Document:

<PAGE>

                                                                    EXHIBIT 4.38

                      SECOND AMENDMENT dated as of January 11, 2001 (this
                      "Amendment"), to the Credit Agreement (the "Credit
                       ---------                                  ------
                      Agreement") dated as of May 31, 2000, as amended pursuant
                      ---------
                      to a First Amendment dated as of December 7, 2000, among
                      McLEODUSA INCORPORATED, a Delaware corporation (the
                      "Borrower"); the lenders party thereto (the "Lenders");
                       --------                                    -------
                      THE CHASE MANHATTAN BANK, a New York banking corporation,
                      as administrative agent (in such capacity, the
                      "Administrative Agent") and as collateral agent (in such
                       --------------------
                      capacity, the "Collateral Agent"); Salomon Smith Barney
                                     ----------------
                      Inc., as syndication agent (in such capacity, the
                      "Syndication Agent"); and Bank of America, N.A. and
                       -----------------
                      Goldman Sachs Credit Partners L.P., as co-documentation
                      agents (in such capacities, the "Co-Documentation
                                                       ----------------
                      Agents").
                      ------

           The Borrower has requested that the Lenders amend certain provisions
of the Credit Agreement, and the Lenders are willing so to amend the Credit
Agreement on the terms and subject to the conditions set forth herein.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.

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

           SECTION 1.  Amendment of Credit Agreement.  The Credit Agreement is
                       -----------------------------
hereby amended, effective as of the Amendment Effective Date, as follows:

           (a)  Amendment of Section 1.01.
                -------------------------

                  (i) The following definitions are inserted in alphabetical
        order in Section 1.01 of the Credit Agreement:

                  ""Series B Preferred Stock" means the Series B Cumulative
                    ------------------------
        Convertible Preferred Stock, par value $0.01 per share, of the
        Borrower."

                  ""Series C Preferred Stock" means the Series C Cumulative
                    ------------------------
        Convertible Preferred Stock, par value $0.01 per share, of the
        Borrower."

                  (ii) The definition of "Change of Control" in Section 1.01 of
        the Credit Agreement is hereby amended by inserting the following
        proviso at the end of such definition:

                      "; provided that any event that constitutes a change of
                         --------
                      control under the Indentures or any future indenture
                      governing unsecured indebtedness issued by the Borrower
                      after the date hereof shall also constitute a "Change of
                      Control" under this Agreement."

           (b) Amendment of Section 6.01(b). Section 6.01(b) of the Credit
               ----------------------------
Agreement is hereby amended by (x) replacing the phrases "Series B Cumulative
Convertible Preferred Stock, par value
<PAGE>

$0.01 per share (the "Series B Preferred Stock")," and "Series C Cumulative
                      ------------------------
Convertible Preferred Stock, par value $0.01 per share, of the Borrower" with
the defined terms "Series B Preferred Stock" and "Series C Preferred Stock",
respectively.

           (c)  Amendment of Section 6.09(a).  Section 6.09(a) of the Credit
                ----------------------------
Agreement is hereby amended as follows:

                      (i)   the phrase "and (v)" is hereby replaced with the
           following phrase:

                          ", (v) following the repayment of all outstanding
                      Loans and Letters of Credit and the termination of all
                      outstanding Commitments hereunder, the Borrower may redeem
                      the Series B Preferred Stock and the Series C Preferred
                      Stock at any time after September 15, 2006 in accordance
                      with the terms thereof, (vi) the Borrower may redeem the
                      Series B Preferred Stock and the Series C Preferred Stock
                      within 180 days after September 15, 2009 if so requested
                      by the holders of such Series B Preferred Stock or Series
                      C Preferred Stock, as the case may be, in accordance with
                      the terms thereof provided that no Event of Default is
                      continuing or would result therefrom and (vii)"; and

                      (ii)   the phrase "this clause (v)" in the proviso thereto
           is replaced with the phrase "clause (vii) preceding".

