Document:

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                          THIRD AMENDMENT dated as of November 29, 2001 (this
                     "AMENDMENT"), to the Credit Agreement (the "CREDIT
                     AGREEMENT") dated as of May 31, 2000, as amended, modified
                     and supplemented pursuant to a First Amendment dated as of
                     December 7, 2000, a Second Amendment dated as of January
                     11, 2001, and a Waiver dated as of August 29, 2001, among
                     McLEODUSA INCORPORATED, a Delaware corporation (the
                     "BORROWER"); the lenders party thereto (the "LENDERS");
                     JPMORGAN CHASE BANK (formerly known as 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").

                                    PREAMBLE

            The Borrower has advised the Lenders that the Borrower is
considering pursuing a restructuring on terms and conditions not materially
inconsistent with those described in Annex I attached hereto, as such Annex
may be amended from time to time in accordance with its terms (the
"RESTRUCTURING") which the Borrower may implement either through an out-of
court series of transactions, including an exchange offer (the "EXCHANGE
OFFER") for the Indenture Debt and a proxy statement and consent solicitation
(the "OUT-OF-COURT ALTERNATIVE") or through an in-court Bankruptcy Proceeding
(the "IN-COURT ALTERNATIVE"). Certain capitalized terms used herein are
defined on Annex II hereto. Capitalized terms used and not defined herein
(including on Annex II hereto) have the meanings defined in the Credit
Agreement as amended hereby.

            In connection with the foregoing, the Borrower has requested that
the Lenders agree to amend or waive certain provisions of the Loan Documents.
The Lenders party hereto are willing to grant such consent and agree to such
amendments and waivers, in each case on the terms and subject to the
conditions set forth herein.

            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. CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT.
Immediately upon the satisfaction of the following conditions, this Amendment
shall become effective (the date on which such conditions are satisfied,
being the "THIRD AMENDMENT EFFECTIVE DATE"):

            (i) the Administrative Agent shall have received counterparts of
this Amendment that, when taken together, bear the signatures of the
Borrower, each Subsidiary Loan Party that is a party to the Subsidiary
Guarantee Agreement on the Third Amendment Effective Date and the Required
Lenders;

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                                                                            2

            (ii) the FL Standby Purchase Agreement (other than those
agreements, documents, certificates and instruments to be executed and
delivered on the closing date of the sale of the Publishing Assets) shall
have been executed and delivered by the parties thereto and shall provide for
a cash purchase price for the Publishing Assets of not less than
$535,000,000; and

            (iii) the FL New Preferred Stock Purchase Agreement (other than
those agreements, documents, certificates and instruments to be executed and
delivered on the closing date of the Forstmann Little investment) shall have
been executed and delivered by the parties thereto and shall provide for a
$100,000,000 all cash investment in the New Preferred Stock by Forstmann
Little.

            SECTION 2.  CERTAIN AMENDMENTS, AGREEMENTS AND WAIVERS.
Immediately upon the Third Amendment Effective Date, the following
amendments, agreements and waivers shall become operative:

            (a) AMENDMENTS TO LOAN DOCUMENTS.  The Credit Agreement and other
Loan Documents are hereby amended as follows:

            (i) Section 1.01 of the Credit Agreement is amended by adding the
         following definitions in appropriate alphabetical order:

                  "'BANKRUPTCY COURT' means the United States Bankruptcy Court
               for the District in which any Bankruptcy Proceeding is pending."

                  "'BANKRUPTCY PROCEEDING' means a voluntary or involuntary case
               commenced in respect of (i) the Borrower or (ii) the Borrower and
               one or more Subsidiaries of the Borrower under Chapter 11 or
               Chapter 7 of the United States Bankruptcy Code 11 U.S.C.
               Section101, ET SEQ. (the "BANKRUPTCY CODE"); PROVIDED that any
               such proceeding shall cease to be a Bankruptcy Proceeding for
               purposes of this definition if in connection with such proceeding
               any of the following requirements is not or ceases to be
               satisfied: (a) the order for relief is entered not later than 20
               days after commencement of the case, (b) in the event a
               post-petition solicitation is to be undertaken in respect of
               holders of any claims or interests of any class impaired by the
               Reorganization Plan, the Bankruptcy Court shall have entered an
               order on or prior to June 1, 2002 approving a disclosure
               statement to solicit acceptances of the Reorganization Plan from
               such holders, (c) the Reorganization Plan shall have been
               substantially consummated not later than August 1, 2002, and (d)
               the Borrower is continuing in good faith to seek consummation of
               the Restructuring."

                  "'DIP AGENT' mean JPMorgan Chase Bank, as Administrative Agent
               under the New Interim Facility."

                  "'ICTC ASSETS' means the capital stock of Illinois
               Consolidated Telephone Company or substantially all its assets,
               liabilities and business, and such other assets of the Borrower
               and its Subsidiaries as may be directly related to, and used in
               and necessary to, the operation of such business."

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                                                                              3

                  "'NEW INTERIM FACILITY' means a debtor-in-possession financing
               facility of the Borrower in a principal amount not in excess of
               $50,000,000 among the Borrower, the DIP Agent and one or more
               lenders identified therein, which facility shall be approved
               pursuant to a Qualifying DIP Order in the Bankruptcy Proceeding
               on terms and conditions not materially inconsistent with those
               set forth in Annex VI to the Third Amendment."

                  "'NEW INTERIM FACILITY OBLIGATIONS' means the obligations of
               the Borrower and its Subsidiaries under the New Interim Facility
               and the related documents, instruments and agreements executed in
               connection therewith, including payment of principal and interest
               and all other amounts payable thereunder."

                  "'NEW POST-RESTRUCTURING FACILITY' means a financing facility
               of the Borrower that becomes effective not earlier than the date
               of consummation of the Restructuring in a principal amount not in
               excess of $160,000,000 (of which $10,000,000 shall be reserved
               and made available to the Borrower on a dollar for dollar basis
               as LC Exposure is reduced under this Agreement) on terms and
               conditions substantially as set forth in Annex III to the Third
               Amendment."

                  "'NEW POST-RESTRUCTURING FACILITY OBLIGATIONS' means the
               obligations of the Borrower and its Subsidiaries under the New
               Post-Restructuring Facility and the related documents,
               instruments and agreements executed in connection therewith,
               including payment of principal and interest and all other amounts
               payable thereunder."

               "'NON-CORE ASSETS' means the assets and businesses specified on
               Schedule 2.11(c) hereto (including the Capital Stock of any
               Subsidiary engaged exclusively in any such business or businesses
               specified on Schedule 2.11(c) and not owning any assets other
               than Non-Core Assets), and, with respect to any business
               specified on Schedule 2.11(c), such other assets of the Borrower
               and its Subsidiaries as may be directly related to, and used in
               and necessary to, the operation of such business."

                  "'PROGRESS CONDITIONS' means the conditions set forth in Annex
               IV to the Third Amendment."

                  "'PUBLISHING ASSETS' means the Capital Stock of McLeodUSA
               Media Group, Inc. or substantially all its assets, liabilities
               and business (including the Capital Stock, assets, business and
               liabilities of its direct and indirect Subsidiaries and such
               other assets of the Borrower and its Subsidiaries as may be
               directly related to, and used in and necessary to, the operation
               of such business, which other assets shall include McLeodUSA
               Technology Building 1 (which currently serves as headquarters for
               McLeodUSA Media Group, Inc.)."

                  "'QUALIFYING CASH COLLATERAL ORDER' means an interim or final
               order of the Bankruptcy Court (i) approving use by the Borrower
               and one or more of its

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               Subsidiaries, as debtors in possession, of cash collateral
               during the pendency of the Bankruptcy Proceedings and (ii)
               affording the lenders under the New Interim Facility, the DIP
               Agent, the Lenders, the Administrative Agent and the
               Collateral Agent protections not materially inconsistent with
               those contemplated by the form of order set forth in Annex V
               to the Third Amendment, as determined by the DIP Agent and the
               Administrative Agent, which order shall not have been stayed
               or revoked and shall otherwise be in full force and effect."

                  "'QUALIFYING DIP ORDER' means an interim or final order of the
               Bankruptcy Court (i) approving the New Interim Facility in the
               Bankruptcy Proceedings and (ii) affording the lenders thereunder,
               the DIP Agent, the Lenders, the Administrative Agent and the
               Collateral Agent protections not materially inconsistent with
               those contemplated by the form of order set forth in Annex VI to
               the Third Amendment, as determined by the DIP Agent and the
               Administrative Agent, which order shall not have been stayed or
               revoked and shall otherwise be in full force and effect."

                  "'REORGANIZATION CONSUMMATION DATE' means the date of the
               substantial consummation (as defined in section 1101 of the
               Bankruptcy Code) of a Reorganization Plan of the Borrower that
               has been confirmed by an order of the Bankruptcy Court that has
               not been revoked or stayed and is otherwise in full force and
               effect at the time of such substantial consummation."

                  "'REORGANIZATION PLAN' means a plan of reorganization of (i)
               the Borrower or (ii) the Borrower and one or more of its
               Subsidiaries that may become debtors in a Bankruptcy Proceeding,
               which plan is in accordance with Annex I to the Third Amendment."

                  "'RESTRUCTURING' means the "RESTRUCTURING" as defined in the
               Third Amendment."

                  "'RESTRUCTURING DATE' means either (i) in the event the
               Restructuring is implemented pursuant to the In-Court Alternative
               (as defined in the Third Amendment), the Reorganization
               Consummation Date or (ii) in the event the Restructuring is
               implemented pursuant to the Out-of-Court Alternative (as defined
               in the Third Amendment), the date on which the Borrower has
               consummated the transactions contemplated by Annex I to the Third
               Amendment, in each case pursuant to and in accordance with the
               terms of the Restructuring."

                  "'THIRD AMENDMENT' means the Third Amendment dated as of
               November 29, 2001, to this Agreement."

                  "'THIRD AMENDMENT EFFECTIVE DATE' has the meaning provided in
               the Third Amendment."
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            (ii) Section 2.03 of the Credit Agreement is hereby amended by
         adding the words "be made by a Financial Officer and shall" immediately
         prior to the words "specify the following information in compliance
         with Section 2.02:" in the third sentence of such section.

            (iii) Section 2.05(e) of the Credit Agreement is hereby amended by
         adding a second proviso to the end of the first sentence thereof
         immediately prior to the period as follows:

               "; PROVIDED FURTHER that, during the pendency of any Bankruptcy
               Proceeding, any such LC Disbursement shall, notwithstanding the
               provisions contained herein as to minimum borrowings or the
               fulfillment of any of the conditions to borrowing set forth
               herein, automatically be converted to an ABR Revolving Borrowing
               in an equivalent amount and the Borrower's obligation to make
               such payment shall be discharged and replaced by the resulting
               ABR Revolving Borrowing."

            (iv) Section 3.05(d) of the Credit Agreement is hereby amended by
         adding, immediately prior to the period at the end thereof, the words
         "except in connection with sales and other dispositions permitted
         hereunder".

            (v) Section 3.15 of the Credit Agreement is hereby amended by (A)
         deleting the words "first priority" as the same appear in subsection
         (a) thereof, (B) adding, immediately after the words "prior and
         superior in right to any other Person" as same appear in subsection (a)
         thereof, the phrase "(other than, unless any Progress Condition has not
         been satisfied on a timely basis, Liens granted to the secured parties
         under the New Interim Facility and the New Post-Restructuring Facility
         and the respective related documents, instruments and agreements
         executed in connection therewith)", (C) adding, immediately after the
         words "prior and superior in right to any other Person" as same appear
         in subsection (b) thereof, the phrase "(other than, unless any Progress
         Condition has not been satisfied on a timely basis, Liens granted to
         the secured parties under the New Interim Facility and the New
         Post-Restructuring Facility and the respective related documents,
         instruments and agreements executed in connection therewith)", (D)
         adding, immediately after the words "prior and superior in right to any
         other Person" as the same appear in subsection (c) thereof, the phrase
         "(other than, unless any Progress Condition has not been satisfied on a
         timely basis, Liens granted to the secured parties under the New
         Interim Facility and the New Post-Restructuring Facility and the
         respective related documents, instruments and agreements executed in
         connection therewith)" and (E) by adding, immediately after the words
         "Permitted Encumbrances" as they appear in subsection (d) thereof, the
         words "and, unless any Progress Condition has not been satisfied on a
         timely basis, Liens granted to the secured parties under the New
         Interim Facility and the New Post-Restructuring Facility and the
         respective related documents, instruments and agreements executed in
         connection therewith."

            (vi) Section 6.01(a)(v) of the Credit Agreement is hereby amended
         and restated in its entirety as follows:

                  "(v) Indebtedness of the Borrower incurred to finance the
               acquisition, construction, installation, development or
               improvement of any fixed or capital assets, including Capital
               Lease Obligations and any Indebtedness assumed in connection

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               with the acquisition of any such assets or secured by a Lien
               on any such assets prior to the acquisition thereof; PROVIDED
               that (A) such Indebtedness is incurred prior to or within 270
               days after such acquisition or the completion of such
               construction, installation, development or improvement, (B)
               the Borrower and the Restricted Subsidiaries are in
               compliance, on a pro forma basis after giving effect to the
               incurrence of such Indebtedness, with the financial covenants
               contained in Sections 6.13, 6.14, 6.16, 6.17 and 6.18 to the
               extent then applicable and (C) (1) with respect to any such
               Indebtedness incurred prior to the Restructuring Date (if a
               Restructuring Date occurs), the aggregate amount of such
               secured Indebtedness incurred under this clause (v)(C)(1)
               shall not exceed $500,000,000 less the principal amount of
               such Indebtedness refinanced under Section 6.01(vii) at any
               time outstanding and (2) with respect to any such Indebtedness
               incurred on or after the Restructuring Date (if a
               Restructuring Date occurs) (a) such Indebtedness shall
               constitute either (x) third party equipment financing in an
               aggregate amount at any time outstanding not to exceed
               $100,000,000 or (y) other Indebtedness constituting Capital
               Lease Obligations in an aggregate amount at any time
               outstanding not to exceed $50,000,000 and (b) the actual or
               implicit interest rate under any purchase money financing,
               installment sale, conditional sale or capital lease entered
               into in reliance on this clause (v)(C)(2) shall not be
               substantially higher than the interest rate(s) then available
               to the Borrower under this Agreement;"

            (vii) Section 6.01(a) is hereby amended by deleting the word "and"
         at the end of clause (viii), renumbering existing clause (ix) as clause
         (xi) and adding new clauses (ix) and (x) as follows:

                  "(ix) unless any Progress Condition has not been satisfied on
               a timely basis, Indebtedness under the New Interim Facility in an
               aggregate principal amount not to exceed $50,000,000;

                  (x) unless any Progress Condition has not been satisfied on a
               timely basis, on and after the Reorganization Consummation Date,
               Indebtedness under the New Post-Restructuring Facility in an
               aggregate principal amount not to exceed $160,000,000 (of which
               $10,000,000 shall be reserved and made available to the Borrower
               on a dollar for dollar basis as LC Exposure is reduced under this
               Agreement); and"

            (viii) Section 6.02 of the Credit Agreement is hereby amended by
         deleting the word "and" at the end of clause (vii), replacing the
         period at the end of clause (viii) with a semicolon and adding new
         clauses (ix) and (x) as follows:

                  "(ix) unless any Progress Condition has not been satisfied on
               a timely basis, Guarantees by any Restricted Subsidiary of the
               New Interim Facility Obligations; and

                  (x) unless any Progress Condition has not been satisfied on a
               timely basis, Guarantees by any Restricted Subsidiary of the New
               Post-Restructuring Facility Obligations."

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            (ix) Section 6.03 of the Credit Agreement is hereby amended by
         amending and restating clause (vii) thereof in its entirety as follows:

               "(vii) Liens securing Indebtedness permitted by Section 6.01(v)
               and Section 6.02(vii) and, unless any Progress Condition has not
               been satisfied on a timely basis, Sections 6.01(a)(ix) and (x)
               and Sections 6.02(ix) and (x)."

            (x) Section 6.05 of the Credit Agreement is amended by adding a new
         paragraph at the end thereof, which shall read in its entirety as
         follows:

                  "Nothing contained in subsections (a), (b) or (c) above shall
               prevent the Borrower or any of its Subsidiaries from consummating
               any transaction permitted under Section 6.07 hereof."

            (xi) Sections 6.06(k) and (l) of the Credit Agreement are hereby
         amended by adding the words "prior to the Third Amendment Effective
         Date," at the beginning of each such Section.

            (xii) Clause (i) of the proviso to Section 6.11 of the Credit
         Agreement is hereby amended and restated in its entirety as follows:

               "(i) unless any Progress Condition has not been satisfied on a
               timely basis, the foregoing shall not apply to restrictions and
               conditions imposed by law or by any Loan Document, the New
               Interim Facility or the New Post-Restructuring Facility or,
               unless the Restructuring Date shall have occurred, imposed by 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,".

            (xiii) Section 9.15 of the Credit Agreement is hereby amended by (A)
         redesignating subsections (b) and (c) thereof as subsections (d) and
         (e) thereof, respectively, and (B) adding new subsections (b) and (c)
         thereto, which shall read in their entirety as follows:

                        "(b) If any of the Collateral shall be sold or disposed
                     of by any Loan Party to a Person other than the Borrower or
                     a Subsidiary of the Borrower in a transaction permitted
                     under the Credit Agreement or consented to by the Required
                     Lenders (or such greater number of Lenders the consent of
                     which is required hereunder), such Collateral shall be
                     automatically released from the Lien created under the Loan
                     Documents.

                        (c) If all of the capital stock of any Subsidiary Loan
                     Party shall be sold or disposed of to a Person other than
                     the Borrower or a Subsidiary of the Borrower in a
                     transaction permitted under the Credit Agreement or
                     consented to by the Required Lenders (or such greater
                     number of Lenders

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                     the consent of which is required hereunder), such
                     Subsidiary Loan Party shall be automatically released
                     from its obligations under the Loan Documents to which
                     it is a party."

            (xiv) Section 3.03 of the Borrower Security Agreement is amended by
         deleting the final sentence appearing therein and inserting the
         following sentence in lieu thereof:

               "The Security Interest is and shall be prior to any other Lien on
               any of the Borrower Collateral, other than, unless any Progress
               Condition has not been satisfied on a timely basis, Liens granted
               to the secured parties under the New Interim Facility and the New
               Post-Restructuring Facility and the respective related documents,
               instruments and agreements executed in connection therewith and
               Liens permitted under Sections 6.03(ii) through (v), inclusive,
               of the Credit Agreement."

            (xv) Section 4.01(a) of the Borrower Security Agreement is amended
         by deleting the words "first priority" appearing in the second sentence
         thereof and adding the following words to the end of such sentence:
         "prior in right to any other Person (other than, unless any Progress
         Condition has not been satisfied on a timely basis, Liens granted to
         the secured parties under the New Interim Facility and the New
         Post-Restructuring Facility and the respective related documents,
         instruments and agreements executed in connection therewith and Liens
         permitted under Section 6.03(ii) through (v), inclusive, of the Credit
         Agreement)".

            (xvi) Section 7.14 of the Borrower Security Agreement is amended by
         adding a new paragraph at the end thereof which shall read in its
         entirety as follows:

                  "If any of the Borrower Collateral shall be sold or disposed
               of to any Person other than a Subsidiary of the Borrower in a
               transaction (a) permitted under the Credit Agreement, (b)
               consented to by the Required Lenders (or such greater number of
               Lenders the consent of which is required under the Credit
               Agreement) or (c) consummated on terms no less favorable than
               contemplated by the Restructuring either (i) during the pendency
               of Bankruptcy Proceedings unless any Progress Condition has not
               been satisfied on a timely basis or (ii) after the effective date
               of the Reorganization Plan, PROVIDED, HOWEVER, in each case under
               this clause (c) that the proceeds of such transaction are applied
               in the manner contemplated by the Restructuring, such Borrower
               Collateral shall be automatically released from the Lien created
               hereunder and, in connection therewith, the Collateral Agent, at
               the request and sole expense of the Borrower, shall execute and
               deliver to the Borrower all releases or other documents
               reasonably necessary or desirable for the release of the Lien
               created hereby on such Borrower Collateral; PROVIDED, FURTHER,
               HOWEVER, that notwithstanding the foregoing, no Lien on the
               Publishing Assets or the proceeds thereof constituting Borrower
               Collateral shall be released prior to the Restructuring Date."
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            (xvii) Section 3.03 of the Subsidiary Security Agreement is amended
         by deleting the final sentence appearing therein and inserting the
         following sentence in lieu thereof:

               "The Security Interest is and shall be prior to any other Lien on
               any of the Guaranteed Obligations Collateral, other than, unless
               any Progress Condition has not been satisfied on a timely basis,
               Liens granted to the secured parties under the New Interim
               Facility and the New Post-Restructuring Facility and the
               respective related documents, instruments and agreements executed
               in connection therewith and Liens permitted under Section
               6.03(ii) through (v), inclusive, of the Credit Agreement."

            (xviii) Section 4.01(a) of the Subsidiary Security Agreement is
         amended by deleting the words "first priority" appearing in the second
         sentence thereof and adding the following words to the end of such
         sentence: "prior in right to any other Person (other than, unless any
         Progress Condition has not been satisfied on a timely basis, Liens
         granted to the secured parties under the New Interim Facility and the
         New Post-Restructuring Facility and the respective related documents,
         instruments and agreements executed in connection therewith and Liens
         permitted under Section 6.03(ii) through (v), inclusive, of the Credit
         Agreement).

            (xix) Section 7.14 of the Subsidiary Security Agreement is amended
         by adding a new paragraph at the end thereof which shall read in its
         entirety as follows:

                  "If any of the Guaranteed Obligations Collateral shall be sold
               or disposed of to a Person other than the Borrower or a
               Subsidiary of the Borrower in a transaction (a) permitted under
               the Credit Agreement, (b) consented to by the Required Lenders
               (or such greater number of Lenders the consent of which is
               required under the Credit Agreement) or (c) consummated on terms
               no less favorable than contemplated by the Restructuring either
               (i) during the pendency of Bankruptcy Proceedings unless any
               Progress Condition has not been satisfied on a timely basis or
               (ii) after the effective date of the Reorganization Plan,
               PROVIDED, HOWEVER, in each case under this clause (c) that the
               proceeds of such transaction are applied in the manner
               contemplated by the Restructuring, such Guaranteed Obligations
               Collateral shall be automatically released from the Lien created
               hereunder and, in connection therewith, the Collateral Agent, at
               the request and sole expense of the relevant Subsidiary Grantor,
               shall execute and deliver to such Subsidiary Grantor all releases
               or other documents reasonably necessary or desirable for the
               release of the Lien created hereby on such Guaranteed Obligations
               Collateral; PROVIDED, FURTHER, HOWEVER, that notwithstanding the
               foregoing, no Lien on the Publishing Assets or the proceeds
               thereof constituting Guaranteed Obligations Collateral shall be
               released prior to the Restructuring Date."

            (xx) Section 3(b) of the Borrower Pledge Agreement is amended by
         inserting the words "and, unless any Progress Condition has not been
         satisfied on a timely basis, except for Liens securing the New Interim
         Facility Obligations and/or the New Post-Restructuring Facility
         Obligations" after the words "except for the security interest granted
         hereunder" appearing therein.

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            (xxi) Section 3(c)(ii) of the Borrower Pledge Agreement is amended
         by inserting the words "and, unless any Progress Condition has not been
         satisfied on a timely basis, Liens securing the New Interim Facility
         Obligations and/or the New Post-Restructuring Facility Obligations"
         after the words "other than the Lien created by this Agreement"
         appearing therein.

            (xxii) Section 3(e) of the Borrower Pledge Agreement is amended by
         deleting the word "first" appearing therein, deleting the semicolon at
         the end thereof, and inserting the following text in lieu of such
         semicolon:

               "with priority over all Liens other than, unless any Progress
               Condition has not been satisfied on a timely basis, Liens
               securing the New Interim Facility Obligations and/or the New
               Post-Restructuring Facility Obligations;"

            (xxiii) Section 3(b) of the Subsidiary Pledge Agreement is amended
         by inserting the words "and, unless any Progress Condition has not been
         satisfied on a timely basis, except for Liens securing the New Interim
         Facility Obligations and/or the New Post-Restructuring Facility
         Obligations" after the words "except for the security interest granted
         hereunder" appearing therein.

            (xxiv) Section 3(c)(ii) of the Subsidiary Pledge Agreement is
         amended by inserting the words "and, unless any Progress Condition has
         not been satisfied on a timely basis, Liens securing the New Interim
         Facility Obligations and/or the New Post-Restructuring Facility
         Obligations" after the words "other than the Lien created by this
         Agreement" appearing therein.

