned,
directly or indirectly, by such Person, or by one or more other Subsidiaries of
such Person, or by such Person and one or more other Subsidiaries of such Person
and (iii) any limited partnership of which such Person or any Subsidiary of such
Person is a general partner.

         "SUCCESSOR NOTE" of any particular Note means every Note issued after,
and evidencing all or a portion of the same Indebtedness as that evidenced by,
such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.09 hereof in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Note.

         "SURVIVING ENTITY" has the meaning set forth in Section 5.01(a) hereof.

         "TELECOMMUNICATIONS ASSETS" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business.

         "TELECOMMUNICATIONS BUSINESS" means the business of (i) transmitting,
or providing services relating to the transmission of, voice, video or data
through owned or leased wireline or wireless transmission facilities, (ii)
creating, developing, constructing, installing, repairing, maintaining or
marketing communications-related systems, network equipment and facilities,
software and other products, (iii) creating, developing, producing or marketing
audiotext or videotext, (iv) publishing or distributing telephone (including
Internet) directories, whether in paper, electronic, audio or video format, (v)
marketing (including direct marketing and telemarketing), or (vi) evaluating,
participating in or pursuing any other business that is primarily related to
those identified in the foregoing clauses (i), (ii), (iii), (iv) or (v) above
(in the case of clauses (iii), (iv) and (v), however, in a manner consistent
with the Company's manner of business on the Issue Date), and shall, in any
event, include all businesses in which the Company or any of its Subsidiaries
are engaged on the Issue Date; PROVIDED that the determination of what
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors.

                                       19
<PAGE>

         "TEMPORARY NOTES" has the meaning set forth in Section 2.11 hereof.

         "TRADING DAY" means, with respect to a security traded on a securities
exchange, automated quotation system or market, a day on which such exchange,
system or market is open for a full day of trading.

         "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture except as
required by Section 9.04 hereof; PROVIDED that in the event the Trust Indenture
Act of 1939 is amended after such date, "Trust Indenture Act" means, to the
extent required by any such amendment, the Trust Indenture Act of 1939, as so
amended.

         "TRUST OFFICER" means any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Assistant
Vice President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Indenture.

         "TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means such successor.

         "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that the
Company has classified as an "Unrestricted Subsidiary" and that has not been
reclassified as a Restricted Subsidiary, pursuant to Section 4.17 hereof.

         "U.S. GOVERNMENT OBLIGATIONS" means (x) securities that are (i) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and (y) depository receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (x) above and held
by such Bank for the account of the holder of such depository receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, PROVIDED that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depository receipt.

         "VOTING STOCK" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times

                                       20
<PAGE>

that such class of Capital Stock has voting power by reason of the happening of
any contingency) to vote in the election of members of the board of directors or
comparable body of such Person.

         "WHOLLY-OWNED RESTRICTED SUBSIDIARY" of any Person means a Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
(other than director's qualifying shares) of which shall at the time be owned by
such Person or by one or more other Wholly-Owned Restricted Subsidiary of such
Person or by such Person and one or more other Wholly-Owned Restricted
Subsidiary of such Person.

         SECTION 1.02.  INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

         Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture. The following Trust Indenture Act terms incorporated by reference in
this Indenture have the following meanings:

         "indenture securities" means the Notes.

         "indenture security holder" means a Holder.

         "indenture to be qualified" means this Indenture.

         "indenture trustee" or "institutional trustee" means the Trustee.

         "obligor" on the indenture securities means the Company or other
obligor on the Notes, if any.

         All other Trust Indenture Act terms used or incorporated by reference
in this Indenture that are defined by the Trust Indenture Act, defined by Trust
Indenture Act reference to another statute or defined by Commission rule have
the meanings assigned to them therein.

         SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:

                  (a) the words "herein," "hereof" and "hereunder," and other
         words of similar import, refer to this Indenture as a whole and not to
         any particular Article, Section or other subdivision;

                  (b) "or" is not exclusive;

                  (c) "including" means including without limitation;

                                       21
<PAGE>

                  (d) the principal amount of any noninterest bearing or other
         discount security, at any date shall be the principal amount thereof
         that would be shown on a balance sheet of the issuer dated such date
         prepared in accordance with GAAP;

                  (e) when used with respect to the Notes, the term "principal
         amount" shall mean the principal amount thereof that would be shown on
         a balance sheet of the issuer dated such date prepared in accordance
         with GAAP; and

                  (f) unless otherwise expressly provided herein, the principal
         amount of any Preferred Stock shall be the greater of (i) the maximum
         liquidation value of such Preferred Stock or (ii) the maximum mandatory
         redemption or mandatory repurchase price with respect to such Preferred
         Stock.

         SECTION 1.04. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.

         Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.

         SECTION 1.05. ACTS OF HOLDERS. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing

                                       22
<PAGE>

appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 7.01 hereof) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by an acknowledgment of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of the signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.

         SECTION 1.06. SATISFACTION AND DISCHARGE. This Indenture shall cease to
be of further effect (except as to the rights of Holders under Sections 2.09,
2.11, 4.02, 4.03 and 4.04 hereof) and the Trustee, on receipt of a Company Order
requesting such action, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when (a) either (i) all
outstanding Notes have been delivered to the Trustee for cancellation or (ii)
all such Notes not theretofore delivered to the Trustee for cancellation (A)
have become due and payable, (B) will become due and payable at their Stated
Maturity within one year or (C) are to be called for redemption within one year
under irrevocable arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Company, and the Company, in the case of (A), (B) or (C) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
the purpose an amount sufficient to pay and discharge the entire indebtedness on
such Notes, for principal (and premium, if any) and interest to the date of such
deposit (in the case of Notes which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be, together with
irrevocable instructions from the Company in form and substance satisfactory to
the Trustee directing the Trustee to apply such funds to the payment thereof;
(b) the Company has paid or caused to be paid all other sums payable hereunder
by the Company; and (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with. Notwithstanding the satisfaction and
discharge of this Indenture pursuant to this Section 1.06, the obligations of
the Company to the Trustee under Section 7.07 hereof, and, if money shall have
been deposited with the Trustee in trust for the Holders pursuant to this
Section 1.06, the obligations of the Trustee under this Section 1.06 and Section
4.03 hereof shall survive.

         All money deposited with the Trustee pursuant to this Section 1.06
shall be held in trust and applied by it, in accordance with the provisions of
the Notes and this Indenture, to the payment, either directly or through any
Paying Agent, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money has been

                                       23
<PAGE>

deposited with the Trustee. If the Trustee or Paying Agent is unable to apply
any money or U.S. Government Obligations in accordance with this Section 1.06 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
this Section 1.06 until such time as the Trustee or Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with this
Section 1.06; PROVIDED that, if the Company has made any payment of interest on
or principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the cash or U.S. Government Obligations held by the
Trustee or Paying Agent.

                                   ARTICLE II.

                                    THE NOTES

         SECTION 2.01. FORM AND DATING. (a) The Notes and the certificate of
authentication of the Trustee thereon shall be substantially in the form
contained in this Article II, with such appropriate insertions, substitutions
and other variations as are required or permitted under this Indenture. Upon
issuance, any such Note shall be duly executed by the Company and authenticated
by the Trustee as hereinafter provided.

         (b) The Notes may have such letters, numbers or other marks of
identification and such legends and endorsements, stamped, printed, lithographed
or engraved thereon, (i) as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, (ii) as may be required to
comply with this Indenture, any law or any rule of any securities exchange on
which the Notes may be listed and (iii) as may be necessary to conform to
customary usage. Each Note shall be dated the date of its authentication by the
Trustee.

         (c) The Notes shall be issued in the form of one or more Global
Securities registered in the name of the Depositary or its nominee and deposited
with the Trustee, as custodian for the Depositary, for credit by the Depositary
to the respective accounts of beneficial owners of the Notes represented thereby
(or such other accounts as they may direct).

SECTION 2.02.  FORM OF FACE OF NOTE.

         [If a Global Security, then insert -- THIS NOTE IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGEABLE
IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN

                                       24
<PAGE>

SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.]

         [If a Global Security to be held by the Depository, then insert --
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

                       12% SENIOR NOTES DUE JULY 15, 2008

 [CUSIP NO. ___________]

No. R-_____                                                $__________________

         McLeodUSA Incorporated, a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _____________, or registered assigns, the
principal sum of ________________ Dollars [if this Note is a Global Security,
then insert: (which principal amount may from time to time be increased or
decreased to such other principal amounts (which, taken together with the
principal amounts of all other outstanding Notes, shall not exceed ONE HUNDRED
AND FIFTY MILLION DOLLARS ($150,000,000) in the aggregate at any time) by
adjustments made on the records of the Trustee hereinafter referred to in
accordance with the Indenture)] on July 15, 2008, and to pay interest thereon
from July 15, 2000, semi-annually in arrears on January 15 and July 15 of each
year, commencing January 15, 2001 at the rate of 12.0% per annum, until the
principal hereof is paid or made available for payment. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be January 1 or July 1
(whether or not a Business Day), as the case may be, immediately preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for, and interest on such Defaulted Interest at the applicable interest rate
borne by the Notes, to the extent lawful, will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Note (or

                                       25
<PAGE>

one or more Predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes not more than
15 calendar days and not less than 10 calendar days prior to such Special
Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.

         Payment of the principal of (and premium, if any) and interest on this
Note will be made at the corporate trust office of the Trustee and at the office
or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, New York, and at any other office or agency
maintained by the Company for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; PROVIDED, HOWEVER, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Note Register.

         Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

Dated:

                                            MCLEODUSA INCORPORATED

                                            By____________________________

SECTION 2.03.  FORM OF REVERSE OF NOTE.

         This Note is one of a duly authorized issue of Notes of the Company
designated as its 12% Senior Notes due July 15, 2008 (the "Notes") issued under
an Indenture, dated as of [__________ __], 2000 (herein called the "Indenture"),
between the Company and United States Trust Company of New York, as trustee
(herein called the "Trustee", which term

                                       26
<PAGE>

includes any successor trustee under the Indenture). The Notes are limited in
aggregate principal amount to $150,000,000. Reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered.

         The Notes are subject to redemption upon not less than 30 nor more than
60 days' notice by mail to each Holder of Notes to be redeemed at such Holder's
address appearing in the Note Register, in amounts of $1,000 or an integral
multiple of $1,000, at any time on or after July 15, 2003 and prior to maturity,
as a whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount) plus
accrued interest to but excluding the Redemption Date (subject to the right of
Holder on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the 12-month period beginning July 15 of each of the years indicated
below:

<TABLE>
<CAPTION>
                                                      Redemption
                           Year                          Price
                           ----                       ----------
                           <S>                        <C>
                           2003                        106.000%

                           2004                        104.000%

                           2005                        102.000%

                           2006                        100.000%
</TABLE>

and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to but
excluding the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Notes, or one or more Predecessor Notes, of record at the close of business on
the relevant Regular Record Dates referred to on the face hereof, all as
provided in the Indenture.

         The Notes do not have the benefit of any sinking fund obligations.

         The Indenture provides that, subject to certain conditions, if (i) a
Change of Control (as defined in the Indenture) occurs or (ii) certain Excess
Proceeds are available to the Company as a result of any Asset Sale, the Company
shall be required to make a Change of Control Offer or an Asset Sale Offer, as
the case may be, for all or a specified portion of the Notes.

                                       27
<PAGE>

         [If not a Global Security insert -- In the event of redemption or
purchase pursuant to an Asset Sale Offer of this Note in part only, a new Note
or Notes of like tenor for the unredeemed or unpurchased portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]

         [If a Global Security insert -- In the event of a deposit or withdrawal
of an interest in this Note (including upon an exchange, transfer, redemption or
repurchase of this Note in part only) effected in accordance with the Applicable
Procedures, the Note Registrar, upon receipt of notice of such event from the
Depositary's custodian for this Note, shall make an adjustment on its records to
reflect an increase or decrease of the outstanding principal amount of this Note
resulting from such deposit or withdrawal, as the case may be.]

         If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.

         The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of this Note, or (ii) certain restrictive covenants and
Events of Default with respect to this Note, in each case upon compliance with
certain conditions set forth therein.

         Unless the context otherwise requires, the Notes shall constitute one
series for all purposes under the Indenture, including without limitation,
amendments, waivers, redemptions, Change of Control Offers and Asset Sale
Offers.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time outstanding,
on behalf of the Holders of all the Notes, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for

                                       28
<PAGE>

registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City of New York, New York, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and like tenor and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.

         The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like tenor and aggregate principal amount of Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.

         No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

         Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         Interest on this Note shall be computed on the basis of a 360-day year
of twelve 30-day months.

         THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.

         All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.07 or 4.08 of the Indenture, check the box:

                                      / /

                                       29
<PAGE>

         If you want to elect to have only a part of this Note purchased by the
Company pursuant to Section 4.07 or 4.08 of the Indenture, state the amount:
$_________________

Dated:____________________               Your Signature:______________________

                          (Sign exactly as name appears
                         on the other side of this Note)

Signature Guarantee:__________________________________________________________
                  Notice: Signature(s) must be guaranteed by an "eligible
                  guarantor institution" meeting the requirements of the Note
                  Registrar which requirements will include membership or
                  participation in STAMP or such other "signature guarantee
                  program" as may be determined by the Trustee in addition to,
                  or in substitution for STAMP, all in accordance with the
                  Securities Exchange Act of 1934, as amended.

         SECTION 2.04.  FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

         This is one of the Notes referred to in the within-mentioned Indenture.

Date:

                                              -----------------------------,
                                                          as Trustee

                                                     By
                                                       ------------------------
                                                        Authorized Signatory

         SECTION 2.05. EXECUTION AND AUTHENTICATION. The aggregate principal
amount of Notes outstanding at any time shall not exceed $150,000,000. The Notes
shall be executed on behalf of the Company by its Chief Executive Officer, its
President or any Executive Vice President and shall be attested by the Company's
Secretary or one of its Assistant Secretaries, in each case by manual or
facsimile signature.

         The Notes shall be authenticated by manual signature of an authorized
officer of the Trustee and shall not be valid for any purpose unless so
authenticated.

         In case any officer of the Company whose signature shall have been
placed upon any of the Notes shall cease to be such officer of the Company
before authentication of such Notes by the Trustee and the issuance and delivery
thereof, such Notes may, nevertheless, be authenticated by the Trustee and
issued and delivered with the same force and effect as though such Person had
not ceased to be such officer of the Company.

                                       30
<PAGE>

         Notwithstanding any other provision hereof, the Trustee shall
authenticate and deliver Notes only upon receipt by the Trustee of an Officers'
Certificate complying with Section 10.04 hereof with respect to satisfaction of
all conditions precedent contained in this Indenture to authentication and
delivery of such Notes.

         Upon compliance by the Company with the provisions of the previous
paragraph, the Trustee shall, upon receipt of a Company Order requesting such
action, authenticate Notes for original issuance in an aggregate principal
amount not to exceed $150,000,000. Such Company Order shall specify the amount
of Notes to be authenticated and the date on which the Notes are to be
authenticated and shall further provide instructions concerning registration,
amounts for each Holder and delivery.

         A Note shall not be valid or entitled to any benefit under this
Indenture or obligatory for any purpose unless executed by the Company and
authenticated by the manual signature of the Trustee as provided herein. The
signature of an authorized officer of the Trustee shall be conclusive evidence,
and the only evidence, that such Note has been authenticated and delivered under
this Indenture.

         The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. Any authenticating agent of the Trustee
shall have the same rights hereunder as any Registrar or Paying Agent. The
Trustee shall not be liable for any failure to act of the authenticating agent
in performing any duty either required herein or authorized herein to be
performed by such person in accordance with the Indenture.

         SECTION 2.06. NOTE REGISTRAR AND PAYING AGENT. The Company shall
maintain, pursuant to Section 4.02 hereof, an office or agency where the Notes
may be presented for registration of transfer or for exchange. The Company shall
cause to be kept at such office a register (the register maintained in such
office being herein sometimes referred to as the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers of Notes entitled to be
registered or transferred as provided herein. The Trustee, at its Corporate
Trust Office, is initially appointed "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. The Company may,
upon written notice to the Trustee, change the designation of the Trustee as
Note Registrar and appoint another Person to act as Note Registrar for purposes
of this Indenture. If any Person other than the Trustee acts as Note Registrar,
the Trustee shall have the right at any time, upon reasonable notice, to inspect
or examine the Note Register and to make such inquiries of the Note Registrar as
the Trustee shall in its discretion deem necessary or desirable in performing
its duties hereunder.