           (d)  Amendment of Section 6.09(b).  Section 6.09(b) of the Credit
                ----------------------------
Agreement is hereby amended as follows:

                      (i)   the following parenthetical is hereby inserted
           immediately following the words "New Preferred Stock" at the end of
           clause (i) of such Section:

                                "(it being understood that this Section 6.09(b)
                            shall not be deemed to prohibit the existence of the
                            provisions contained in Section 4.08 of the
                            Indentures permitting certain holders of
                            Indebtedness of the Borrower to require the
                            repurchase of such Indebtedness following certain
                            sales of assets of the Borrower (other than the
                            Indenture specified in clause (b) of the definition
                            of "Indentures," in which such sale of assets is
                            specified in Section 4.09 thereof) or such
                            substantially similar provisions as may be contained
                            in future indentures governing unsecured
                            indebtedness issued by the Borrower after the
                            Effective Date; provided that no such repurchases
                                            --------
                            shall be effected so long as any Loans, Letters of
                            Credit or Commitments are outstanding under this
                            Agreement)";

                      (ii)  the word "and" at the end of clause (iii) of such
                            Section is hereby deleted; and

                      (iii) the following phrase is hereby inserted at the end
                            of clause (iv) of such Section: "; and (v) payments
                            to redeem outstanding Indebtedness pursuant to the
                            exercise of certain rights of the holders of such
                            Indebtedness to require the repurchase of such
                            Indebtedness arising in the event of a change in
                            control of the Borrower specified in Section 4.07 of
                            each of the Indentures or such substantially similar
                            provisions as may be contained in future indentures
<PAGE>

                            governing unsecured indebtedness issued by the
                            Borrower after the date hereof."

           (e) Amendment of Section 6.11. Section 6.11 of the Credit Agreement
               --------------------------
is hereby amended by replacing the phrase "or the Indentures" in clause (i) of
the proviso the reto with the following phrase:

           ", the Indentures or any provisions restricting or imposing
        conditions upon Liens as may be contained in future indentures governing
        unsecured indebtedness issued by the Borrower after the Effective Date
        provided that such provisions are no more restrictive than the
        provisions restricting or imposing conditions upon Liens contained in
        the Indentures on May 31, 2000."

           SECTION 2. Representations and Warranties. To induce the other
                      ------------------------------
parties hereto to enter into this Amendment, the Borrower represents and
warrants to each of the Lenders, the Administrative Agent and the Collateral
Agent that, as of the Amendment Effective Date:

           (a) The representations and warranties set forth in Article III of
the Credit Agreement are true and correct in all material respects on and as of
the Amendment Effective Date with the same effect as though made on and as of
the Amendment Effective Date, except to the extent such representations and
warranties expressly relate to an earlier date.

           (b) After giving effect to the agreements and waivers herein, no
Default or Event of Default has occurred and is continuing.

           SECTION 3. Effectiveness. This Amendment shall become effective on
                      -------------
the date (the "Amendment Effective Date") that the Administrative Agent shall
               ------------------------
have received counterparts of this Amendment that, when taken together, bear the
signatures of the Borrower and the Required Lenders. Once effective, this
Amendment shall be retroactive to May 31, 2000.

           SECTION 4. Effect of Amendment. Except as expressly set forth herein,
                      -------------------
this Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of or otherwise affect the rights and remedies of the Lenders, the
Administrative Agent or the Collateral Agent under the Credit Agreement or any
other Loan Document, and shall not alter, modify, amend or in any way affect any
of the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other provision of the Credit Agreement or any other
Loan Document, all of which are ratified and affirmed in all respects and shall
continue in full force and effect. Nothing herein shall be deemed to entitle the
Borrower to a consent to, or a waiver, amendment, modification or other change
of, any of the terms, conditions, obligations, covenants or agreements contained
in the Credit Agreement or any other Loan Document in similar or different
circumstances. This Amendment shall apply and be effective only with respect to
the provisions of the Credit Agreement specifically referred to herein.