            (xxv) Section 3(e) of the Subsidiary Pledge Agreement is amended by
         deleting the word "first" appearing therein, deleting the semicolon at
         the end thereof, and inserting the following text in lieu of such
         semicolon:

               "with priority over all Liens other than, unless any Progress
               Condition has not been satisfied on a timely basis, Liens
               securing the New Interim Facility Obligations and/or the New
               Post-Restructuring Obligations;"

            (xxvi) Section 3.03 of the Intercompany Security Agreement is
         amended by deleting the final sentence appearing therein and inserting
         the following sentence in lieu thereof:

               "The Security Interest is and shall be prior to any other Lien on
               any of the Intercompany Collateral, other than, unless any
               Progress Condition has not been satisfied on a timely basis,
               Liens granted to the secured parties under the New Interim
               Facility and the New Post-Restructuring Facility and the
               respective related documents, instruments and agreements executed
               in connection therewith and Liens permitted under Section
               6.03(ii) through (v), inclusive, of the Credit Agreement."

            (xxvii) Section 6.14 of the Intercompany Security Agreement is
         amended by adding a new paragraph at the end thereof which shall read
         in its entirety as follows:

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                                                                            11

                  "If any of the Intercompany Collateral shall be sold or
               disposed of to a Person other than the Borrower or a Subsidiary
               of the Borrower in a transaction (a) permitted under the Credit
               Agreement, (b) consented to by the Required Lenders (or such
               greater number of Lenders the consent of which is required under
               the Credit Agreement) or (c) consummated on terms no less
               favorable than contemplated by the Restructuring either (i)
               during the pendency of Bankruptcy Proceedings unless any Progress
               Condition has not been satisfied on a timely basis or (ii) after
               the effective date of the Reorganization Plan, PROVIDED, HOWEVER,
               in each case under this clause (c) that the proceeds of such
               transaction are applied in the manner contemplated by the
               Restructuring, such Intercompany Collateral shall be
               automatically released from the Lien created hereunder and, in
               connection therewith, the Parent shall execute and deliver to the
               appropriate Subsidiary Grantor all releases or other documents
               reasonably necessary or desirable for the release of the Lien
               created hereby on such Intercompany Collateral; PROVIDED,
               FURTHER, HOWEVER, that notwithstanding the foregoing, no Lien on
               the Publishing Assets or the proceeds thereof constituting
               Intercompany Collateral shall be released prior to the
               Restructuring Date."

            (b) LIMITATION ON BORROWINGS. On and after the Third Amendment
Effective Date and through and including the earliest of the date of
commencement of any Bankruptcy Proceeding, the date the Borrower consummates the
Out-of-Court Alternative (the "OUT-OF-COURT CONSUMMATION DATE") and the date the
Borrower shall have determined not to proceed with the transactions contemplated
hereby and shall have so advised the Administrative Agent in writing, the
Borrower agrees that the total Revolving Exposure shall not exceed $160,000,000
in the aggregate at any time outstanding and any requests for Borrowings or
issuances of Letters of Credit in excess thereof delivered during such period
shall be ineffective. Any unused Revolving Commitments shall terminate on the
date of commencement of any proceeding under any bankruptcy, insolvency or other
similar law in respect of the Borrower or any Subsidiary (whether or not such
proceedings are Bankruptcy Proceedings).

            (c) AGREEMENT NOT TO EXERCISE REMEDIES. So long as no Event of
Default (other than any Event of Default waived hereunder) shall have occurred
and be continuing under the Credit Agreement, as amended from time to time,
neither the Administrative Agent, the Collateral Agent nor any Lender shall make
any demand under the Subsidiary Guarantee Agreement or otherwise exercise any
remedies under the Subsidiary Security Documents, other than in respect of
unpaid principal, interest, fees and other amounts that shall be due and payable
under the terms of the Loan Documents, PROVIDED, HOWEVER, that the foregoing
limitation on the exercise of remedies shall cease to be effective if any
Progress Condition is not satisfied on a timely basis.

            (d) CONSENTS OF THE REQUIRED LENDERS. The Lenders hereby consent, in
the event the Bankruptcy Proceeding is commenced, to the entry of a Qualifying
Cash Collateral Order and a Qualifying DIP Order, subject to a "Carve-Out" to be
specified therein, in each case reasonably acceptable to the Administrative
Agent.

            (e) WAIVER OF CERTAIN BANKRUPTCY-RELATED EVENTS OF DEFAULT. The
Lenders hereby waive, solely to the extent the events specified below occur
during the period from the Third

<Page>

                                                                            12

Amendment Effective Date to the earliest of the Out-of-Court Consummation
Date, the Reorganization Consummation Date, August 1, 2002 and the date the
Borrower shall have determined not to proceed with the transactions
contemplated hereby and shall have so advised the Administrative Agent in
writing (i) any Default or Event of Default under the Credit Agreement or any
other Loan Document (x) attributable solely to the filing by or against the
Borrower or any of its Subsidiaries of any Bankruptcy Proceeding or (y)
resulting from actions the Borrower or any of its Subsidiaries are not
permitted to take by virtue of their status as debtors in a Bankruptcy
Proceeding (other than in the case of this clause (y) any failure to pay
principal, interest or fees to the Administrative Agent or the Lenders), (ii)
any Default or Event of Default under clause (g) of Article VII of the Credit
Agreement attributable solely to a Default or Event of Default under Material
Indebtedness arising solely from the filing by or against the Borrower or any
of its Subsidiaries of any Bankruptcy Proceeding or resulting from actions
the Borrower or any of its Subsidiaries are not permitted to take by virtue
of their status as debtors in a Bankruptcy Proceeding and (iii) any Default
or Event of Default under clause (l) of Article VII of the Credit Agreement
attributable solely to the occurrence of an event specified in clauses (a),
(b) or (c) of the definition of ERISA Event arising solely from the filing of
any Bankruptcy Proceeding, PROVIDED that the waivers contained in this
subsection (e) shall be of no force and effect if any Progress Condition has
not been satisfied on a timely basis.

            (f) WAIVER OF CERTAIN PAYMENT CROSS-DEFAULTS. The Lenders hereby
waive, solely to the extent such failure occurs during the period from the
Third Amendment Effective Date to the earliest of the Out-of-Court
Consummation Date, the Reorganization Consummation Date, August 1, 2002 and
the date the Borrower shall have determined not to proceed with the
transactions contemplated hereby and shall have so advised the Administrative
Agent in writing, any Default or Event of Default under the Credit Agreement
or any other Loan Document attributable solely to the failure of the Borrower
to pay any amounts constituting Indenture Debt when due, PROVIDED that the
waivers contained in this subsection (f) shall be of no force and effect if
any applicable Progress Condition has not been satisfied on a timely basis.

            (g) WAIVER OF SECTION 5.01(A). The Lenders hereby waive
compliance by the Borrower with the Section 5.01(a) of the Credit Agreement
solely with respect to (i) any "going concern" or like qualification or
exception attributable solely to the Borrower's pursuit of the Restructuring
that may be set forth in the report of the Borrower's independent public
accountants with respect to the Borrower's financial statements for the
fiscal year ending December 31, 2001 and (ii) any failure by the Borrower to
deliver its financial statements for the fiscal year ending December 31, 2001
within 100 days after the end of such fiscal year, provided that such
financial statements are delivered in the manner required by Section 5.01(a)
(subject to the waiver contained in clause (i) above) within 105 days after
the end of such fiscal year, PROVIDED that the waivers contained in this
subsection (g) shall be of no force and effect if any Progress Condition has
not been satisfied on a timely basis.

            (h) WAIVER OF SECTION 5.13. The Lenders hereby waive compliance
by the Borrower and its Restricted Subsidiaries with the provisions of
Section 5.13 of the Credit Agreement solely with respect to any provision
contained therein that would require Greene County Partners, Inc. (i) to
satisfy the Collateral and Guarantee Requirement or (ii) to be or become a
party to any Security

<Page>

                                                                            13

Document or the Intercompany Security Agreement, or to grant any of the Liens
provided for therein or in such Section 5.13.

            (i) WAIVER OF SECTION 6.07. The Lenders hereby waive compliance
by the Borrower and its Restricted Subsidiaries with the provisions of
Section 6.07 of the Credit Agreement (other than the proviso contained
therein) solely with respect to any sale, transfer or other disposition,
during the period from the Third Amendment Effective Date through the
earliest to occur of the Restructuring Date, August 1, 2002 and the date the
Borrower shall have determined not to proceed with the transactions
contemplated hereby and shall have so advised the Administrative Agent in
writing, of the ICTC Assets, the Non-Core Assets or the Publishing Assets,
PROVIDED, that the proceeds of such transactions are applied in the manner
contemplated by the Restructuring and PROVIDED, FURTHER that the waivers
contained in this subsection (i) shall be of no force and effect if any
applicable Progress Condition has not been satisfied on a timely basis.

            (j) WAIVER OF SECTION 6.09. The Lenders hereby waive compliance
by the Borrower with the provisions of Section 6.09(b) of the Credit
Agreement solely to the extent necessary to permit the Borrower to enter into
agreements in connection with the Restructuring, PROVIDED, that nothing
contained in this Section 2(j) shall permit the Borrower to consummate
transactions under such agreements if the consummation of such transactions
would otherwise violate the terms of Section 6.09(b) of the Credit Agreement
(except to the extent waived under any provision of this Amendment).

            (k) WAIVER OF SECTION 6.10. The Lenders hereby waive compliance
by the Borrower with the provisions of Section 6.10 of the Credit Agreement
solely to the extent necessary to permit the Borrower to enter into the FL
Standby Purchase Agreement, the FL New Preferred Stock Purchase Agreement or
any agreement, document or instrument entered into in connection with either
such agreement, PROVIDED that nothing contained in the Section 2(k) shall
permit the Borrower to consummate transactions under such agreements if the
consummation of such transactions would otherwise violate the terms of
Section 6.10 of the Credit Agreement (except to the extent waived under any
provision of this Amendment).

            (l) SALE OF PUBLISHING ASSETS. The Borrower agrees to use
commercially reasonable efforts consistent with the timetable contemplated
hereby for the Restructuring to obtain higher and better (compared with the
offer of Forstmann Little set forth in the FL Standby Purchase Agreement) all
cash offers to purchase the Publishing Assets.

            (m) CANCELATION OF INTERCOMPANY INDEBTEDNESS. Notwithstanding
anything contained in the Credit Agreement or the other Loan Documents to the
contrary, the Borrower and its Subsidiaries may cancel or forgive any
Intercompany Indebtedness of, by or to any Subsidiary in connection with the
sale or disposition of the Capital Stock or all or substantially all of the
assets of any such Subsidiary to the extent such sale or disposition is
permitted under the Credit Agreement. As used herein, (i) "INTERCOMPANY
INDEBTEDNESS" means (A) indebtedness and other obligations of the Borrower to
any of its Subsidiaries and (B) indebtedness and other obligations of any
Subsidiary to the Borrower or any other Subsidiary and (ii) "CANCEL OR FOREGIVE"
means the cancelation or foregiveness of Indebtedness or, in the case of
Indebtedness owed by a Subsidiary of the Borrower,

<Page>

                                                                            14

the conversion of such Indebtedness to equity of such Subsidiary, the
contribution of such Indebtedness to the capital of such Subsidiary or any
similar transaction.

            (n) SALE AND LEASE-BACK OF EFFINGHAM, ILLINOIS BUILDING. The
Lenders hereby waive the provisions of Sections 6.01, 6.02, 6.03 and 6.04 of
the Credit Agreement to the extent necessary to permit the Borrower and its
Restricted Subsidiaries to enter into a sale and lease-back transaction with
respect to the Loan Parties' Effingham, Illinois building; PROVIDED that
Attributable Debt in respect of any lease of the Borrower and its Restricted
Subsidiaries entered into as part of such sale and lease-back shall not
exceed $2,700,000 in the aggregate.

            SECTION 3. AMENDMENTS, WAIVERS AND AGREEMENTS THAT BECOME
OPERATIVE ON THE RESTRUCTURING DATE. The following amendments, waivers and
agreements shall (in the case of Section (b), to the extent contemplated
therein) become operative immediately upon satisfaction of the conditions set
forth in Section 4:

            (a)  AMENDMENTS TO THE CREDIT AGREEMENT.

               (i) Section 1.01 of the Credit Agreement is hereby amended as
               follows:

                        (A) The definition of "Applicable Rate" is hereby
                     amended to replace the table set forth therein with the
                     following:

<Table>
<Caption>
----------------------------------------------------------------------------------------------------
 Level     Ratings    LIBOR Spread for         ABR Spread for       LIBOR Spread      ABR Spread
                    Revolving Loans and     Revolving Loans and     for Tranche B    for Tranche B
                    Tranche A Term Loans    Tranche A Term Loans     Term Loans       Term Loans
----------------------------------------------------------------------------------------------------
<S>      <C>              <C>                   <C>                 <C>               <C>
   V     >=BBB-/Baa3        2.00%                   1.00%               3.75%            2.75%
----------------------------------------------------------------------------------------------------
   IV      BB+/Ba1          2.50%                   1.50%               3.75%            2.75%
----------------------------------------------------------------------------------------------------
  III      BB/Ba2           3.00%                   2.00%               4.00%            3.00%
----------------------------------------------------------------------------------------------------
   II      BB-/Ba3          3.25%                   2.25%               4.00%            3.00%
----------------------------------------------------------------------------------------------------
   I       BB-/Ba3          3.50%                   2.50%               4.25%            3.25%
----------------------------------------------------------------------------------------------------
</Table>

PROVIDED, that during any period after the second anniversary of the
Restructuring Date on which the ICTC Sale Conditions have not been met (an
"ADDITIONAL INTEREST PERIOD"), $225,000,000 in principal amount of Term Loans
shall bear additional interest hereunder (the "ADDITIONAL INTEREST") at a
rate equal to 1.50% per annum. During any such Additional Interest Period,
such Additional Interest shall be applied to that portion of each Lender's
Term Loans equal to the proportion that $225,000,000 bears to the aggregate
of all Term Loans outstanding at such time. As used herein, "ICTC SALE
CONDITIONS" means a sale or other disposition of the Capital Stock of ICTC or
substantially all of the ICTC Assets has been consummated.
<Page>

                                                                            15

                        (B) The definition of "Indentures" is hereby amended and
                     restated in its entirety as follows:

                              "'INDENTURES' means (a) the Indenture dated as of
                     March 4, 1997, between the Borrower (as successor to
                     McLeod, Inc.) and United States Trust Company of New York,
                     as Trustee, in respect of $500,000,000 10-1/2% Senior
                     Discount Notes due 2007, (b) the Indenture dated as of July
                     21, 1997, between the Borrower and United States Trust
                     Company of New York, as Trustee, in respect of $225,000,000
                     9-1/4% Senior Notes due 2007, (c) the Indenture dated as of
                     March 16, 1998, between the Borrower and United States
                     Trust Company of New York, as Trustee, in respect of
                     $300,000,000 8 3/8% Senior Notes due 2008, (d) the
                     Indenture dated as of October 30, 1998, between the
                     Borrower and United States Trust Company of New York, as
                     Trustee, in respect of $300,000,000 9 1/2% Senior Notes
                     due 2008, (e) the Indenture dated as of February 22, 1999,
                     between the Borrower and United States Trust Company of
                     New York, as Trustee, in respect of $500,000,000 8 1/8%
                     Senior Notes due 2009, (f) the Indenture dated
                     December 14, 2000, between the Borrower and United States
                     Trust Company of New York, as Trustee, in respect of
                     $150,000,000 12% Senior Notes Due 2008, (g) the Indenture
                     dated December 14, 2000, between the Borrower and United
                     States Trust Company of New York, as Trustee, with respect
                     to $210,000,000 of 11 1/2% Senior Notes Due 2009, and (h)
                     the Senior Debt Securities Indenture dated January 15,
                     2001, between the Borrower and United States Trust Company
                     of New York, as Trustee, and the First Supplemental
                     Indenture, dated January 15, 2001, thereunder, with respect
                     to $750,000,000 11 3/8% Senior Notes Due 2009."

                        (C) The definitions of "Borrower Secured Obligations"
                     and "Guaranteed Obligations" shall be deleted and the
                     definition of "Obligations" shall be amended and restated
                     in its entirety as follows:

                              "'OBLIGATIONS' means (i) the due and punctual
                     payment by the Borrower of (A) the principal of and
                     premium, if any, and interest (including interest accruing
                     during the pendency of any bankruptcy, insolvency,
                     receivership or other similar proceeding, regardless of
                     whether allowed or allowable in such proceeding) on the
                     Loans and the Swingline Loans, when and as due, whether at
                     maturity, by acceleration, upon one or more dates set for
                     prepayment or otherwise, (B) each payment required to be
                     made by the Borrower under this Agreement in respect of any
                     Letter of Credit, when and as due, including payments in
                     respect of reimbursement of disbursements, interest thereon
                     and obligations to provide cash collateral and (C) all
                     other monetary obligations, including fees, costs, expenses
                     and indemnities, whether primary, secondary, direct,
                     contingent, fixed or otherwise (including monetary
                     obligations incurred during the pendency of any bankruptcy,
                     insolvency, receivership or other similar proceeding,
                     regardless of whether allowed or allowable in such
                     proceeding), of the Borrower to the Secured

<Page>

                                                                            16

                     Parties under this Agreement or the other Loan
                     Documents, (ii) the due and punctual performance of all
                     covenants, agreements, obligations and liabilities of
                     the Borrower and the other Loan Parties under or
                     pursuant to this Agreement and the other Loan Documents
                     and (iii) the due and punctual payment and performance
                     of all obligations of any Loan Party under each
                     Designated Hedging Agreement entered into with a
                     counterparty that was a Lender (or an Affiliate of a
                     Lender) at the time such Designated Hedging Agreement
                     was entered into (or, if later, on the date of this
                     Agreement)."

                        (D) The definition of "Permitted Holders" is hereby
                     amended and restated in its entirety as follows:

                        "'PERMITTED HOLDERS' means (i) Clark E. and Mary E.
                     McLeod and foundations and trusts controlled by them or
                     either of them, and Affiliates (other than the Borrower
                     and the Restricted Subsidiaries) of each of the
                     foregoing and (ii) (x) Forstmann Little & Co., Forstmann
                     Little & Co. Equity Partnership-V, L.P., Forstmann
                     Little & Co. Equity Partnership-VII, L.P., Forstmann
                     Little & Co. Subordinated Debt and Equity Management
                     Buyout Partnership-VI, L.P., Forstmann Little & Co.
                     Subordinated Debt and Equity Management Buyout
                     Partnership-VII, L.P. and Forstmann Little & Co.
                     Subordinated Debt and Equity Management Buyout
                     Partnership-VIII, L.P. and (y) any other investment fund
                     Controlled and managed by the same general partner or
                     investment manager as any of the investment funds
                     referred to in clause (x)."

                        (E) Section 1.01 of the Credit Agreement is hereby
                     amended by amending and restating in its entirety the
                     definition of "Prepayment Event" as follows:

                              "'PREPAYMENT EVENT'  means:

                        (a) any sale, transfer or other disposition (including
                     pursuant to a sale and leaseback transaction) of any
                     property or asset of the Borrower or any Restricted
                     Subsidiary, other than (i) dispositions described in
                     clauses (a) and (b) of Section 6.07 and (ii) other
                     dispositions resulting in aggregate Net Proceeds not
                     exceeding $5,000,000 during any fiscal year of the
                     Borrower;

                        (b) any casualty or other insured damage to, or any
                     taking under power of eminent domain or by condemnation or
                     similar proceeding of, any property or asset of the
                     Borrower or any Restricted Subsidiary, but only to the
                     extent that the Net Proceeds therefrom have not been
                     applied to repair, restore or replace such property or
                     asset or to purchase Telecommunications Assets within
                     twelve months after such event; or

                        (c) the incurrence by the Borrower of any Indebtedness,
                     other than Indebtedness permitted by Sections 6.01(a)(i)
                     through (xi), inclusive."

<Page>

                                                                            17

                        (F) The definitions of "Financed Telecommunications
                     Assets", "Purchase Money Revolving Loans" and "Non-Purchase
                     Money Loans" are hereby deleted.

                        (G) The following definitions shall be added in
                     appropriate alphabetical order:

                              "'CAPITAL EXPENDITURES" means, for any period and
                     without duplication, (a) the additions to property, plant
                     and equipment and other capital expenditures of Borrower
                     and the Restricted Subsidiaries that are (or would be) set
                     forth in a consolidated statement of cash flows of the
                     Borrower for such period prepared in accordance with GAAP
                     and (b) Capital Lease Obligations incurred by the Borrower
                     and the Restricted Subsidiaries during such period."

                              "'FORSTMANN LITTLE' means Forstmann Little &
                     Co. or any Affiliate thereof."

                  (ii) Section 2.03 of the Credit Agreement is hereby amended by
               adding the word "and" immediately following the semicolon at the
               end of clause (v), replacing "; and" at the end of clause (vi)
               with a period and deleting the clause immediately following
               clause (vi).

                  (iii) Section 2.11(c) of the Credit Agreement is hereby
               amended and restated in its entirety as follows:

                              "(c) In the event and on each occasion that any
                     Net Proceeds are received by or on behalf of the Borrower
                     or any Subsidiary in respect of any Prepayment Event, the
                     Borrower shall, immediately after such Net Proceeds are
                     received, prepay Term Borrowings in an aggregate amount
                     equal to such Net Proceeds; PROVIDED that, notwithstanding
                     the foregoing (i) in the case of any Net Proceeds received
                     by or on behalf of the Borrower or any Subsidiary in
                     respect of any sale, transfer or other disposition of the
                     Publishing Assets, no prepayment shall be required pursuant
                     to this paragraph in respect of such Net Proceeds to the
                     extent that (A) the first $535,000,000 of the gross
                     proceeds therefrom have been applied to pay Indebtedness
                     under the Indentures pursuant to the Restructuring and (B)
                     the excess of such Net Proceeds received by the Borrower or
                     any of its Subsidiaries over $535,000,000 (including Net
                     Proceeds received in the event that Forstmann Little shall
                     enter into a definitive agreement within 12 months of the
                     Restructuring Date to sell such assets in a transaction
                     that requires a payment by Forstmann Little to the Borrower
                     or any such Subsidiary) up to a maximum of $25,000,000
                     shall be applied by the Borrower to the prepayment of the
                     Term Borrowings (it being understood that the Borrower and
                     its Subsidiaries may retain Net Proceeds in excess of
                     $560,000,000 (including Net Proceeds received in the event
                     that Forstmann

<Page>

                                                                            18

                     Little shall resell (or enter into a definitive agreement
                     to resell) such assets within 12 months of the
                     Restructuring Date in a transaction that requires a
                     payment by Forstmann Little to the Borrower or any of
                     its Subsidiaries) resulting from any sale, transfer or
                     other disposition of the Publishing Assets for working
                     capital and general corporate purposes, including
                     capital expenditures, and may apply all or any portion
                     of such excess to pay Indebtedness under the Indentures
                     pursuant to the Restructuring), (ii) in the event Net
                     Proceeds are received by or on behalf of the Borrower or
                     any Subsidiary in respect of any sale, transfer or other
                     disposition of the ICTC Assets, the Borrower shall,
                     immediately after such Net Proceeds are received, prepay
                     Term Borrowings with the initial $225,000,000 (it being
                     understood that if the sale, transfer or other
                     disposition of the ICTC Assets yields less that
                     $225,000,000 in Net Proceeds, the entire amount of such
                     Net Proceeds shall be used to repay the Term Loan
                     Borrowings and there shall be no further prepayment with
                     respect to such ICTC Assets) of such Net Proceeds and
                     the Borrower and its Subsidiaries shall be entitled to
                     retain any Net Proceeds in excess of such $225,000,000
                     for working capital and general corporate purposes,
                     including permitted Capital Expenditures, and (iii) in
                     the event Net Proceeds are received by or on behalf of
                     the Borrower or any Subsidiary in respect of any sale,
                     transfer or other disposition of Non-Core Assets, no
                     prepayment shall be required pursuant to this paragraph
                     in respect of such Net Proceeds and the Borrower and its
                     Subsidiaries shall be entitled to retain such Net
                     Proceeds for working capital and general corporate
                     purposes, including permitted Capital Expenditures."