                                       31
<PAGE>

         The Company shall enter into an appropriate agency agreement with any
Person designated by the Company as Note Registrar or Paying Agent that is not a
party to this Indenture, which agreement shall incorporate the provisions of the
Trust Indenture Act and shall implement the provisions of this Indenture that
relate to such Note Registrar or Paying Agent. Prior to the designation of any
such Person, the Company shall, by written notice (which notice shall include
the name and address of such Person), inform the Trustee of such designation. If
the Company fails to maintain a Note Registrar or Paying Agent, the Trustee
shall act as such.

         Upon surrender for registration of transfer of any Note at an office or
agency of the Company designated for such purpose, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized denomination
or denominations, of like tenor and aggregate principal amount, all as requested
by the transferor.

         Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee or the Note
Registrar) be duly endorsed, or be accompanied by a duly executed instrument of
transfer in form satisfactory to the Company, the Trustee and the Note
Registrar, by the Holder thereof or such Holder's attorney duly authorized in
writing.

         SECTION 2.07. PAYING AGENT TO HOLD MONEY IN TRUST. On or prior to 10:00
a.m. on each due date of the principal, premium, or any payment of interest with
respect to any Note, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal, premium or interest when so becoming due.

         The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that such Paying Agent, shall hold in trust for the benefit of
Holders or the Trustee all money held by such Paying Agent for the payment of
principal, premium, or interest with respect to the Notes, shall notify the
Trustee of any default by the Company in making any such payment and at any time
during the continuance of any such default, upon the written request of the
Trustee, shall forthwith pay to the Trustee all sums held in trust by such
Paying Agent.

         The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section 2.07, the Paying Agent shall have no
further liability for the money delivered to the Trustee.

         SECTION 2.08.  REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

         (a) At the option of the Holder, and subject to the other provisions of
this Section 2.08, Notes may be exchanged for other Notes of any authorized
denominations and of

                                       32

<PAGE>

a like tenor and aggregate principal amount, upon surrender of the Notes to be
exchanged at such office or agency. Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Notes which the Holder making the exchange is entitled to receive.

         All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

         Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.

         No service charge shall be made to the Holder for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Sections 2.11, 3.06 or 9.06 hereof or in accordance with
any offer pursuant to Section 4.07 or 4.08 hereof not involving any transfer.

         Any holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests in such Global Security
may be effected through a book entry system maintained by the holder of such
Global Security (or its agent) and the ownership of a beneficial interest in the
Note shall be reflected in a book entry.

         The Company shall not be required (i) to issue, register the transfer
of or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes selected
for redemption under Section 3.03 and ending at the close of business on the day
of such mailing, or (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.

         (b) [Intentionally deleted.]

         (c) [Intentionally deleted.]

         (d) The provisions of Clauses (1), (2), (3), (4) and (5) below shall
apply only to Global Securities:

                  (1) Each Global Security authenticated under this Indenture
         shall be registered in the name of the Depositary or a nominee thereof
         and delivered to the

                                       33
<PAGE>

         Depositary or a nominee thereof or custodian therefor, and each such
         Global Security shall constitute a single Note for all purposes of this
         Indenture.

                  (2) Notwithstanding any other provision in this Indenture, no
         Global Security may be exchanged in whole or in part for Notes
         registered, and no transfer of a Global Security in whole or in part
         may be registered, in the name of any Person other than the Depositary
         or a nominee thereof unless (i) the Depositary notifies the Company
         that it is unwilling or unable to continue as a depositary for such
         Global Security or if at any time the Depositary ceases to be a
         clearing agency registered under the Exchange Act, and a successor
         depositary is not appointed by the Company within 90 days, (ii) the
         Company executes and delivers to the Trustee a notice that such Global
         Security shall be so transferable, registrable and exchangeable, and
         such transfer shall be registrable or (iii) there shall have occurred
         and be continuing an Event of Default with respect to the Notes
         represented by such Global Security.

                  (3) If any Global Security is to be exchanged for other Notes
         or canceled in whole, it shall be surrendered by or on behalf of the
         Depositary or its nominee to the Trustee, as Note Registrar, for
         exchange or cancellation as provided in this Article II. If any Global
         Security is to be exchanged for other Notes or canceled in part, or if
         another Note is to be exchanged in whole or in part for a beneficial
         interest in any Global Security, then either (i) such Global Security
         shall be so surrendered for exchange or cancellation as provided in
         this Article II or (ii) the principal amount thereof shall be reduced
         or increased by an amount equal to the portion thereof to be so
         exchanged or canceled, or equal to the principal amount of such other
         Note to be so exchanged for a beneficial interest therein, as the case
         may be, by means of an appropriate adjustment made on the records of
         the Trustee, as Note Registrar, whereupon the Trustee, in accordance
         with the Applicable Procedures, shall instruct the Depositary or its
         authorized representative to make a corresponding adjustment to its
         records. Upon any such surrender or adjustment of a Global Security,
         the Trustee shall, subject to Section 2.08(d)(2) hereof and as
         otherwise provided in this Article II, authenticate and deliver any
         Notes issuable in exchange for such Global Security (or any portion
         thereof) to or upon the order of, and registered in such names as may
         be directed by, the Depositary or its authorized representative. Upon
         the request of the Trustee in connection with the occurrence of any of
         the events specified in the preceding paragraph, the Company shall
         promptly make available to the Trustee a reasonable supply of Notes
         that are not in the form of Global Securities. The Trustee shall be
         entitled to rely upon any order, direction or request of the Depositary
         or its authorized representative which is given or made pursuant to
         this Article II if such order, direction or request is given or made in
         accordance with the Applicable Procedures.

                  (4) Every Note authenticated and delivered upon registration
         of transfer of, or in exchange for or in lieu of, a Global Security or
         any portion thereof, whether

                                       34
<PAGE>

         pursuant to this Section, Section 2.05, 2.09, 3.06, 4.07, 4.08 or 9.06
         hereof or otherwise, shall be authenticated and delivered in the form
         of, and shall be, a Global Security, unless such Note is registered in
         the name of a Person other than the Depositary or a nominee thereof.

                  (5) None of the Company, the Trustee, any agent of the
         Trustee, any Paying Agent or the Note Registrar will have any
         responsibility or liability for any aspect of the Depository's records
         (or the records of the participant of such Depository) relating to or
         payments made on account of beneficial ownership interests of a Global
         Security or for maintaining, supervising or reviewing any records of
         the Depository relating to such beneficial ownership interests.

         SECTION 2.09. REPLACEMENT NOTES. If any mutilated Note is surrendered
to the Trustee, the Company shall execute and upon its written request the
Trustee shall authenticate and deliver, in exchange for any such mutilated Note,
a new Note containing identical provisions and of like principal amount, bearing
a number not contemporaneously outstanding.

         If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Note and (ii)
such security or indemnity as may be required by them to save either of them and
any agent of each of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note containing identical provisions and of like principal amount, bearing a
number not contemporaneously outstanding.

         In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.

         Upon the issuance of any new Note under this Section 2.09, the Company
may require the payment by the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

         Every new Note issued pursuant to this Section 2.09 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.

                                       35
<PAGE>

         The provisions of this Section 2.09 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.

         SECTION 2.10. OUTSTANDING NOTES. Notes outstanding at any time are all
Notes authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation and those described in this Section 2.10 as not
outstanding. A Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds such Note.

         If a Note is replaced pursuant to Section 2.09 hereof, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that such replaced Note is held by a bona fide purchaser.

         If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or Maturity date money sufficient to pay
all principal, premium, if any, and interest payable on that date with respect
to the Notes (or portions thereof) to be redeemed or maturing, as the case may
be, then on and after that date such Notes (or such portions thereof) shall
cease to be outstanding and interest on them shall cease to accrue.

         In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent or any amendment,
modification or other change to this Indenture, Notes held or beneficially owned
by the Company or a Restricted Subsidiary of the Company or by an Affiliate of
the Company or a Restricted Subsidiary of the Company or by agents of any of the
foregoing shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent or any amendment, modification or other change to this Indenture,
only Notes which a Trust Officer knows are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith shall not be disregarded if
the pledgee establishes to the satisfaction of the Trustee such pledgee's right
so to act with respect to the Notes and that the pledgee is not the Company or
an Affiliate of the Company or any of their agents.

         SECTION 2.11. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Company may execute, and the Trustee shall authenticate, temporary
notes ("Temporary Notes") which are printed, lithographed, or otherwise
produced, substantially of the tenor of the definitive Notes in lieu of which
they are issued and with such appropriate insertions, omissions, substitutions
and other variations.

         If Temporary Notes are issued, the Company shall cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the Temporary Notes shall be exchangeable for definitive Notes upon
surrender of the Temporary Notes to the Trustee, without charge to the Holder.
Until so exchanged, Temporary Notes will evidence the same debt and will be
entitled to the same benefits under this Indenture as the definitive Notes in
lieu of which they have been issued.

                                       36
<PAGE>

         SECTION 2.12. CANCELLATION. The Company at any time may deliver Notes
to the Trustee for cancellation. The Note Registrar and the Paying Agent shall
forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange, purchase or payment. The Trustee shall cancel all Notes
surrendered for registration of transfer, exchange, purchase, payment or
cancellation and shall destroy such canceled Notes unless the Company shall by
Company Order otherwise direct. The Company may not issue new Notes to replace
Notes that have been delivered to the Trustee for cancellation.

         SECTION 2.13. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest
on any Note which is payable, and is punctually paid or duly provided for, on
any Interest Payment Date shall be paid to the Person in whose name such Note is
registered at the close of business on the Regular Record Date for such interest
payment, which shall be the January 1 or July 1 (whether or not a Business Day)
immediately preceding such Interest Payment Date.

         Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Regular Record Date, and, except as hereinafter provided, such
Defaulted Interest, and any interest payable on such Defaulted Interest, may be
paid by the Company, at its election, as provided in clause (a) or (b) below:

                  (a) The Company may elect to make payment of any Defaulted
         Interest, and any interest payable on such Defaulted Interest, to the
         Persons in whose names the Notes are registered at the close of
         business on a Special Record Date for the payment of such Defaulted
         Interest, which shall be fixed in the following manner. The Company
         shall notify the Trustee in writing of the amount of Defaulted Interest
         proposed to be paid on the Notes and the date of the proposed payment,
         and at the same time the Company shall deposit with the Trustee an
         amount of money equal to the aggregate amount proposed to be paid in
         respect of such Defaulted Interest or shall make arrangements
         satisfactory to the Trustee for such deposit prior to the date of the
         proposed payment, such money when deposited to be held in trust for the
         benefit of the Persons entitled to such Defaulted Interest as provided
         in this Clause. Thereupon the Trustee shall fix a Special Record Date
         for the payment of such Defaulted Interest which shall be not more than
         15 calendar days and not less than 10 calendar days prior to the date
         of the proposed payment and not less than 10 calendar days after the
         receipt by a Trust Officer of the Trustee of the notice of the proposed
         payment. The Trustee shall promptly notify the Company of such Special
         Record Date and, in the name and at the expense of the Company, shall
         cause notice of the proposed payment of such Defaulted Interest and the
         Special Record Date therefor to be sent, first class mail, postage
         prepaid, to each Holder at such Holder's address as it appears in the
         Note Register, not less than 10 calendar days prior to such Special
         Record Date. Notice of the proposed payment of such Defaulted Interest
         and the Special Record Date therefor having been mailed as aforesaid,
         such Defaulted Interest shall be paid to the Persons in

                                       37
<PAGE>

         whose names the Notes are registered at the close of business on such
         Special Record Date and shall no longer be payable pursuant to the
         following clause (b).

                  (b) The Company may make payment of any Defaulted Interest,
         and any interest payable on such Defaulted Interest, on the Notes in
         any other lawful manner not inconsistent with the requirements of any
         securities exchange on which the Notes may be listed, and upon such
         notice as may be required by such exchange, if, after notice given by
         the Company to the Trustee of the proposed payment pursuant to this
         clause, such manner of payment shall be deemed practicable by the
         Trustee.

         Subject to the foregoing provisions of this Section 2.13, each Note
delivered under this Indenture upon registration of transfer of, or in exchange
for, or in lieu of, any other Note, shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Note.

         SECTION 2.14. AUTHORIZED DENOMINATIONS. The Notes shall be issuable in
minimum denominations of $1,000 and any integral multiple thereof.

         SECTION 2.15. COMPUTATION OF INTEREST. Interest on the Notes shall be
computed on the basis of a 360-day year of twelve 30-day months.

         SECTION 2.16. PERSONS DEEMED OWNERS. Prior to the due presentation for
registration of transfer of any Note, the Company, the Trustee, the Paying
Agent, the Note Registrar or any co-registrar may deem and treat the person in
whose name Note is registered as the absolute owner of such Note for the purpose
of receiving payment of principal of, premium, if any, and interest on such Note
and for all other purposes whatsoever, whether or not such Note is overdue, and
none of the Company, the Trustee, the Paying Agent, the Note Registrar or any
co-Registrar shall be affected by notice to the contrary.

         SECTION 2.17. CUSIP NUMBERS. The Company, in issuing the Notes, may use
"CUSIP" and "ISIN" numbers for each series of Notes and, if so, the Trustee
shall use the relevant CUSIP and ISIN numbers in any notices to Holders as a
convenience to such Holders; PROVIDED that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP and ISIN
numbers printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in any CUSIP or "ISIN" numbers used.

         SECTION 2.18. HOLDER LISTS. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders and shall otherwise comply with Trust Indenture
Act Section 312(a). If the Trustee is not the Note Registrar, the Company shall
furnish to the Trustee as of each Regular Record Date and at such other times as
the Trustee may request in writing a list in such form and as of such date as

                                       38
<PAGE>

the Trustee may reasonably require of the names and addresses of Holders,
including the aggregate principal amount of Notes held by each Holder.

                                  ARTICLE III.

                                   REDEMPTION

         SECTION 3.01. NOTICE TO TRUSTEE. If the Company elects to redeem Notes
pursuant to paragraph two of the reverse side of the Notes, it shall notify the
Trustee in writing of the Redemption Date and the principal amount of Notes to
be redeemed. The Company shall give each such notice to the Trustee at least 60
calendar days prior to the Redemption Date unless the Trustee consents in
writing to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with any conditions to such redemption set forth herein
and in the Notes.

         SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. If less than all the
Notes are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed by lot, on a PRO RATA or other basis as it shall deem fair and
appropriate; PROVIDED that the Trustee may select for redemption in part only
Notes in denominations larger than $1,000. In selecting Notes to be redeemed
pursuant to this Section 3.02, the Trustee shall make such adjustments,
reallocations and eliminations as it shall deem proper so that the principal
amount of each Note to be redeemed shall be $1,000 or an integral multiple
thereof, by increasing, decreasing or eliminating any amount less than $1,000
which would be allocable to any Holder. If the Notes to be redeemed are
certificated Notes, the certificated Notes to be redeemed shall be selected by
the Trustee by prorating, as nearly as may be, the principal amount of
certificated Notes to be redeemed among the Holders of certificated Notes
registered in their respective names. The Trustee in its discretion may
determine the particular Notes (if there are more than one) registered in the
name of any Holder which are to be redeemed, in whole or in part. Provisions of
this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be redeemed.

         SECTION 3.03. NOTICE OF REDEMPTION. At least 30 calendar days but not
more than 60 calendar days before a Redemption Date, the Company shall send a
notice of redemption, first class mail, postage prepaid, to Holders of Notes to
be redeemed at the addresses of such Holders as they appear in the Note
Register.