           SECTION 5. Counterparts. This Amendment may be executed in any number
                      ------------
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.
<PAGE>

           SECTION 6.  Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
                       --------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

           SECTION 7.  Headings. The headings of this Amendment are for purposes
                       --------
of reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>

           IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized officers, all as of the date and year
first above written.

                                   McLEODUSA INCORPORATED

                                      by

                                   _________________________________
                                         Name:
                                         Title:

                                   Acknowledged and Agreed:

                                   EACH OF THE SUBSIDIARIES
                                   LISTED AS SUBSIDIARY GUARANTORS
                                   ON SCHEDULE I TO THE
                                   SUBSIDIARY GUARANTEE AGREEMENT,

                                      by
                                         ___________________________

                                         Name:
                                         Title:  Authorized Officer
<PAGE>

                                    THE CHASE MANHATTAN BANK,
                                    individually and as Agent

                                       by
                                    _________________________________
                                          Name:
                                          Title:
<PAGE>

                                   Name of Institution:

                                        by

                                    _________________________________
                                          Name:
                                          Title:<PAGE>

                                                                   Exhibit 10.53

                   INTERCONNECTION AGREEMENT AMENDMENT TERMS
                   -----------------------------------------

     This Amendment Agreement ("Amendment") is made and entered into by and
between McLeodUSA Telecommunications Services, Inc. ("McLeod") and Qwest
Corporation ("Qwest") (collectively, the "Parties") on this 26th day of October,
2000.

     The Parties agree to file this Amendment as an amendment all
Interconnection Agreements ("Agreements" and, singularly, "Agreement") between
them, now in effect or entered into prior to December 31, 2003, with the
Amendment containing the following provisions:

1.   This Amendment is entered into between the Parties based on the following
conditions, and such conditions being integrally and inextricably are a material
part of this agreement:

     1.1  McLeodUSA purchased, as of the end of 1999 over 200,000 local exchange
lines for resale from Qwest (throughout the 14-state area where Qwest is an
incumbent local exchange carrier).

     1.2  Qwest and McLeodUSA currently have an agreement, on a region-wide
basis,  for the exchange of local traffic, including Internet-related traffic,
on a "bill and keep" basis, that provides for the mutual recovery of costs
through the offsetting of reciprocal obligations for local exchange traffic
which originates with a customers of one company and terminates to a customer of
the other company, provided however, that these provisions will not affect or
avoid the obligations to pay the rates set out on Attachment 3.2.

     1.3  The Parties wish to establish a business-to-business relationship and
have agreed that they will attempt to resolve all differences or issues that may
arise under the Agreements or this Amendment under the escalation process to be
established between the parties, and modified if appropriate.

     1.4  The Parties agree that the terms and conditions contained in this
Amendment are based on current characteristics of McLeodUSA, which includes
service to business and Centrex-related customers and includes a fair
representation of all businesses, with no large proportion of usage going to a
particular type of business.

     1.5  The Parties agree that the terms and conditions contained in this
Amendment are based on the characteristics of McLeodUSA's traffic

                                   -PAGE 1-
<PAGE>

patterns, which does not include identifiable usage by any particular type of
user.

     1.6   This Amendment shall be deemed effective on October 1, 2000, subject
to approval by the appropriate state commissions, and the parties agree to
implement the terms of the Amendment effective October 1, 2000. This Amendment
will be incorporated in any future Agreements, but nothing in any new Agreement
will extend the termination date of this Amendment or its terms beyond the term
provided herein. Nothing in this Amendment will extend the expiration date of
any existing interconnection agreement.  This Amendment and the underlying
Agreement shall be binding on Qwest and McLeodUSA and their subsidiaries,
successors and assigns.

     1.7   In interpreting this Amendment, all attempts will be made to read the
provisions of this Amendment consistent with Agreements and all effective
amendments.  In the event that there is a conflict between this Amendment and an
Agreement or previous amendments, the terms and conditions of this Amendment
shall supersede all previous documents.