               (iv) Section 2.11 of the Credit Agreement is hereby further
            amended by adding a new paragraph (f) as follows:

                              "(f) Voluntary and mandatory prepayments (other
                     than any mandatory prepayment pursuant to Section 3(d) of
                     the Third Amendment, any mandatory prepayment from the
                     proceeds of the New Preferred Stock, resulting from a
                     disposition of the ICTC Assets or the Publishing Assets or
                     resulting from the resale of the Publishing Assets by
                     Forstmann Little as set forth in Section 2.11(c)) of
                     Tranche A Term Loans or Tranche B Term Loans and repayments
                     of Tranche A Term Loans or Tranche B Term Loans as a result
                     of acceleration upon an Event of Default resulting from the
                     occurrence of a Change in Control, in each case made after
                     the Restructuring Date and prior to the third anniversary
                     of the Restructuring Date, shall be accompanied by payment
                     of a prepayment fee as follows:

                     (A)   if such prepayment or repayment is made on or before
                           the first anniversary of the Restructuring Date, a
                           fee equal to 3% of the amount or such prepayment or
                           repayment; and

<Page>

                                                                            19

                     (B)   if such prepayment or repayment is made after the
                           first anniversary but on or before the second
                           anniversary of the Restructuring Date, a fee equal to
                           2% of the amount of such prepayment or repayment; and

                     (C)   if such prepayment or repayment is made after the
                           second anniversary but on or before the third
                           anniversary of the Restructuring Date, a fee equal to
                           1% of the amount of such prepayment or repayment."

                  (v) Section 2.20 of the Credit Agreement is hereby deleted.

                  (vi) Section 5.11 of the Credit Agreement is hereby amended
               and restated in its entirety as follows:

                              "The proceeds of the Loans and the issuance of
                     Letters of Credit will be used by the Borrower for working
                     capital and general corporate purposes, including the
                     construction, expansion, development or acquisition of
                     Telecommunications Assets and Telecommunications
                     Businesses. No part of the proceeds of any Loan will be
                     used, whether directly or indirectly, for any purpose that
                     entails a violation of any of the Regulations of the Board,
                     including Regulations U and X."

                  (vii) The Credit Agreement is amended by adding a new Section
               5.16 thereto, which shall read in its entirety as follows:

                        "SECTION 5.16. DISPOSITION OF ICTC. The Borrower agrees
                     that it will, either directly or through its Subsidiaries
                     and on or before the fourteen-month anniversary of the
                     Restructuring Date, have either (a) sold or otherwise
                     disposed of substantially all of the ICTC Assets through an
                     asset sale, stock sale, merger or similar transaction or
                     (b) entered into a purchase, sale or merger or similar
                     agreement providing for the sale or other disposition of
                     the Capital Stock of ICTC or substantially all of the ICTC
                     Assets, which agreement shall be subject only to receipt of
                     necessary regulatory approvals, continued accuracy of
                     customary representations and warranties, compliance with
                     customary covenants and other customary closing
                     documentation conditions of a ministerial nature."

                  (viii) Section 6.01(a) is hereby amended by deleting the word
               "and" at the end of clause (x) and amending and restating in its
               entirety clause (xi) and adding a new clause (xii) as follows:

                        "(xi) so long as the Borrower and the Restricted
                     Subsidiaries are in compliance, on a pro forma basis after
                     giving effect to the incurrence of such Indebtedness, with
                     the financial covenants contained in Sections 6.13, 6.14,
                     6.16, 6.17 and 6.18 to the extent then applicable, other
                     senior unsecured Indebtedness, ranked pari passu with the
                     Indebtedness of the Borrower under

<Page>

                                                                            20

                     the Loan Documents, in an aggregate principal amount at
                     any time outstanding not to exceed $50,000,000; and

                        (xii) so long as the Borrower and the Restricted
                     Subsidiaries are in compliance, on a pro forma basis after
                     giving effect to the incurrence of such Indebtedness, with
                     the financial covenants contained in Sections 6.13, 6.14,
                     6.16, 6.17 and 6.18 to the extent then applicable, other
                     unsecured Indebtedness subordinated to the Obligations in a
                     manner reasonably satisfactory to the Required Lenders."

                  (ix) Section 6.02(v) of the Credit Agreement is hereby amended
               by adding immediately after the words "after the date hereof" as
               the same appear therein, the words "as a result of a Permitted
               Business Acquisition permitted under Section 6.06(e)".

                  (x) Section 6.03(iv) of the Credit Agreement is hereby amended
               by adding immediately after the words "prior to the time such
               Person becomes a Restricted Subsidiary" as the same appear
               therein, the words ", in each case as a result of a Permitted
               Business Acquisition permitted under Section 6.06(e)".

                  (xi) Section 6.06(d) of the Credit Agreement is hereby amended
               by deleting the reference to "(i)" in the proviso, inserting a
               comma immediately after the word "shall" in the proviso and
               deleting the following words "and (ii) in the case of loans to be
               used to acquire Financed Telecommunications Assets, be made
               pursuant to the Intercompany Loan Agreement".

                  (xii) Section 6.06(e) of the Credit Agreement is hereby
               amended by adding the words ", PROVIDED that the Leverage Ratio
               immediately before and after giving effect to any such Permitted
               Business Acquisition made after the Restructuring Date shall be
               equal to or less than 4.00 to 1.00" at the end of such clause
               immediately prior to the semicolon.

                  (xiii) Section 6.07(a) of the Credit Agreement is hereby
               amended by adding the words "(including in the case of inventory,
               sales of inventory in bulk)" at the end thereof immediately prior
               to the semicolon.

                  (xiv) Section 6.07(c) is hereby amended and restated in its
               entirety as follows:

                        "(c) sales, transfers and other dispositions of assets
                     (including Capital Stock of Subsidiaries) that are not
                     permitted by any other clause of this Section; PROVIDED
                     that the Net Proceeds from (i) sales, transfers and other
                     dispositions of Non-Core Assets are utilized by the
                     Borrower for working capital and general corporate
                     purposes, including permitted Capital Expenditures and (ii)
                     sales, transfers and other dispositions of other assets

<Page>

                                                                            21

                     permitted by this clause (c) are applied in accordance with
                     the provisions of Section 2.11(c);"

                  (xv) Section 6.13 of the Credit Agreement is hereby amended
               and restated in its entirety as follows:

                              "SECTION 6.13. LEVERAGE RATIO . The Borrower will
                     not permit the Leverage Ratio as of any date during any
                     period set forth below to exceed the ratio set forth
                     opposite such period:

<Table>
<Caption>
                                  PERIOD                          RATIO
                                  ------                          -----
<S>                                                              <C>
                        January 1, 2003 to December 31, 2003      11.00 to 1.00
                        January 1, 2004 to March 31, 2004         10.00 to 1.00
                        April 1, 2004 to June 30, 2004            8.50 to 1.00
                        July 1, 2004 to September 30, 2004        7.00 to 1.00
                        October 1, 2004 to March 31, 2005         6.00 to 1.00
                        April 1, 2005 to September 30, 2005       5.00 to 1.00
                        October 1, 2005 and thereafter            4.00 to 1.00"
</Table>

                  (xvi) Section 6.14 of the Credit Agreement is hereby amended
               and restated in its entirety as follows:

                              "SECTION 6.14. CAPITAL EXPENDITURE LIMITATION. The
                     Borrower shall not permit the Capital Expenditures of the
                     Borrower and the Restricted Subsidiaries for any fiscal
                     year of the Borrower to exceed the sum of (i) with respect
                     to the fiscal years ending December 31, 2002, 2006 and
                     thereafter, $350,000,000 and with respect to the fiscal
                     years ending December 31, 2003, 2004 and 2005, $300,000,000
                     and (ii) an amount equal to the Applicable Capex
                     Carryforward for such fiscal year. For the purpose for any
                     fiscal year commencing with the Borrower's fiscal year
                     2002, the "APPLICABLE CAPEX CARRYFORWARD" means an amount,
                     not in excess of $50,000,000, equal to the difference
                     between (x) the product of (A) with respect to the fiscal
                     years ending December 31, 2002, 2006 and thereafter,
                     $350,000,000 and with respect to the fiscal years ending
                     December 31, 2003, 2004 and 2005, $300,000,000 MULTIPLIED
                     BY (B) the number of fiscal years of the Borrower then
                     elapsed since, and including, fiscal year 2001 through the
                     fiscal year most recently ended (the "CALCULATION PERIOD")
                     MINUS (y) the aggregate amount of actual Capital
                     Expenditures actually made during the Calculation Period."

                  (xvii) Section 6.15 of the Credit Agreement is hereby amended
               and restated in its entirety as follows:

                              "SECTION 6.15. [Intentionally Omitted.]"
<Page>

                                                                            22

               (xviii) Section 6.16 of the Credit Agreement is hereby amended
               and restated in its entirety as follows:

                              "SECTION 6.16. MINIMUM ACCESS LINES IN SERVICE.
                     The Borrower will not permit the Access Lines in Service as
                     of any of the dates set forth below to be less than the
                     minimum amount indicated opposite to such date:
<Table>
<Caption>
                        DATE                                MINIMUM
                        ----                                -------
<S>                                                       <C>
                        December 31, 2001                   900,000
                        March 31, 2002                      900,000
                        June 30, 2002                       900,000
                        September 30, 2002                  900,000
                        December 31, 2002                   900,000
                        March 31, 2003                      1,000,0000
                        June 30, 2003                       1,000,0000
                        September 30, 2003                  1,000,0000
                        December 31, 2003                   1,000,0000
                        March 31, 2004 and thereafter       no minimum"
</Table>

               (xix) Section 6.17 of the Credit Agreement is hereby amended and
               restated in its entirety as follows:

                              "SECTION 6.17. INTEREST EXPENSE COVERAGE RATIO .
                     The Borrower will not permit the ratio of (a) Consolidated
                     EBITDA to (b) Consolidated Cash Interest Expense, in each
                     case for any period of four consecutive fiscal quarters
                     ending during any period set forth below to be less than
                     the ratio set forth opposite such period:
<Table>
<Caption>
                                  PERIOD                           RATIO
                                  ------                           -----
<S>                                                           <C>
                        January 1, 2003 to March 31, 2004      1.00 to 1.00
                        April 1, 2004 to June 30, 2004         1.25 to 1.00
                        July 1, 2004 to December 31, 2004      1.50 to 1.00
                        January 1, 2005 to June 30, 2005       2.00 to 1.00
                        July 1, 2005 and thereafter            2.50 to 1.00"
</Table>

               (xx) Section 6.18 of the Credit Agreement is hereby amended and
               restated in its entirety as follows:

                              "SECTION 6.18. MINIMUM CONSOLIDATED REVENUE . The
                     Borrower will not permit Consolidated Revenue for any
                     period of four consecutive fiscal quarters ending during
                     any period set forth below, to be less than the amount set
                     forth opposite such period:

<Page>

                                                                            23
<Table>
<Caption>
                        PERIOD                                  MINIMUM
                        ------                                  -------
<S>                                                     <C>
                        December 31, 2000 to                $1,100,000,000
                        December 31, 2001

                        January 1, 2002 to                  $1,300,000,000
                        June 30, 2002

                        July 1, 2002 to                     $1,200,000,000
                        September 30, 2002

                        October 1, 2002 to                  $1,100,000,000
                        December 31, 2002

                        January 1, 2003 to                  $900,000,000
                        December 31, 2003

                        January 1, 2004 to                  $1,000,000,000
                        December 31, 2004

                        January 1, 2005 and thereafter      no minimum"
</Table>

                  (xxi) The Credit Agreement is amended by deleting all
               references to Section 6.15 contained therein.

                  (xxii) The Credit Agreement is amended by adding a new
               Schedule 2.11(c) in the form of Annex VII hereto.

            (b) AMENDMENTS TO THE CREDIT AGREEMENT THAT BECOME OPERATIVE IN THE
EVENT OF THE CONSUMMATION OF THE OUT-OF-COURT ALTERNATIVE. In the event that the
Restructuring is consummated through the Out-of-Court Alternative, the following
amendment to the Credit Agreement shall become operative immediately upon
satisfaction of the conditions subsequent set forth in Section 4:

            (i) The parties hereto agree that immediately upon the occurrence of
         the Restructuring Date the Revolving Commitments of the Revolving
         Lenders will be permanently reduced by $140,000,000, and each Revolving
         Lender party hereto hereby waives any prior notice of such reduction
         required under Section 2.08(d) of the Credit Agreement.

            (c) WAIVERS TO PERMIT RESTRUCTURING. The Lenders hereby agree (i)
that the provisions of Sections 2.11(c) (as in effect prior to the Restructuring
Date), 6.01(b), 6.07, 6.09, 6.10 and 6.12 of the Credit Agreement are hereby
waived to the extent, but only to the extent, necessary to permit consummation
of the transactions contemplated to be effected on the Restructuring Date
pursuant to the Restructuring (including the execution, delivery and performance
of a publishing, branding and operating agreement to be executed pursuant to the
FL Standby Purchase Agreement) and (ii) the provisions of Section 6.09 of the
Credit Agreement are hereby waived to the extent, but

<Page>

                                                                            24

only to the extent, necessary to permit the conversion of the New Preferred
Stock to New Common Stock pursuant to the terms of the New Preferred Stock;
PROVIDED that the waivers contained in this subsection (c) shall be of no
force and effect if any applicable Progress Condition has not been satisfied
on a timely basis.

            (d) PREPAYMENT OF TERM BORROWINGS. The parties hereto agree that
immediately upon the occurrence of the Restructuring Date the Borrower shall
prepay Term Borrowings in an amount not less than $35,000,000, such prepayment
to be allocated ratably between the Tranche A Term Borrowings and Tranche B Term
Borrowings outstanding at such time, and each Lender party hereto hereby waives
any prior notice of such prepayment required under Section 2.11(e) of the Credit
Agreement.

            SECTION 4.  CONDITIONS.  The provisions of Section 3 shall become
operative on the date the following conditions are satisfied:

            (a) the Restructuring shall have been consummated prior to the
failure of any applicable Progress Condition to be satisfied on a timely
basis;

            (b) the Borrower shall have paid an amendment fee to the
Administrative Agent for distribution to each Lender that has delivered an
executed counterpart of this Amendment to the Administrative Agent by November
29, 2001, equal to 1.00% of the aggregate amount (existing immediately prior to
execution of this Amendment) of such Lender's Term Loans, Revolving Exposure and
unutilized Commitments (such payment to be made by wire transfer of immediately
available funds to the Administrative Agent for the respective accounts of such
Lenders);

            (c) the Credit Agreement and the Security Documents shall have
been amended, and such amendments shall have become effective, to provide (i)
that the Obligations will be unconditionally guaranteed (the "GUARANTEES")
subject to no stated limitations as to amount, on a senior basis by each
existing and subsequently acquired or organized Subsidiary of the Borrower
and (ii) that the Obligations and the Guarantees will be secured by
substantially all the assets of the Borrower and each existing and
subsequently acquired or organized Subsidiary of the Borrower, including but
not limited to (a) a priority (subject only to the prior Lien of the New
Interim Facility Obligations, if any, and the New Post-Restructuring Facility
Obligations, if any) pledge of all the capital stock, and any other equity
interests, and intercompany indebtedness held by the Borrower and by each
existing or subsequently acquired or organized (direct or indirect)
Subsidiary of the Borrower (limited, in the case of foreign Subsidiaries, to
65% of the capital stock of foreign Subsidiaries directly owned by domestic
Subsidiaries), and (b) perfected priority (subject only to the prior Lien of
the New Interim Facility Obligations, if any, and the New Post-Restructuring
Facility Obligations, if any) security interests in, and mortgages on,
substantially all other tangible and intangible assets of the Borrower and
each existing or subsequently acquired or organized domestic Subsidiary of
the Borrower (including but not limited to accounts receivable, inventory,
real property, equipment, trademarks, other intellectual property, licensing
agreements, cash, investments, contract rights and proceeds of the foregoing)
subject to Liens permitted under Sections 6.03(ii) through (v), inclusive, of
the Credit Agreement and reasonable exceptions if, in the reasonable judgment
of the Administrative Agent in consultation with the Borrower, the expense of
taking a security interest or mortgage would not, in light of the benefits to
accrue to the Lenders, economically justify taking such

<Page>

                                                                            25

security interest or mortgage. All filings, recordations and other actions
necessary or advisable, in the judgment of the Administrative Agent, to
perfect such security interests shall have been made or taken and all taxes
and fees in connection therewith shall have been paid. The Lenders shall have
received such favorable opinions of outside and internal counsel as it may
reasonably request with respect to the foregoing matters;

            (d) On the Restructuring Date, the negative covenants in each of
the Indentures relating to indebtedness, liens and restrictive agreements of
subsidiaries shall cease to be applicable to the Borrower and each of its
Subsidiaries and the terms referred to in paragraph (c) of this Section shall
not violate any contractual agreements of the Borrower or any of its
Subsidiaries; and

            (e) All fees of and all reasonable out-of-pocket expenses
incurred by the Arrangers, the Administrative Agent and the Collateral Agent
in connection with this Amendment or any of the other transactions
contemplated hereby, including all reasonable fees, disbursements and other
charges of Cravath, Swaine & Moore and Davis Polk & Wardwell, counsel to the
Administrative Agent, and Bryan Cave LLP, counsel to the DIP Agent, in each
case for which invoices shall have been submitted to the Borrower at least
three Business Days prior to the Restructuring Date, shall have been paid.

            SECTION 5. TERMINATION OF THE AMENDMENT. This Amendment shall
terminate and the amendments, waivers and agreements set forth herein shall
be deemed null and void (other than with respect to the amendments contained
in Sections 2(a)(ii), (iv), (vi), (xi), (xiii) and, in each case disregarding
clause (c) thereof, (xvi), (xix) and (xxvii), the waivers contained in
Sections 2(h), (j), (k), (m) and (n) hereof, and the provisions of Section 7
which amendment, waivers and agreements shall survive the termination of this
Amendment) if:

            (a) the conditions set forth in Section 4 shall not have been
satisfied on or prior to August 1, 2002; or

            (b)  any Progress Condition to the extent applicable shall fail
to be satisfied on a timely basis.

            SECTION 6. 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 contained
herein, no Default or Event of Default has occurred and is continuing.

            SECTION 7. (a) GENERAL RELEASE. In consideration of, among other
things, the forbearance provided for herein, the Borrower, on behalf of itself
and its Subsidiaries and its and their

<Page>

                                                                            26

successors and assigns (collectively, "RELEASORS"), hereby forever waives,
releases and discharges to the fullest extent permitted by law any and all
claims (including, without limitation, crossclaims, counterclaims, defenses,
rights of set-off and recoupment), causes of action, demands, suits, costs,
expenses and damages (collectively, the "CLAIMS"), that any Releasor now has,
of whatsoever nature and kind, whether known or unknown, whether arising at
law or in equity, against any or all of the Administrative Agent, the
Collateral Agent, the Issuing Bank and any Lender and their respective
Related Parties, and their respective successors and assigns and each and all
of the officers, directors, employees, agents, attorneys and other
representatives of each of the foregoing (collectively, the "RELEASEES"),
based in whole or in part on facts, whether or not now known, existing on or
before the execution of this Amendment relating to the Credit Agreement or
any of the other Loan Documents or any act or omission of the Administrative
Agent, the Collateral Agent, the Issuing Bank or any Lender in connection
with the credit extended thereunder; PROVIDED that the releases contained
herein shall not affect, excuse or absolve the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender from performing its
obligations under the Credit Agreement or any of the other Loan Documents.
Acceptance by the Borrower of this Amendment, any Loans or other financial
accommodations made by the Administrative Agent or any Lender after the date
hereof shall constitute a ratification, adoption and confirmation by
Releasors of the foregoing general release of all Claims against any Releasee
that are based in whole or in part on facts, whether or not now known or
unknown, existing on or prior to the date of this Amendment. In entering into
this Amendment, the Borrower has consulted with and been represented by
counsel and expressly disclaims any reliance on any representations, acts or
omissions by any of the Releasees and hereby agrees and acknowledges that the
validity and effectiveness of the release set forth above do not depend in
any way on any such representations, acts and/or omissions or the accuracy,
completeness or validity thereof. The provisions of this Section shall be
operative as of the Third Amendment Effective Date and shall survive the
termination of this Amendment, the Credit Agreement and the other Loan
Documents and payment in full of all amounts owing thereunder.

            (b) THE ARRANGERS. The parties hereto agree that the expense
reimbursement and indemnification provisions of Section 9.03 of the Credit
Agreement shall, subject to the limitations contained therein, apply to the
Arrangers, their Affiliates and Related Parties, including in connection with
the arrangement of this Amendment, the preparation and administration of this
Amendment or any amendments, modifications or waivers of the provisions
hereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), the execution or delivery of this Amendment or any other
agreement or instrument contemplated hereby, the performance by the parties
to this Amendment of their respective obligations hereunder, the consummation
of the transactions contemplated hereby and any acts or omissions of the
Arrangers in exercising their rights and duties as set forth in this
Amendment. Any reference in Section 9.03 of the Credit Agreement to "the
Administrative Agent" shall also be deemed a reference to each Arranger. No
Arranger shall be liable for any action or omission of such Arranger made in
good faith in connection with the matters expressly delegated herein (or in
the Annexes attached hereto) to the discretion of the Arrangers. Any Arranger
may at any time resign as Arranger hereunder. Upon resignation of any
Arranger, the remaining Arrangers may in their discretion request that the
Borrower appoint a replacement Arranger to be selected by the Borrower in its
sole and absolute discretion (but which in any event shall be a Lender). The
Borrower agrees to consider in good faith such request but shall be under no
obligation to appoint a replacement Arranger. To the extent a replacement
Arranger is not appointed, the remaining Arrangers shall continue to act as
the Arrangers hereunder.

<Page>

                                                                            27

            SECTION 8. 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, the Collateral Agent or any Loan Party
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 and other Loan Documents
specifically referred to herein.

            SECTION 9. 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.

             SECTION 10.  APPLICABLE LAW.  THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

            SECTION 11.  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        /s/ Chris A. Davis
                                           -----------------------------------
                                           Name:  Chris A. Davis
                                           Title: Chief Operating & Financial
                                                  Officer

                                       Acknowledged and Agreed:

                                       EACH OF THE SUBSIDIARIES LISTED ON
                                       SCHEDULE I TO THE SUBSIDIARY GUARANTEE
                                       AGREEMENT.

                                       by        /s/ Chris A. Davis
                                           -----------------------------------
                                           Name:
                                           Title: Authorized Officer

<Page>

                                       JPMORGAN CHASE BANK,
                                       Individually and as Administrative
                                       Agent,

                                       by       /s/ Norma C. Corio
                                         -------------------------------------
                                         Name:  Norma C. Corio
                                         Title: Managing Director

<Page>

                                       Name of Institution: Citicorp USA, Inc.
                                                            ------------------

                                       by      /s/ Timothy L. Freeman
                                          ------------------------------------
                                          Name:  Timothy L. Freeman
                                          Title: Managing Director

<Page>

                                       BANK OF AMERICA, N.A.