         The notice shall identify the Notes to be redeemed and shall state:

                  (a) the Redemption Date;

                                       39
<PAGE>

                  (b) the Redemption Price (and shall specify the portion of
         such Redemption Price that constitutes the amount of accrued and unpaid
         interest to be paid, if any);

                  (c) the name and address of the Paying Agent;

                  (d) that the Notes called for redemption must be surrendered
         to the Paying Agent to collect the Redemption Price;

                  (e) if any Note is being redeemed in part, the portion of the
         principal amount of such Note to be redeemed and that, after the
         Redemption Date, a new Note or Notes in principal amount equal to the
         unredeemed portion will be issued;

                  (f) if fewer than all the outstanding Notes are to be
         redeemed, the identification and principal amounts of the particular
         Notes to be redeemed;

                  (g) that, unless the Company defaults in making the redemption
         payment, interest on the Notes (or portions thereof) called for
         redemption shall cease and such Notes (or portions thereof) shall cease
         to accrue interest on and after the Redemption Date; and

                  (h) any other information necessary to enable Holders to
         comply with the notice of redemption.

         At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03 in a timely manner.

         SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption
is mailed, Notes called for redemption shall become due and payable on the
Redemption Date and at the Redemption Price stated in such notice. Upon
surrender to the Paying Agent, such Notes shall be paid at the Redemption Price
stated in such notice. Failure to give notice or any defect in the notice to any
Holder shall not affect the validity of the notice to any other Holder.

         SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or prior to 10:00 a.m.,
New York City time, on each Redemption Date, the Company shall deposit with the
Paying Agent (or, if the Company, one of its Subsidiaries or any of their
Affiliates is the Paying Agent, the Paying Agent shall segregate and hold in
trust for the benefit of the Holders) money, in federal or other immediately
available funds, sufficient to pay the Redemption Price on all Notes to be
redeemed on that date other than Notes or portions of Notes called for
redemption on such date which have been delivered by the Company to the Trustee
for cancellation.

         So long as the Company complies with the preceding paragraph and the
other provisions of this Article III, interest on the Notes to be redeemed on
the applicable

                                       40
<PAGE>

Redemption Date shall cease to accrue from and after such date and such Notes or
portions thereof shall be deemed not to be entitled to any benefit under this
Indenture except to receive payment of the Redemption Price on the Redemption
Date. If any Note called for redemption shall not be so paid upon surrender for
redemption, then, from the Redemption Date until such principal is paid,
interest shall be paid on the unpaid principal and, to the extent permitted by
law, on any accrued but unpaid interest thereon, in each case at the rate
prescribed therefor by such Notes.

         SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender and cancellation
of a Note that is redeemed in part, the Company shall issue and the Trustee
shall authenticate and deliver to the surrendering Holder (at the Company's
expense) a new Note equal in principal amount to the unredeemed portion of the
Note surrendered and canceled; PROVIDED that each such Note shall be in a
principal amount of $1,000 or an integral multiple thereof.

                                   ARTICLE IV.

                                    COVENANTS

         SECTION 4.01. PAYMENT OF NOTES. The Company shall promptly pay the
principal of, premium, if any, and interest on, the Notes on the dates and in
the manner provided in the Notes and in this Indenture. Principal, premium and
interest shall be considered paid on the date due if, on such date, the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal, premium and interest then due.

         To the extent lawful, the Company shall pay interest on (i) any overdue
principal of (and premium, if any, on) the Notes, at the interest rate borne on
the Notes and (ii) Defaulted Interest (without regard to any applicable grace
period), at the same rate. The Company's obligation pursuant to the previous
sentence shall apply whether such overdue amount is due at its Stated Maturity,
as a result of the Company's obligations pursuant to Section 3.05, Section 4.07
or Section 4.08 hereof, or otherwise.

         SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee its agent to
receive all presentations, surrenders, notices and demands.

                                       41
<PAGE>

         The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes may
be presented or surrendered for any or all of such purposes, and may from time
to time rescind such designations; PROVIDED that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York, for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation and any
change in the location of any such other office or agency.

         SECTION 4.03. MONEY FOR THE NOTE PAYMENTS TO BE HELD IN TRUST. If the
Company, any Subsidiary of the Company or any of their respective Affiliates
shall at any time act as Paying Agent with respect to the Notes, such Paying
Agent shall, on or before each due date of the principal of (and premium, if
any) or interest on any of the Notes, segregate and hold in trust for the
benefit of the Persons entitled thereto money sufficient to pay the principal
(and premium, if any) or interest so becoming due until such money shall be paid
to such Persons or otherwise disposed of as herein provided, and shall promptly
notify the Trustee of its action or failure so to act.

         Whenever the Company shall have one or more Paying Agents with respect
to the Notes, it shall, prior to or on each due date of the principal of (and
premium, if any) or interest on any of the Notes, deposit with a Paying Agent a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Paying Agent shall promptly notify the Trustee of the
Company's action or failure so to act.

         SECTION 4.04. CORPORATE EXISTENCE. Subject to the provisions of Article
IV and Article V hereof, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect the corporate existence,
rights (charter and statutory) and franchises of the Company and each of its
Restricted Subsidiaries; PROVIDED that the Company and any such Restricted
Subsidiary shall not be required to preserve the corporate existence of any such
Restricted Subsidiary or any such right or franchise if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and PROVIDED FURTHER that any Restricted
Subsidiary may consolidate with, merge into, or sell, convey, lease or otherwise
dispose of all of its property and assets to the Company or any wholly owned
Restricted Subsidiary.

         SECTION 4.05. MAINTENANCE OF PROPERTY. The Company shall cause all
Property used or useful in the conduct of its business or the business of any of
its Restricted Subsidiaries and material to the Company and its Restricted
Subsidiaries taken as a whole to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as, in the judgment of the Company, may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at

                                       42
<PAGE>

all times; PROVIDED that nothing in this Section 4.05 shall prevent the Company
from discontinuing the operation or maintenance of any of such Property if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any of its Restricted Subsidiaries.

         SECTION 4.06. PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any of its Restricted Subsidiaries or upon the
income, profits or Property of the Company or any of its Restricted Subsidiaries
and (b) all material lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien upon the Property of the Company or any of
its Restricted Subsidiaries; PROVIDED that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings upon stay of execution or the enforcement
thereof and for which adequate reserves in accordance with GAAP or other
appropriate provision has been made.

         SECTION 4.07. REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF
CONTROL. (a) Upon the occurrence of a Change of Control, each Holder shall have
the right to require the Company to purchase such Holder's Notes, in whole or in
part, in a principal amount that is an integral multiple of $1,000, pursuant to
the offer described in Section 4.07(b) hereof (the "Change of Control Offer"),
at a purchase price (the "Change of Control Purchase Price") in cash equal to
101 percent of the principal amount of such Notes (or portions thereof), plus
accrued and unpaid interest, if any, to the Change of Control Payment Date.

         (b) Within 30 calendar days of the date of any Change of Control, the
Company, or the Trustee at the request and expense of the Company, shall send to
each Holder by first class mail, postage prepaid, a notice prepared by the
Company stating:

                  (i) that a Change of Control has occurred and a Change of
         Control Offer is being made pursuant to this Section 4.07, and that all
         Notes that are timely tendered will be accepted for payment;

                  (ii) the Change of Control Purchase Price, and the date Notes
         are to be purchased pursuant to the Change of Control Offer (the
         "Change of Control Payment Date"), which date shall be a date occurring
         no earlier than 30 calendar days nor later than 60 calendar days
         subsequent to the date such notice is mailed;

                  (iii) that any Notes or portions thereof not tendered or
         accepted for payment will continue to accrue interest;

                  (iv) that, unless the Company defaults in the payment of the
         Change of Control Purchase Price with respect thereto, all Notes or
         portions thereof accepted for payment

                                       43
<PAGE>

         pursuant to the Change of Control Offer shall cease to accrue interest
         from and after the Change of Control Payment Date;

                  (v) that any Holder electing to have any Notes or portions
         thereof purchased pursuant to a Change of Control Offer will be
         required to surrender such Notes, with the form entitled "Option of
         Holder to Elect Purchase" on the reverse of such Notes completed, to
         the Paying Agent at the address specified in the notice, prior to the
         close of business on the third Business Day preceding the Change of
         Control Payment Date;

                  (vi) that any Holder shall be entitled to withdraw such
         election if the Paying Agent receives, not later than the close of
         business on the second Business Day preceding the Change of Control
         Payment Date, a telegram, telex, facsimile transmission or letter,
         setting forth the name of the Holder, the principal amount of Notes
         delivered for purchase, and a statement that such Holder is withdrawing
         such Holder's election to have such Notes or portions thereof purchased
         pursuant to the Change of Control Offer;

                  (vii) that any Holder electing to have Notes purchased
         pursuant to the Change of Control Offer must specify the principal
         amount that is being tendered for purchase, which principal amount must
         be $1,000 or an integral multiple thereof;

                  (viii) that any Holder whose Notes are being purchased only in
         part will be issued new Notes equal in principal amount to the
         unpurchased portion of the Note or Notes surrendered, which unpurchased
         portion will be equal in principal amount to $1,000 or an integral
         multiple thereof; and

                  (ix) any other information necessary to enable any Holder to
         tender Notes and to have such Notes purchased pursuant to this Section
         4.07.

         (c) On the Change of Control Payment Date, the Company shall (i) accept
for payment any Notes or portions thereof properly tendered pursuant to the
Change of Control Offer; (ii) irrevocably deposit with the Paying Agent, by
10:00 a.m., New York City time, on such date, in immediately available funds, an
amount equal to the Change of Control Purchase Price in respect of all Notes or
portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee the Notes so accepted together with an Officers' Certificate listing
the Notes or portions thereof tendered to the Company and accepted for payment.
The Paying Agent shall promptly send by first class mail, postage prepaid, to
each Holder of Notes or portions thereof so accepted for payment, payment in an
amount equal to the Change of Control Purchase Price for such Notes or portions
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.

                                       44
<PAGE>

         (d) Upon surrender and cancellation of a Note that is purchased in part
pursuant to a Change of Control Offer, the Company shall promptly issue and the
Trustee shall authenticate and deliver to the surrendering Holder of such Note,
a new Note equal in principal amount to the unpurchased portion of such
surrendered Note; PROVIDED that each such new Note shall be in a principal
amount of $1,000 or an integral multiple thereof.

         (e) The Company shall comply with the requirements of Section 14(e)
under the Exchange Act and any other securities laws or regulations, to the
extent such laws and regulations are applicable, in connection with the purchase
of Notes pursuant to a Change of Control Offer.

         SECTION 4.08. LIMITATION ON ASSET SALES. (a) The Company shall not, and
shall not permit any of its Restricted Subsidiaries, directly or indirectly, to,
consummate any Asset Sale, unless:

                  (i) the Company or such Restricted Subsidiary, as the case may
         be, receives consideration for such Asset Sale at least equal to the
         Fair Market Value (as evidenced by a Board Resolution delivered to the
         Trustee) of the Property or assets sold or otherwise disposed of;

                  (ii) at least 75 percent of the consideration received in
         respect of such Asset Sale by the Company or such Restricted
         Subsidiary, as the case may be, for such Property or assets consists of
         (a) Cash Proceeds and/or Telecommunications Assets; (b) shares of
         publicly-traded Voting Stock of any Person engaged in the
         Telecommunications Business in the United States; or (c) the assumption
         of Indebtedness of the Company or such Restricted Subsidiary (other
         than Indebtedness that is subordinated to the Notes) and the release of
         the Company or the Restricted Subsidiary, as the case may be, from all
         liability on the Indebtedness assumed; and

                  (iii) the Company or such Restricted Subsidiary, as the case
         may be, uses the Net Cash Proceeds from such Asset Sale in the manner
         set forth in Section 4.08(b) hereof.

         (b) Within 360 calendar days after the closing of any Asset Sale, the
Company or such Restricted Subsidiary, as the case may be, may, at its option:

                  (i) reinvest an amount equal to the Net Cash Proceeds, or any
         portion thereof, from such Asset Sale in Telecommunications Assets or
         in Capital Stock of any Person engaged in the Telecommunications
         Business; and/or

                  (ii) apply an amount equal to such Net Cash Proceeds, or
         remaining Net Cash Proceeds, to the permanent reduction of Indebtedness
         of the Company (other than Indebtedness to a Restricted Subsidiary of
         the Company) that is senior to or PARI PASSU

                                       45
<PAGE>

         with the Notes or to the permanent reduction of Indebtedness or
         Preferred Stock of any Restricted Subsidiary of the Company (other than
         Indebtedness to, or Preferred Stock owned by, the Company or another
         Restricted Subsidiary of the Company).

Net Cash Proceeds from any Asset Sale that are not applied pursuant to clause
(i) or (ii) above within 360 calendar days of the closing of such Asset Sale
shall constitute "Excess Proceeds."

         (c) If at any time the aggregate amount of Excess Proceeds calculated
as of such date exceeds $25 million, the Company shall use the then-existing
Excess Proceeds to make an offer, as described in Section 4.08(d) hereof (an
"Asset Sale Offer"), to purchase from all Holders, on a PRO RATA basis, Notes in
an aggregate principal amount equal to the maximum principal amount that may be
purchased out of the then-existing Excess Proceeds, at a purchase price (the
"Asset Sale Purchase Price") in cash equal to 100 percent of the principal
amount of such Notes, plus accrued and unpaid interest, if any, to the Asset
Sale Payment Date.

         (d) Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $25 million, the Company, or the Trustee at the request and expense of
the Company, shall send to each Holder by first class mail, postage prepaid, a
notice prepared by the Company stating:

                  (i) that an Asset Sale Offer is being made pursuant to this
         Section 4.08, and that all Notes that are timely tendered will be
         accepted for payment, subject to proration in the event the amount of
         Excess Proceeds is less than the aggregate Asset Sale Purchase Price of
         all Notes timely tendered pursuant to the Asset Sale Offer;

                  (ii) the Asset Sale Purchase Price, the amount of Excess
         Proceeds that are available to be applied to purchase tendered Notes,
         and the date Notes are to be purchased pursuant to the Asset Sale Offer
         (the "Asset Sale Payment Date"), which date shall be a date no earlier
         than 30 calendar days nor later than 40 calendar days subsequent to the
         date such notice is mailed;

                  (iii) that any Notes or portions thereof not tendered or
         accepted for payment will continue to accrue interest;

                  (iv) that, unless the Company defaults in the payment of the
         Asset Sale Purchase Price with respect thereto, all Notes or portions
         thereof accepted for payment pursuant to the Asset Sale Offer shall
         cease to accrue interest from and after the Asset Sale Payment Date;

                  (v) that any Holder electing to have any Notes or portions
         thereof purchased pursuant to the Asset Sale Offer will be required to
         surrender such Notes, with the form entitled "Option of Holder to Elect
         Purchase" on the reverse of such Notes completed, to the Paying Agent
         at the address specified in the notice, prior to the close of business
         on the third Business Day preceding the Asset Sale Payment Date;

                                       46
<PAGE>

                  (vi) that any Holder shall be entitled to withdraw such
         election if the Paying Agent receives, not later than the close of
         business on the second Business Day preceding the Asset Sale Payment
         Date, a telegram, telex, facsimile transmission or letter, setting
         forth the name of the Holder, the principal amount of Notes delivered
         for purchase, and a statement that such Holder is withdrawing such
         Holder's election to have such Notes or portions thereof purchased
         pursuant to the Asset Sale Offer;

                  (vii) that any Holder electing to have Notes purchased
         pursuant to the Asset Sale Offer must specify the principal amount that
         is being tendered for purchase, which principal amount must be $1,000
         or an integral multiple thereof;

                  (viii) that any Holder whose Notes are being purchased only in
         part will be issued new Notes equal in principal amount to the
         unpurchased portion of the Note or Notes surrendered, which unpurchased
         portion will be equal in principal amount to $1,000 or an integral
         multiple thereof; and

                  (ix) any other information necessary to enable any Holder to
         tender Notes and to have such Notes purchased pursuant to this Section
         4.08.