     1.8   Except as modified herein, the provisions of the Agreements shall
remain in full force and effect.  Neither the Agreements nor this Amendment may
be further amended or altered except by written instrument executed by an
authorized representative of both Parties.  This specifically excludes
amendments resulting from regulatory or judicial decisions regarding pricing of
unbundled network elements, which shall have no effect on the pricing offered
under this Amendment, prior to termination of this Amendment.

     1.9   The Parties intending to be legally bound have executed this
Amendment effective as of October 1, 2000, in multiple counterparts, each of
which is deemed an original, but all of which shall constitute one and the same
instrument.

     1.10  Unless terminated as provided in this section, the initial term of
this Amendment is from the date of signing until December 31, 2003 ("Initial
Term") and this Amendment shall thereafter automatically continue until either
party gives at least six (6) months advance written notice of termination.  This
is Amendment can only be terminated during the Initial Term in the event the
Parties agree.

     1.11  In the event of termination, the pricing, terms, and conditions for
all services and network elements purchased under this Amendment shall
immediately be converted, at the option of McLeodUSA, to either  other
prevailing prices for combinations of network elements, or to retail services
purchased at the prevailing wholesale discount.  In either case, if and to the

                                   -PAGE 2-
<PAGE>

extent conversion of service is necessary, reasonable and appropriate cost-based
nonrecurring charges will apply.

     1.12 All factual preconditions and duties set forth in this Amendment are,
are intended to be, and are considered by the parties to be, reasonably related
to, and dependent upon each other.

     1.13 To the extent any Agreement does not contain a force majeure
provision, then if either party's performance of this Amendment or any
obligation under this Amendment is prevented, restricted or interfered with by
causes beyond such parties reasonable control, including but not limited to acts
of God, fire, explosion, vandalism which reasonable precautions could not
protect against, storm or other similar occurrence, any law, order, regulation,
direction, action or request of any unit of federal, state or local government,
or of any civil or military authority, or by national emergencies,
insurrections, riots, wars, strikes or work stoppages or vendor failures, cable
cuts, shortages, breach or delays, then such party shall be excused from such
performance on a day-to-day basis to the extent of such prevention, restriction
or interference (a "Force Majeure").

     1.14 Neither party will present itself as representing or jointly marketing
services with the other, or market its services using the name of the other
party, without the prior written consent of the other party.

2.   In consideration of the agreements and covenants set forth above and the
entire group of covenants provided in section 3, all taken as a whole and fully
integrated with the terms and conditions described below and throughout this
Amendment, with such consideration only being adequate if all such agreements
and covenants are made and are enforceable, McLeodUSA agrees to the following:

     2.1  To pay Qwest $43.5 million to convert to the Platform described herein
and in Attachment 3.2.

     2.2  Based on all the terms and conditions contained herein, McLeodUSA may
also purchase DSL and voice mail (at full retail rates) from Qwest for resale.

     2.3  During each of the three calendar years of this Amendment, to maintain
for the purpose of providing service to McLeodUSA's customers, no fewer than
275,000 local exchange lines purchased from Qwest, and to maintain on Qwest
local exchange lines to end users at least seventy percent (70%) (in terms of
physical non-DS1/DS3 facilities) of McLeodUSA's local exchange service in the
region where Qwest is the incumbent local exchange

                                   -PAGE 3-
<PAGE>

service provider. In addition, beginning in 2001, at least 1000 lines will be
maintained in each state (including no less than 125,000 lines in the state of
Iowa) in which Qwest is the incumbent local exchange service provider. For
purposes of this provision, local exchange lines purchased include lines
purchased for resale and unbundled loops, whether purchased alone or in
combination with other network elements. This minimum line commitment will be
reduced proportionally in the event Qwest sells any exchanges where it is
currently the incumbent local exchange service provider.

     2.4  To place orders for the product offered in this amendment, and for
features associated with the product, using (at McLeodUSA's option) primarily
through either IMA or EDI electronic interfaces offered by Qwest.