                                       By:     /s/ Elizabeth Borow
                                          ------------------------------------
                                          Name:  Elizabeth Borow
                                          Title: Managing Director

<Page>

                               Name of Institution: Credit Suisse First Boston
                                                    --------------------------

                               by      /s/ David L. Sawyer   /s/ Kristin Lepri
                                  --------------------------------------------
                                  Name:  David L. Sawyer         Kristin Lepri
                                  Title: Vice President          Associate

<Page>

                               Name of Institution: Citicorp USA, Inc.
                                                   ---------------------------

                                       by     /s/ Timothy L. Freeman
                                         -------------------------------------
                                         Name:  Timothy L. Freeman
                                         Title: Managing Director

<Page>

                               ADDISON CDO, LIMITED (ACCT 1279)
                               By:  Pacific Investment Management Company LLC,
                                    as its Investment Advisor

                                       By:    /s/ Mohan V. Phansalkar
                                          ------------------------------------
                                              Mohan V. Phansalkar
                                              Executive Vice President

<Page>

                               CAPTIVA III FINANCE LTD. (ACCT. 275),
                               as advised by Pacific Investment Management
                               Company LLC

                                       By:    /s/ David Dyer
                                          ------------------------------------
                                          Name:  David Dyer
                                          Title: Director

<Page>

                               CAPTIVA IV FINANCE LTD. (ACCT. 1275),
                               as advised by Pacific Investment Management
                               Company LLC

                                       By:    /s/ David Dyer
                                          ------------------------------------
                                          Name:  David Dyer
                                          Title: Director

<Page>

                               DELANO COMPANY (ACCT 274)
                               By: Pacific Investment Management Company LLC,
                                   as its Investment Advisor

                                       By:    /s/ Mohan V. Phansalkar
                                          ------------------------------------
                                              Mohan V. Phansalkar
                                              Executive Vice President

<Page>

                                 JISSEKIKUN FUNDING, LTD. (ACCT 1288)
                                 By:  Pacific Investment Management Company LLC,
                                      as its Investment Advisor

                                      By: /s/ Mohan V. Phansalkar
                                          ------------------------------------
                                          Mohan V. Phansalkar
                                          Executive Vice President

<Page>

                                 ROYALTON COMPANY (ACCT 280)
                                 By:  Pacific Investment Management Company LLC,
                                      as its Investment Advisor

                                      By: /s/ Mohan V. Phansalkar
                                          ------------------------------------
                                          Mohan V. Phansalkar
                                          Executive Vice President

<Page>

                    Name of Institution: Sankary High Yield Asset Partners, L.P.
                                         --------------------------------------

                                     By: /s/ Diane J. Exter
                                         ------------------------------------
                                         Name:    Diane J. Exter
                                         Title: Managing Director
                                                Portfolio Manager

<Page>

                 Name of Institution: Sankary High Yield Partners II, L.P.
                                      ------------------------------------------

                                     By: /s/ Diane J. Exter
                                         ------------------------------------
                                         Name:    Diane J. Exter
                                         Title: Managing Director
                                                Portfolio Manager

<Page>

                Name of Institution: Sankary High Yield Partners III, L.P.
                                     -------------------------------------------

                                     By: /s/ Diane J. Exter
                                         ------------------------------------
                                         Name:    Diane J. Exter
                                         Title: Managing Director
                                                Portfolio Manager

<Page>

                                      Sankary Advisors, LLC as Collateral
                                      Manager for Great Point CLO 1999-1
                 Name of Institution: LTD., as Term Lender
                                      ------------------------------------------

                                     By: /s/ Diane J. Exter
                                         ------------------------------------
                                         Name:    Diane J. Exter
                                         Title: Managing Director
                                                Portfolio Manager

<Page>

                                      Sankary Advisors, Inc., as Collateral
                                      Manager for Brant Point CBO
                 Name of Institution: 1999-1 LTD., as Term Lender
                                      ------------------------------------------

                                     By: /s/ Diane J. Exter
                                         ------------------------------------
                                         Name:    Diane J. Exter
                                         Title: Managing Director
                                                Portfolio Manager

<Page>

                                      Sankary Advisors, LLC, as Collateral
                                      Manager for Brant Point II CBO 2000-1
                 Name of Institution: LTD., as Term Lender
                                      ------------------------------------------

                                     By: /s/ Diane J. Exter
                                         ------------------------------------
                                         Name:    Diane J. Exter
                                         Title: Managing Director
                                                Portfolio Manager

<Page>

                             NAME OF INSTITUTION: KZH CYPRESSTREE-1 LLC
                                                  ------------------------------

                                     By: /s/ Joyce Fraser-Bryant
                                         ------------------------------------
                                         Name:    Joyce Fraser-Bryant
                                         Title:     Authorized Agent

<Page>

                             NAME OF INSTITUTION: KZH ING-1 LLC
                                                  ------------------------------

                                     By: /s/ Joyce Fraser-Bryant
                                         ------------------------------------
                                         Name:    Joyce Fraser-Bryant
                                         Title:     Authorized Agent

<Page>

                             NAME OF INSTITUTION: KZH ING-2 LLC
                                                  ------------------------------

                                     By: /s/ Joyce Fraser-Bryant
                                         ------------------------------------
                                         Name:    Joyce Fraser-Bryant
                                         Title:     Authorized Agent

<Page>

                             NAME OF INSTITUTION: KZH ING-3 LLC
                                                  ------------------------------

                                     By: /s/ Joyce Fraser-Bryant
                                         ------------------------------------
                                         Name:    Joyce Fraser-Bryant
                                         Title:     Authorized Agent

<Page>

                                       Name of Institution:  KZH PONDVIEW LLC
                                                           --------------------

                                         by
                                            /s/ Joyce Fraser-Bryant
                                           ------------------------------------
                                           Name: Joyce Fraser-Bryant
                                           Title:  Authorized Agent

<Page>

                                       Name of Institution:  KZH STERLING LLC
                                                           --------------------

                                         by
                                            /s/ Joyce Fraser-Bryant
                                           ------------------------------------
                                           Name: Joyce Fraser-Bryant
                                           Title:  Authorized Agent

<Page>

                                       Name of Institution:  KZH WATERSIDE LLC
                                                           --------------------

                                         by
                                            /s/ Joyce Fraser-Bryant
                                           ------------------------------------
                                           Name: Joyce Fraser-Bryant
                                           Title:  Authorized Agent

<Page>

                                  Name of Institution: CITIBANK, N.A.
                                                      ------------------------

                                                 by        /s/ David L. Harris
                                                           -------------------
                                                     Name:     David L. Harris
                                                     Title:     Vice President
<Page>
                                                 MOUNTAIN CAPITAL CLO I, LTD.

                                                 By /s/ Chris Siddons
                                                 ---------------------------
                                                 Name:  Chris Siddons
                                                 Title: Director

<Page>
                                                 MOUNTAIN CAPITAL CLO II, LTD.

                                                 By /s/ Chris Siddons
                                                 ---------------------------
                                                 Name:  Chris Siddons
                                                 Title: Director

<Page>
                              Name of Institution: HARRIS TRUST & SAVINGS BANK
                                                   ---------------------------

                                                 by       /s/ Scott F. Geik
                                                          --------------------
                                                     Name:    Scott F. Geik
                                                     Title:   Managing Director

<Page>
                     Name of Institution: Carlyle High Yield Partners II, Ltd.
                                          ------------------------------------

                                                 by       /s/ Michael J. Zupon
                                                          --------------------
                                                     Name:    Michael J. Zupon
                                                     Title:   Managing Director
<Page>
                                  Sequils, Centurion V, Ltd.
                                  American Express Asset Management Group Inc.
                                  as Collateral Manager
             Name of Institution:
                                  --------------------------------------------

                                                 by     /s/ Michael M. Leyland
                                                        ----------------------
                                                     Name:  Michael M. Leyland
                                                     Title: Managing Director
<Page>
                                  Centurion CDO II, Ltd.
                                  By: American Express Asset Management
                                  Group Inc. as Collateral Manager
             Name of Institution:
                                  --------------------------------------------

                                                 by     /s/ Michael M. Leyland
                                                        ----------------------
                                                     Name:  Michael M. Leyland
                                                     Title: Managing Director

<Page>
                                  Centurion CDO III, Limited
                                  American Express Asset Management Group Inc.
                                  as Collateral Manager
             Name of Institution:
                                  --------------------------------------------

                                                 by     /s/ Michael M. Leyland
                                                        ----------------------
                                                     Name:  Michael M. Leyland
                                                     Title: Managing Director
<Page>

                                                     Seaboard CLO 2000 Ltd.
                                                 By: ORIX Capital Markets, LLC
                             Name of Institution:    Its Collateral Manager
                                                 ------------------------------

                                  by  /s/ Sheppard H.C. Davis, Jr.
                                     ------------------------------------------
                                     Name:  Sheppard H.C. Davis, Jr.
                                     Title: Managing Director

<Page>

                             Name of Institution:    CREDIT AGRICOLE INDOSUEZ
                                                 ------------------------------

                                  by  /s/ John McCuskey      /s/ Rene LeBlanc
                                     ------------------------------------------
                                     Name:  John McCuskey        Rene LeBlanc
                                     Title: FVP                  VP

<Page>

                                                      ML CLO XII PILGRIM
                                                     AMERICA (CAYMAN) Ltd.
                                                   By: ING Pilgrim Investments
                             Name of Institution:  as its investment manager
                                                 ------------------------------

                                  by  /s/ Robert L. Wilson
                                     ------------------------------------------
                                     Name:  Robert L. Wilson
                                     Title: Vice President

<Page>

                                                     SEQUILS PILGRIM-1 Ltd.
                                                   By: ING Pilgrim Investments
                             Name of Institution:  as its investment manager
                                                 ------------------------------

                                  by  /s/ Robert L. Wilson
                                     ------------------------------------------
                                     Name:  Robert L. Wilson
                                     Title: Vice President

<Page>

                                                     PILGRIM CLO 1999-1 Ltd.
                                                   By: ING Pilgrim Investments
                             Name of Institution:  as its investment manager
                                                 ------------------------------

                                  by  /s/ Robert L. Wilson
                                     ------------------------------------------
                                     Name:  Robert L. Wilson
                                     Title: Vice President

<Page>

                              PILGRIM AMERICA HIGH INCOME INVESTMENTS INC. LTD.
                                                   By: ING Pilgrim Investments
                             Name of Institution:  as its investment manager
                                                 ------------------------------

                                  by  /s/ Robert L. Wilson
                                     ------------------------------------------
                                     Name:  Robert L. Wilson
                                     Title: Vice President

<Page>

                                                       ML CLO XV PILGRIM
                                                     AMERICA (CAYMAN) Ltd.
                                                   By: ING Pilgrim Investments
                             Name of Institution:  as its investment manager
                                                 ------------------------------

                                  by  /s/ Robert L. Wilson
                                     ------------------------------------------
                                     Name:  Robert L. Wilson
                                     Title: Vice President

<Page>

                             Name of Institution:  Goldentree High Yield
                                                   Opportunities I, L.P.
                                                 ------------------------------

                                  by  /s/ Frederick Haddad
                                     ------------------------------------------
                                     Name:  Frederick Haddad
                                     Title: Vice President

<Page>

                             Name of Institution:  Heller Financial, Inc.
                                                 ------------------------------
                                                 by: Heller Financial Asset
                                                     Management LLC

                                  by  /s/ K. Craig Gallehugh
                                     ------------------------------------------
                                     Name:  K. Craig Gallehugh
                                     Title: Senior Vice President

<Page>

                             Name of Institution:  Webster Bank
                                                 ------------------------------

                                  by  /s/ Elisabeth V. Piker
                                     ------------------------------------------
                                     Name:  Elisabeth V. Piker
                                     Title: Vice President

<Page>

                                       Name of Institution:  ERSTE BANK
                                                           --------------------

                                         by            /s/ John Fry
                                            -----------------------------------
                                            Name:         JOHN FRY
                                            Title:      VICE PRESIDENT
                                                   ERSTE BANK NEW YORK BRANCH

                                                      /s/ John S. [ILLEGIBLE]
                                            -----------------------------------
                                            Name:       JOHN S. [ILLEGIBLE]
                                            Title:     MANAGING DIRECTOR
                                                   ERSTE BANK NEW YORK BRANCH

<PAGE>

                                   Name of Institution:  The Bank of Nova Scotia
                                                         -----------------------

                                         by        /s/ Stephen C. Levi
                                            -----------------------------------
                                            Name:    STEPHEN C. LEVI
                                            Title:   AUTHORIZED SIGNATORY

<Page>

                             Name of Institution:  TEXTRON FINANCIAL CORPORATION

                                         by        /s/ Naoto Hayashida
                                            -----------------------------------
                                            Name:    Naoto Hayashida
                                            Title:   Director

<Page>

                            Name of Institution:  IBM CREDIT CORPORATION
                                                  ------------------------------

                                         by        /s/ Thomas S. Curcio
                                            -----------------------------------
                                            Name:    Thomas S. Curcio
                                            Title:   Manager of Credit

<Page>

                                   Name of Institution:  KATONAH I, LTD.
                                                         -----------------------

                                         by        /s/ RALPH DELLA ROCCA
                                            ------------------------------------
                                            Name:    RALPH DELLA ROCCA
                                            Title:   AUTHORIZED OFFICER
                                                    KATONAH CAPITAL, LLC.
                                                        AS MANAGER

<Page>

                                   Name of Institution:  KATONAH II, LTD.
                                                         -----------------------

                                         by        /s/ RALPH DELLA ROCCA
                                            ------------------------------------
                                            Name:    RALPH DELLA ROCCA
                                            Title:   AUTHORIZED OFFICER
                                                    KATONAH CAPITAL, LLC.
                                                        AS MANAGER

<Page>

                         Name of Institution:  TORONTO DOMINION (NEW YORK), INC.
                                               ---------------------------------

                                         by        /s/ Stacy Malek
                                            ------------------------------------
                                            Name:      STACY MALEK
                                            Title:    VICE PRESIDENT

<Page>

                                        VAN KAMPEN
                                        PRIME RATE INCOME TRUST
                                        BY: VAN KAMPEN INVESTMENT ADVISORY CORP.

                                         by        /s/ William D. Lenga
                                            ------------------------------------
                                            Name:     WILLIAM D. LENGA
                                            Title:    VICE PRESIDENT

<Page>

                                        VAN KAMPEN
                                        SENIOR INCOME TRUST
                                        BY: VAN KAMPEN INVESTMENT ADVISORY CORP.

                                         by        /s/ William D. Lenga
                                            ------------------------------------
                                            Name:     WILLIAM D. LENGA
                                            Title:    VICE PRESIDENT

<Page>

                                        VAN KAMPEN
                                        SENIOR FLOATING RATE FUND
                                        BY: VAN KAMPEN INVESTMENT ADVISORY CORP.

                                         by        /s/ William D. Lenga
                                            ------------------------------------
                                            Name:     WILLIAM D. LENGA
                                            Title:    VICE PRESIDENT

<Page>

                                  VAN KAMPEN CLO I, LIMITED
                                  BY: VAN KAMPEN MANAGEMENT,
                                  INC.
                                  as Collateral Manager

                                     by /s/ William D. Lenga
                                        --------------------------
                                        Name: WILLIAM D. LENGA
                                        Title: VICE PRESIDENT

<Page>

                                  VAN KAMPEN CLO II, LIMITED
                                  BY: VAN KAMPEN MANAGEMENT,
                                  INC.
                                  as Collateral Manager

                                     by /s/ William D. Lenga
                                        --------------------------
                                        Name: WILLIAM D. LENGA
                                        Title: VICE PRESIDENT

<Page>

                                  Name of Institution: PINEHURST TRADING, INC.
                                                       -----------------------

                                     by /s/ Ann E. Morris
                                        --------------------------
                                        Name: ANN E. MORRIS
                                        Title: ASST. VICE PRESIDENT

<Page>

                                  Name of Institution: MUIRFIELD TRADING LLC
                                                       ---------------------

                                     by /s/ Ann E. Morris
                                        --------------------------
                                        Name: ANN E. MORRIS
                                        Title: ASST. VICE PRESIDENT

<Page>

                                  Name of Institution: OLYMPIC FUNDING TRUST,
                                                       SERIES 1999-1
                                                       -----------------------

                                     by /s/ Ann E. Morris
                                        --------------------------
                                        Name: ANN E. MORRIS
                                        Title: AUTHORIZED AGENT

<Page>

                                 Name of Institution: BANK OF TOKYO--
                                                      MITSUBISHI TRUST COMPANY
                                                      -----------------------

                                    by /s/ [ILLEGIBLE] Vukovich
                                       --------------------------
                                       Name: W. VUKOVICH
                                       Title: VICE PRESIDENT

<Page>

                                  GENERAL ELECTRIC CAPITAL CORPORATION,

                                     by /s/ T. Rodney [ILLEGIBLE]
                                        --------------------------
                                        Name: T. RODNEY [ILLEGIBLE]
                                        Title: MANAGER--OPERATIONS

<Page>

                                 Name of Institution: GOLDMAN SACHS
                                                      CREDIT PARTNERS LP.
                                                      -----------------------

                                    by /s/ Stephen B. King
                                       --------------------------
                                       Name: STEPHEN B. KING
                                       Title: AUTHORIZED SIGNATORY

<Page>

                                 Name of Institution: CHARTER VIEW PORTFOLIO
                                                      By: INVESCO Senior
                                                      Secured Management, Inc.
                                                      As Investment Advisor

                                    by /s/ Thomas H. B. Ewald
                                       --------------------------
                                       Name: THOMAS H. B. EWALD
                                       Title: AUTHORIZED SIGNATORY

<Page>

                                 Name of Institution: AIM FLOATING RATE FUND
                                                      By: INVESCO Senior
                                                      Secured Management, Inc.
                                                      As Attorney in fact

                                    by /s/ Thomas H. B. Ewald
                                       --------------------------
                                       Name: THOMAS H. B. EWALD
                                       Title: AUTHORIZED SIGNATORY
<Page>

                                           AMMC CDO II, LIMITED
                                           By: American Money Management Corp.,
                      Name of Institution: as Collateral Manager
                                           -------------------------

                                           by    /s/ David P. Meyer
                                               -------------------------------
                                               Name: David P. Meyer
                                               Title:  Vice President

<Page>

                                 NATIONAL WESTMINSTER BANK PLC
                                  By: NatWest Capital Markets Limited, its Agent
                                  By: Greenwich Captial Markets, Inc., its Agent
                                 Name of Institution  -------------------------

                                           by    /s/ Harry Paschalidis
                                               -------------------------------
                                               Name: Harry Paschalidis
                                               Title: AVP

<Page>

                                       ARCHIMEDES FUNDING III, LTD.
                                       By:  ING Captial Advisors LLC,
                                             as Collateral Manager

                                       By: /s/ Steven Gorski
                                          -------------------------------
                                       Name:   Steven Gorski
                                       Title:  Vice President

<Page>

                                       SEQUILS-ING I (HBDGM), LTD.

                                       By:  ING Capital Advisors LLC
                                            As Collateral Manager

                                       By:  /s/ Steven Gorski
                                          -------------------------------
                                       Name:    Steven Gorski
                                       Title:   Vice President

<Page>

                                       The ING CAPITAL SENIOR SECURED
                                       HIGH INCOME FUND, LP.

                                       By:  ING Capital Advisors LLC.
                                            As Investment Advisor

                                       By:  /s/ Steven Gorski
                                          -------------------------------
                                       Name:    Steven Gorski
                                       Title:   Vice President

<Page>

                                  Name of Institution: CSAM FUNDING I
                                                      ----------------

                                     by  /s/ Andrew H. Marshak
                                        ------------------------------
                                        Name:  ANDREW H. MARSHAK
                                        Title: AUTHORIZED SIGNATORY

<Page>

                                  Name of Institution: FIRST DOMINION FUNDING I
                                                       -------------------------

                                     by  /s/ Andrew H. Marshak
                                        ------------------------------
                                        Name:  ANDREW H. MARSHAK
                                        Title: AUTHORIZED SIGNATORY

<Page>

                                  Name of Institution: TRYON CLO LTD. 2000-1
                                                       -------------------------

                                     by  /s/ Adrienne Musgnug
                                        ------------------------------
                                        Name:  Adrienne Musgnug
                                        Title: Director

<Page>

                                  Name of Institution: APEX (IDM) CDO I, LTD.
                                                       -------------------------

                                     by  /s/ Adrienne Musgnug
                                        ------------------------------
                                        Name:  Adrienne Musgnug
                                        Title: Director

<Page>

                                  Name of Institution: ELC (CAYMAN) LTD.
                                                       -------------------------

                                     by  /s/ Adrienne Musgnug
                                        ------------------------------
                                        Name:  Adrienne Musgnug
                                        Title: Director

<Page>

                           Name of Institution:  ELC (Cayman) Ltd. 2000-1
                                               ---------------------------------

                             by /s/ Adrienne Musgnug
                                -----------------------------------
                                Name: Adrienne Musgnug
                                Title: Director

<Page>

                           Name of Institution:  Salomon Brothers Holding
                                                 Company, Inc.
                                               ---------------------------------

                             by /s/ Edward A.C. Sutherland
                                -----------------------------------
                                Name: Edward A.C. Sutherland
                                Title: Managing Director

<Page>

                           INDOSUEZ CAPITAL FUNDING IIA, LIMITED
                           By: Indosuez Capital as Portfolio Advisor

                           By: /s/ Jack C. Henry
                              ---------------------------------------
                           Name: Jack C. Henry
                           Title: Principal

                           INDOSUEZ CAPTIAL FUNDING III, LIMITED
                           By: Indosuez Capital as Portfolio Advisor

                           By: /s/ Jack C. Henry
                              ---------------------------------------
                           Name: Jack C. Henry
                           Title: Principal

                           INDOSUEZ CAPITAL FUNDING IV, L.P.
                           By: Indosuez Capital as Portfolio Advisor

                           By: /s/ Jack C. Henry
                              ---------------------------------------
                           Name: Jack C. Henry
                           Title: Principal

                           INDOSUEZ CAPITAL FUNDING VI, LIMITED
                           By: Indosuez Capital as Collateral Manager

                           By: /s/ Jack C. Henry
                              ---------------------------------------
                           Name: Jack C. Henry
                           Title: Principal

<Page>

                           Name of Institution: U.S. Bank National Association
                                               ---------------------------------

                             by /s/ Michael J. Homeyer
                                -----------------------------------
                                Name: Michael J. Homeyer
                                Title: Vice President

<Page>

                           Name of Institution: AIMCO CDO Series 2000-A
                                               ---------------------------------

                             by /s/ Jerry D. Zinkula
                                -----------------------------------
                                Name: Jerry D. Zinkula
                                Title: Authorized Signatory

                             by /s/ David Walsh
                                -----------------------------------
                                  David Walsh
                                  Authorized Signatory

<Page>

                           Name of Institution: ALLSTATE LIFE INSURANCE COMPANY
                                               ---------------------------------

                             by /s/ Jerry D. Zinkula
                                -----------------------------------
                                Name: Jerry D. Zinkula
                                Title: Authorized Signatory

                             by  /s/ David Walsh
                                -----------------------------------
                                  David Walsh
                                  Authorized Signatory

<Page>

                          Name of Institution: Pacifica Partners I, L.P.
                                               Improved Credit Asset Management
                                               as its investment manager
                                               ---------------------------------

                             by /s/ Sean R. Walker
                                -----------------------------------
                                Name: Sean R. Walker
                                Title: Vice President

<Page>

                           Name of Institution: ING (U.S.) CAPITAL LLC
                                               ---------------------------------

                             by /s/ Ken Bravo
                                -----------------------------------
                                Name: Ken Bravo
                                Title: Director

<Page>

                           ARES Leveraged Investment Fund II, L.P.

                           By:  ARES Management II, L.P.
                           Its: General Partner

                           By:  /s/  Jeff Moore
                                -----------------------------------
                           Title:    Jeff Moore
                                    Vice President

<Page>

                           ARES III CLO Ltd.

                           By:  ARES CLO Management LLC,
                                Investment Manager

                           By:  /s/  Jeff Moore
                                -----------------------------------
                           Title:    Jeff Moore
                                    Vice President

<Page>

                                  ARES IV CLO LTD.

                                  By:  Ares CLO Management IV, L.P.,
                                       Investment Manager

                                  By:  Ares CLO GP IV, LLC,
                                       Its Managing Member

                                  By:    /s/ Jeff Moore
                                         ---------------------------------
                                         Name:  JEFF MOORE
                                         Title: VICE PRESIDENT

<Page>

                                  ARES V CLO LTD.