         (e) If the aggregate Asset Sale Purchase Price of the Notes surrendered
by Holders exceeds the amount of Excess Proceeds as indicated in the notice
required by Section 4.08(d) hereof, the Trustee shall select the Notes to be
purchased on a PRO RATA basis based on the principal amount of the Notes
tendered, with such adjustments as may be deemed appropriate by the Trustee, so
that only Notes in denominations of $1,000 or integral multiples thereof shall
be purchased.

         (f) On the Asset Sale Payment Date, the Company shall (i) accept for
payment any Notes or portions thereof properly tendered and selected for
purchase pursuant to the Asset Sale Offer and Section 4.08(e) hereof; (ii)
irrevocably deposit with the Paying Agent, by 10:00 a.m., New York City time, on
such date, in immediately available funds, an amount equal to the Asset Sale
Purchase Price in respect of all Notes or portions thereof so accepted; and
(iii) deliver, or cause to be delivered, to the Trustee the Notes so accepted
together with an Officers' Certificate listing the Notes or portions thereof
tendered to the Company and accepted for payment. The Paying Agent shall
promptly send by first class mail, postage prepaid, to each Holder of Notes or
portions thereof so accepted for payment, payment in an amount equal to the
Asset Sale Purchase Price for such Notes or portions thereof. The Company shall
publicly announce the results of the Asset Sale Offer on or as soon as
practicable after the Asset Sale Payment Date.

         (g) Upon surrender and cancellation of a Note that is purchased in
part, the Company shall promptly issue and the Trustee shall authenticate and
deliver to the surrendering Holder of such Note a new Note equal in principal
amount to the unpurchased

                                       47
<PAGE>

portion of such surrendered Note; PROVIDED that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof.

         (h) Upon completion of an Asset Sale Offer (including payment of the
Asset Sale Purchase Price for accepted Notes), any surplus Excess Proceeds that
were the subject of such offer shall cease to be Excess Proceeds, and the
Company may then use such amounts for general corporate purposes.

         (i) The Company shall comply with the requirements of Section 14(e)
under the Exchange Act and any other securities laws or regulations, to the
extent such laws and regulations are applicable, in connection with the purchase
of Notes pursuant to an Asset Sale Offer.

         SECTION 4.09. LIMITATION ON CONSOLIDATED INDEBTEDNESS. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness after the Issue Date unless either (a) the ratio of (i) the
aggregate consolidated principal amount of Indebtedness of the Company
outstanding as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the Incurrence of such Indebtedness and any
other Indebtedness Incurred since such balance sheet date and the receipt and
application of the proceeds thereof, to (ii) Consolidated Cash Flow Available
for Fixed Charges for the four full fiscal quarters immediately preceding the
Incurrence of such Indebtedness for which consolidated financial statements of
the Company have been filed with the Commission or have otherwise become
publicly available, determined on a PRO FORMA basis as if any such Indebtedness
had been Incurred and the proceeds thereof had been applied at the beginning of
such four fiscal quarters, would be less than 5.5 to 1.0 for such four-quarter
periods ending on or prior to December 31, 2000 and 5.0 to 1.0 for such periods
ending thereafter, or (b) the Company's Consolidated Capital Ratio as of the
most recent quarterly or annual balance sheet of the Company that has been filed
with the Commission or has otherwise become publicly available, after giving PRO
FORMA effect to (x) the Incurrence of such Indebtedness and any other
Indebtedness Incurred since such balance sheet date and (y) paid-in capital
received since such balance sheet date or concurrently with the Incurrence of
such Indebtedness, and in each case the receipt and application of the proceeds
thereof, is less than 2.0 to 1.0.

         (b) Notwithstanding the foregoing limitation, the Company and any
Restricted Subsidiary may Incur each and all of the following:

                  (i) Indebtedness under Senior Credit Facilities in an
         aggregate principal amount outstanding or available at any one time not
         to exceed $100 million, and any renewal, extension, refinancing or
         refunding thereof in an amount which, together with any principal
         amount remaining outstanding or available under all Senior Credit
         Facilities, does not exceed the aggregate principal amount outstanding
         or available under all Senior Credit Facilities immediately prior to
         such renewal, extension, refinancing or refunding;

                                       48
<PAGE>

                  (ii) Indebtedness under Qualified Receivable Facilities in an
         aggregate principal amount outstanding or available at any one time not
         to exceed the greater of (x) $150 million or (y) an amount equal to 85%
         of net Receivables determined in accordance with GAAP, and any renewal,
         extension, refinancing or refunding thereof in an amount which,
         together with any principal amount remaining outstanding or available
         under all Qualified Receivable Facilities, does not exceed the
         aggregate principal amount outstanding or available under all Qualified
         Receivable Facilities immediately prior to such renewal, extension,
         refinancing or refunding;

                  (iii) Purchase Money Indebtedness, PROVIDED that the amount of
         such Purchase Money Indebtedness does not exceed 90% of the cost of the
         construction, acquisition or improvement of the applicable
         Telecommunications Assets;

                  (iv) Indebtedness owed by the Company to any Wholly-Owned
         Restricted Subsidiary of the Company or Indebtedness owed by a
         Restricted Subsidiary of the Company to the Company or a Wholly-Owned
         Restricted Subsidiary of the Company; PROVIDED that upon either (x) the
         transfer or other disposition by such Wholly-Owned Restricted
         Subsidiary or the Company of any Indebtedness so permitted to a Person
         other than the Company or another Wholly-Owned Restricted Subsidiary of
         the Company or (y) the issuance (other than directors' qualifying
         shares), sale, lease, transfer or other disposition of shares of
         Capital Stock (including by consolidation or merger) of such
         Wholly-Owned Restricted Subsidiary to a Person other than the Company
         or another such Wholly-Owned Restricted Subsidiary, the provisions of
         this clause (iv) shall no longer be applicable to such Indebtedness and
         such Indebtedness shall be deemed to have been Incurred at the time of
         such transfer or other disposition;

                  (v) Indebtedness Incurred to renew, extend, refinance or
         refund (each, a "refinancing") the Notes or Indebtedness outstanding at
         the date of the Indenture or Purchase Money Indebtedness Incurred
         pursuant to clause (iii) of this paragraph in an aggregate principal
         amount not to exceed the aggregate principal amount of and accrued
         interest on the Indebtedness so refinanced plus the amount of any
         premium required to be paid in connection with such refinancing
         pursuant to the terms of the Indebtedness so refinanced or the amount
         of any premium reasonably determined by the Company as necessary to
         accomplish such refinancing by means of a tender offer or privately
         negotiated repurchase, plus the expenses of the Company incurred in
         connection with such refinancing; PROVIDED that Indebtedness the
         proceeds of which are used to refinance the Notes or Indebtedness which
         is PARI PASSU to the Notes or Indebtedness which is subordinate in
         right of payment to the Notes shall only be permitted under this clause
         (v) if (A) in the case of any refinancing of the Notes or Indebtedness
         which is PARI PASSU to the Notes, the refinancing Indebtedness is made
         PARI PASSU to the Notes or constitutes Subordinated Indebtedness, and,
         in the case of any refinancing of Subordinated Indebtedness, the
         refinancing Indebtedness constitutes Subordinated

                                       49
<PAGE>

         Indebtedness and (B) in any case, the refinancing Indebtedness by its
         terms, or by the terms of any agreement or instrument pursuant to which
         such Indebtedness is issued, (x) does not provide for payments of
         principal of such Indebtedness at stated maturity or by way of a
         sinking fund applicable thereto or by way of any mandatory redemption,
         defeasance, retirement or repurchase thereof by the Company (including
         any redemption, retirement or repurchase which is contingent upon
         events or circumstances, but excluding any retirement required by
         virtue of the acceleration of any payment with respect to such
         Indebtedness upon any event of default thereunder), in each case prior
         to the time the same are required by the terms of the Indebtedness
         being refinanced and (y) does not permit redemption or other retirement
         (including pursuant to an offer to purchase made by the Company) of
         such Indebtedness at the option of the Holder thereof prior to the time
         the same are required by the terms of the Indebtedness being
         refinanced, other than a redemption or other retirement at the option
         of the Holder of such Indebtedness (including pursuant to an offer to
         purchase made by the Company) which is conditioned upon a change of
         control pursuant to provisions substantially similar to those described
         in Section 4.07 hereof;

                  (vi) Indebtedness consisting of Permitted Interest Rate and
         Currency Protection Agreements;

                  (vii) Indebtedness (A) in respect of performance, surety or
         appeal bonds provided in the ordinary course of business or (B) arising
         from customary agreements providing for indemnification, adjustment of
         purchase price for closing balance sheet changes within 90 days after
         closing, or similar obligations, or from Guarantees or letters of
         credit, surety bonds or performance bonds securing any obligations of
         the Company or any of its Restricted Subsidiaries pursuant to such
         agreements, in each case Incurred in connection with the disposition of
         any business, assets or Restricted Subsidiary of the Company (other
         than Guarantees of Indebtedness Incurred by any Person acquiring all or
         any portion of such business, assets or Restricted Subsidiary of the
         Company for the purpose of financing such acquisition) and in an
         aggregate principal amount not to exceed the gross proceeds actually
         received by the Company or any Restricted Subsidiary in connection with
         such disposition; and

                  (viii) Indebtedness not otherwise permitted to be Incurred
         pursuant to clauses (i) through (vii) above, which, together with any
         other outstanding Indebtedness Incurred pursuant to this clause (viii),
         has an aggregate principal amount not in excess of $10 million at any
         time outstanding.

         (c) Notwithstanding any other provision of this Section 4.09, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.09, shall not be deemed to be exceeded due
solely as the result of fluctuations in the exchange rates of currencies.

                                       50
<PAGE>

         (d) For purposes of determining any particular amount of Indebtedness
under this Section 4.09, (1) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (2) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.12
hereof shall not be treated as Indebtedness. For purposes of determining
compliance with this Section 4.09, in the event that an item of Indebtedness
meets the criteria of more than one of the types of Indebtedness described in
the above clauses, the Company, in its sole discretion, shall classify such item
of Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.

         SECTION 4.10. LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF
RESTRICTED SUBSIDIARIES. The Company shall not permit any Restricted Subsidiary
of the Company to Incur any Indebtedness or issue any Preferred Stock except:

                  (i) Indebtedness or Preferred Stock outstanding on the date of
         the Indenture after giving effect to the application of the proceeds of
         the Notes;

                  (ii) Indebtedness Incurred or Preferred Stock issued to and
         held by the Company or a Wholly-Owned Restricted Subsidiary of the
         Company (PROVIDED that such Indebtedness or Preferred Stock is at all
         times held by the Company or a Wholly-Owned Restricted Subsidiary of
         the Company);

                  (iii) Indebtedness Incurred or Preferred Stock issued by a
         Person prior to the time (A) such Person became a Restricted Subsidiary
         of the Company, (B) such Person merges into or consolidates with a
         Restricted Subsidiary of the Company or (C) another Restricted
         Subsidiary of the Company merges into or consolidates with such Person
         (in a transaction in which such Person becomes a Restricted Subsidiary
         of the Company), which Indebtedness or Preferred Stock was not Incurred
         or issued in anticipation of such transaction and was outstanding prior
         to such transaction;

                  (iv) Indebtedness under a Senior Credit Facility which is
         permitted to be outstanding under clause (i) of Section 4.09(b);

                  (v) in the case of a Restricted Subsidiary that is a Qualified
         Receivable Subsidiary, Indebtedness under a Qualified Receivable
         Facility which is permitted to be outstanding under clause (ii) of
         Section 4.09(b);

                  (vi) Indebtedness consisting of Permitted Interest Rate and
         Currency Protection Agreements;

                  (vii) Indebtedness (A) in respect of performance, surety and
         appeal bonds provided in the ordinary course of business or (B) arising
         from customary agreements providing for indemnification, adjustment of
         purchase price for closing balance sheet

                                       51
<PAGE>

         changes within 90 days after closing, or similar obligations, or from
         Guarantees or letters of credit, surety bonds or performance bonds
         securing any obligation of such Restricted Subsidiary pursuant to such
         agreements, in each case Incurred in connection with the disposition of
         any business, assets or Restricted Subsidiary of such Restricted
         Subsidiary (other than Guarantees of Indebtedness Incurred by any
         Person acquiring all or any portion of such business, assets or
         Restricted Subsidiary for the purpose of financing such acquisition)
         and in an aggregate principal amount not to exceed the gross proceeds
         actually received by such Restricted Subsidiary in connection with such
         disposition;

                  (viii) Indebtedness or Preferred Stock which is exchanged for,
         or the proceeds of which are used to refinance, refund or redeem, any
         Indebtedness or Preferred Stock permitted to be outstanding pursuant to
         clauses (i) and (iii) hereof or any extension or renewal thereof (for
         purposes hereof, a "refinancing"), in an aggregate principal amount, in
         the case of Indebtedness, or with an aggregate liquidation preference
         in the case of Preferred Stock, not to exceed the aggregate principal
         amount of the Indebtedness so refinanced or the aggregate liquidation
         preference of the Preferred Stock so refinanced, plus the amount of any
         premium required to be paid in connection with such refinancing
         pursuant to the terms of the Indebtedness or Preferred Stock so
         refinanced or the amount of any premium reasonably determined by the
         Company as necessary to accomplish such refinancing by means of a
         tender offer or privately negotiated repurchase, plus the amount of
         expenses of the Company and the applicable Restricted Subsidiary
         Incurred in connection therewith and provided the Indebtedness or
         Preferred Stock Incurred or issued upon such refinancing by its terms,
         or by the terms of any agreement or instrument pursuant to which such
         Indebtedness or Preferred Stock is Incurred or issued, (x) does not
         provide for payments of principal or liquidation value at the stated
         maturity of such Indebtedness or Preferred Stock or by way of a sinking
         fund applicable to such Indebtedness or Preferred Stock or by way of
         any mandatory redemption, defeasance, retirement or repurchase of such
         Indebtedness or Preferred Stock by the Company or any Restricted
         Subsidiary of the Company (including any redemption, retirement or
         repurchase which is contingent upon events or circumstances, but
         excluding any retirement required by virtue of acceleration of such
         Indebtedness upon an event of default thereunder), in each case prior
         to the time the same are required by the terms of the Indebtedness or
         Preferred Stock being refinanced and (y) does not permit redemption or
         other retirement (including pursuant to an offer to purchase made by
         the Company or a Restricted Subsidiary of the Company) of such
         Indebtedness or Preferred Stock at the option of the holder thereof
         prior to the stated maturity of the Indebtedness or Preferred Stock
         being refinanced, other than a redemption or other retirement at the
         option of the holder of such Indebtedness or Preferred Stock (including
         pursuant to an offer to purchase made by the Company or a Restricted
         Subsidiary of the Company) which is conditioned upon the change of
         control of the Company pursuant to provisions substantially similar to
         those described in Section 4.07 hereof and provided, further, that in
         the case of any exchange or

                                       52
<PAGE>

         redemption of Preferred Stock of a Restricted Subsidiary of the
         Company, such Preferred Stock may only be exchanged for or redeemed
         with Preferred Stock of such Restricted Subsidiary; and

                  (ix) Indebtedness Incurred or Preferred Stock issued by a
         Restricted Subsidiary, PROVIDED that the Fair Market Value of the
         Company's Investment in all Restricted Subsidiaries which Incur
         Indebtedness or issue Preferred Stock pursuant to this clause (ix)
         shall not exceed, at any time, $30,000,000 in the aggregate, and
         PROVIDED FURTHER that such Indebtedness Incurred is otherwise permitted
         pursuant to Section 4.09 hereof.