     2.5  To remain on a "bill and keep" basis for the exchange of local traffic
and Internet-related traffic, with Qwest, throughout the territories where Qwest
is currently the incumbent local exchange service provider until December 31,
2002.

     2.6  To enter into and maintain interconnection agreements, or one regional
agreement, covering the provision of Products in each state of the entire
territory where Qwest is the incumbent local exchange service provider.

     2.7  To provide Qwest accurate daily working telephone numbers of McLeodUSA
customers to allow Qwest to provide daily usage information to McLeodUSA so that
McLeodUSA can bill interexchange or other companies switched access or other
rates as appropriate.

     2.8  To provide Qwest with rolling 12 month forecasted line volumes to the
central office level for unbundled loops, and otherwise where marketing
campaigns are conducted, updated quarterly.

     2.9  To hold Qwest harmless in the event of disputes between McLeodUSA and
other carriers regarding the billing of access or other charges associated with
usage measured by a Qwest switch; provided that Qwest agrees to cooperate in any
investigation related to such a dispute to the extent necessary to determine the
type and accuracy of such usage.

3.   In consideration of the agreements and covenants set forth above and the
entire group of covenants provided in section 2, all taken as a whole and fully
integrated with the terms and conditions described below and throughout this
Amendment, with such consideration only being adequate if all such agreements
and covenants are made and are enforceable, Qwest agrees to the following:

                                   -PAGE 4-
<PAGE>

     3.1  To waive and release all charges associated with conversion from
resold services to the unbundled network platform and for terminating McLeodUSA
contracts for services purchased from Qwest for resale as described in this
amendment.

     3.2  To provide throughout the term of this Amendment the Platform and
Products described herein and in Attachment 3.2, regardless of regulatory or
judicial decisions on components of an unbundled network element platform, upon
the rates, terms and conditions described herein and in Attachment 3.2.

     3.3  To provide daily usage information to McLeodUSA, for the working
telephone numbers supplied to Qwest by McLeodUSA, so that McLeodUSA can bill
interexchange or other companies switched access or other rates as appropriate.

     3.4  To remain on a "bill and keep" basis for the exchange of local traffic
and Internet-related traffic with McLeodUSA, throughout the territories where
Qwest is currently the incumbent local exchange service provider until December
31, 2002.

     3.5  To provide (at McLeodUSA's option) IMA and EDI electronic interfaces
to adequately support the product described in section 3.2.

McLeodUSA Telecommunications                   Qwest Corporation
 Services, Inc.

_______________________________         _________________________________
Authorized Signature                          Authorized Signature

Blake O. Fisher
-------------------------------         _________________________________
Name Printed/Typed                             Name Printed/Typed

Group Vice President
-------------------------------         _________________________________
Title                                   Title

October 26, 2000                        October 26, 2000
-------------------------------         _________________________________
Date                                    Date

                                   -PAGE 5-
<PAGE>

                                Attachment 3.2

I.   Performance by McLeodUSA of the covenants and agreements in section 2 of
     the Amendment to which this Attachment is a part.

II.  Performance by Qwest of the covenants and agreements in section 3 of the
     Amendment to which this Attachment is a part.

III. State recurring rates for lines, adjustments, charges, other terms and
     conditions, included and excluded platform features, are at the end of this
     attachment, and are subject to and clarified by the following:

     A.   In determining state-wide usage McLeodUSA agrees to allow Qwest to
          audit its records of usage of the platform on a quarterly basis. If
          average usage exceeds the 525 minutes per month for a three month
          period, or the agreed upon measurement period, on a state-by-state
          basis, all platform service shall be increased by the appropriate
          increment. The first increment audit will be conducted during December
          2000. If average usage is above 525 minutes on a state-wide basis, the
          incremental usage element will not be applied for January, February
          and March usage, or the agreed upon measurement period. The second
          incremental audit will be conducted in March of 2001 based upon
          December, January and February usage, or the agreed upon measurement
          period. If the average usage is above 525 minutes for that quarter,
          then the appropriate increment usage element(s) will be applied to
          April, May and June usage, or the agreed upon measurement period. All
          audits will follow on a rolling quarterly basis, and all increments
          shall be applied on a rolling basis at the state level.