                                  By:  Ares CLO Management V, L.P.,
                                       Investment Manager

                                  By:  Ares CLO GP V, LLC,
                                       Its Managing Member

                                  By:    /s/ Jeff Moore
                                         ---------------------------------
                                         Name:  JEFF MOORE
                                         Title: VICE PRESIDENT

<Page>

                                         by: PPM America Inc., as
                                         Attorney-in-fact, on behalf of
                                         Jackson National Life Insurance
                                         Company

                             Name of Institution:
                                                  ------------------------

                                  By:    /s/ John [ILLEGIBLE]
                                         ---------------------------------
                                         Name:  John [ILLEGIBLE]
                                         Title: SENIOR MANAGING DIRECTOR

<Page>

                      Name of Institution: SEQUILS -- CUMBERLAND I, LTD.
                                           ------------------------
                                           By: Deerfield Capital Management LLC
                                               as its Collateral Manager

                                  by:    /s/ Mark E. Wittnebel
                                         ---------------------------------
                                         Name:  MARK E. WITTNEBEL
                                         Title: SR. VICE PRESIDENT

<Page>

                                         OCTAGON INVESTMENT PARTNERS II, LLC
                                             By: Octagon Credit Investors, LLC
                                                 as sub-investment manager

                                  by:    /s/ Andrew D. Gordon
                                         ---------------------------------
                                         Name:  ANDREW D. GORDON
                                         Title: PORTFOLIO MANAGER

<Page>

                                         OCTAGON INVESTMENT PARTNERS III, LTD.
                                             By: Octagon Credit Investors, LLC
                                                 as Portfolio Manager

                                  by:    /s/ Andrew D. Gordon
                                         ---------------------------------
                                         Name:  ANDREW D. GORDON
                                         Title: PORTFOLIO MANAGER

<Page>

                                         OCTAGON INVESTMENT PARTNERS IV, LTD.
                                             By: Octagon Credit Investors, LLC
                                                 as collateral manager

                                  by:    /s/ Andrew D. Gordon
                                         ---------------------------------
                                         Name:  ANDREW D. GORDON
                                         Title: PORTFOLIO MANAGER

<Page>

                             Name of Institution: FLEET NATIONAL BANK
                                                  ------------------------

                                  by:    /s/ Kay H. Campbell
                                         ---------------------------------
                                         Name:  KAY H. CAMPBELL
                                         Title: VICE PRESIDENT

<Page>

                             Name of Institution: BANK OF MONTREAL
                                                  ------------------------

                                  By:    /s/ S. Valia
                                         ---------------------------------
                                         Name:  S. VALIA
                                         Title: Managing Director

<Page>

                        Name of Institution: LIBERTY - STEIN ROE ADVISOR
                                             FLOATING RATE ADVANTAGE FUND
                                             by STEIN ROE & FARNHAM
                                             INCORPORATED, AS ADVISOR
                                             ------------------------

                             by:    /s/ James R. Fellows
                                    ---------------------------------
                                    Name:  JAMES R. FELLOWS
                                    Title: SR. VICE PRESIDENT &
                                           PORTFOLIO MANAGER
<Page>

          Name of Institution: Stein Roe Floating Rate Limited Liability Company
                               -------------------------------------------------

                      by        /s/ James R. Fellows
                         ------------------------------------
                         Name:   James R. Fellows
                         Title:  Senior Vice President
                                 Stein Roe & Farnham Incorporated,
                                 As Advisor To The Stein Roe Floating Rate
                                 Limited Liability Company
<Page>

                  Name of Institution: The Sumitomo Trust and Banking Co., Ltd.,
                                                 New York Branch
                                       -----------------------------------------

                      by        /s/ Frances E. Wynne
                         ------------------------------------
                         Name:   Frances E. Wynne
                         Title:  Vice-President

McLeodUSA Incorporated
Third Amendment

<Page>

                  Name of Institution: Scudder Floating Rate Fund
                                       -----------------------------------------

                      by        /s/ Kenneth Weber
                         ------------------------------------
                         Name:   Kenneth Weber
                         Title:  Sr. Vice President
<Page>

                                        Stanfield Arbitrage CDO, LTD.
                                       BY: Stanfield Capital Partners LLC
                  Name of Institution:     As Its Collateral Manager
                                       -----------------------------------------

                      by        /s/ Gregory L. Smith
                         ------------------------------------
                         Name:   Gregory L. Smith
                         Title:  Partner
<Page>

                                        Stanfield/RMF Transatlantic CDO, LTD.
                                       BY: Stanfield Capital Partners LLC
                  Name of Institution:     As Its Collateral Manager
                                       -----------------------------------------

                      by        /s/ Gregory L. Smith
                         ------------------------------------
                         Name:   Gregory L. Smith
                         Title:  Partner

<Page>

                                              Stanfield CLO, LTD.
                                        BY: Stanfield Capital Partners LLC
                  Name of Institution:     As Its Collateral Manager
                                       -----------------------------------------

                      by        /s/ Gregory L. Smith
                         ------------------------------------
                         Name:   Gregory L. Smith
                         Title:  Partner

<Page>

                                              Windsor Loan Funding, Limited
                                        BY: Stanfield Capital Partners LLC
                  Name of Institution:     As Its Investment Manager
                                       -----------------------------------------

                      by        /s/ Gregory L. Smith
                         ------------------------------------
                         Name:   Gregory L. Smith
                         Title:  Partner

<Page>

                  Name of Institution:     five finance Corp.
                                       -----------------------------------------

                      by        /s/ Maura K. Conner
                         ------------------------------------
                         Name:   Maura K. Conner
                         Title:  Alternative Investment Strategies
<Page>

                  Name of Institution:  BANKERS TRUST COMPANY
                                       -----------------------------------------

                      by       /s/ Annemarie Reilly-Papazogiou
                         -------------------------------------
                         Name:   Annemarie Reilly-Papazogiou
                         Title:  Director
<Page>

                                                                        ANNEX I

                        PRINCIPAL TERMS OF RESTRUCTURING

The following is a description of the principal terms for the restructuring
of the Borrower's Balance Sheet:

1.   The Borrower will (A) sell its directory publishing business to either
     (i) Forstmann Little & Co. or its affiliates for a cash purchase price of
     at least $535,000,000 or (ii) such other person that submits a higher
     and better all cash offer and (B) use (i) the first $535,000,000 of the
     gross cash proceeds of such sale and (ii) at the Borrower's option, use
     the gross cash proceeds in excess of $560,000,000 to redeem the
     outstanding Indenture Debt;

2.   The FL Standby Purchase Agreement shall not provide for any break-up fee
     or any expense reimbursement in favor of the purchaser;

3.   In the event that the Restructuring is consummated through the
     Out-of-Court Alternative, the Indentures governing the Indenture Debt
     will be amended to remove all lien, indebtedness and restrictive
     subsidiary agreements restrictions;

4.   Any disclosure statement soliciting the votes of the holders of the
     Indenture Debt for the In-Court Alternative will disclose the related
     amendments to the Credit Agreement and will disclose that during the
     pendency of a Bankruptcy Proceeding the Borrower intends to pay, on a
     current basis, all interest, commitment fees, letter of credit
     participation fees and fronting fees when due pursuant to the terms of
     the Credit Agreement and related documentation and all fees and expenses
     payable to the Administrative Agent thereunder, including the reasonable
     fees and disbursements of counsel;

5.   In the event that the Restructuring is consummated through the In-Court
     Alternative, all interest, commitment fees, letter of credit
     participation fees and fronting fees under the Credit Agreement and
     related documentation and all fees and expenses payable to the
     Administrative Agent thereunder, including the reasonable fees and
     disbursements of counsel, will be paid on a current basis in accordance
     with the terms of the Credit Agreement;

6.   The outstanding shares of Series A Preferred Stock, Series D Preferred
     Stock and Series E Preferred Stock and existing common stock of the
     Borrower will be converted to common stock (the "NEW COMMON STOCK") of
     the restructured Borrower;

7.   Forstmann Little & Co. ("FORSTMANN LITTLE") and its affiliates will make
     a $100,000,000 all cash investment in a new series of preferred stock of
     the restructured Borrower, $25,000,000 of such investment will be used
     to pay the Borrower's Indenture Debt, $35,000,000 of such investment
     will be used to prepay the Term Borrowings and $40,000,000 of such
     investment will be retained by the Borrower and used for general
     corporate purposes, including capital expenditures. Such preferred stock
     shall be mandatorily convertible into common stock of the Borrower
     within 60 days of the issuance of;

<Page>
                                                                           2

 8.  The Borrower may implement the Restructuring either out-of-court through
     an exchange offer for the Indenture Debt and the Borrower's Series A, D
     and E Preferred Stock or in-court through a proceeding under Chapter 11
     of the United States Bankruptcy Code, which in either case shall be
     consummated on or prior to August 1, 2002;

 9.  If the Restructuring is accomplished through the In-Court Alternative,
     the plan of reorganization for the Restructuring shall be confirmed on
     or prior to August 1, 2002 and shall provide that the liens and claims
     of the Lenders under the Credit Agreement will be unimpaired within the
     meaning of Section 1124 of the Bankruptcy Code;

10.  The Borrower will redeem at least 95% of its outstanding Indenture Debt
     for (i) cash in the amount of $560,000,000; (ii) common equity of the
     restructured Borrower in an amount acceptable to the Arrangers; and
     (iii) at the Borrower's discretion, the excess, if any, of the gross
     sales proceeds received by the Borrower in the sale of its directory
     publishing business over $560,000,000; and

11.  Upon consummation of the Restructuring, (i) Forstmann Little and its
     affiliates will be entitled to at least two representatives on the
     restructured Borrower's Board of Directors; (ii) Forstmann Little and
     its affiliates will own common stock and warrants of the restructured
     Borrower in an amount representing approximately 40% of the equity
     ownership of the restructured Borrower; and (iii) Theodore J. Forstmann
     will be chairman of the Executive Committee of the restructured Borrower.

The actions or events referred to in clauses 1, 3, 6, 7 (other than the
conversion of the preferred stock referenced therein to common stock of the
restructured Borrower), 10 and 11 will be taken or consummated (subject only
to the completion of certain ministerial acts to be consummated promptly
thereafter) on or before the Restructuring Date.

The Borrower shall be entitled to amend the terms of this Annex I without the
consent of the Lenders provided that the terms of the amended Annex I are not
materially inconsistent with the terms set forth above and provided further
that the amendment does not have an adverse effect on the Lenders. All other
amendments to this Annex I shall require the consent of the Required Lenders.
Prior to consummation of a restructuring on terms inconsistent (whether or not
material) with the terms of this Annex I, the Borrower shall notify the
Arrangers of the terms of such restructuring. In the event that a dispute
arises as to whether changes in the terms of the Restructuring set forth in
clause 10 or 11 above result in an amended Annex I being materially
inconsistent with the terms set forth above, the dispute shall be settled by
the following dispute resolution mechanism: (i) the Borrower shall notify the
Administrative Agent that it is invoking this dispute resolution mechanism;
(ii) upon receipt of such notice, the Administrative Agent shall, within five
Business Days of receipt of such notice, commence a meeting among the Borrower
and the Arrangers at which the Borrower will present the Arrangers with the
principal terms of the revised Restructuring and request a determination that
such terms are not materially inconsistent with this Annex I; and (iii)
within five Business Days following such presentation, all of the Arrangers
shall determine whether or not the terms of the revised Restructuring are
materially inconsistent with the terms of Annex I described above and shall
inform the Borrower of such determination in writing. Such determination
shall be binding on all parties.

                                       2

<Page>
                                                                             3

The Restructuring will in any event be subject to all provisions of the
Credit Agreement, as amended.
<Page>

                                                                       ANNEX II

                              DEFINITIONS

     "ARRANGERS" means JPMorgan Chase Bank, Bank of America, N.A. and
Citicorp USA, Inc.

     "FL STANDBY PURCHASE AGREEMENT" means the standby purchase agreement
entered into among Forstmann Little, certain of its affiliates and the
Borrower on or about the Third Amendment Effective Date and each other
agreement, document, certificate or instrument delivered or to be delivered
in connection therewith, pursuant to which Forstmann Little or any of such
affiliates will, in the event that the Borrower has not received and accepted
a higher and better all cash offer for the sale of the Publishing Assets on
or prior to the Restructuring Date, purchase the Publishing Assets for cash
consideration of $535,000,000 on or prior to the Restructuring Date.

     "FL NEW PREFERRED STOCK PURCHASE AGREEMENT" means the stock purchase
agreement entered into among Forstmann Little, certain of its affiliates and
the Borrower on or about the Third Amendment Effective Date and each other
agreement, document, certificate or instrument delivered or to be delivered in
connection therewith, pursuant to which Forstmann Little and such affiliates
will make an investment in a new series of preferred stock (the "New
Preferred Stock") of the restructured Borrower as described in Annex I.

     "FORSTMANN LITTLE" is defined in Annex I.

     "INDENTURE DEBT" means the outstanding Indebtedness of the Borrower
under the Indentures.

     "NEW COMMON STOCK" is defined in Annex I.

<Page>

                                                                      ANNEX III

                           MCLEOD USA INCORPORATED
                        SENIOR SECURED CREDIT FACILITY
                   SUMMARY OF PRINCIPAL TERMS AND CONDITIONS

<Table>
<S>                          <C>

BORROWER:                    McLeodUSA Incorporated (the "Borrower").

ADMINISTRATIVE AND           JPMorgan Chase Bank ("JPMorgan") will act as sole
COLLATERAL AGENT:            administrative agent and collateral agent
                             (collectively the "Agent") for the Facility and
                             will perform the duties customarily associated
                             with such roles.

ADVISOR, ARRANGER AND        J.P. Morgan Securities Inc. will act as advisor,
BOOKRUNNER:                  lead arranger and sole bookrunner for the
                             Facility (the "Arranger") and will perform the
                             duties customarily associated with such roles.

OTHER AGENTS:                To be determined.

LENDERS:                     A syndicate of financial institutions reasonably
                             satisfactory to the Agent, the Arranger and the
                             Borrower (the "Lenders").

FACILITY:                    Senior Secured Revolving Credit Facility in an
                             aggregate principal amount of up to $160,000,000
                             (of which $10,000,000 shall be reserved and made
                             available to the Borrower on a dollar for dollar
                             basis as LC Exposure (as defined in the Existing
                             Credit Agreement referred to below) is reduced
                             under the Existing Credit Agreement) (the
                             "Facility") of which an amount to be agreed will
                             be available in the form of letters of credit.

PURPOSE:                     The proceeds of loans under the Facility and the
                             issuance of

<Page>

                             letters of credit shall be used to prepay all
                             outstanding loans under any New Interim Facility
                             (as defined in the Third Amendment referred to
                             below) and for working capital and other general
                             corporate purposes of the Borrower and its
                             subsidiaries.

AVAILABILITY:                Loans under the Facility will be available at
                             any time prior to the final maturity of the
                             Facility. Amounts repaid under the Facility may be
                             reborrowed to the extent of the available
                             commitments.

FINAL MATURITY:              The Facility will mature and the commitments
                             thereunder will terminate on May 31, 2007.

GUARANTEES:                  All obligations of the Borrower in respect of
                             the Facility (collectively, the "Obligations")
                             will be unconditionally and irrevocably
                             guaranteed on a senior basis (the "Guarantees")
                             by each existing and subsequently acquired or
                             organized domestic subsidiary (which term shall
                             include any indirect subsidiary) of the Borrower
                             other than the Excluded Subsidiaries (as defined
                             below) and subsidiaries with de minimus business,
                             assets or operations and other than subsequently
                             acquired or organized subsidiaries that the
                             Borrower may designate at the time of such
                             acquisition or organization as unrestricted in
                             accordance with criteria to be agreed (each such
                             unrestricted subsidiary, an "Unrestricted
                             Subsidiary"; all other subsidiaries of the
                             Borrower are "Restricted Subsidiaries"). The
                             following domestic Subsidiaries shall be excluded
                             from the collateral and guarantee

</Table>
<Page>
                                                                             7

                             requirements of the Facility: Greene County
                             Partners, Inc., Midwest Cellular Associates and
                             Illinois Consolidated Telephone Company (the
                             "Excluded Subsidiaries").

SECURITY:                    The Obligations and the Guarantees, will be
                             secured by (i) a first priority pledge of all
                             the capital stock, and any other equity
                             interests, and intercompany indebtedness owned
                             by the Borrower or any domestic subsidiary of
                             each existing and each subsequently acquired or
                             organized direct or indirect subsidiary of the
                             Borrower (other than stock of Excluded
                             Subsidiaries and subsidiaries with de minimus
                             business, assets or operations and limited, in
                             the case of foreign subsidiaries, to 65% of the
                             capital stock of foreign subsidiaries directly
                             owned by domestic subsidiaries), and (ii) a
                             perfected first priority security interest in,
                             and mortgages on, substantially all the tangible
                             and intangible assets of the Borrower and each
                             existing and each subsequently acquired or
                             organized domestic subsidiary of the Borrower
                             other than Excluded Subsidiaries (including but
                             not limited to accounts receivable, inventory,
                             real property, equipment, trademarks, other
                             intellectual property, licensing agreements, cash,
                             investments, contract rights and proceeds of the
                             foregoing), subject to exceptions to be agreed
                             (collectively, the "Collateral").

                             All the above-described security interests shall
                             be created on terms, and pursuant to

<Page>

                                                                             8

                             documentation, reasonably satisfactory to the
                             Lenders and the Borrower, and on the Closing
                             Date such security interests shall have become
                             perfected and the Agent shall have received
                             satisfactory evidence as to the priority
                             (subject to customary exceptions) thereof. None
                             of the Collateral shall be subject to any other
                             pledges, security interests, mortgages or other
                             liens, except as permitted by the definitive
                             credit documentation; PROVIDED that the
                             Collateral shall also secure, subject only to
                             the prior lien securing the Obligations under
                             the Facility, all obligations under the Existing
                             Credit Agreement and the related loan, guarantee
                             and security documents and any hedging agreement
                             facilities provided by any lender under the
                             Existing Credit Agreement or its affiliates to
                             the Borrower and designated by the Borrower as a
                             secured obligation.

                             Notwithstanding the foregoing, the Agent may
                             agree to exclude particular assets from the
                             Collateral where it determines that such assets
                             are not significant or the cost or
                             impracticality of including such assets would be
                             excessive in relation to the benefits to the
                             Lenders, and may grant extensions of time for
                             the perfection of liens on particular assets
                             where perfection cannot be accomplished by the
                             Closing Date.

INTEREST RATES AND FEES:     As set forth on Annex I hereto.

VOLUNTARY COMMITMENT         Voluntary prepayments of borrowings under the
REDUCTIONS/                  Facility, and voluntary

<Page>

                                                                             9

PREPAYMENTS:                 reductions of the unutilized portion of the
                             Facility commitments, will be permitted at any
                             time, in whole or in part, in minimum principal
                             amounts to be agreed upon, without premium or
                             penalty but subject to reimbursement of the
                             Lenders' breakage costs in the event any such
                             reduction results in a prepayment of Adjusted
                             LIBOR borrowings other than on the last day of
                             the relevant interest period.

                             Any reduction of the commitments under the
                             Facility shall be accompanied by prepayment of
                             the loans under the Facility to the extent such
                             loans exceed the amount of the commitments under
                             the Facility as so reduced.

DOCUMENTATION:               A credit agreement (the "Credit Agreement") and
                             other loan, guarantee and security documentation
                             substantially in the form of the Credit
                             Agreement dated as of May 31, 2000, as amended
                             through the Third Amendment (the "Third
                             Amendment") dated as of November 29, 2001 (the
                             "Existing Credit Agreement"), among the
                             Borrower, the lenders party thereto and
                             JPMorgan, as agent, and the related loan,
                             guarantee and security documents, incorporating
                             the terms contained herein, other customary
                             terms and provisions and such other provisions
                             not inconsistent with the terms contained herein
                             as the Agent and the Borrower may reasonably
                             agree in the context of the transactions
                             contemplated hereby.

<Page>

                                                                            10

REPRESENTATIONS AND          Substantially similar to those set forth in the
WARRANTIES:                  Existing Credit Agreement (to be applicable to
                             the Borrower and its Restricted Subsidiaries),
                             including, but not limited to: accuracy of
                             financial statements; no material adverse
                             change; absence of material litigation;
                             effectiveness and no violation of agreements or
                             instruments; existence and validity of
                             governmental consents and permits; compliance
                             with laws (including but not limited to ERISA,
                             margin regulations and communications and
                             environmental laws and regulations); payment of
                             taxes; ownership of properties and subsidiaries;
                             insurance; inapplicability of the Investment
                             Company Act and Public Utility Holding Company
                             Act; effectiveness of regulatory approvals;
                             labor matters; environmental matters; accuracy
                             of information; and validity, priority and
                             perfection (subject to customary qualifications)
                             of security interests.

CONDITIONS PRECEDENT TO      Substantially similar to those set forth in the
INITIAL BORROWING:           Existing Credit Agreement, including but not
                             limited to: delivery of satisfactory legal
                             opinions; delivery of financial statements and
                             other financial information to be agreed upon;
                             execution and delivery to the Agent of
                             satisfactory security documents to create the liens
                             on the Collateral, completion of all filings and
                             other actions as are necessary to perfect such
                             liens; absence of material adverse change in the
                             business, assets, operations, financial condition
                             or material agreements of the Borrower and its
                             subsidiaries,

<Page>

                                                                            11

                             taken as a whole; absence of defaults,
                             prepayment events or creation of liens under
                             debt instruments or other agreements as a result
                             of the transactions contemplated hereby;
                             evidence of authority; all necessary consents;
                             and payments of fees and expenses.

                             The Restructuring (as defined in the Third
                             Amendment) of the Borrower shall have been
                             consummated on the terms set forth on Annex I to
                             the Third Amendment, as amended in accordance
                             with its terms.

                             The Reorganization Consummation Date (as defined
                             in the Third Amendment) shall have occurred.

                             The Third Amendment shall be in full force and
                             effect and all conditions set forth in Section 4
                             thereof shall have been satisfied.

                             No Default or Event of Default (each as defined
                             in the Existing Credit Agreement) shall have
                             occurred and be continuing under the Existing
                             Credit Agreement.

                             The Lenders shall have received a pro forma
                             consolidated balance sheet of the Borrower as of
                             the closing of the Facility, which shall not be
                             materially inconsistent with the 8-year business
                             plan provided to the Lenders in connection with
                             the Third Amendment.

                             The Borrower shall, on a pro forma basis, be in
                             compliance with all financial covenants under
                             the Facility.

<Page>

                                                                             12

CONDITIONS TO EACH           Delivery of a borrowing notice, accuracy in all
BORROWING:                   material respects of all representations and
                             warranties, and absence of defaults and events
                             of default at the time of, and after giving
                             effect to, such borrowing; PROVIDED that the
                             accuracy of any representation or warranty
                             regarding a material adverse change will only be
                             made for Borrowings that increase the principal
                             amount of outstanding Loans.

AFFIRMATIVE COVENANTS:       Substantially similar to those set forth in the
                             Existing Credit Agreement (to be applicable to
                             the Borrower and its Restricted Subsidiaries),
                             including the maintenance of existence and
                             material rights and licenses; performance of
                             obligations; delivery of audited annual
                             financial statements, unaudited quarterly
                             financial statements, annual budgets (prepared
                             on a quarterly basis), certain revenue,
                             subscriber and churn information on a quarterly
                             basis, other financial and operating information
                             to be agreed, and notices of defaults,
                             litigation and other adverse matters;
                             maintenance of properties in good working order
                             as reasonably necessary for the conduct of the
                             Borrower's business; maintenance of insurance in
                             accordance with prevailing industry standards;
                             compliance with applicable laws and regulations;
                             inspection of books and properties; agreement to
                             cause each domestic subsidiary of the Borrower
                             acquired or organized after the closing to
                             guarantee the Guaranteed Obligations and provide
                             Collateral as required by the

<Page>
                                                                              13

                             credit documentation; further assurances; and
                             payment of taxes.

NEGATIVE COVENANTS:          Substantially similar to those set forth in the
                             Existing Credit Agreement (to be applicable to
                             the Borrower and its Restricted Subsidiaries),
                             including limitations on dividends and
                             distributions on, and redemptions and
                             repurchases of, capital stock and other similar
                             payments; prohibition on voluntary prepayments,
                             redemptions and repurchases of other debt;
                             limitations on liens and sale-leaseback
                             transactions; limitations on loans and
                             investments; limitations on debt and
                             guarantees of the Borrower and separate
                             limitations on debt and guarantees of subsidiaries
                             (PROVIDED that Splitrock will be permitted to
                             maintain the indebtedness under its existing
                             capital lease obligations in an amount not to
                             exceed the current outstanding amount thereof);
                             limitations on mergers, acquisitions and asset
                             sales and dispositions (PROVIDED that mergers and
                             similar transactions among wholly owned Restricted
                             Subsidiaries will be permitted); limitations on
                             transactions with affiliates; limitations on
                             changes in business conducted; and limitations
                             on amendments and waivers of debt and other
                             material agreements in a manner adverse in any
                             significant respect to the interests of the
                             Lenders.

FINANCIAL COVENANTS:         The Credit Agreement will contain financial
                             covenants substantially similar to those set
                             forth in the

<Page>
                                                                              14

                             Existing Credit Agreement, including:

                             (a)  MINIMUM ACCESS LINES IN SERVICE.

                                  Not to be less than the amounts indicated
                                  below:

<Table>
<Caption>
                                  YEAR               MINIMUM
                                  ----               -------
                                  <S>                <C>
                                  2001               900,000
                                  2002               900,000
                                  2003               1,000,000
                                  2004 and
                                  thereafter         No Minimum
</Table>

                             (d)  TOTAL LEVERAGE.

                                  The ratio, on any date on or after January
                                  1, 2003, of Total Debt to EBITDA for the
                                  trailing four fiscal quarters ended during
                                  any period set forth below not to be greater
                                  than the ratio indicated below opposite such
                                  period:

<Table>
<Caption>
                                  PERIOD                 RATIO
                                  ------                 -----
                                  <S>                    <C>

                                  1/1/03-12/31/03        11.00:1.00
                                  1/1/04-3/31/04         10.00:1.00
                                  4/1/04-6/30/04          8.50:1.00
                                  7/1/04-9/30/04          7.00:1.00
                                  10/1/04-3/31/05         6.00:1.00
                                  4/1/05-9/30/05          5.00:1.00
                                  10/1/05 and
                                  thereafter              4.00:1.00
</Table>

                             (e)  MINIMUM REVENUE.

                                  The Consolidated Revenue of the Borrower
                                  and the Restricted Subsidiaries for the
                                  trailing four fiscal quarters ended during
                                  any

<Page>
                                                                              15

                                  period set forth below not to be less than
                                  the amounts indicated below opposite such
                                  period:

<Table>
<Caption>
                                  PERIOD                       MINIMUM
                                  ------                       -------
                                  <S>                      <C>

                                  12/31/00-12/31/01        $1,100,000,000
                                  1/1/02-6/30/02           $1,300,000,000
                                  7/1/02-9/30/02           $1,200,000,000
                                  10/1/02-12/31/02         $1,100,000,000
                                  1/1/03-12/31/03            $900,000,000
                                  1/1/04-12/31/04          $1,000,000,000
                                  1/1/05 and thereafter    no minimum
</Table>

                             (f)  INTEREST COVERAGE.