         SECTION 4.11. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment unless, at the time of and after giving
effect to such proposed Restricted Payment:

                  (i) no Default or Event of Default shall have occurred and be
         continuing or shall occur as a consequence thereof;

                  (ii) after giving effect, on a PRO FORMA basis, to such
         Restricted Payment and the incurrence of any Indebtedness the net
         proceeds of which are used to finance such Restricted Payment, the
         Company could incur at least $1.00 of additional Indebtedness pursuant
         to the first paragraph of Section 4.09 hereof; and

                  (iii) after giving effect to such Restricted Payment on a PRO
         FORMA basis, the aggregate amount expended (the amount so expended, if
         other than cash, to be determined in good faith by a majority of the
         disinterested members of the Board of Directors, whose determination
         shall be conclusive and evidenced by a resolution thereof) or declared
         for all Restricted Payments after February 22, 1999 does not exceed the
         sum of (A) 50% of the Consolidated Net Income of the Company (or, if
         Consolidated Net Income shall be a deficit, minus 100% of such deficit)
         for the period (taken as one accounting period) beginning on the last
         day of the fiscal quarter immediately preceding February 22, 1999 and
         ending on the last day of the fiscal quarter for which the Company's
         financial statements have been filed with the Commission or otherwise
         become publicly available immediately preceding the date of such
         Restricted Payment, PLUS (B) 100% of the net reduction in Investments,
         subsequent to February 22, 1999, in any Person, resulting from payments
         of interest on Indebtedness, dividends, repayments of loans or
         advances, or other transfers of Property (but only to the extent such
         interest, dividends, repayments or other transfers of Property are not
         included in the calculation of Consolidated Net Income), in each case
         to the Company or any Restricted Subsidiary from any Person (including,
         without limitation, from Unrestricted Subsidiaries) or from
         redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
         (valued in each case as provided in the definition of "Investments" in
         Section 1.01 hereof), not to exceed in the case of any Person the
         amount of Investments previously made subsequent to February 22, 1999
         by the

                                       53
<PAGE>

         Company or any Restricted Subsidiary in such Person and which was
         treated as a Restricted Payment; PROVIDED that the Company or a
         Restricted Subsidiary of the Company may make any Restricted Payment
         with the aggregate net proceeds received after February 22, 1999,
         including the fair value of property other than cash (determined in
         good faith by the Board of Directors as evidenced by a resolution of
         the Board of Directors filed with the Trustee), (x) as capital
         contributions to the Company, (y) from the issuance (other than to a
         Restricted Subsidiary) of Capital Stock (other than Disqualified Stock)
         of the Company and warrants, rights or options on Capital Stock (other
         than Disqualified Stock) of the Company, or (z) from the conversion of
         Indebtedness of the Company into Capital Stock (other than Disqualified
         Stock and other than by a Restricted Subsidiary) of the Company after
         February 22, 1999.

         (b) The foregoing limitations shall not prevent the Company from:

                  (i) paying a dividend on its Capital Stock at any time within
         60 days after the declaration thereof if, on the declaration date, the
         Company could have paid such dividend in compliance with the preceding
         paragraph of this Section 4.11;

                  (ii) retiring (A) any Capital Stock of the Company or any
         Restricted Subsidiary of the Company, (B) Indebtedness of the Company
         that is subordinated in right of payment to the Notes, or (C)
         Indebtedness of a Restricted Subsidiary of the Company, in exchange
         for, or out of the proceeds of the substantially concurrent sale of
         Qualified Stock of the Company;

                  (iii) retiring any Indebtedness of the Company subordinated in
         right of payment to the Notes in exchange for, or out of the proceeds
         of, the substantially concurrent incurrence of Indebtedness of the
         Company (other than Indebtedness to a Subsidiary of the Company),
         PROVIDED that such new Indebtedness (A) is subordinated in right of
         payment to the Notes at least to the same extent as, (B) has an Average
         Life at least as long as, and (C) has no scheduled principal payments
         due in any amount earlier than, any equivalent amount of principal
         under the Indebtedness so retired;

                  (iv) retiring any Indebtedness of a Restricted Subsidiary of
         the Company in exchange for, or out of the proceeds of, the
         substantially concurrent incurrence of Indebtedness of the Company or
         any Restricted Subsidiary that is permitted under Section 4.09 hereof
         (in the case of Indebtedness of the Company) and Section 4.10 hereof
         (in the case of Indebtedness of Restricted Subsidiaries) and that (A)
         is not secured by any assets of the Company or any Restricted
         Subsidiary to a greater extent than the retired Indebtedness was so
         secured, (B) has an Average Life at least as long as the retired
         Indebtedness, and (C) is subordinated in right of payment to the Notes
         at least to the same extent as the retired Indebtedness;

                                       54
<PAGE>

                  (v) retiring any Capital Stock or options to acquire Capital
         Stock of the Company or any Restricted Subsidiary of the Company held
         by any directors, officers or employees of the Company or any
         Restricted Subsidiary, PROVIDED that the aggregate price paid for all
         such retired Capital Stock shall not exceed, in the aggregate, the sum
         of $2 million plus the aggregate cash proceeds received by the Company
         subsequent to the Issue Date from issuances of Capital Stock or options
         to acquire Capital Stock by the Company to directors, officers or
         employees of the Company and its Subsidiaries;

                  (vi) making payments or distributions to dissenting
         stockholders pursuant to applicable law in connection with a
         consolidation, merger or transfer of assets permitted in Article V
         hereof;

                  (vii) retiring any Capital Stock of the Company to the extent
         necessary (as determined in good faith by a majority of the
         disinterested members of the Board of Directors, whose determination
         shall be conclusive and evidenced by a resolution thereof) to prevent
         the loss, or to secure the renewal or reinstatement, of any license or
         franchise held by the Company or any Restricted Subsidiary from any
         governmental agency;

                  (viii) making Investments in any Person primarily engaged in
the Telecommunications Business; PROVIDED, that the aggregate amount of such
Investments does not exceed at any time the sum of (A) $30,000,000 plus (B) the
amount of Net Cash Proceeds received by the Company after February 22, 1999 as a
capital contribution or from the sale of its Capital Stock (other than
Disqualified Stock) to a Person who is not a Subsidiary of the Company, except
to the extent such Net Cash Proceeds are used to make Restricted Payments
permitted pursuant to clauses (x), (y) and (z) of clause (iii) of Section
4.11(a) hereof or clause (ii) of Section 4.11(b) hereof or this clause (viii),
plus (C) the net reduction in Investments made pursuant to this clause (viii)
resulting from distributions on or repayments of such Investments or from the
Net Cash Proceeds from the sale of any such Investment (except in each case to
the extent any such payment or proceeds are included in the calculation of
Consolidated Net Income) or from such Person becoming a Restricted Subsidiary
(valued in each case as provided in the definition of "Investment" set forth in
Section 1.01 hereof), PROVIDED that the net reduction in any Investment shall
not exceed the amount of such Investment; and

                  (ix) making Investments not otherwise permitted in an
         aggregate amount not to exceed $15 million at any time outstanding.

         (c) In determining the amount of Restricted Payments permissible under
this Section 4.11, amounts expended pursuant to clauses (ii), (iii) and (iv) of
the foregoing paragraph shall not be included as Restricted Payments.

                                       55
<PAGE>

         (d) Not later than the date of making any Restricted Payment (including
any Restricted Payment permitted to be made pursuant to the two previous
paragraphs), the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the required calculations were computed, which calculations may be
based upon the Company's latest available financial statements.

         SECTION 4.12. LIMITATION ON LIENS. (a) The Company shall not, and shall
not permit any Restricted Subsidiary of the Company to, Incur or suffer to exist
any Lien on or with respect to any property or assets now owned or hereafter
acquired to secure any Indebtedness without making, or causing such Restricted
Subsidiary to make, effective provision for securing the Notes (x) equally and
ratably with such Indebtedness as to such property for so long as such
Indebtedness will be so secured or (y) in the event such Indebtedness is
Indebtedness of the Company which is subordinate in right of payment to the
Notes, prior to such Indebtedness as to such property for so long as such
Indebtedness will be so secured.

         (b) The foregoing restrictions shall not apply to:

                  (i) Liens existing on the date of the Indenture and securing
         Indebtedness outstanding on the date of the Indenture or Incurred on or
         after the Issue Date pursuant to any Senior Credit Facility or
         Qualified Receivable Facility;

                  (ii) Liens securing Indebtedness in an amount which, together
         with the aggregate amount of Indebtedness then outstanding or available
         under all Senior Credit Facilities (or under refinancings or amendments
         of such Senior Credit Facilities), does not exceed 1.5 times the
         Company's Consolidated Cash Flow Available for Fixed Charges for the
         four full fiscal quarters preceding the Incurrence of such Lien for
         which the Company's consolidated financial statements have been filed
         with the Commission or become publicly available, determined on a PRO
         FORMA basis as if such Indebtedness had been Incurred and the proceeds
         thereof had been applied at the beginning of such four fiscal quarters;

                  (iii) Liens in favor of the Company or any Wholly-Owned
         Restricted Subsidiary of the Company;

                  (iv) Liens on Property of the Company or a Restricted
         Subsidiary acquired, constructed or constituting improvements made
         after the Issue Date of the Notes to secure Purchase Money Indebtedness
         which is otherwise permitted under the Indenture, PROVIDED that (a) the
         principal amount of any Indebtedness secured by any such Lien does not
         exceed 100% of such purchase price or cost of construction or
         improvement of the Property subject to such Lien, (b) such Lien
         attaches to such property prior to, at the time of or within 180 days
         after the acquisition, completion of construction or commencement of
         operation of such Property and (c) such Lien does not extend to or

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<PAGE>

         cover any Property other than the specific item of Property (or portion
         thereof) acquired, constructed or constituting the improvements made
         with the proceeds of such Purchase Money Indebtedness;

                  (v) Liens to secure Acquired Indebtedness, PROVIDED that (a)
         such Lien attaches to the acquired asset prior to the time of the
         acquisition of such asset and (b) such Lien does not extend to or cover
         any other Property;

                  (vi) Liens to secure Indebtedness Incurred to extend, renew,
         refinance or refund (or successive extensions, renewals, refinancings
         or refundings), in whole or in part, Indebtedness secured by any Lien
         referred to in the foregoing clauses (i), (ii), (iv) and (v) so long as
         such Lien does not extend to any other Property and the principal
         amount of Indebtedness so secured is not increased except as otherwise
         permitted under clause (v) of Section 4.09(b) hereof (in the case of
         Indebtedness of the Company) or clause (viii) of Section 4.10 hereof
         (in the case of Indebtedness of Restricted Subsidiaries);

                  (vii) Liens not otherwise permitted by the foregoing clauses
         (i) through (vi) in an aggregate amount not to exceed 5% of the
         Company's Consolidated Tangible Assets;

                  (viii) Liens granted after the Issue Date pursuant to the
         immediately preceding paragraph to secure the Notes; and

                  (ix) Permitted Liens.

         SECTION 4.13. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into, assume, Guarantee or otherwise become liable
with respect to any Sale and Leaseback Transaction (other than a Sale and
Leaseback Transaction between the Company or a Restricted Subsidiary on the one
hand and a Restricted Subsidiary or the Company on the other hand), unless (i)
the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Sale and Leaseback Transaction at least equal
to the Fair Market Value (as evidenced by a Board Resolution delivered to the
Trustee) of the Property subject to such transaction; (ii) the Attributable
Indebtedness of the Company or such Restricted Subsidiary with respect thereto
is included as Indebtedness and would be permitted by Section 4.09 hereof or
Section 4.10 hereof, as the case may be; (iii) the Company or such Restricted
Subsidiary would be permitted to create a Lien on such Property without securing
the Notes by Section 4.12 hereof; and (iv) the Net Cash Proceeds from such
transaction are applied in accordance with Section 4.08 hereof; PROVIDED that
the Company shall be permitted to enter into Sale and Leaseback Transactions for
up to $30 million with respect to construction of the Company's headquarters
buildings located in Cedar Rapids, Iowa, PROVIDED that any such transaction is
entered into within 180 days of the earlier of (x) substantial completion or (y)
occupation of the applicable phase of such headquarters building.

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<PAGE>

         SECTION 4.14. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, cause or suffer to exist or
become effective, or enter into, any encumbrance or restriction (other than
pursuant to law or regulation) on the ability of any Restricted Subsidiary (i)
to pay dividends or make any other distributions in respect of its Capital Stock
or pay any Indebtedness or other obligation owed to the Company or any
Restricted Subsidiary; (ii) to make loans or advances to the Company or any
Restricted Subsidiary; or (iii) to transfer any of its Property to the Company
or any other Restricted Subsidiary, except:

                  (a) any encumbrance or restriction existing as of the Issue
         Date or any other agreement relating to any Existing Indebtedness or
         any Indebtedness under a Qualified Receivable Facility otherwise
         permitted under this Indenture;

                  (b) any encumbrance or restriction pursuant to an agreement
         relating to an acquisition of Property, so long as the encumbrances or
         restrictions in any such agreement relate solely to the Property so
         acquired;

                  (c) any encumbrance or restriction relating to any
         Indebtedness of any Restricted Subsidiary existing on the date on which
         such Restricted Subsidiary is acquired by the Company or another
         Restricted Subsidiary (other than any such Indebtedness Incurred by
         such Restricted Subsidiary in connection with or in anticipation of
         such acquisition);

                  (d) any encumbrance or restriction pursuant to an agreement
         effecting a permitted refinancing of Indebtedness issued pursuant to an
         agreement referred to in the foregoing clauses (a) through (c), so long
         as the encumbrances and restrictions contained in any such refinancing
         agreement are not materially more restrictive than the encumbrances and
         restrictions contained in such agreements;

                  (e) customary provisions (A) that restrict the subletting,
         assignment or transfer of any property or asset that is a lease,
         license, conveyance or contract or similar property or asset; (B)
         existing by virtue of any transfer of, agreement to transfer, option or
         right with respect to, or Lien on, any property or assets of the
         Company or any Restricted Subsidiary not otherwise prohibited by the
         Indenture or (C) arising or agreed to in the ordinary course of
         business, not relating to any Indebtedness, and that do not,
         individually or in the aggregate, detract from the value of property or
         assets of the Company or any Restricted Subsidiary in any manner
         material to the Company or any Restricted Subsidiary;

                  (f) in the case of clause (iii) above, restrictions contained
         in any security agreement (including a Capital Lease Obligation)
         securing Indebtedness of the

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<PAGE>

         Company or a Restricted Subsidiary otherwise permitted under the
         Indenture, but only to the extent such restrictions restrict the
         transfer of the property subject to such security agreement; and

                  (g) any restriction with respect to a Restricted Subsidiary of
         the Company imposed pursuant to an agreement which has been entered
         into for the sale or disposition of all or substantially all of the
         Capital Stock or assets of such Restricted Subsidiary, provided that
         the consummation of such transaction would not result in an Event of
         Default or an event that, with the passing of time or the giving of
         notice or both, would constitute an Event of Default, that such
         restriction terminates if such transaction is not consummated and that
         the consummation or abandonment of such transaction occurs within one
         year of the date such agreement was entered into.

         Nothing contained in this Section 4.14 shall prevent the Company or any
other Restricted Subsidiary from (1) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted under Section 4.12 hereof or (2)
restricting the sale or other disposition of property or assets of the Company
or any of its Restricted Subsidiaries that secure Indebtedness of the Company or
any of its Restricted Subsidiaries otherwise permitted under Section 4.09 hereof
or Section 4.10 hereof, as the case may be.

         SECTION 4.15. LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Company (i) shall not permit any Restricted
Subsidiary to issue any Capital Stock other than to the Company or a
Wholly-Owned Restricted Subsidiary unless immediately after giving effect
thereto such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Investment of the Company or any other Restricted Subsidiary
in such Restricted Subsidiary would have been permitted under Section 4.11
hereof if made on the date of such issuance and (ii) shall not permit any Person
other than the Company or a Wholly-Owned Restricted Subsidiary to own any
Capital Stock of any Restricted Subsidiary, other than directors' qualifying
shares and except for:

                  (a) a sale of 100% of the Capital Stock of a Restricted
         Subsidiary sold in a transaction not prohibited by the covenant
         described under Section 4.08 hereof;

                  (b) a sale of the Capital Stock of a Restricted Subsidiary
         sold in a transaction not prohibited by the covenant described under
         Section 4.08 hereof if, after giving effect thereto, greater than 50%
         of the Capital Stock of such Restricted Subsidiary is owned by the
         Company or by a Wholly-Owned Restricted Subsidiary;

                  (c) Capital Stock of a Restricted Subsidiary issued and
         outstanding on the Issue Date and held by Persons other than the
         Company or any Restricted Subsidiary;

                  (d) Capital Stock of a Restricted Subsidiary issued and
         outstanding prior to the time that such Person becomes a Restricted
         Subsidiary so long as such Capital Stock

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<PAGE>

         was not issued in anticipation or contemplation of such Person's
         becoming a Restricted Subsidiary or otherwise being acquired by the
         Company;

                  (e) any Preferred Stock permitted to be issued under Section
         4.10 hereof; and

                  (f) ownership by any Person other than the Company or a
         Subsidiary of the Company of less than 50% of the Capital Stock of a
         Person (A) in which the Company or a Restricted Subsidiary has made a
         Permitted Investment pursuant to clause (iii) of the definition of
         "Permitted Investments" set forth in Section 1.01 hereof, (B) of which
         more than 50% of such Person's Capital Stock is owned, directly or
         indirectly, by the Company and (C) as to which the Company has the
         power to direct the policies, management and affairs.