     B.   The rates provided for by this platform do not apply to usage
          associated with toll traffic.  Additional local usage charges will
          apply to usage associated with toll traffic.

     C.   Platform rates include only one listing per telephone number.

     D.   Rates for voice messaging and DSL service are retail rates and are
          offered conditioned on paragraph I above where such services are
          available.

     E.   Rates associates with miscellaneous charges, or governmental
          mandates, such as local number portability, shall be passed through to
          McLeodUSA.

     F.   The Platform rates provided for in this Amendment shall only apply
          to additions to existing CENTREX common blocks

                                   -PAGE 6-
<PAGE>

                                Attachment 3.2

          established prior to October 1, 2000, and only apply to business local
          exchange customers served through this unbundled network element
          platform where facilities exist. Appropriate charges for any new
          CENTREX-related services or augments where facilities do not exist
          will apply. This Amendment only applies to platform services provided
          for business users and users of existing CENTREX common blocks. Qwest
          will not provide McLeodUSA any new CENTREX common blocks. Appropriate
          nonrecurring charges will apply to any disconnects, charges or
          additions to this platform. These rates do not apply to basic
          residential exchange (1FR) service.

IV.  G.   Any features or functions not explicitly provided for in this
          Amendment shall be provided only for a charge (both recurring and
          nonrecurring), based upon Qwest's rates to provide such service in
          accordance with the terms and conditions of the appropriate tariff or
          Agreement for the applicable jurisdiction.

                          PRICES FOR OFFERING

                   Platform       Additional charge
                  Recurring       for each 100 Minute
                                  increment * 525
                                  MOU/Month

 AZ                      30.80                     0.280
 CO                      34.00                     0.295
 IA                      26.04                     0.270
 ID                      33.15                     0.295
 MN                      27.00                     0.205
 MT                      34.95                     0.300
 ND                      28.30                     0.260
 NE                      35.95                     0.300
 NM                      27.15                     0.140
 OR                      26.90                     0.170
 SD                      29.45                     0.345
 UT                      22.60                     0.270
 WA                      24.00                     0.195
 WY                      33.40                     0.360

* more than

                                   -PAGE 7-
<PAGE>

                                Attachment 3.2

FEATURES INCL IN FLAT RATED UNE - BUSINESS
Call Hold
Call Transfer
Three-Way Calling
Call Pickup
Call Waiting/Cancel Call Waiting
Distinctive Ringing
Speed Call Long - Customer Change
Station Dial Conferencing (6-Way)
Call Forwarding Busy Line
Call Forwarding Don't Answer
Call Forwarding Variable
Call Forwarding Variable Remote
Call Park (Basic - Store & Retrieve)
Message Waiting Indication A/V

                                   -PAGE 8-
<PAGE>

                                Attachment 3.2

FEATURES INCL IN
EXISTING CENTREX
COMMON BLOCKS
Call Hold
Call Transfer
Three-Way Calling
Call Pickup
Call Waiting/Cancel Call Waiting
Distinctive Ringing
Speed Call Long - Customer Change
Station Dial Conferencing (6-Way)
Call Forwarding Busy Line
Call Forwarding Don't Answer
Call Forwarding Variable
Call Park (Basic - Store & Retrieve)
Message Waiting Indication A/V
Centrex Management System (CMS)
Station Mssg Detail Recording (SMDS)
Data Call Protection
Hunting Billing
Individual Line Billing
Intercept
Intrasystem Calling
Intercom
Night Service
Outgoing Trunk Queuing
Line Restrictions
Touch Tone
Directed Call Pickup
AIOD
Dial 0
Automatic Call Back Ring Again
Direct Inward Dialing
Direct Outward Dialing
Executive Busy Override
Last Number Redial
Make Set Busy
Network Speed call
Primary Listing

                                   -PAGE 9-

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