                                  The ratio of Consolidated EBITDA to
                                  Consolidated Cash Interest Expense for the
                                  trailing four fiscal quarters ended during
                                  any period set forth below not to be less
                                  than the ratio indicated below opposite
                                  such period:

<Table>
<Caption>
                                  PERIOD                 RATIO
                                  ------                 -----
                                  <S>                    <C>

                                  1/1/03-3/31/04         1.00:1.00
                                  4/1/04-6/30/04         1.25:1.00
                                  7/1/04-12/31/04        1.50:1.00
                                  1/1/05-6/30/05         2.00:1.00
                                  7/1/05 and
                                  thereafter             2.50:1.00
</Table>

                             (g)  CAPITAL EXPENDITURES.  The Borrower shall
                                  not permit the Capital Expenditures of the
                                  Borrower and the Restricted Subsidiaries
                                  for any fiscal

<Page>
                                                                              16

                                  year of the Borrower to exceed the sum of
                                  (i) with respect to the fiscal years ending
                                  December 31, 2002, 2006 and thereafter,
                                  $350,000,000 and with respect to the fiscal
                                  years ending December 31, 2003, 2004 and
                                  2005, $300,000,000 and (ii) an amount equal
                                  to the Applicable Capex Carryforward for
                                  such fiscal year. For the purpose for any
                                  fiscal year commencing with the Borrower's
                                  fiscal year 2002, the "APPLICABLE CAPEX
                                  CARRYFORWARD" means an amount, not in
                                  excess of $50,000,000, equal to the
                                  difference between (x) the product of (A)
                                  with respect to the fiscal years ending
                                  December 31, 2002, 2006 and thereafter,
                                  $350,000,000 and with respect to the fiscal
                                  years ending December 31, 2003, 2004 and
                                  2005, $300,000,000 MULTIPLIED BY (B) the
                                  number of fiscal years of the Borrower then
                                  elapsed since, and including, fiscal year
                                  2001 through the fiscal year most recently
                                  ended (the "CALCULATION PERIOD") MINUS (y)
                                  the aggregate amount of actual Capital
                                  Expenditures actually made during the
                                  Calculation Period.

EVENTS OF DEFAULT:           Substantially similar to those set forth in the
                             Existing Credit Agreement, including: non-payment
                             of principal or (subject to a five-day grace
                             period) interest, fees or other amounts,
                             violation of covenants, incorrectness of
                             representations and warranties in any material
                             respect, cross default

<Page>
                                                                              17

                             and cross acceleration to other material
                             indebtedness, bankruptcy, material judgments,
                             certain ERISA events, actual or asserted (by the
                             Borrower or any of its affiliates) invalidity of
                             loan or security documents, and Change in
                             Control.

VOTING:                      Amendments and waivers of the Credit Agreement
                             and the other definitive loan, guarantee and
                             security documentation will require the approval
                             of Lenders holding more than 50% of the
                             aggregate amount of the loans and commitments
                             under the Facility, except that the consent of
                             each Lender adversely affected thereby shall be
                             required with respect to, among other things,
                             (i) increases in commitments, (ii) reductions of
                             principal, interest or fees, (iii) extensions of
                             final maturity and (iv) releases of
                             substantially all the Collateral or any
                             Guarantee (other than in connection with any
                             sale of Collateral or a subsidiary permitted by
                             the Credit Agreement.)

COST AND YIELD PROTECTION:   Usual for facilities and transactions of this
                             type.

ASSIGNMENTS AND              The Lenders will be permitted to assign loans and
PARTICIPATIONS:              commitments to other Lenders (or their
                             affiliates) without restriction, or to other
                             financial institutions with the consent of the
                             Borrower and the Agent, in each case not to be
                             unreasonably withheld. Each assignment (except
                             to other Lenders or their affiliates) will be in
                             a minimum aggregate principal amount of
                             $5,000,000. The Agent will receive a processing
                             and recordation fee of $3,500, payable

<Page>
                                                                              18

                             by the assignor and/or the assignee, with each
                             assignment.

                             The Lenders will be permitted to participate
                             loans and commitments without restriction.
                             Voting rights of participants shall be limited
                             to matters in respect of (i) increases in
                             commitments, (ii) reductions of principal,
                             interest or fees, (iii) extensions of final
                             maturity and (iv) releases of substantially all
                             of the Collateral or any Guarantees (other than
                             in connection with any sale of Collateral or a
                             subsidiary permitted by the Credit Agreement).

EXPENSES AND                 All reasonable out-of-pocket expenses (including
INDEMNIFICATION:             but not limited to expenses incurred in
                             connection with due diligence) of the Agent and
                             the Arranger associated with the initial
                             syndication of the Facility and with the
                             preparation, execution and delivery, waiver or
                             modification and enforcement of the Credit
                             Agreement and the other documentation
                             contemplated hereby and thereby (including but
                             not limited to the reasonable fees, disbursements
                             and other charges of counsel) are to be paid by
                             the Borrower. In addition, all reasonable
                             out-of-pocket expenses of the Lenders for
                             enforcement costs and documentary taxes
                             associated with the Facility are to be paid by
                             the Borrower.

                             The Borrower will indemnify the Agent, the
                             Arranger and the Lenders and their officers,
                             directors, agents, advisors, controlling persons
                             and affiliates and hold them harmless from and
                             against all reasonable costs, expenses

<Page>
                                                                             19

                             (including but not limited to reasonable fees,
                             disbursements and other charges of counsel) and
                             liabilities of any such indemnified person
                             arising out of or relating to any claim or any
                             litigation or other proceedings (regardless of
                             whether such indemnified person is a party
                             thereto) that relate to the Facility or the
                             transactions contemplated hereby; PROVIDED that
                             no indemnified person will be indemnified for
                             its own gross negligence or wilful misconduct.
                             Each indemnified person will provide
                             the Borrower with prompt written notification of
                             any claim for which indemnification may be
                             sought; PROVIDED that the failure of any
                             indemnified person to give such notice shall not
                             affect the Borrower's indemnity obligations
                             under the Facility. The Borrower will, upon
                             confirming in writing to such indemnitee that the
                             Borrower assumes full liability for all such claims
                             and related costs and damages, have the right to
                             control the defense of any such claim (other than
                             a claim by the Borrower against such indemnified
                             person) with counsel selected by it that is
                             satisfactory to such indemnified person; PROVIDED
                             that such indemnified person shall have the right
                             to employ separate counsel if (i) the Borrower
                             consents, (ii) the Borrower's chosen counsel has
                             a conflict of interest or (iii) the defendants in
                             such action may include that the Borrower and such
                             indemnified person, and such indemnified person
                             reasonably concludes that it has additional or
                             different legal defenses to such action.

<Page>
                                                                              20

COUNSEL FOR THE AGENT        Cravath, Swaine & Moore
AND THE ARRANGER:

GOVERNING LAW AND
FORUM:                       New York.

<Page>
                                                                         ANNEX I

INTEREST RATES:              The interest rates under the Facility will be as
                             follows:

                             At the Borrower's option, LIBOR or ABR plus, in
                             each case, the applicable spread shown in the
                             pricing grid at the end of this Annex I.

                             The Borrower may elect interest periods of 1, 2, 3
                             or 6 months (or, if available from all Lenders,
                             of 9 or 12 months) for LIBOR borrowings
                             including 1-month interest periods if an Event
                             of Default has occurred and is continuing.

                             Calculation of interest and fees shall be on the
                             basis of actual days elapsed in a year of 360
                             days (or 365 or 366 days, as the case may be, in
                             the case of ABR loans based on the Prime Rate).
                             Interest shall be payable at the end of each
                             interest period and, in any event, at least every
                             3 months.

                             Interest on overdue amounts will accrue, in the
                             case of principal, at the otherwise applicable
                             rate plus 2% and in the case of other amounts at
                             the interest rate applicable to ABR loans plus
                             2%.

                             LIBOR is the London interbank offered rate for
                             eurodollar deposits for the relevant interest
                             period, as reflected on the applicable Telerate
                             screen. At the request of any Lender,
                             LIBOR-based interest will be adjusted to reflect
                             statutory reserves under Regulation D for
                             eurocurrency liabilities applicable to such
                             Lender.

                             ABR is the Alternate Base Rate, which is the
                             highest of JPMorgan's Prime
<Page>

                                                                               2
                             Rate and the Federal Funds Effective Rate plus
                             1/2 of 1%.

COMMITMENT FEES:             A commitment fee on the undrawn portion of the
                             commitment of each Lender (including JPMorgan)
                             to the Facility will accrue at the applicable
                             rate shown in the pricing grid at the end of
                             this Annex I commencing on the Closing Date and
                             will be payable quarterly in arrears and upon
                             any termination of such Lender's commitment.

<Page>

                              PRICING GRID(1)

<Table>
<Caption>

            Level      Ratings           LIBOR Spread    ABR Spread
            -----      -------           ------------    ----------
<S>                  <C>                 <C>             <C>
              V      >=BBB-/Baa3              2.00%          1.00%
            -------------------------------------------------------
             IV        BB+/Ba1                2.50%          1.50%
            -------------------------------------------------------
            III        BB/Ba2                 3.00%          2.00%
            -------------------------------------------------------
             II        BB-/Ba3                3.25%          2.25%
            -------------------------------------------------------
             I       < BB-/Ba3                3.50%          2.50%
            -------------------------------------------------------
</Table>

<Table>
<Caption>

                 Revolver Usage             Commitment Fee
            ---------------------------------------------------
<S>                                         <C>
                < 25% Used                     100.0 bps.
            ---------------------------------------------------
                25-50% Used                     75.0 bps.
            ---------------------------------------------------
                > 50% Used                      50.0 bps.
            ---------------------------------------------------
</Table>

--------------------------
(1)  Interest rate spreads will be determined based upon the ratings (the
     "Ratings") assigned to the Borrower's senior secured debt made by
     Moody's and Standard & Poor's. In the event of split Ratings, spreads
     shall be determined by reference to the lower of the two Ratings;
     PROVIDED that if the split in Ratings is greater than one, spreads shall
     be determined by reference to the Rating one above the lower of the two
     Ratings. Any change in interest rate spreads based on a change in the
     Ratings shall be effective on the date such change in Ratings is
     publicly announced.

<Page>

                                                                       ANNEX IV

                             PROGRESS CONDITIONS

 1.      The Restructuring Date shall have occurred on or before August 1, 2002.

 2.      If proceedings are commenced with respect to the Borrower or any
 subsidiary under the Bankruptcy Code, such proceedings shall at all times be
 Bankruptcy Proceedings, as such term is defined in the Agreement.

 3.      In connection with any Bankruptcy Proceedings with respect to the
 Borrower or any subsidiary:

         (a)  all orders submitted to the Bankruptcy Court by the debtor
              contemporaneously with the commencement of such debtor's
              Bankruptcy Proceedings shall be reasonably satisfactory in form
              and substance to the DIP Agent and the Administrative Agent;

         (b)  a Qualifying Cash Collateral Order shall have been entered not
              later than 10 days following the date on which an order for relief
              is entered into the Bankruptcy Proceedings, and, from and after
              the date of entry of such order, a Qualifying Cash Collateral
              Order shall at all times be in full force and effect and shall not
              have been stayed in such Bankruptcy Proceedings;

         (c)  in the event a debtor in possession financing is obtained in
              the Bankruptcy Proceedings, the order in the Bankruptcy
              Proceedings approving such debtor in possession financing shall
              at all times be a Qualifying DIP Order, and such order shall
              remain in full force and effect and shall not have been stayed in
              such Bankruptcy Proceedings;

         (d)  no order approving the use of cash collateral of the Lenders,
              providing adequate protection to the Lenders, or authorizing any
              debtor in possession financing (a "LENDER ORDER") shall be
              reversed, revoked, altered or modified without the consent of the
              Administrative Agent and, in the case of any order approving a
              debtor in possession financing, the DIP Agent, each its sole
              discretion;

         (e)  relief from the automatic stay shall not have been granted with
              respect to any claims exceeding in the aggregate $10 million; and

         (f)  the Bankruptcy Proceedings shall not have been dismissed or
              converted to proceedings under Chapter 7 of the Bankruptcy Code,
              no trustee  shall have been appointed in the Bankruptcy
              Proceedings, the exclusive period of the debtor to file a plan of
              reorganization in the case shall at all times remain in full force
              and effect, and no motion or application seeking any of the
              foregoing shall have been made or threatened.

 4.      (a)  No any action or proceeding challenging the validity or perfection
              of any Lien purported to be created under any Security Document or
              the priority thereof required by the applicable Security Document
              or any claim of any Lender, the

<Page>

                                                                               2

              Administrative Agent, the Collateral Agent or any Arranger, or
              seeking any legal or equitable relief against any Lender, the
              Administrative Agent, the Collateral Agent or any Arranger with
              respect to the Credit Agreement or the Borrower (including,
              without limitation, pursuant to any avoidance power under the
              Bankruptcy Code or state law)(any such action or proceeding
              being referred to herein as a "LENDER LITIGATION") shall have
              been commenced by the Borrower or any Subsidiary (as debtor or
              otherwise or in the name of any such entity).

         (b)  Any Lender Litigation commenced by a party other than the
              Borrower or a Subsidiary shall be dismissed or withdrawn, in
              either case with prejudice, on or prior to the earlier of the
              Restructuring Date and August 1, 2002 and shall be resolved
              without adverse consequences for the Lenders. The Lenders shall
              be reimbursed by the Borrower promptly after written demand
              therefor for all reasonable costs and expenses (including the
              reasonable fees and expenses of counsel) incurred in connection
              with any Lender Litigation.

 5.      In the event a case shall at any time be commenced under the
 Bankruptcy Code with respect to any direct or indirect subsidiary of the
 Borrower, any order providing for adequate protection of the Lenders
 (including, without limitation, any Qualifying Cash Collateral Order or any
 Qualifying DIP Order and in any event consistent with the limitations set
 forth in the Subsidiary Guarantee Agreement) in effect in the Bankruptcy
 Proceedings of the Borrower shall be made applicable to the case involving
 such subsidiary on substantially the same terms as such order applies in the
 Bankruptcy Proceedings of the Borrower within 10 days after the date of the
 order for relief in the case of such subsidiary.

 6.      In the event a case shall at any time be commenced under the
 Bankruptcy Code with respect to any direct or indirect subsidiary of the
 Borrower, the venue of such case shall be maintained in the same Bankruptcy
 Court as the Bankruptcy Proceedings with respect to the Borrower and not
 later than two Business Days subsequent to the order for relief entered in
 such case shall have been administratively consolidated with the Bankruptcy
 Proceedings of the Borrower before the same judge.

 7.      (a)  No event shall have occurred that is an Event of Default under
 the Credit Agreement (whether or not the effect of such Event of Default is
 stayed as a consequence of the pendency of any Bankruptcy Proceedings).

         (b)  No event shall have occurred that would have become an Event of
 Default under the Credit Agreement after the commencement of Bankruptcy
 Proceedings had notice thereof been given when the Borrower first became
 aware of the occurrence of such event (whether or not such notice was given),
 PROVIDED, HOWEVER, that this paragraph (b) shall not apply to any event that
 all of the Arrangers agree in writing to exclude from this paragraph. In
 agreeing to exclude an event referred to in the preceding sentence, the
 Arrangers shall be entitled to rely, without further responsibility,
 liability or inquiry, on Non-Objection of the Lenders (as defined in
 paragraph 9 below).

<Page>

                                                                               3

 8.      No Event of Default under the New Interim Facility shall have
 occurred which has not been cured or waived.

 9.      For purposes hereof, with respect to any action proposed to be taken
 by the Arrangers, "NON-OBJECTION OF THE LENDERS" shall be conclusively deemed
 to have occurred if, within 5 business days after notice has been sent by the
 Administrative Agent to the Lenders of the intention of the Arrangers to take
 such action, the Required Lenders shall have failed to notify the
 Administrative Agent in writing that they object to the taking of such
 action by the Arrangers. Notice to the Lenders shall be given in accordance
 with the provisions of Section 9.01 of the Credit Agreement.

<Page>

                                                                        ANNEX V

                   FORM OF QUALIFYING CASH COLLATERAL ORDER

                        UNITED STATES BANKRUPTCY COURT

                          _______ DISTRICT OF _______

______________________________
In re                         )  Case No.________
                              )
McLEODUSA INCORPORATED,       )  Chapter 11
McLEOD PURCHASING, LLC,       )
                              )
             Debtors.         )
                              )
______________________________)

                  [INTERIM] [FINAL] ORDER AUTHORIZING USE OF
                         CASH COLLATERAL AND PROVIDING
              ADEQUATE PROTECTION UNDER 11 U.S.C. 105, 361 AND 363

     UPON THE MOTION (the "MOTION"), dated ______________, of [Debtor] (the
"BORROWER") and [Other Debtor] ("[NAME]"), each as Debtor and
Debtor-in-Possession (together, the "DEBTORS"), pursuant to Sections 105,
361, and 363 of the United States Bankruptcy Code, 11 U.S.C. Sections 101, ET
SEQ. (the "CODE"), and Rule 4001 of the Federal Rules of Bankruptcy Procedure
(the "BANKRUPTCY RULES") seeking, among other things:

              (1)  to authorize the use of cash collateral, pursuant to
          section 363 of the Bankruptcy Code and subject to the terms and
          conditions set forth herein, which secures obligations owing to the
          lenders (the "PRE-PETITION SECURED LENDERS") under or in connection
          with that certain Credit

<Page>

                                                                               2

          Agreement, dated as of May 31, 2000 (as heretofore amended,
          supplemented or otherwise modified, the "PRE-PETITION CREDIT
          AGREEMENT"), among the Borrower, the banks listed therein, the letter
          of credit issuing banks named therein, and JP Morgan Chase Bank
          (formerly known as The Chase Manhattan Bank) ("MORGAN"), as
          administrative agent and collateral agent for the Pre-Petition
          Secured Lenders (in such capacity, the "PRE-PETITION 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 capacity,
          the "CO-DOCUMENTATION AGENTS") and together with the Pre-Petition
          Agent and the Syndication Agent, the "AGENTS"); and

              (2)  the granting of adequate protection to the
          Pre-Petition Secured Lenders and the Agents in respect of the liens
          securing the Pre-Petition Credit Agreement and the Subsidiary
          Guarantee Agreement dated as of May 31, 2000 among each Subsidiary of
          McLeodUSA Incorporated listed on Schedule I thereto (each a
          "GUARANTOR") and The Chase Manhattan Bank, as collateral agent for
          the Secured Parties (the "SUBSIDIARY GUARANTEE AGREEMENT") (the
          Pre-Petition Credit Agreement, the Subsidiary Guarantee Agreement and
          the related security agreements, mortgages, deeds of trust, security
          documents and other loan

<Page>

                                                                               3

          documentation being collectively referred to herein as the "EXISTING
          AGREEMENTS"); and

     DUE NOTICE of the Motion, and the [Interim] Hearing thereon having been
given by the Debtors to the twenty largest unsecured creditors of each of the
Debtors, the Pre-Petition Agent, the Pre-Petition Secured Lenders and the
United States Trustee for the District of_______________; and

     THE [INTERIM] HEARING having been held on [DATE]; and

     UPON THE RECORD made by the Debtors at the [Interim] Hearing, and after
due deliberation and consideration and sufficient cause appearing therefor;

     IT IS FOUND, DETERMINED, ORDERED AND ADJUDGED, that:

     (d)       JURISDICTION.  The Court has core jurisdiction over these
          proceedings and the parties and property affected hereby pursuant to
          28 U.S.C. Sections 157(b) and 1334.

     (e)       NOTICE.  The notice given by the Debtors of the Motion and the
          [Interim] Hearing constitutes due and sufficient notice of the Motion
          and the Interim Hearing.

     (f)       DEBTORS' STIPULATIONS.  Without prejudice to the rights of any
          other party, the Debtors have stipulated and agreed that:

          (1)  in accordance with the terms of the Existing Agreements and as
of the date hereof and as of the filing of the Debtors' chapter 11 petitions
herein (the "PETITION DATE"), the Borrower was truly and justly indebted and
liable to the Pre-Petition Secured

<Page>

                                                                               4

Lenders, without defense, counterclaim or offset of any kind, in the aggregate
principal amount of approximately $[AMOUNT] in respect of loans made and in
the aggregate principal amount of approximately $[AMOUNT] in respect of
letters of credit issued, in each case, by the Pre-Petition Secured Lenders
pursuant to the Existing Agreements, plus interest thereon and fees and
expenses incurred in connection therewith as provided in the Existing
Agreements (collectively, together with the obligations of the Guarantors
under the Existing Agreements, the "PRE-PETITION DEBT"), and the Subsidiary
Guaranty Agreements constitute valid, binding non-voidable obligations of the
Guarantors, enforceable in accordance with their terms;

          (2)  the liens and security interests granted to the Pre-Petition
Agent pursuant to the security agreements and the mortgages, deeds of trust
and other security documents executed by any of the Debtors or the Guarantors
in favor of the Pre-Petition Agent in connection with the Existing
Agreements, are valid, perfected, enforceable, non-voidable first-priority
liens and security interests in the personal and real property described in
such agreements, mortgages, deeds of trust and security documents (the
"PRE-PETITION COLLATERAL") subject only to liens permitted under the Existing
Agreements; and

          (3)  the aggregate value of the Pre-Petition Collateral
substantially exceeds the aggregate amount of the Pre-Petition Debt.

     (g)       THE CASH COLLATERAL.  All funds of the Debtors (including any
          funds of the Debtors on deposit at the Pre-Petition Secured Lenders
          or at any other

<Page>

                                                                               5

          institution) as of the Petition Date are cash collateral of the
          Pre-Petition Secured Lenders within the meaning of Section 363(a)
          of the Code. In addition, all cash proceeds of Pre-Petition
          Collateral received after the Petition Date are cash collateral of
          the Pre-Petition Secured Lenders within the meaning of Section
          363(a) of the Code. Furthermore, to the extent, as of the Petition
          Date, any funds were on deposit with the Pre-Petition Secured
          Lenders, such funds were subject to rights of set-off. By virtue of
          such set-off rights, such funds are subject to a lien in favor of
          such Pre-Petition Secured Lenders pursuant to Sections 506(a) and
          553 of the Code. The Pre-Petition Secured Lenders are obligated, to
          the extent provided for in the Existing Agreements, to share the
          benefit of such liens with the other Pre-Petition Secured Lenders
          party to such Existing Agreements based upon their respective PRO
          RATA shares of the obligations under such Existing Agreements. All
          such cash collateral (including without limitation, funds subject
          to such setoff rights) are referred to herein as "CASH COLLATERAL."

     (h)       USE OF CASH COLLATERAL.  (a) Except as otherwise set
          forth herein, the Debtors are hereby authorized to use all Cash
          Collateral of the Pre-Petition Secured Lenders other than
          Disposition Proceeds (as hereinafter defined), PROVIDED that the
          Pre-Petition Secured Lenders are granted adequate protection as
          hereinafter set forth, and PROVIDED FURTHER that, absent the
          written consent of the Required Lenders (as defined in the
          Pre-Petition

<Page>

                                                                               6

          Credit Agreement), the Debtors shall cease to be
          authorized to use Cash Collateral pursuant to this Order upon the
          failure to satisfy any condition set forth in Annex I to this Order
          (the "PROGRESS CONDITIONS") on a timely basis (the date on which
          such authorization terminates being referred to herein as the
          "TERMINATION DATE"). In furtherance of and subject to the
          foregoing, until the Termination Date, Pre-Petition Secured Lenders
          are directed promptly upon request of the Debtor for whose account
          the Cash Collateral is held to turn over to the Debtors all cash
          collateral within the meaning of Section 363(a) of the Code
          received or held by them.

     (b)  Notwithstanding the foregoing authorization to use Cash Collateral,
all proceeds of any sale or other disposition of assets of the Borrower or
any Guarantor outside the ordinary course of business ("DISPOSITION
PROCEEDS") shall be segregated and invested, subject to further order of the
Court or disposition pursuant to a plan of reorganization, PROVIDED, HOWEVER,
that any Disposition Proceeds from the sale of Non-Core Assets (as defined in
the Credit Agreement) received prior to the Termination Date may be retained
or applied in accordance with the terms of the Credit Agreement.

     (i)       ADEQUATE PROTECTION. The Pre-Petition Secured Lenders are
          entitled, pursuant to Sections 361 and 363(e) of the Code, to
          adequate protection of their interest in the Pre-Petition
          Collateral, including the Cash Collateral, for any diminution in
          value of the Pre-Petition Secured Lenders' interests in the
          Pre-Petition Collateral, including, without limitation, any such
          diminution

<Page>

                                                                               7

          resulting from the use by the Debtors of Cash Collateral and any
          other Pre-Petition Collateral, and the imposition of the automatic
          stay pursuant to Section 362 of the Code.