         SECTION 4.16. TRANSACTIONS WITH AFFILIATES. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
sell, lease, transfer, or otherwise dispose of, any of its Properties or assets
to, or purchase any Property or assets from, or enter into any contract,
agreement, understanding, loan, advance or Guarantee with or for the benefit of,
any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (a)
such Affiliate Transaction or series of Affiliate Transactions is on terms that
are no less favorable to the Company or such Restricted Subsidiary than those
that would have been obtained in a comparable arm's-length transaction by the
Company or such Restricted Subsidiary with a Person that is not an Affiliate
(or, in the event that there are no comparable transactions involving Persons
who are not Affiliates of the Company or the relevant Restricted Subsidiary to
apply for comparative purposes, is otherwise on terms that, taken as a whole,
the Company has determined to be fair to the Company or the relevant Restricted
Subsidiary) and (b) the Company delivers to the Trustee (i) with respect to any
Affiliate Transaction involving aggregate payments in excess of $1 million, a
certificate of the chief executive, operating or financial officer of the
Company evidencing such officer's determination that such Affiliate Transaction
or series of Affiliate Transactions complies with clause (a) above and is in the
best interests of the Company or such Restricted Subsidiary and (ii) with
respect to any Affiliate Transaction or series of Affiliate Transactions
involving aggregate payments in excess of $5 million, a Board Resolution
certifying that such Affiliate Transaction or series of Affiliate Transactions
complies with clause (a) above and that such Affiliate Transaction or series of
Affiliate Transactions has been approved by a majority of the disinterested
members of the Board of Directors who have determined that such Affiliate
Transaction or series of Affiliate Transactions is in the best interest of the
Company or such Restricted Subsidiary; PROVIDED that the following shall not be
deemed Affiliate Transactions:

                  (i) any employment agreement entered into by the Company or
         any of its Restricted Subsidiaries in the ordinary course of business
         and consistent with industry practice;

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<PAGE>

                  (ii) any agreement or arrangement with respect to the
         compensation of a director or officer of the Company or any Restricted
         Subsidiary approved by a majority of the disinterested members of the
         Board of Directors and consistent with industry practice;

                  (iii) transactions between or among the Company and its
         Restricted Subsidiaries;

                  (iv) transactions permitted by Section 4.11 hereof;

                  (v) transactions pursuant to any agreement or arrangement
         existing on the Issue Date; and

                  (vi) transactions with respect to wireline or wireless
         transmission capacity, the lease or sharing or other use of cable or
         fiberoptic lines, equipment, rights-of-way or other access rights,
         between the Company or any Restricted Subsidiary and any other Person;
         PROVIDED, in any case, that such transaction is on terms that are no
         less favorable, taken as a whole, to the Company or the relevant
         Restricted Subsidiary than those that could have been obtained in a
         comparable transaction by the Company or such Restricted Subsidiary
         with Persons who are not Affiliates of the Company or the relevant
         Restricted Subsidiary (or, in the event that there are no comparable
         transactions involving Persons who are not Affiliates of the Company or
         the relevant Restricted Subsidiary to apply for comparative purposes,
         is otherwise on terms that, taken as a whole, the Company has
         determined to be fair to the Company or the relevant Restricted
         Subsidiary).

         SECTION 4.17. RESTRICTED AND UNRESTRICTED SUBSIDIARIES. (a) The Company
may designate a Subsidiary (including a newly formed or newly acquired
Subsidiary) of the Company or any of its Restricted Subsidiaries as an
Unrestricted Subsidiary if such Subsidiary does not have any obligations which,
if in Default, would result in a cross default on Indebtedness of the Company or
a Restricted Subsidiary (other than Indebtedness to the Company or a
Wholly-Owned Restricted Subsidiary), and (i) such Subsidiary has total assets of
$1,000 or less, (ii) such Subsidiary has assets of more than $1,000 and an
Investment in such Subsidiary in an amount equal to the Fair Market Value of
such Subsidiary would then be permitted under Section 4.11(a) hereof or (iii)
such designation is effective immediately upon such Person becoming a
Subsidiary. Unless so designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company or any of its Restricted Subsidiaries shall
be classified as a Restricted Subsidiary thereof.

         (b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, take any action or enter into any transaction or series of
transactions that would result in a Person (other than a newly formed Subsidiary
having no outstanding Indebtedness (other than Indebtedness to the Company or a
Restricted Subsidiary) at the date of determination)

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<PAGE>

becoming a Restricted Subsidiary (whether through an acquisition, the
redesignation of an Unrestricted Subsidiary or otherwise), unless, after giving
effect to such action, transaction or series of transactions on a pro forma
basis, (i) the Company could incur at least $1 of additional Indebtedness
pursuant to Section 4.09(a) hereof and (ii) no Default or Event of Default would
occur.

         (c) Subject to clause (b), an Unrestricted Subsidiary may be
redesignated as a Restricted Subsidiary. The designation of a Subsidiary as an
Unrestricted Subsidiary or the designation of an Unrestricted Subsidiary as a
Restricted Subsidiary in compliance with clause (b) shall be made by the Board
of Directors pursuant to a Board Resolution delivered to the Trustee and shall
be effective as of the date specified in such Board Resolution, which shall not
be prior to the date such Board Resolution is delivered to the Trustee.

         SECTION 4.18. REPORTS. The Company shall file with the Trustee within
15 days after it files them with the Commission copies of the annual and
quarterly reports and the information, documents, and other reports that the
Company is required to file with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act ("SEC Reports"). In the event the Company shall cease
to be required to file SEC Reports pursuant to the Exchange Act, the Company
shall nevertheless continue to file such reports with the Commission (unless the
Commission shall not accept such a filing) and in any event with the Trustee.
The Company shall furnish copies of the SEC Reports to the Holders of Notes at
the time the Company is required to file the same with the Trustee and will make
such information available to investors who request it in writing.

         SECTION 4.19. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT OR EVENT OF
DEFAULT. The Company shall deliver to the Trustee within 120 calendar days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate stating whether or not, to the best knowledge of such
officer, the Company has complied with all conditions and covenants under this
Indenture, and, if the Company shall be in Default, specifying all such Defaults
and the nature thereof of which such officer may have knowledge.

         For the purposes of this Section 4.19, compliance shall be determined
without regard to any period of grace or requirement of notice under this
Indenture.

         The Company shall deliver written notice to the Trustee within 30
calendar days after any executive officer of the Company becomes aware of the
occurrence of any event which constitutes, or with the giving of notice or the
lapse of time or both would constitute, a Default or Event of Default,
describing such Default or Event of Default, its status and what action the
Company is taking or proposes to take with respect thereto.

                                   ARTICLE V.

              CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER

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<PAGE>

         SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS. The Company
shall not in any transaction or series of related transactions, consolidate
with, or merge with or into, any other Person or permit any other Person to
merge with or into the Company (other than a merger of a Restricted Subsidiary
of the Company into the Company in which the Company is the continuing
corporation), or sell, convey, assign, transfer, lease or otherwise dispose of
all or substantially all of the Property and assets of the Company and its
Restricted Subsidiaries taken as a whole to any other Person, unless:

                  (a) either (i) the Company shall be the continuing corporation
         or (ii) the corporation (if other than the Company) formed by such
         consolidation or into which the Company is merged, or the Person which
         acquires, by sale, assignment, conveyance, transfer, lease or
         disposition, all or substantially all of the Property and assets of the
         Company and its Restricted Subsidiaries taken as a whole (any such
         corporation or Person being the "Surviving Entity") shall be a
         corporation organized and validly existing under the laws of the United
         States of America, any political subdivision thereof, any state thereof
         or the District of Columbia, and shall expressly assume, by an
         indenture supplemental hereto, executed and delivered to the Trustee,
         in form reasonably satisfactory to the Trustee, the due and punctual
         payment of the principal of (and premium, if any) and interest on all
         the Notes and the performance of every covenant and obligation in this
         Indenture on the part of the Company to be performed or observed;

                  (b) immediately after giving effect to such transaction or
         series of related transactions on a PRO FORMA basis (including, without
         limitation, any Indebtedness incurred or anticipated to be incurred in
         connection with or in respect of such transaction or series of related
         transactions), no Default or Event of Default shall have occurred and
         be continuing;

                  (c) immediately after giving effect to such transaction or
         series of related transactions on a PRO FORMA basis (including, without
         limitation, any Indebtedness incurred or anticipated to be incurred in
         connection with or in respect of such transaction or series of
         transactions), the Company (or the Surviving Entity, if the Company is
         not continuing) would (A) be permitted to Incur $1.00 of additional
         Indebtedness under Section 4.09(a) hereof and (B) have a Consolidated
         Net Worth that is not less than the Consolidated Net Worth of the
         Company immediately before such transaction or series of transactions;
         and

                  (d) if, as a result of any such transaction, Property of the
         Company would become subject to a Lien prohibited by the provisions of
         the Indenture described under Section 4.12 hereof, the Company or the
         successor entity to the Company shall have secured the Notes as
         required thereby.

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<PAGE>

         In connection with any consolidation, merger, conveyance, lease or
other disposition contemplated by this Section 5.01, the Company shall deliver,
or cause to be delivered, to the Trustee, in form reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, lease or disposition and any
supplemental indenture in respect thereto comply with this Article V and that
all conditions precedent herein provided for relating to such transaction have
been complied with.

         SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation
with, or merger by the Company with or into, any other corporation, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the Property and assets of the Company and its Restricted
Subsidiaries taken as a whole in accordance with Section 5.01 hereof, the
successor corporation formed by such consolidation or into which the Company is
merged, or the Person to which such sale, conveyance, assignment, transfer,
lease, conveyance or other disposition is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein; and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the Notes,
EXCEPT for the obligation to pay the principal of (and premium, if any) and
interest on the Notes.

                                   ARTICLE VI.

                              DEFAULTS AND REMEDIES

         SECTION 6.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein with respect to the Notes, means any one of the following events
(whatever the reason for such event, and whether it shall be voluntary or
involuntary, or be effected by operation of law, pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

                  (a) default in the payment of interest on any Note when the
         same becomes due and payable, and the continuance of such Default for a
         period of 30 calendar days; or

                  (b) default in the payment of the principal of (or premium, if
         any, on) any Note when the same becomes due and payable whether upon
         Maturity, optional redemption, required repurchase (including pursuant
         to a Change of Control Offer or an Asset Sale Offer) or otherwise, or
         the failure to make an offer to purchase any Note as herein required;
         or

                  (c) default in the performance, or breach, of any covenant or
         agreement contained in Section 4.07, Section 4.08 or Article V hereof;
         or

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<PAGE>

                  (d) default in the performance, or breach, of any covenant or
         warranty of the Company contained in this Indenture or the Notes (other
         than a covenant or warranty addressed in Section 6.01(a), Section
         6.01(b) or Section 6.01(c) hereof), and the continuance of such Default
         or breach for a period of 60 calendar days after written notice thereof
         has been given to the Company by the Trustee or to the Company and the
         Trustee by the Holders of at least 25 percent of the aggregate
         principal amount of the outstanding Notes specifying such Default and
         stating that such notice is a "Notice of Default" delivered in
         connection with this Indenture; or

                  (e) a default or defaults under any bond, debenture, note or
         other evidence of Indebtedness by the Company or any Restricted
         Subsidiary of the Company (or under any mortgage, indenture or
         instrument under which there may be issued or by which there may be
         secured or evidenced any Indebtedness by the Company or any such
         Restricted Subsidiary) having, individually or in the aggregate, a
         principal or similar amount outstanding of at least $10 million,
         whether such indebtedness now exists or shall hereafter be created,
         which default or defaults shall have resulted in the acceleration of
         the maturity of such Indebtedness prior to its express maturity or
         shall constitute a failure to pay such Indebtedness when due and
         payable after the expiration of any applicable grace period with
         respect thereto or shall have resulted in such Indebtedness becoming or
         being declared due and payable; or

                  (f) a final judgment or final judgments for the payment of
         money (other than to the extent covered by insurance as to which the
         insurance company has acknowledged coverage and other than to the
         extent covered by an indemnity given by an insurance company) is
         entered against the Company or any Restricted Subsidiary of the Company
         in an aggregate amount in excess of $10 million by a court or courts of
         competent jurisdiction, which judgment is not discharged, waived,
         stayed, bonded or satisfied for a period of 45 consecutive calendar
         days; or

                  (g) the entry by a court having jurisdiction in the premises
         of (i) a decree or order for relief in respect of the Company or any
         Restricted Subsidiary of the Company in an involuntary case or
         proceeding under United States bankruptcy laws, as now or hereafter
         constituted, or any other applicable Federal, state, or foreign
         bankruptcy, insolvency, or other similar law or (ii) a decree or order
         adjudging the Company or any Restricted Subsidiary of the Company a
         bankrupt or insolvent, or approving as properly filed a petition
         seeking reorganization, arrangement, adjustment or composition of, or
         in respect of, the Company or any Restricted Subsidiary of the Company
         under United States bankruptcy laws, as now or hereafter constituted,
         or any other applicable Federal, state or foreign bankruptcy,
         insolvency, or similar law, or appointing a custodian, receiver,
         liquidator, assignee, trustee, sequestrator or other similar official
         of the Company or any Restricted Subsidiary of the Company or of any
         substantial part of the Property or assets of the Company or any

                                       65
<PAGE>

         Restricted Subsidiary of the Company, or ordering the winding-up or
         liquidation of the affairs of the Company or any Restricted Subsidiary
         of the Company, and the continuance of any such decree or order for
         relief or any such other decree or order unstayed and in effect for a
         period of 60 consecutive calendar days; or

                  (h) (i) the commencement by the Company or any Restricted
         Subsidiary of the Company of a voluntary case or proceeding under
         United States bankruptcy laws, as now or hereafter constituted, or any
         other applicable Federal, state, or foreign bankruptcy, insolvency or
         other similar law or of any other case or proceeding to be adjudicated
         a bankrupt or insolvent; or (ii) the consent by the Company or any
         Restricted Subsidiary of the Company to the entry of a decree or order
         for relief in respect of the Company or any Restricted Subsidiary of
         the Company in an involuntary case or proceeding under United States
         bankruptcy laws, as now or hereafter constituted, or any other
         applicable Federal, state, or foreign bankruptcy, insolvency, or other
         similar law or to the commencement of any bankruptcy or insolvency case
         or proceeding against the Company or any Restricted Subsidiary of the
         Company; or (iii) the filing by the Company or any Restricted
         Subsidiary of the Company of a petition or answer or consent seeking
         reorganization or relief under United States bankruptcy laws, as now or
         hereafter constituted, or any other applicable Federal, state or
         foreign bankruptcy, insolvency or other similar law; or (iv) the
         consent by the Company or any Restricted Subsidiary of the Company to
         the filing of such petition or to the appointment of or taking
         possession by a custodian, receiver, liquidator, assignee, trustee,
         sequestrator or similar official of the Company or any Restricted
         Subsidiary of the Company or of any substantial part of the Property or
         assets of the Company or any Restricted Subsidiary of the Company, or
         the making by the Company or any Restricted Subsidiary of the Company
         of an assignment for the benefit of creditors; or (v) the admission by
         the Company or any Restricted Subsidiary of the Company in writing of
         its inability to pay its debts generally as they become due; or (vi)
         the taking of corporate action by the Company or any Restricted
         Subsidiary of the Company in furtherance of any such action.

         SECTION 6.02. ACCELERATION. If any Event of Default (other than an
Event of Default specified in Section 6.01(g) or Section 6.01(h) hereof) occurs
and is continuing, then and in every such case, the Trustee by a notice in
writing to the Company may, and at the direction of the Holders of not less than
25 percent of the outstanding aggregate principal amount of Notes by a notice in
writing to the Company and the Trustee, shall declare the Default Amount and any
accrued and unpaid interest on all Notes then outstanding to be immediately due
and payable. Upon any such declaration, such Default Amount and any accrued and
unpaid interest on all Notes then outstanding will become and be immediately due
and payable.

         If an Event of Default specified in Section 6.01(g) or Section 6.01(h)
hereof occurs, the Default Amount and any accrued and unpaid interest on all
Notes then outstanding shall IPSO FACTO become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of Notes.

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<PAGE>

         In the event of a declaration of acceleration because an Event of
Default set forth in Section 6.01(e) hereof has occurred and is continuing, such
declaration of acceleration shall be automatically rescinded and annulled if the
event of default triggering such Event of Default pursuant to Section 6.01(e)
hereof shall be remedied, or cured, or waived by the holders of the relevant
Indebtedness, within 60 calendar days after such event of default; PROVIDED no
judgment or decree for the payment of the money due on the Notes has been
obtained by the Trustee as hereinafter in this Article VI provided.

         At any time after a declaration of acceleration with respect to Notes
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article VI provided, the
Holders of a majority in principal amount of the outstanding Notes, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if,

                  (a) the Company has paid or deposited with the Trustee a sum
         sufficient to pay:

                  (i) all overdue installments of interest on all Notes,

                  (ii) the principal of (and premium, if any, on) any Notes
         which have become due otherwise than by such declaration of
         acceleration and interest thereon at the rate or rates prescribed
         therefor in such Notes,

                  (iii) to the extent that payment of such interest is lawful,
         interest on the Defaulted Interest at the rate prescribed therefor in
         the Notes and this Indenture, and

                  (iv) all moneys paid or advanced by the Trustee hereunder and
         the reasonable compensation, expenses, disbursements and advances of
         the Trustee, its agents and counsel and all other amounts due to the
         Trustee pursuant to Section 7.07 hereof; and

                  (b) all Events of Default with respect to the Notes, other
         than the non-payment of the principal of Notes which have become due
         solely by such declaration of acceleration, have been cured or waived
         by the Holders as provided herein.

         No such rescission shall affect any subsequent Default or impair any
right consequent thereon.

         SECTION 6.03. OTHER REMEDIES. The Company covenants that if an Event of
Default specified in Section 6.01(a) or Section 6.01(b) hereof occurs the
Company shall, upon demand of the Trustee, pay to the Trustee, for the benefit
of the Holders, the whole amount then due and payable on the Notes for principal
(and premium, if any) and interest and, to the extent

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that payment of such interest shall be legally enforceable, interest upon the
overdue principal (and premium, if any) and upon Defaulted Interest, at the rate
or rates prescribed therefor in such Notes; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and all other amounts due to the
Trustee pursuant to Section 7.07 hereof.

         If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may and, at the
direction of the Holders of not less than a majority of the outstanding
aggregate principal amount of the Notes, shall institute a judicial proceeding
for the collection of the sums so due and unpaid, and may prosecute such
proceeding to judgment or final decree, and may enforce the same against the
Company or any other obligor upon such Notes and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the Property and
assets of the Company or any other obligor upon such Notes, wherever situated.

         If an Event of Default with respect to the Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.

         SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the outstanding Notes may, on behalf of the
Holders of all the Notes, waive any past Default and its consequences under this
Article VI, except a Default (a) in the payment of the principal of (or premium,
if any) or interest on, any Note, or (b) in respect of a covenant or provision
hereof which under Section 9.02 hereof cannot be modified or amended without the
consent of the Holders of each outstanding Note affected.

         SECTION 6.05. CONTROL BY MAJORITY. The Holders of not less than a
majority in principal amount of the outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee; PROVIDED that

                  (a) such direction shall not be in conflict with any rule of
         law or with this Indenture or unduly prejudicial to the rights of other
         Holders and would not subject the Trustee to personal liability, and

                  (b) the Trustee may take any other action deemed proper by the
         Trustee which is not inconsistent with such direction.

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         SECTION 6.06. LIMITATION ON SUITS. No Holder of Notes shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:

                  (a) such Holder has previously given written notice to the
         Trustee of a continuing Event of Default with respect to the Notes;

                  (b) the Holders of not less than 25 percent in principal
         amount of the outstanding Notes shall have made written request to the
         Trustee to institute proceedings in respect of such Event of Default in
         its own name as Trustee hereunder;

                  (c) such Holder or Holders have offered and, if requested,
         provided to the Trustee security or indemnity satisfactory to the
         Trustee in its reasonable discretion against the costs, expenses and
         liabilities to be incurred in compliance with such request;

                  (d) the Trustee for 30 calendar days after its receipt of such
         notice, request and offer of indemnity has failed to institute any such
         proceeding; and

                  (e) no direction inconsistent with such written request has
         been given to the Trustee during such 30-day period by the Holders of a
         majority in principal amount of the outstanding Notes;

in any event, it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holders of Notes, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Holders of Notes.

         SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal of (premium, if any) and interest on the Notes held by such Holder, on
or after the respective due dates expressed in the Notes or the redemption dates
or purchase dates provided for therein, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall be absolute and
unconditional and shall not be impaired or affected without the consent of such
Holder.

         SECTION 6.08. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceedings, or any
voluntary or involuntary case under United States bankruptcy laws, as now or
hereafter constituted, relative to the Company or any other obligor upon the
Notes or the Property and assets of the Company or of such other obligor or

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<PAGE>

their creditors, the Trustee (irrespective of whether the principal of such
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise, (i) to file and
prove a claim for the whole amount of principal (and premium, if any) and
interest owing and unpaid in respect of the Notes, to file such other papers or
documents and to take such other actions, including participating as a member or
otherwise in any official committee of creditors appointed in the matter, as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel and all other amounts due to the Trustee
pursuant to Section 7.07 hereof) and of the Holders allowed in such judicial
proceeding, and (ii) to collect and receive any moneys or other Property payable
or deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, custodian, liquidator, sequestrator (or other similar
official) in any such proceeding is hereby authorized by each Holder to make
such payments to the Trustee, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

         SECTION 6.09. PRIORITIES. Any money collected by the Trustee pursuant
to this Article VI shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (premium, if any) or interest, upon presentation of the Notes and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:

                  FIRST: To the payment of all amounts due the Trustee under
         Section 7.07 hereof;

                  SECOND: To the payment of the amounts then due and unpaid for
         principal of (and premium, if any) and interest on the Notes, ratably,
         without preference or priority of any kind, according to the amounts
         due and payable on such Notes for principal (and premium, if any) and
         interest, respectively; and

                  THIRD:  To the Company.

         The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.09. At least 15 calendar days before such
record date, the Company shall mail to each Holder and the Trustee a notice that
states such record date, the payment

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<PAGE>

date and amount to be paid. The Trustee may mail such notice in the name and at
the expense of the Company.

         SECTION 6.10. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10 percent in principal amount of
the outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Note on or after its Stated Maturity.

         SECTION 6.11. WAIVER OF STAY OR EXTENSION LAWS. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.

         SECTION 6.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF THE
NOTES. All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name, as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes.

         SECTION 6.13. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder of Notes has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case the Company, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

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<PAGE>

         SECTION 6.14. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided in Section 2.09 hereof, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

         SECTION 6.15. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article VI or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.

                                  ARTICLE VII.

                                     TRUSTEE

SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and shall use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.

         (b) Except during the continuance of an Event of Default of which a
Trust Officer has actual knowledge: (i) the Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture against
the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; PROVIDED that in
the case of any such certificates or opinions that by any provision of this
Indenture are specifically required to be furnished to the Trustee, the Trustee
shall examine such certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.

         (c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; PROVIDED that: (i) this paragraph (c) shall not limit the effect of
paragraph (b) of this Section 7.01; (ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and (iii) the
Trustee shall not be

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<PAGE>

liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05 hereof.

         (d) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.

         (e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk of liability is
not reasonably assured to it.

         (f) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Article VII and to the provisions of the Trust
Indenture Act.

         SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper Person. Except as provided in Section 7.01(b) hereof, the Trustee
need not investigate any fact or matter stated in the document.

         (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on any
Officers' Certificate or Opinion of Counsel.

         (c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any such agent; PROVIDED that such agent was
appointed with due care by the Trustee.
         (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided that the Trustee's conduct does not constitute willful
misconduct or gross negligence.

         (e) The Trustee shall not be charged with knowledge of any Default or
Event of Default under Section 6.01(c), 6.01(d), 6.01(e) or 6.01(f) hereof, of
the identity of any Restricted Subsidiary or of the existence of any Change of
Control or Asset Sale unless either (i) a Trust Officer shall have actual
knowledge thereof, or (ii) the Trustee shall have received notice thereof in
accordance with Section 10.02 hereof from the Company or any Holder of Notes.

         (f) The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

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<PAGE>

         (g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney.

         (h) The Trustee shall not be liable for any action it takes or omits to
take in good faith in accordance with the direction of the Holders of a majority
of the aggregate outstanding principal amount of Notes relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture.

         SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, any Paying
Agent or Note Registrar, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee, Paying
Agent or Note Registrar hereunder, as the case may be; PROVIDED that the Trustee
must in any event comply with Sections 7.10 and 7.11 hereof.

         SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes, and it shall not be responsible (a) for any
statement of the Company in this Indenture, including the recitals contained
herein, or in any document issued in connection with the sale of the Notes or in
the Notes other than the Trustee's certificate of authentication or (b) for
compliance by the Company with the Registration Agreement.

         SECTION 7.05. NOTICE OF DEFAULTS. Within 90 calendar days after the
occurrence of any Default hereunder known to a Trust Officer with respect to the
Notes, the Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Note Register, notice of such Default hereunder known to
the Trustee, unless such Default shall have been cured or waived; PROVIDED that,
except in the case of a Default in the payment of the principal of (or premium,
if any) or interest on any Note, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors and/or Trust Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders.

         SECTION 7.06. PRESERVATION OF INFORMATION; REPORTS BY TRUSTEE TO
HOLDERS. (a) The Company shall furnish or cause to be furnished to the Trustee:

                  (i) semiannually, not less than 10 calendar days prior to each
         Interest Payment Date, a list, in such form as the Trustee may
         reasonably require, of the names

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<PAGE>

         and addresses of the Holders as of the Regular Record Date immediately
         preceding such Interest Payment Date, and

                  (ii) at such other times as the Trustee may request in
         writing, within 30 calendar days after the receipt by the Company of
         any such request, a list of similar form and content as of a date not
         more than 15 calendar days prior to the time such list is furnished;

PROVIDED that if and so long as the Trustee shall be the Note Registrar for the
Notes, no such list need be furnished with respect to the Notes.

         (b) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.06(a) hereof and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar, if so acting. The Trustee may destroy any list furnished to it as
provided in Section 7.06(a) hereof upon receipt of a new list so furnished.

         (c) Holders may communicate as provided in Section 312(b) of the Trust
Indenture Act with other Holders with respect to their rights under this
Indenture or under the Notes.

         (d) Each Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders in accordance with this Section 7.06,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under this Section 7.06.

         (e) Within 60 calendar days after April 15 of each year commencing with
the year 1999, the Trustee shall transmit by mail to all Holders of Notes, a
brief report dated as of such April 15 if and to the extent required under
Section 313(a) of the Trust Indenture Act.

         (f) The Trustee shall comply with Sections 313(b) and 313(c) of the
Trust Indenture Act.

         (g) A copy of each report described in Section 7.06(e) hereof shall, at
the time of its transmission to Holders, be filed by the Trustee with each stock
exchange, if any, upon which the Notes are then listed, with the Commission and
also with the Company. The Company shall promptly notify the Trustee of any
stock exchange upon which the Notes are listed.

         SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses

                                       75
<PAGE>

shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents and counsel. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust.

         The Company shall indemnify the Trustee for, and hold it harmless
against, any and all loss, liability or expense (including reasonable attorneys'
fees) arising out of or incurred by it in connection with the acceptance or
administration of the trust created by this Indenture and the performance of its
duties hereunder, except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend any such claim and the
Trustee shall cooperate in the defense of such claim. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.

         The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
willful misconduct, negligence or bad faith.

         To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of, premium, if any, and interest on, particular Notes.

         The Company's payment obligations pursuant to this Section 7.07 shall
survive the resignation or removal of the Trustee and discharge of this
Indenture. Subject to any other rights available to the Trustee under applicable
bankruptcy law, when the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.01(g) or Section 6.01(h) hereof, the expenses are
intended to constitute expenses of administration under bankruptcy law.

         SECTION 7.08. REPLACEMENT OF TRUSTEE. (a) No resignation or removal of
the Trustee and no appointment of a successor Trustee pursuant to this Article
VII shall become effective until the acceptance of appointment by the successor
Trustee under this Section 7.08.

         (b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 calendar days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

         (c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the outstanding Notes, delivered to the Trustee
and to the Company.

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<PAGE>

         (d) If at any time:

                  (i) the Trustee shall fail to comply with Section 310(b) of
         the Trust Indenture Act after written request therefor by the Company
         or by any Holder who has been a bona fide Holder of a Note for at least
         six months, unless the Trustee's duty to resign is stayed in accordance
         with the provisions of Section 310(b) of the Trust Indenture Act; or

                  (ii) the Trustee shall cease to be eligible under Section 7.10
         hereof and shall fail to resign after written request therefor by the
         Company or by any such Holder; or

                  (iii) the Trustee shall become incapable of acting or a decree
         or order for relief by a court having jurisdiction in the premises
         shall have been entered in respect of the Trustee in an involuntary
         case under the United States bankruptcy laws, as now or hereafter
         constituted, or any other applicable Federal or state bankruptcy,
         insolvency or similar law; or a decree or order by a court having
         jurisdiction in the premises shall have been entered for the
         appointment of a receiver, custodian, liquidator, assignee, trustee,
         sequestrator (or other similar official) of the Trustee or of its
         Property and assets or affairs, or any public officer shall take charge
         or control of the Trustee or of its Property and assets or affairs for
         the purpose of rehabilitation, conservation, winding up or liquidation;
         or

                  (iv) the Trustee shall commence a voluntary case under the
         United States bankruptcy laws, as now or hereafter constituted, or any
         other applicable Federal or state bankruptcy, insolvency or similar law
         or shall consent to the appointment of or taking possession by a
         receiver, custodian, liquidator, assignee, trustee, sequestrator (or
         other similar official) of the Trustee or its Property and assets or
         affairs, or shall make an assignment for the benefit of creditors, or
         shall admit in writing its inability to pay its debts generally as they
         become due, or shall take corporate action in furtherance of any such
         action,

then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to the Notes, or (ii) subject to Section 6.10 hereof, any
Holder who has been a bona fide Holder of a Note for at least six months may, on
behalf of such Holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee for the Notes.

         (e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by or pursuant to a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by the Holders of a majority in principal amount of the outstanding
Notes

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<PAGE>

delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with this Section 7.08, become the successor Trustee and to that extent replace
any successor Trustee appointed by the Company. If no successor Trustee shall
have been so appointed by the Company or the Holders and shall have accepted
appointment in the manner hereinafter provided, any Holder that has been a bona
fide Holder of a Note for at least six months may, subject to Section 6.10
hereof, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.

         (f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such resignation, removal and appointment by first class mail, postage
prepaid, to the Holders as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Trustee with
respect to the Notes and the address of its Corporate Trust Office.

         (g) In the event of an appointment hereunder of a successor Trustee,
each such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all Property and money held by such former
Trustee hereunder, subject to its Lien, if any, provided for in Section 7.07
hereof.

         (h) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in Section 7.08(g) hereof.

         (i) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article VII and under the Trust Indenture Act.

         SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. Any corporation into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder; PROVIDED that such corporation shall be
otherwise qualified and eligible under this Article VII and under the Trust
Indenture Act, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then

                                       78
<PAGE>

in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes. In the event that any Notes shall not have been
authenticated by such predecessor Trustee, any such successor Trustee may
authenticate and deliver such Notes, in either its own name or that of its
predecessor Trustee, with the full force and effect which this Indenture
provides for the certificate of authentication of the Trustee.

         SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times
be a Trustee hereunder which shall be

                  (i) a corporation organized and doing business under the laws
         of the United States of America, any State or Territory thereof or the
         District of Columbia, authorized under such laws to exercise corporate
         trust powers, and subject to supervision or examination by Federal,
         State, Territorial or District of Columbia authority, or

                  (ii) a corporation or other Person organized and doing
         business under the laws of a foreign government that is permitted to
         act as Trustee pursuant to a rule, regulation or order of the
         Commission, authorized under such laws to exercise corporate trust
         powers, and subject to supervision or examination by authority of such
         foreign government or a political subdivision thereof substantially
         equivalent to supervision or examination applicable to United States
         institutional trustees,

in either case having a combined capital and surplus of at least $25,000,000.

         If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 7.10, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Neither the Company nor any Affiliate of the Company shall serve as Trustee
hereunder. If at any time the Trustee shall cease to be eligible to serve as
Trustee hereunder pursuant to the provisions of this Section 7.10, it shall
resign immediately in the manner and with the effect specified in this Article
VII.

         If the Trustee has or shall acquire any "conflicting interest" within
the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing
with the Commission the application referred to in the penultimate paragraph of
Section 310(b) of the Trust Indenture Act.

         SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor

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<PAGE>

relationship listed in Section 311(b) of the Trust Indenture Act. A Trustee who
has resigned or been removed shall be subject to Section 311(a) of the Trust
Indenture Act to the extent indicated therein.

                                  ARTICLE VIII.

                                   DEFEASANCE

         SECTION 8.01. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE. The Company may elect, at its option, at any time, to have Section
8.02 or Section 8.03 hereof applied to the outstanding Notes (in whole and not
in part) upon compliance with the conditions set forth below in this Article
VIII. Such election shall be evidenced by a Board Resolution delivered to the
Trustee.

         SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's
exercise of its option to have this Section 8.02 applied to the outstanding
Notes (in whole and not in part), the Company shall be deemed to have been
discharged from its obligations with respect to such Notes as provided in this
Section 8.02 on and after the date the conditions set forth in Section 8.04
hereof are satisfied (hereinafter called "Defeasance"). For this purpose, such
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Notes and to have satisfied all its
other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), subject to the following which shall
survive until otherwise terminated or discharged hereunder:

         (a) the rights of Holders of such Notes to receive, solely from the
trust fund described in Section 8.04 hereof and as more fully set forth in such
Section 8.04, payments in respect of the principal of and any premium and
interest on such Notes when such payments are due,

         (b) the Company's obligations with respect to such Notes under Sections
2.09, 2.10, 2.12, 4.02 and 4.03 hereof,

         (c) the rights, powers, trusts, duties and immunities of the Trustee
under this Indenture,

         (d) Article III hereof, and

         (e) this Article VIII.

         Subject to compliance with this Article VIII, the Company may exercise
its option to have this Section 8.02 applied to the outstanding Notes (in whole
and not in part)

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<PAGE>

notwithstanding the prior exercise of its option to have Section 8.03 hereof
applied to such Notes.

         SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise of its
option to have this Section 8.03 applied to the outstanding Notes (in whole and
not in part), (i) the Company shall be released from its obligations under
Section 5.01(c) and (d), Sections 4.05 through 4.18, inclusive, and any covenant
added to this Indenture subsequent to the Issue Date pursuant to Section 9.01
hereof, (ii) the occurrence of any event specified in Section 6.01(c) or Section
6.01(d) hereof, with respect to any of Section 5.01(c) and (d), Sections 4.05
through 4.18, inclusive, and any covenant added to this Indenture subsequent to
the Issue Date pursuant to Section 9.01 hereof, shall be deemed not to be or
result in an Event of Default, in each case with respect to such Notes as
provided in this Section 8.03 on and after the date the conditions set forth in
Section 8.04 hereof are satisfied (hereinafter called "Covenant Defeasance").
For this purpose, such Covenant Defeasance means that, with respect to such
Notes, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such specified
Section (to the extent so specified in the case of Sections 6.01(c) and 6.01(d)
hereof), whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any such Section to
any other provision herein or in any other document; but the remainder of this
Indenture and such Notes shall be unaffected thereby.

         SECTION 8.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to the application of Section 8.02 or Section
8.03 hereof to the outstanding Notes:

         (a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to the benefits of the Holders of such Notes, (i) money in an amount, or (ii)
U.S. Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or
(iii) a combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or any such other qualifying trustee)
to pay and discharge, the principal of and any installment of interest on such
Notes on the respective Stated Maturities thereof, in accordance with the terms
of this Indenture and such Notes.

         (b) In the event of an election to have Section 8.02 hereof apply to
the outstanding Notes, the Company shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee stating that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date of this Indenture, there has been a
change in the applicable Federal income tax law, in either case (i) or (ii) to
the

                                       81
<PAGE>

effect that, and based thereon such opinion shall confirm that, the Holders of
such Notes will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with respect to
such Notes and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would be the case if such deposit,
Defeasance and discharge were not to occur.

         (c) In the event of an election to have Section 8.03 hereof apply to
the outstanding Notes, the Company shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee to the effect that the
Holders of such Notes will not recognize gain or loss for Federal income tax
purposes as a result of the deposit and Covenant Defeasance to be effected with
respect to such Notes and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would be the case if such
deposit and Covenant Defeasance were not to occur.

         (d) No Default or Event of Default with respect to the outstanding
Notes shall have occurred and be continuing at the time of such deposit after
giving effect thereto or at any time on or prior to the 91st calendar day after
the date of such deposit (it being understood that this condition shall not be
deemed satisfied until after such 91st calendar day).

         (e) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture Act
(assuming for the purpose of this clause (e) that all Notes are in default
within the meaning of such Act).

         (f) Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.

         (g) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within the
meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder.

         (h) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.

         SECTION 8.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; MISCELLANEOUS PROVISIONS. All money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee pursuant
to Section 8.04 hereof in respect of the outstanding Notes shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any such
Paying Agent as the Trustee may determine, to the Holders of such Notes, of all
sums due and to become due thereon in respect of principal and any premium and
interest, but

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<PAGE>

money so held in trust need not be segregated from other funds except to the
extent required by law. The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.

         Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company Order
any money or U.S. Government Obligations held by it as provided in Section 8.04
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof that would then be required to be
deposited to effect the Defeasance or Covenant Defeasance, as the case may be,
with respect to the outstanding Notes.

         The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal, premium, if any, or
interest that remains unclaimed for two years; PROVIDED that the Trustee or such
Paying Agent before being required to make any payment may cause to be published
at the expense of the Company once in a newspaper of general circulation in the
City of New York or mail to each Holder entitled to such money at such Holder's
address (as set forth in the Note Register) notice that such money remains
unclaimed and that after a date specified therein (which shall be at least 30
days from the date of such publication or mailing) any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.

         SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable
to apply any money in accordance with this Article VIII with respect to any
Notes by reason of any order or judgement of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application then the
obligations under this Indenture and such Notes from which the Company has been
discharged or released pursuant to Sections 8.02 or 8.03 hereof shall be revived
and reinstated as though no deposit had occurred pursuant to this Article VIII
with respect to such Notes, until such time as the Trustee or Paying Agent is
permitted to apply all money held in trust pursuant to Section 8.05 hereof with
respect to such Notes in accordance with this Article VIII; provided that if the
Company makes any payment of principal of or any premium or interest on any such
Note following such reinstatement of its obligations, the Company shall be
subrogated to the rights (if any) of the Holders of such Notes to receive such
payment from the money so held in trust.

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<PAGE>

                                   ARTICLE IX.

                                   AMENDMENTS

         SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee
may, at any time, and from time to time, without notice to or consent of any
Holder of Notes, enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

                  (a) to evidence the succession of another Person to the
         Company and the assumption by such successor of the covenants of the
         Company herein and contained in the Notes; or

                  (b) to add to the covenants of the Company, for the benefit of
         the Holders of all of the Notes, or to surrender any right or power
         herein conferred upon the Company; or

                  (c) to add any additional Events of Default; or

                  (d) to provide for uncertificated Notes in addition to or in
         place of certificated Notes; or

                  (e) to evidence and provide for the acceptance of appointment
         hereunder of a successor Trustee; or

                  (f) to secure the Notes; or

                  (g) to cure any ambiguity herein, or to correct or supplement
         any provision hereof which may be inconsistent with any other provision
         hereof or to add any other provisions with respect to matters or
         questions arising under this Indenture; PROVIDED that such actions
         shall not adversely affect the interests of the Holders of Notes in any
         material respect; or

                  (h) to comply with the requirements of the Commission in order
         to effect or maintain the qualification of this Indenture under the
         Trust Indenture Act.

         SECTION 9.02. WITH CONSENT OF HOLDERS. With the consent of the Holders
of not less than a majority in principal amount of the outstanding Notes, by Act
of said Holders delivered to the Company and the Trustee, the Company and the
Trustee may enter into one or more indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders; PROVIDED that no such supplemental indenture shall, without the
consent of the Holder of each outstanding Note,

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<PAGE>

                  (a) change the Stated Maturity of the principal of, or any
         installment of interest on, any Note, or alter the redemption
         provisions thereof, or reduce the principal amount thereof (or any
         premium, if any), or the interest thereon, that would be due and
         payable upon Maturity thereof, or change the place of payment where, or
         the coin or currency in which, any Note or any premium or interest
         thereon is payable, or impair the right to institute suit for the
         enforcement of any such payment on or after the Maturity thereof; or

                  (b) reduce the percentage in principal amount of the
         outstanding Notes, the consent of whose Holders is required for any
         such supplemental indenture; or

                  (c) modify any of the provisions of Section 6.04 hereof,
         except to increase any percentage set forth therein or to provide that
         certain other provisions of this Indenture cannot be modified or waived
         without the consent of the Holder of each outstanding Note affected
         thereby; or

                  (d) subordinate in right of payment, or otherwise subordinate,
         the Notes to any other Indebtedness; or

                  (e) modify any of the provisions of this Section 9.02, except
         to increase any percentage set forth herein or to provide that certain
         other provisions of this Indenture cannot be modified or waived without
         the consent of the Holder of each outstanding Note affected thereby.

         It shall not be necessary for any Act of Holders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.

         SECTION 9.03. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Notes theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby.

         SECTION 9.04. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or
supplement to this Indenture or the Notes shall comply with the Trust Indenture
Act as then in effect.

         SECTION 9.05. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent
to an amendment, supplement or a waiver by a Holder of a Note shall bind the
Holder and every subsequent Holder of such Note or portion of such Note that
evidences the same debt as the consenting Holder's Note, even if notation of the
consent or waiver is not made on such Note;

                                       85
<PAGE>

PROVIDED that any such Holder or subsequent Holder may revoke the consent or
waiver as to such Holder's Note or portion of such Note if the Trustee receives
the notice of revocation at least one day prior to the date the amendment,
supplement or waiver becomes effective. After an amendment, supplement or waiver
becomes effective pursuant to this Article IX, it shall bind every Holder.

         The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to give their consent or take
any other action described above or required or permitted to be taken pursuant
to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
calendar days after such record date.

         SECTION 9.06. NOTATION ON OR EXCHANGE OF NOTES. If a supplemental
indenture changes the terms of a Note, the Trustee may require the Holder
thereof to deliver such Note to the Trustee. The Trustee may place an
appropriate notation on such Note regarding the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for such Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment
or supplement.

         SECTION 9.07. TRUSTEE TO EXECUTE SUPPLEMENTAL INDENTURES. The Trustee
shall execute any supplemental indenture authorized pursuant to this Article IX
if such supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but shall
not be required to, execute such supplemental indenture. In executing any
supplemental indenture, the Trustee shall be (subject to Section 7.01 hereof)
fully protected in relying upon an Officers' Certificate and an Opinion of
Counsel, which shall not be at the expense of the Trustee, stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture.

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<PAGE>

                                   ARTICLE X.

                                  MISCELLANEOUS

         SECTION 10.01. TRUST INDENTURE ACT CONTROLS. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by, or with another provision (an "incorporated provision") included in
this Indenture by operation of, Sections 310 to 318, inclusive, of the Trust
Indenture Act, such imposed duties or incorporated provision shall control.

         SECTION 10.02. NOTICES. Any notice or communication shall be in writing
and delivered in person or mailed by first class mail, postage prepaid,
addressed as follows: if to the Company: McLeodUSA Incorporated, 6400 C Street,
S.W., Cedar Rapids, Iowa 52406, Attention: Clark E. McLeod; if to the Trustee:
United States Trust Company of New York, 114 West 47th Street, New York, New
York 10036, Attention: Corporate Trust Administration.

         The Company or the Trustee, by notice to the other, may designate
additional or different addresses for subsequent notices or communications. Any
notice or communication mailed to a Holder shall be sent to the Holder by first
class mail, postage prepaid, at the Holder's address as it appears in the Note
Register and shall be duly given if so sent within the time prescribed. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders. If a notice or
communication is mailed to the Company, the Trustee or a Holder in the manner
provided above, it is duly given, whether or not the addressee receives it. In
case by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail to Holders, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

         SECTION 10.03. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon
any request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee: (a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and (b) an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

         SECTION 10.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture (other than pursuant to Section 4.19 hereof)
shall include: (a) a statement that the individual making such certificate or
opinion has read such covenant or condition; (b) a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are based; (c) a statement
that, in the opinion of such individual, such person has made such examination
or investigation as is necessary to enable such person to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (d) a statement as to whether or not, in the opinion

                                       87
<PAGE>

of such individual, such covenant or condition has been complied with; provided
that, with respect to matters of fact, an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.

         SECTION 10.05. RULES BY TRUSTEE, PAYING AGENT AND NOTE REGISTRAR. The
Trustee may make reasonable rules for action by or a meeting of Holders, and any
Note Registrar and Paying Agent may make reasonable rules for their functions;
PROVIDED that no such rule shall conflict with terms of this Indenture or the
Trust Indenture Act.

         SECTION 10.06. PAYMENTS ON BUSINESS DAYS. If a payment hereunder is
scheduled to be made on a date that is not a Business Day, payment shall be made
on the next succeeding day that is a Business Day, and no interest shall accrue
with respect to that payment during the intervening period. If a regular record
date is a date that is not a Business Day, such record date shall not be
affected.

         SECTION 10.07. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.

         SECTION 10.08. NO RECOURSE AGAINST OTHERS. No controlling Person,
director, officer, employee, incorporator or stockholder of the Company, as
such, shall have any liability for any obligations of the Company under the
Notes or this Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation, solely by reason of its past, present or
future status as a controlling Person, director, officer, employee, incorporator
or stockholder of the Company. By accepting a Note, each Holder waives and
releases all such liability (but only such liability) as part of the
consideration for issuance of such Note to such Holder.

         SECTION 10.09. SUCCESSORS. All agreements of the Company in this
Indenture and the Notes shall bind its successors and assigns whether so
expressed or not. All agreements of the Trustee in this Indenture shall bind its
successors and assigns whether so expressed or not.

         SECTION 10.10. COUNTERPARTS. This Indenture may be executed in any
number of counterparts and by the parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

         SECTION 10.11. TABLE OF CONTENTS; HEADINGS. The table of contents,
cross-reference table and headings of the Articles and Sections of this
Indenture have been inserted for

                                       88
<PAGE>

convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.

         SECTION 10.12. SEVERABILITY. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

         SECTION 10.13. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.

                                       89
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.

                                  MCLEODUSA INCORPORATED

                                  By
                                    -------------------------------------------
                                  Name:
                                  Title:

                                  UNITED STATES TRUST COMPANY OF NEW YORK,
                                  as Trustee

                                  By
                                    -------------------------------------------
                                  Name:
                                  Title:

                                       90

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