          (1)  ADEQUATE PROTECTION LIENS. As adequate protection for any
diminution in the value of the Pre-Petition Collateral, effective upon the
date of this Order and without the necessity of the execution by the Debtors
of mortgages, security agreements or otherwise, the following security
interests and liens are hereby granted to the Pre-Petition Secured Lenders
(all property identified below in this paragraph (1) being collectively
referred to as the "COLLATERAL," and such security interests and liens being
collectively referred to as the "LIENS"), subject only to (a) valid and
perfected non-voidable liens in existence on the Petition Date and (b) valid
liens in existence on the Petition Date that are perfected subsequent to the
Petition Date as permitted by Section 546(b) of the Code, (c) liens, if any,
granted pursuant to a Qualifying DIP Order (as defined in the Pre-Petition
Credit Agreement) entered by this Court prior to the Termination Date, and
(d) applicable provisions of the Carve-Out:

               (i)  a perfected first priority senior security interest in and
         lien upon all cash of the Debtors (whether maintained with the Agents
         or otherwise) and any investment of the funds of the Debtors, whether
         existing on the Petition Date or thereafter acquired (all of such
         property referred to in this clause (i) being hereinafter referred to
         as the "CREDIT AGREEMENT CASH COLLATERAL"), and

<Page>

                                                                               8

              (ii)  a perfected first priority security interest in and lien
         upon all other pre- and post-petition property of the Debtors, whether
         existing on the Petition Date or thereafter acquired, including,
         without limitation, accounts receivable, contracts, documents,
         equipment, general intangibles, instruments, inventory, interests in
         leaseholds, real property and the capital stock of the subsidiaries
         of the Debtors and the proceeds of all of the foregoing (but not
         including the proceeds of causes of action arising solely under the
         Code or incorporated thereunder pursuant to section 544(b)(1)
         thereof).

         Notwithstanding the foregoing, in the event the Restructuring is
consummated prior to the Termination Date and the Pre-Petition Lenders timely
receive all payments and other distributions to which they are entitled in
accordance with the terms of the Restructuring and of the Credit Agreement,
the Pre-Petition Lenders shall not receive any further cash payments in
respect of the foregoing adequate protection liens.

         (2)  SECTION 507(b) CLAIM.  The Pre-Petition Agent and the
Pre-Petition Secured Lenders are hereby granted, subject to the payment of
the Carve-Out, a superpriority claim as provided for in Section 507(b) of the
Code.

         (3)  INTEREST, FEES AND EXPENSES.  The Agents and the Pre-Petition
Secured Lenders shall receive (a) cash payments in the amount of all accrued
and unpaid letter of credit fees and interest on the Pre-Petition Debt at the
rate provided for in the Existing Agreements, and all other accrued and
unpaid fees and disbursements (including, but not limited to, fees owed to
the Pre-Petition Agent) incurred prior to the Petition Date owing

<Page>

                                                                               9

under the Existing Agreements, (b) current cash payments from the Debtors (i)
of all fees and expenses payable to the Agents and otherwise under the
Existing Agreements, including but not limited to, the reasonable fees and
disbursements of counsel and financial consultants for the Pre-Petition Agent
and (ii) on the first business day of each month, all accrued but unpaid
letter of credit fees, and interest on the Pre-Petition Debt at a rate per
annum equal to the non-default contractual interest rate under the
Pre-Petition Credit Agreement, PROVIDED that, without prejudice to the rights
of any other party to contest such assertion, if the Restructuring is not
consummated prior to the Termination Date, the Pre-Petition Secured Lenders
reserve their rights to assert claims for the payment of additional interest
calculated at any other applicable rates of interest (including, without
limitation, default rates), or on any other basis, provided for in the
Existing Agreements.

         (4)  PRESERVATION AND MONITORING OF COLLATERAL.  The Debtors are
hereby authorized and directed to take all steps reasonably necessary to
protect and maintain the value of the Pre-Petition Collateral, including,
without limitation, making such capital expenditures and performing such
maintenance as may be necessary for purposes of maintaining such value. The
Pre-Petition Secured Lenders shall be permitted to retain expert consultants
and financial advisors at the expense of the Debtors, which consultants and
advisors shall be given reasonable access for purposes of monitoring the
value of the Pre-Petition Collateral and the compliance by the Debtors with
the provisions of this paragraph.

<Page>

                                                                            10

        [(5) LIMITATION ON CHARGING EXPENSES AGAINST COLLATERAL. Except to
the extent of  the Carve-Out (as hereinafter defined), no expenses of
administration of these Cases or any future proceeding or that may result
therefrom, including liquidation in bankruptcy or other proceedings under the
Code, shall be charged against or recovered from the Collateral or, while the
Debtors are permitted to use Cash Collateral that is part of the Collateral
or the Pre-Petition Collateral, the Pre-Petition Collateral, pursuant to
Section 506(c) of the Code or any similar principal of law, without the prior
written consent of the Pre-Petition Agent, and no such consent shall be
implied from any other action, inaction, or acquiescence by the Pre-Petition
Agent or the Pre-Petition Secured Lenders.](2)

    (j) PRIORITY OF OBLIGATIONS HEREUNDER; CARVE OUT.

        (a) Pursuant to Section 507(b) of the Code, all of the Debtors'
obligations arising under this Order sha(1)ll constitute obligations of the
Debtors with priority over any and all administrative expenses or other
claims under Sections 105,326,328,[506(c)](1), 507(a) or [726](1) of the
Code, subject only to the payment of the Carve Out (as hereinafter defined).

        (b) For purposes hereof, the "Carve-Out" means an amount equal to the
sum of (x) in the event of the occurrence of the Termination Date, the
allowed and unpaid

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

(1)  Unless otherwise determined by Arrangers in their sole discretion prior
     to completion of the final hearing on the cash collateral order, the
     bracketed language shall be included in the final cash collateral order.

<Page>

                                                                            11

professional fees and disbursements incurred by the Debtor and by any
statutory committee (each, a "COMMITTEE") appointed in the Cases in an
aggregate amount not in excess of the sum of (i) $2.5 million; plus (ii) the
allowed unpaid professional fees and disbursements incurred by the Debtors
and the Committee prior to the Termination Date, plus (y) the payment of fees
pursuant to 28 U.S.C Section 1930 and to the Clerk of the Court, PROVIDED
HOWEVER that so long as the Termination Date shall not have occurred, the
Debtors shall be permitted to pay compensation and reimbursement of expenses
allowed and payable under Sections 330 and 331 of the Code, as the same may
be due and payable, and any such compensation and expenses previously paid
prior to the Termination Date shall not be applied against the Carve-Out. No
portion of the Carve-Out shall be utilized for the payment of professional
fees and disbursements incurred in connection with any challenge to the
amount, extent, priority, validity, perfection or enforcement of the
indebtedness of the Borrowers owing to the Pre-Petition Secured Lenders.

    (k)  RESERVATION OF RIGHTS OF PRE-PETITION SECURED LENDERS. Under the
       circumstances, the Court finds that, notwithstanding any other
       provision hereof, the adequate protection provided herein is
       reasonable and sufficient to protect the interests of the Pre-Petition
       Secured Lenders. However, the Pre-Petition Agent and the Pre-Petition
       Secured Lenders may request further or different adequate protection,
       and the Debtors or any other party may contest any such request.
       Moreover, nothing contained in this Order

<Page>

                                                                            12

       (including, without limitation, the authorization of the use of Cash
       Collateral) shall impair or modify the right of any Pre-Petition
       Secured Lender that is a party to a swap agreement or other eligible
       financial contract with a Debtor to assert rights of set-off or other
       rights with respect thereto (or the right of the Debtors to contest
       such assertions).

    (l)  PERFECTION OF ADEQUATE PROTECTION LIENS. The Agents and the
       Pre-Petition Secured Lenders that have been granted security interests
       and liens hereunder shall not be required to file or record financing
       statements, mortgages, notices of lien or similar instruments in any
       jurisdiction or take any other action in order to validate and perfect
       the security interests and liens granted to them pursuant to this
       Order. If the Pre-Petition Agent on behalf of the Pre-Petition Secured
       Lenders shall, in its sole discretion, choose to file such financing
       statements, mortgages, notices of lien or similar instruments or
       otherwise confirm perfection of such security interests and liens, the
       liens and security interests granted herein shall be deemed perfected
       at the time and on the date of entry of this Order. Upon the request
       of the Pre-Petition Agent, each of the Pre-Petition Secured Lenders
       and the Pre-Petition Agent, without any further consent of any party,
       is authorized to take, execute and deliver such instruments (in each
       case without representation or warranty of any kind) to enable the
       Pre-petition Agent to further perfect, preserve and enforce the
       security interests

<Page>
                                                                            13

              and liens granted to the Pre-Petition Agent and the
              Pre-Petition Lenders by this Order.

         (m)        PRESERVATION OF RIGHTS GRANTED UNDER THE ORDER.

              (a) Except for claims and liens granted to the DIP Agent
under a Qualifying DIP Order (each as defined in the Pre-Petition Credit
Agreement) prior to the Termination Date, no claim having a priority superior
to or PARI PASSU with that granted by this Order to the Agents and the
Lenders or to the Pre-Petition Agent and the Pre-Petition Secured Lenders,
respectively, shall be granted, and the security interests and liens granted
to the Pre-Petition Agent and the Pre-Petition Secured Lenders hereunder
shall not be (i) subject to any lien or security interest that is avoided and
preserved for the benefit of the Debtors' estates under Section 551 of the
Code or (ii) subordinated to or made PARI PASSU with any other lien or
security interest under Section 364(d) of the Code or otherwise.

              (b) Other than pursuant to the written consent of the
Pre-Petition Agent and the Pre-Petition Secured Lenders, the Debtors shall
not seek an order dismissing any of the Cases. If an order dismissing any of
the Cases under Section 1112 of the Code or otherwise is at any time entered,
such order shall provide (in accordance with Sections 105 and 349 of the
Code) that (x) the liens, security interests and claims granted to the
Pre-Petition Agent and the Pre-Petition Secured Lenders pursuant to this
Order shall continue in full force and effect and shall maintain their
priorities as provided in this Order until all obligations in respect thereof
shall have been paid and satisfied in full (and

<Page>
                                                                            14

that such security interests, liens and claims shall, notwithstanding such
dismissal, remain binding on all parties in interest) and (y) this Court
shall retain jurisdiction, notwithstanding such dismissal, for the purposes
of enforcing the claims, liens and security interests referred to in (x) above.

              (c) If any or all of the provisions of this Order are hereafter
reversed, modified, vacated or stayed, such reversal, stay, modification or
vacation shall not affect the validity and enforceability of any lien or
priority authorized or created hereby. Notwithstanding any such reversal,
stay, modification or vacation, any use of Cash Collateral prior to written
notice to the Pre-Petition Agent of the effective date of such reversal,
stay, modification or vacation shall be governed in all respects by this
Order, as applicable, and the Pre-Petition Secured Lenders shall be entitled
to all the rights, remedies, privileges and benefits granted in this Order
with respect to all uses of Cash Collateral.

              (d) The obligations of the Debtors under this Order shall not
be discharged by the entry of an order confirming a plan of reorganization in
any of the Cases and, pursuant to Section 1141(d)(4) of the Code, the Debtors
have waived such discharge.

         (n)        LIMITATION ON USE OF COLLATERAL. Notwithstanding anything
              herein to the contrary, no Cash Collateral, Collateral or the
              Carve-Out (collectively, the "DESIGNATED ASSETS") may be used to
              object, contest or raise any defense to, the validity, perfection,
              priority, extent or enforceability of the Pre-Petition Debt or the
              liens securing the Pre-Petition Debt, or to assert any

<Page>
                                                                            15

              claims or causes of action against the Pre-Petition Secured
              Lenders or the Pre-Petition Agent, PROVIDED, HOWEVER, that
              Designated Assets in an amount not to exceed $100,000 in the
              aggregate may be utilized to pay allowed expenses of the Official
              Committee of Unsecured Creditors (the "COMMITTEE") appointed in
              these cases incurred in connection with the investigation or
              evaluation of the validity, perfection, priority, extent or
              enforceability of the Pre-Petition Debt or the liens securing the
              Pre-Petition Debt.

         (o)        PARTIES IN INTEREST BOUND. The admissions contained in
paragraph 3 shall be binding upon the Debtors under all circumstances, and
shall be binding upon all other parties in interest, including without
limitation; the Committee, unless (a) a party in interest (including the
Committee) has properly filed an adversary proceeding or contested matter
(subject to the limitation set forth in paragraph 11) challenging the
validity, enforceability or priority of the Pre-Petition Debt or the liens on
the Pre-Petition Collateral in respect thereof, or otherwise asserting any
claims or causes of action against the Pre-Petition Agent or the Pre-Petition
Secured Lenders on behalf of the Debtors' estates, no later than the date
that is 90 days after the date that the Committee has been appointed, and
(b) the Court rules in favor of the plaintiff in any such timely and properly
filed adversary proceeding or contested matter. If no such adversary
proceeding or contested matter is

<Page>
                                                                             16

                  commenced as of such date, the Pre-Petition Debt shall
                  constitute allowed clams, not subject to subordination and
                  otherwise unavoidable, for all purposes in these chapter 11
                  cases and any subsequent chapter 7 cases, the liens securing
                  the Pre-Petition Debt on the Pre-Petition Collateral shall be
                  deemed legal, valid, binding, perfected, not subject to
                  defense, counterclaim, offset of any kind, subordination and
                  otherwise unavoidable, and the Pre-Petition Agent or the
                  Pre-Petition Secured Lenders, the Pre-Petition Debt and the
                  liens on the Pre-Petition Collateral securing the Pre-Petition
                  Debt shall not be subject to any other or further challenge by
                  any party in interest seeking to exercise the rights of the
                  Debtors' estates, including without limitation, any successor
                  thereto. If any such adversary proceeding or contested matter
                  is timely commenced as of such date, the admissions contained
                  in paragraph 3 shall nonetheless remain binding and preclusive
                  (as provided in this paragraph) except to the extent that such
                  acknowledgements and agreements were expressly challenged in
                  such adversary proceeding or contested matter.

         (p)      SUCCESSORS AND ASSIGNS. The provisions of this Order shall be
                  binding upon the Agents, the Pre-Petition Agent, the
                  Pre-Petition Secured Lenders and the Debtors and their
                  respective successors and assigns (including any chapter 7 or
                  chapter 11 trustee hereinafter appointed or elected for the
                  estate of any of the Debtors) and inure to the benefit of the

<Page>
                                                                             17

                  Agents, the Pre-Petition Agent, the Pre-Petition Secured
                  Lenders and the Debtors and (except with respect to any
                  trustee hereinafter appointed or elected for the estate of any
                  of the Debtors) their respective successors and assigns.

         [(q)     FINAL HEARING. The Final Hearing on the Motion is scheduled
                  for _______, 2002 at ____ before this Court] (2)

         [(r)     NOTICES. The Interim Hearing was held pursuant to the
                  authorization of Bankruptcy Rule 4001(b)(2), whereby notice of
                  the Motion and the Interim Hearing was given to the United
                  States Trustee, the Debtors' twenty (20) largest creditors, as
                  listed on schedules filed pursuant to Bankruptcy Rule 1007(d)
                  with the Debtors' petition, the Pre-Petition Agent and the
                  Pre-Petition Secured Lenders. Debtors shall promptly mail
                  copies of this Order to the parties having been given notice
                  of the Interim Hearing and to any other party which has filed
                  a request for notices with this Court and to any Committee
                  after the same has been appointed, or Committee counsel, if
                  the same shall have been appointed. Any party in interest
                  objecting to the relief sought at the Final Hearing shall
                  serve and file written objections; which objections shall be
                  served upon (i) attorneys for the Debtors: Skadden, Arps,
                  Slate, Meagher & Flom, Attn: David S. Kurtz, 333 W. Wacker
                  Drive, Suite 2100, Chicago, IL 60606; (ii) Attorneys for
                  Morgan, as administrative agent

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

(2)      This paragraph to be included in Interim Order only.

<Page>
                                                                             18

                  and collateral agent for the Pre-Petition Secured Lenders:
                  Cravath, Swain & Moore, Worldwide Plaza, 825 Eighth Avenue,
                  New York, NY 10019, Attn: Kimberly A. Grousset; Davis Polk &
                  Wardwell, 450 Lexington Ave., New York, NY 10017, Attn: Donald
                  S. Bernstein; and (iii) the Office of the United States
                  Trustee for the [INSERT DISTRICT], [INSERT ADDRESS], and shall
                  be filed with the Clerk of the United States Bankruptcy Court,
                  [INSERT DISTRICT], in each case to be actually received by
                  said counsel and by the Clerk no later than ___ p.m. local
                  time ___ (__) days before such hearing.] (3)

Dated:

                                             ------------------------------
                                             UNITED STATES BANKRUPTCY JUDGE

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

(3)      This paragraph to be included in Interim Order only.

<Page>

                                                                        ANNEX VI

                                FORM OF DIP ORDER
                                -----------------

                                [TO BE REVISED]

                         UNITED STATES BANKRUPTCY COURT

                              DISTRICT OF
                                          ---------

In re                           )       Case No.
                                )               ---------
McLeodUSA Incorporated,         )       Chapter 11
McLeod Purchasing, LLC,         )
                                )
                     Debtors.

          FINAL ORDER (I) AUTHORIZING DEBTORS TO OBTAIN POST-PETITION
FINANCING PURSUANT TO 11 U.S.C.ss.ss.105, 361, 362, 364(c)(1), 364(c)(2),
     364(c)(3) and 364(d)(1) AND (II) GRANTING ADEQUATE PROTECTION TO
                        PRE-PETITION SECURED PARTIES

         UPON THE MOTION (the "MOTION"), dated ___________, of McLeodUSA
Incorporated and McLeod Purchasing, LLC (jointly and severally, the "BORROWER"
or the "BORROWERS"), each as Debtor and Debtor-in-Possession (jointly and
severally, the "DEBTOR" or the "DEBTORS"), pursuant to Sections 105, 361, 362,
364(c)(1), 364(c)(2), 364(d)(1) of the United States Bankruptcy Code, 11
U.S.C.ss.ss.101, ET SEQ. (the "CODE"), and Rules 2002, 4001 and 9014 of the
Federal Rules of Bankruptcy Procedure (the "BANKRUPTCY RULES") seeking, among
other things:

<Page>

                (1) authorization to obtain post-petition financing (the
         "FINANCING"), up to the principal amount of $50 million, from the
         JPMorgan Chase Bank ("MORGAN" or the "ADMINISTRATIVE AGENT"), and
         J.P. Morgan Securities Inc. ("JPMSI" or the "SYNDICATION AGENT" and
         together with Morgan, the "AGENTS") acting as Agents for themselves
         and a syndicate of financial institutions (together with the Agents,
         the "DIP LENDERS") to be arranged by the Agents; and

                (2) the granting of adequate protection to the lenders (the
         "PRE-PETITION SECURED LENDERS") under or in connection with that
         certain Credit Agreement, dated as of May 31, 2000 (as heretofore
         amended, supplemented or otherwise modified, the "PRE-PETITION CREDIT
         AGREEMENT") among the Borrower, the banks listed therein, the letter of
         credit issuing banks named therein, and Morgan, as administrative agent
         for the Pre-Petition Secured Lenders (the "PRE-PETITION AGENT"), and
         that certain Security Agreement, dated as of [DATE], between __________
         and Morgan as Collateral Agent (as heretofore amended, supplemented or
         otherwise modified, the "SECURITY AGREEMENT" and, collectively with the
         Pre-Petition Credit Agreement, and the Mortgages and other loan
         documentation executed in connection therewith, the "EXISTING
         AGREEMENTS") whose liens and security interests are being primed by the
         Financing; and DUE NOTICE of the Motion and the Final Hearing having
         been given by the Debtors to the twenty largest unsecured creditors of
         each of the Debtors, the Pre-Petition Agent, the Pre-Petition Secured
         Lenders and the United States Trustee for the District of _________;
         and

THE FINAL HEARING having been held on [DATE]; and

                                        2

<Page>

         UPON THE RECORD made by the Debtors at the Final Hearing, and after due
deliberation and consideration and sufficient cause appearing therefor;

         IT IS FOUND, DETERMINED, ORDERED AND ADJUDGED, that:

         1.      JURISDICTION. This Court has core jurisdiction over these
proceedings and the parties and property affected hereby pursuant to 28
U.S.C.ss.ss.157(b) and 1334.

         2.      NOTICE. The notice given by the Debtors of the Motion and the
Final Hearing constitutes due and sufficient notice of the Motion and the Final
Hearing.

         3.      DEBTORS' STIPULATIONS. Without prejudice to the rights of any
other party, the Debtors have stipulated and agreed that:

                 (1) in accordance with the terms of the Existing Agreements
and as of the date hereof and as of the filing of the Debtors' Chapter 11
petitions herein (the "PETITION DATE"), Borrower _______________ was truly
and justly indebted and liable to the Pre-Petition Secured Lenders, without
defense, counterclaim or offset of any kind, in the aggregate principal
amount of approximately $[AMOUNT] in respect of loans made and in the
aggregate principal amount of approximately $[AMOUNT] in respect of letters
of credit issued, in each case, by the Pre-Petition Secured Lenders pursuant
to the Existing Agreements, plus interest thereon and fees and expenses
incurred in connection therewith as provided in the Existing Agreements
(collectively, the "PRE-PETITION DEBT");

                 (2) the liens and security interests granted to the
Pre-Petition Agent pursuant to the Security Agreement and pursuant to all
mortgages, deeds of trust and other security documents executed by either or
both of the Debtors in favor of the Pre-Petition Agent in connection with the
Existing Agreements, are valid, perfected, enforceable, first priority liens and
security interests in the personal and real property described in such
Agreement,

                                        3
<Page>

mortgages, deeds of trusts and security documents (the "PRE-PETITION
COLLATERAL") subject only to (a) the liens and security interests granted to
the Agents and the DIP Lenders pursuant to this Order and the DIP Credit
Agreement and (b) liens permitted under the Existing Agreements to the extent
such permitted liens are permitted thereunder to be senior to or pari passu
with the liens of the Pre-Petition Agent on the Pre-Petition Collateral; and

         (3)  the aggregate value of the Pre-Petition Collateral substantially
exceeds the aggregate amount of the Pre-Petition Debt.

     4.  FINDINGS REGARDING THE FINANCING

         (a)  The Debtors have a need to obtain financing in order to permit,
among other things, the orderly continuation of the operation of their
business, to maintain business relationships with vendors and suppliers, to
make capital expenditures and to satisfy other working capital needs of
themselves and certain of their subsidiaries and affiliates, and the ability
of the Debtors to obtain sufficient working capital and liquidity through the
incurrence of new indebtedness for borrowed money and other financial
accommodations is vital to the preservation and maintenance of the going
concern values of the Debtors and a successful reorganization of the Debtors.

         (b)  The Debtors are unable to obtain adequate unsecured credit
allowable under Section 503(b)(1) of the Code as an administrative expense,
and a credit facility in the amount and on the terms provided by the
Financing is unavailable to the Debtors without the Debtors granting to the
Agents and the DIP Lenders (subject to the Carve-Out, as defined below) the
Superpriority Claim and the DIP Liens (each as defined below).

                                       4

<Page>

         (c)  The terms of the Financing are fair and reasonable, and reflect
the Debtors' exercise of prudent business judgment consistent with their
fiduciary duty and are supported by reasonably equivalent value and fair
consideration.

         (d)  The Financing has been negotiated in good faith and at
arms-length between the Debtors and the Agents, and any credit extended,
letters of credit issued for the account of and loans made to the Debtors by
the DIP Lenders pursuant to the Debtor-in-Possession Credit Agreement
attached as Exhibit A to the Motion as such agreement has been modified as of
the date hereof (the "DIP CREDIT AGREEMENT"), and any credit extended in
respect of overdrafts referred to in the DIP Credit Agreement, shall be
deemed to have been extended by the DIP Lenders in good faith, as that term
is used in Section 364(e) of the Code.

     5.  AUTHORIZATION OF THE FINANCING AND THE DOCUMENTS.1'

         (a)  The Debtors are hereby authorized to borrow or obtain letters
of credit pursuant to the DIP Credit Agreement, which shall be used in
accordance with this Order and the DIP Credit Agreement for the purposes set
forth in the DIP Credit Agreement. In addition, the Debtors are hereby
authorized to the extent provided in the DIP Credit Agreement to incur
overdrafts and related liabilities arising from treasury, depository and cash
management services or in connection with any automated clearing house fund
transfers provided to or for the benefit of the Debtors by [BANK] or any of
its affiliates (in addition to the amount of borrowings and letters of credit
obtained pursuant to the DIP Credit Agreement).

--------------
1'   The Court has entered its Interim Order Authorizing Use of Cash
Collateral and Providing Adequate Protection Under 11 U.S.C. Sections 105,
361 and 363, and contemporaneously with this order is entering its Final
Order Authorizing Use of Cash Collateral and Providing Adequate Protection
Under U.S.C. Sections 105, 361 and 363 (the "Cash Collateral Orders").
Notwithstanding any provision in either of the Cash Collateral Orders to

                                       5

<Page>

         (b)  In furtherance of the foregoing, each of the Debtors is
authorized and directed to do and perform all acts, to make, execute and
deliver all instruments and documents (including, without limitation, the
execution of security agreements, mortgages and financing statements), and to
pay all fees, that may be reasonably required or necessary for the Debtors'
performance of the Financing, including, without limitation:

              (1) the execution, delivery and performance of the Financing
Documents (as defined in the DIP Credit Agreement) and any exhibits attached
thereto, including, without limitation, the DIP Credit Agreement and the
Security Agreement (substantially in the forms attached to the Motion),
contemplated thereby (as each such item is defined in the DIP Credit
Agreement) (collectively, and together with the letter agreement referred to
in clause (3) below, the "DOCUMENTS"),

              (2) the execution and delivery of one or more amendments to the
DIP Credit Agreement for, among other things, the purpose of adding financial
institutions as DIP Lenders and reallocating the commitments for the
Financing among the DIP Lenders in each case in such form as the Debtors, the
Agents and the DIP Lenders may agree,

              (3) the non-refundable payment to the Agents or the DIP
Lenders, as the case may be, of the fees referred to in the DIP Credit
Agreement (and in the separate letter agreement dated [DATE] between the
Borrowers and the Agents referred to in the DIP Credit Agreement) and such
Letter of Credit Fees, Commitment Fees and reasonable costs and expenses as
may be due from time to time including, without limitation, attorneys' fees

--------------
the contrary, the provisions of this Order shall control.

                                       6

<Page>

and disbursements as provided in the Documents, all as such terms are defined
in the Documents, and

                 (4) performance of all other acts required under or in
connection with the Documents.

           (c) Upon execution and delivery of the Documents, the Documents
shall constitute valid and binding obligations of the Debtors, enforceable
against each Debtor party thereto in accordance with their terms.

     6.    SUPERPRIORITY CLAIMS.

           (a) Pursuant to Section 364(c)(1) of the Code, all of the Debtors'
obligations and indebtedness arising under or in respect of the Financing and
the Documents (including without limitation in respect of overdrafts referred
to in Section _____ of the DIP Credit Agreement)(the "DIP OBLIGATIONS") shall
constitute obligations of the Debtors with priority over any and all
administrative expenses of the kind specified in Sections 503(b) and 501(b)
of the Code, and over any and all administrative expenses or other claims
under Sections 105, 326, 328, 330, 331, 506(c), 507(a), 546(c) or 726 of the
Code (the "SUPERPRIORITY CLAIMS"), subject only in the event of the
occurrence of a Default or an Event of Default (each as defined in the DIP
Credit Agreement) to the payment of the Carve Out (as hereinafter defined).

           (b) For purposes hereof, the "Carve-Out" means an amount equal to
the sum of (x) in the event of the occurrence and during the continuance of a
Default or an Event of Default (each as defined in the Agreement) or an event
that would constitute a Default or an Event of Default with the giving of
notice or lapse of time or both, the allowed and unpaid professional fees and
disbursements incurred by the Debtor and by any statutory committee

                                       7

<Page>

(each, a "COMMITTEE") appointed in the Cases in an aggregate amount not in
excess of the sum of (i) $2.5 million; plus (ii) the amount certified to the
Administrative Agent by the Debtors in the last Borrowing Base (to be defined
in the Agreement) prior to a Default or an Event of Default as constituting
the then unpaid professional fees and disbursements incurred by the Debtors
and the Committee, plus (y) the payment of fees pursuant to 28 U.S.C. Section
1930 and to the Clerk of the Court, PROVIDED HOWEVER that so long as no
Default or Event of Default or an event which with the giving of notice or
lapse of time or both would constitute a Default or an Event of Default shall
have occurred and be continuing, the Debtors shall be permitted to pay
compensation and reimbursement of expenses allowed and payable under Sections
330 and 331 of the Code, as the same may be due and payable, and any such
compensation and expenses previously paid prior to the occurrence of a
Default or Event of Default shall not be applied against the Carve-Out. No
portion of the Carve-Out shall be utilized for the payment of professional
fees and disbursements incurred in connection with any challenge to the
amount, extent, priority, validity, perfection or enforcement of the
indebtedness of the Borrowers owing to the parties primed by the priming
liens or to the collateral securing such indebtedness.

     7.    DIP LIENS. As security for the DIP Obligations, effective upon the
date of this Order and without the necessity of the execution by the Debtors
of mortgages, security agreements or otherwise, the following security
interests and liens are hereby granted to the Agent and the DIP Lenders (all
properly identified in clauses (1), (2) and (3) below being collectively
referred to as the "COLLATERAL," and such security interests and liens being
collectively referred to as the "DIP LIENS") subject (except in the case of
amounts deposited in respect of Letters of Credit pursuant to Section _____
of the DIP Credit Agreement,

                                       8
<Page>

which shall not be subject to the Carve-Out) in the event of the occurrence
of a Default or an Event of Default, to the payment of the Carve-Out:

                 (1) FIRST LIEN ON CASH BALANCES AND UNENCUMBERED PROPERTY.
Pursuant to Section 364(c)(2) of the Code, the Agent and the DIP Lenders are
hereby granted a perfected first priority senior security interest in and
lien upon (A) all Cash Balances (as defined in the DIP Credit Agreement) and
other cash of the Borrowers (whether maintained with the Agents or otherwise)
and any investment of the funds contained therein (all of such property
referred to in this clause (A) being hereinafter referred to as the "CREDIT
AGREEMENT CASH COLLATERAL"), and (B) all unencumbered pre- and post-petition
property of the Debtors, whether existing on the Petition Date or thereafter
acquired (but not including the proceeds of causes of action arising solely
under the Code, including, but not limited to, avoidance actions, or
incorporated thereunder pursuant to section 544(b)(1) thereof).

                 (2) LIEN PRIMING PRE-PETITION LIENS. Pursuant to Section
364(d)(1) of the Code, the Agent and the DIP Lenders are hereby granted a
perfected first priority senior priming security interest in and lien upon
all pre- and post-petition property of the Debtors (including, without
limitation, accounts receivable, contracts, documents, equipment, general
intangibles, instruments, inventory, interests in leaseholds, real property
and the capital stock of the subsidiaries of the Debtors and the proceeds of
all of the foregoing), whether now existing or hereafter acquired, that is
subject to the existing liens presently securing any of the Debtors'
indebtedness, including, but not limited to Debtors' indebtedness (including
in respect of issued but undrawn letters of credit) to the Pre-Petition
Secured Lenders (but not including the proceeds of causes of action accruing
solely under the Code, including, but not limited to, avoidance actions, or
incorporated thereunder pursuant to Section 544(b)(1)

                                       9
<Page>

thereof). Such security interests and liens shall be senior in all respects
to the security interests and liens in such property of the holders of any of
the Debtors' indebtedness, including the Debtors' indebtedness to the
Pre-Petition Secured Lenders and any present and future liens of the
Pre-Petition Secured Lenders (including, without limitation, adequate
protection liens granted hereunder) but shall not be senior to the interests
of other parties arising out of liens, if any, in such property existing on
the Petition Date (i) to the extent scheduled in Schedule ___ to the DIP
Credit Agreement; and (ii) to the extent such liens secure any indebtedness
(other than indebtedness to the Pre-Petition Secured Lenders and as scheduled
in Schedule ___ in an aggregate amount less than or equal to [$1 million],
including liens that are perfected subsequent to the Petition Date as
permitted by Section 546(b) of the Code.

                  (3) LIEN JUNIOR TO LIENS OF OTHER SECURED CREDITORS. Pursuant
to Section 364(c)(3) of the Code, the Agent and the DIP Lenders are hereby
granted a perfected junior priority security interest in and lien upon all pre-
and post-petition property of the Debtors (which liens will be supplemental to
those liens described in clause (2) of this paragraph 7, as to which the liens
and security interests in favor of the Agents will be as described in such
clause), whether now existing or hereafter acquired, that is subject to valid
and perfected liens in existence on the Petition Date or to valid liens in
existence on the Petition Date that are perfected subsequent to the Petition
Date as permitted by Section 546(b) of the Code, junior to such valid and
perfected liens (but not including the proceeds of causes of action accruing
solely under the Code, including, but not limited to, avoidance actions, or
incorporated thereunder pursuant to Section 544(b)(1) thereof).

      8.    PROTECTION OF DIP LENDERS' RIGHTS.

                                       10

<Page>

                  (a) So long as there are any borrowings or letters of credit
outstanding, or the DIP Lenders have any Commitment (as defined in the DIP
Credit Agreement) under the DIP Credit Agreement, the Pre-Petition Secured
Lenders shall take no action to foreclose upon the liens granted to the
Pre-Petition Secured Lenders pursuant to the Existing Agreements and this Order
or otherwise exercise remedies against the Collateral.

                  (b) Subject only to the provisions of the DIP Credit
Agreement, the automatic stay provisions of Section 362 of the Code are vacated
and modified to the extent necessary to permit the Agents and the DIP Lenders to
exercise, upon the occurrence of an Event of Default and the giving of the five
business days' written notice to the Debtors and any Committee, all rights and
remedies against the Collateral provided for in the Documents (including,
without limitation, the right to setoff monies of the Debtors in accounts
maintained with the Agents or any DIP Lender).

      9. ADEQUATE PROTECTION. The Pre-Petition Secured Lenders are entitled,
pursuant to Sections 361 and 364(d)(1) of the Code, to adequate protection of
their interest in the Pre-Petition Collateral for any diminution in value of
the Pre-Petition Secured Lenders' interests in the Pre-Petition Collateral,
including, without limitation, any such diminution resulting from the priming
of the Pre-Petition Agent's security interests and liens in the Pre-Petition
Collateral by the Agents and the DIP Lenders pursuant to the Financing
Documents and this Order and the imposition of the automatic stay pursuant to
Section 362 of the Code. As adequate protection, the Pre-Petition Agent and
the Pre-Petition Secured Lenders are hereby granted the following:

                  (1) ADEQUATE PROTECTION LIENS. The Pre-Petition Agent and
the Pre-Petition Secured Lenders are hereby granted (effective upon the date
of this Order and

                                       11

<Page>

without the necessity of the execution by the Debtors of mortgages, security
agreements, pledge agreements, financing statements or other agreements) a
perfected first priority senior security interest in and lien upon all the
Collateral, subject and subordinate only to (a) the security interests and liens
granted to the Agents for the benefit of the DIP Lenders in this Order and
pursuant to the Documents and any liens on the Collateral to which such liens so
granted to the Agents are junior, (b) the applicable provisions of the
Carve-Out, (c) any compensation (exclusive of professional fees and expenses)
directly payable to any trustee appointed in these chapter 11 cases, (d) valid
and perfected non-voidable liens in existence on the Petition Date and (e) valid
liens in existence on the Petition Date that are perfected subsequent to the
Petition Date as permitted by Section 546(b) of the Code, provided, however,
that in the event the Restructuring is consummated, the Pre-Petition Secured
Lenders shall not be entitled to any cash payment with respect to such liens.

                  (2) SECTION 507(b) CLAIM. The Pre-Petition Agent and the
Pre-Petition Secured Lenders are hereby granted, subject, in the event of the
occurrence of a Default or an Event of Default, to the payment of the Carve-Out,
a superpriority claim as provided for in Section 507(b) of the Code, immediately
junior to the claims under Section 364(c)(1) of the Code held by the Agents and
the DIP Lenders.

                  (3) INTEREST, FEES AND EXPENSES. The Pre-Petition Agent and
the Pre-Petition-Secured Lenders shall receive (a) cash payments in an amount
equal to all accrued and unpaid letter of credit fees and interest on the
Pre-Petition Debt at the rate provided for in the Existing Agreements, and all
other accrued and unpaid fees and disbursements (including, but not limited to,
fees owed to the Pre-Petition Agent) incurred prior to the Petition Date owing
under the Existing Agreements, (b) current cash payments (i) in an amount equal
to all

                                       12
<Page>

fees and expenses payable to the Pre-Petition Agent and otherwise under the
Existing Agreements, including but not limited to, the reasonable fees and
disbursements of counsel and financial consultants for the Pre-Petition Agent
and (ii) on the first business day of each month, all accrued but unpaid
letter of credit fees, and interest on the Pre-Petition Debt at a rate per
annum equal to the non-default contractual interest rate under the
Pre-Petition Credit Agreement, PROVIDED that, without prejudice to the rights
of any other party to contest such assertion, the Pre-Petition Secured Lenders
reserve their rights, upon the occurrence of a Default or Event of Default
under the Pre-Petition Credit Agreement (other than a Default or Event of
Default that has been waived in accordance with the terms of the Third
Amendment dated ____, 2001, to the Pre-Petition Credit Agreement), to assert
claims for the payment of additional interest calculated at any other
applicable rates of interest (including, without limitation, default rates),
or on any other basis, provided for in the Existing Agreements.

               (4)  PRESERVATION AND MONITORING OF COLLATERAL.  The Debtors
are hereby authorized and directed to take all steps reasonably necessary to
protect and maintain the value of the Pre-Petition Collateral, including,
without limitation, making such capital expenditures and performing such
maintenance as may be necessary for purposes of maintaining such value. The
Pre-Petition Secured Lenders shall be permitted to continue to retain expert
consultants and financial advisors at the expense of the Debtors, which
consultants and advisors shall be given reasonable access not less frequently
than quarterly for purposes of monitoring the value of the Pre-Petition
Collateral and the compliance by the Debtors with the provisions of this
paragraph.

               (5)  LIMITATION ON CHARGING EXPENSES AGAINST COLLATERAL.
Except to the extent of the Carve-Out, no expenses of administration of the
Cases or any future

                                      13

<Page>

proceeding or that may result therefrom, including liquidation in bankruptcy
or other proceedings under the Code, shall be charged against or recovered
from the Collateral or, to the extent such expenses are incurred prior to
repayment in full of all amounts owing to the DIP Lenders the Pre-Petition
Collateral, pursuant to Section 506(c) of the Code or any similar principal
of law, without the prior written consent of the Agents or the Pre-Petition
Agent, as the case may be, and no such consent shall be implied from any
other action, inaction, or acquiescence by the Agents, the DIP Lenders, the
Pre-Petition Agent or the Pre-Petition Secured Lenders.

      10.  RESERVATION OF RIGHTS OF PRE-PETITION SECURED LENDERS.  The Court
finds that, notwithstanding any other provision hereof, the adequate
protection provided herein is reasonable and sufficient to protect the
interests of the Pre-Petition Secured Lenders. However, the Pre-Petition
Agent and the Pre-Petition Secured Lenders may request further or different
adequate protection, and the Debtors or any other party may contest any such
request. Moreover, nothing contained in this Order shall impair or modify the
right of any Pre-Petition Secured Lender that is a party to a swap agreement
or other eligible financial contract with a Debtor to assert rights of
set-off or other rights with respect thereto (or the right of the Debtors to
contest such assertions).

      11.  PERFECTION OF DIP LIENS AND ADEQUATE PROTECTION LIENS.  The
Agents, the DIP Lenders and the Pre-Petition Secured Lenders that have been
granted security interests and liens hereunder shall not be required to file
or record financing statements, mortgages, notices of lien or similar
instruments in any jurisdiction or take any other action in order to validate
and perfect the security interests and liens granted to them pursuant to
this Order. If the Agents on behalf of the DIP Lenders or the Pre-Petition
Secured Lenders shall, in their

                                      14

<Page>

sole discretion, choose to file such financing statements, mortgages, notices
of lien or similar instruments or otherwise confirm perfection of such
security interests and liens, the liens and security interest granted herein
shall be deemed perfected at the time and on the date of entry of this Order.
The Pre-Petition Secured Lenders shall not file such financing statements,
mortgages, notices of lien or similar instruments, or otherwise confirm
perfection of such security interests and liens, unless the Agents on behalf
of the DIP Lenders shall theretofore have done so. Upon the request of the
Agents, each of the Pre-Petition Secured Lenders and the Pre-Petition Agent,
without any further consent of any party, is authorized to take, execute and
deliver such instruments (in each case without representation or warranty of
any kind) to enable the Agents to further perfect, preserve and enforce the
security interests an liens granted to the Agents for the benefit of the DIP
Lenders by the Documents and this Order.

      12.  PRESERVATION OF RIGHTS GRANTED UNDER THE ORDER.

           (a) No claim having a priority superior to or PARI PASSU with that
granted by this Order to the Agents and the DIP Lenders or to the
Pre-Petition Agent and the Pre-Petition Secured Lenders, respectively, shall
be granted while any portion of the Financing (or refinancing thereof) or the
commitment thereunder remains outstanding, and the security interests and
liens granted to the Agents on behalf of the DIP Lenders hereunder shall not
be (i) subject to any lien or security interest that is avoided and preserved
for the benefit of the Debtors' estates under Section 551 of the Code or (ii)
subordinated to or made PARI PASSU with any other lien or security interest
under Section 364(d) of the Code or otherwise.

                                       15

<Page>

           (b) Unless all obligations and indebtedness owing to the Agents
and the DIP Lenders under the DIP Credit Agreement shall theretofore have
been paid in full (and, with respect to outstanding Letters of Credit issued
pursuant to the DIP Credit Agreement, cash collateralized in accordance with
the provisions of the DIP Credit Agreement), the Debtors shall not seek, and
it shall constitute an Event of Default if any of the Debtors seek, or if
there is entered, an order dismissing any of the Cases. If an order
dismissing any of the Cases under Section 1112 of the Code or otherwise is at
any time entered, such order shall provide (in accordance with Sections 105
and 349 of the Code) that (x) the superpriority claims, priming liens and
security interests and replacement security interests granted to the Agents
and the DIP Lenders and the Pre-Petition Secured Lenders, as the case may be,
pursuant to this Order shall continue in full force and effect and shall
maintain their priorities as provided in this Order until all obligations in
respect thereof shall have been paid and satisfied in full (and that such
superpriority claims, priming liens and replacement liens, shall,
notwithstanding such dismissal, remain binding on all parties in interest)
and (y) this Court shall retain jurisdiction, notwithstanding such dismissal,
for the purposes of enforcing the claims, liens and security interests
referred to in (x) above.

           (c) If any or all of the provisions of this Order are hereafter
reversed, modified, vacated or stayed, such reversal, stay, modification or
vacation shall not affect (x) the validity of any obligation, indebtedness or
liability incurred by the Debtors to the DIP Lenders prior to written notice
to the Agents of the effective date of such reversal, stay, modification or
vacation or (y) the validity and enforceability of any lien or priority
authorized or created hereby or pursuant to the DIP Credit Agreement with
respect to any such obligation, indebtedness or liability. Notwithstanding
any such reversal, stay,

                                      16

<Page>

modification or vacation, or any indebtedness, obligation or liability
incurred by the Debtors to the DIP Lenders prior to written notice to
Pre-Petition Agent and the Agents of the effective date of such reversal,
stay, modification or vacation shall be governed in all respects by the
original provisions of this Order, as applicable, and the DIP Lenders and the
Pre-Petition Secured Lenders shall be entitled to all the rights, remedies,
privileges and benefits granted in this Order and/or pursuant to the DIP
Credit Agreement with respect to all such indebtedness, obligation or
liability.

           (d) The obligations of the Debtors under this Order and the
Financing Documents shall not be discharged by the entry of an order
confirming a plan of reorganization in any of the Cases and, pursuant to
Section 1141(d)(4) of the Code, the Debtors have waived such discharge.

      13.  LIMITATION ON USE OF FINANCING PROCEEDS AND COLLATERAL.
Notwithstanding anything herein to the contrary, no borrowings, letters of
credit, Collateral or the Carve-Out (collectively, the "DESIGNATED ASSETS")
may be used to object, contest or raise any defense to, the validity,
perfection, priority, extent or enforceability of the Pre-Petition Debt or
the liens securing the Pre-Petition Debt, or to assert any claims or causes
of action against the Pre-Petition Secured Lenders or the Pre-Petition Agent
PROVIDED, HOWEVER, that Designated Assets in an amount not to exceed $100,000
in the aggregate may be utilized to pay allowed expenses of any Official
Committee of Unsecured Creditors appointed in these cases incurred in
connection with the investigation or evaluation of the validity, perfection,
priority, extent or enforceability of the Pre-Petition Debt or the liens
securing the Pre-Petition Debt.

      14.  AMENDMENTS TO THE DOCUMENTS.  The Debtors, the Agents and the DIP
Lenders may amend, modify, supplement or waive any provision of the Documents
if such

                                      17

<Page>

amendment, modification, supplement or waiver is permitted under the terms of
the Documents and is not material (in the good faith judgment of the Debtors
and the Agents), without the need to apply to, or receive further approval
from, the Court, PROVIDED, HOWEVER, that the Debtors shall give notice to any
Committee and the Office of the United States Trustee of any non-material
amendments, waivers, supplements or modifications.

    15. SUBROGATION OF DEBTORS. Upon (a) final satisfaction and repayment in
full of all DIP Obligations to the Agent and the DIP Lenders under the DIP
Credit Agreement and (b) termination of the commitments thereunder, each of
the Debtors shall thereafter, automatically and without further act or deed,
be subrogated to the rights of the Agents and the DIP Lenders under the DIP
Credit Agreement as against the other Debtors based upon each respective
Debtor's actual (a) usage of or benefit from the proceeds of the Financing and
(b) repayment or satisfaction thereof. Such rights of subrogation shall
include, without limitation, all of the liens, collateral, priorities,
superpriorities and other rights, remedies and claims granted to the Agents
or the DIP Lenders, as the case may be, under the Documents or otherwise.
Final determination of the respective usage of or benefit from the proceeds
of the Financing by each Debtor and its liability therefor, as well as the
amount of any claims arising by way of subrogation in favor of the other
Debtors, shall be made by this Court after notice and a hearing.

    16. ORDER GOVERNS. In the event of any inconsistency between the
provisions of this Order and of the DIP Credit Agreement, the provisions of
this Order shall govern.

    17. SUCCESSORS AND ASSIGNS. The provisions of this Order shall be binding
upon the Agents, the DIP Lenders, the Pre-Petition Agent, the Pre-Petition
Secured Lenders and the Debtors and their respective successors and assigns
(including any chapter 7 or chapter 11

                                       18

<Page>

trustee hereinafter appointed or elected for the estate of any of the
Debtors) and inure to the benefit of the Agents, the DIP Lenders, the
Pre-Petition Agent, the Pre-Petition Secured Lenders and the Debtors and
(except with respect to any trustee hereinafter appointed or elected for the
estate of any of the Debtors) their respective successors and assigns.

Dated:

                                             ------------------------------
                                             UNITED STATES BANKRUPTCY JUDGE

                                      19

<Page>

                                                                     ANNEX VII

                                    NON-CORE ASSETS
                                    ---------------

<Table>
<Caption>

ASSET                              DESCRIPTION
-----                              -----------
<S>                                <C>
DTG/ATS                            South Dakota ILEC, CLEC and cable assets

Splitrock                          National data network

CapRock Services                   Off-shore oil service

Greene County                      Local cable operator

Iowa/ATS                           Cedar Rapids cable and telco overbuild

IBS                                Telecom equipment

Operator Services                  411 services

Public Services                    Pay phone services

Ruffalo CODY                       Telemarketing

CMR                                Telemarketing

Inventory                          Excess telecommunications equipment

Gulfstream V and other aircraft    Aircraft

Effingham, Illinois building       Building

Facilities                         Idle and excess facilities identified for
                                   sale or consolidation and having an
                                   estimated value of $15,280,000 in the
                                   aggregate as of September 30, 2001
</Table>

The foregoing assets are identified in the Third Amendment as Non-Core
Assets. These assets may be disposed of as a sale of stock, sale of assets,
merger or consolidation, or any combination of the foregoing.<Page>
------------------------------------------------------------------------------
------------------------------------------------------------------------------

                          STOCK PURCHASE AGREEMENT

                                By and Among

                         McLEODUSA HOLDINGS, INC.,

                          PUBCO ACQUISITION CORP.,

                                    and

                          McLEODUSA INCORPORATED,

                        Dated as of December 3, 2001

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

                                    Page 1

<Page>

                                          TABLE OF CONTENTS

<Table>
<S>          <C>  <C>                                                                      <C>
ARTICLE I         SALE OF STOCK
             1.1.   The Sale.................................................................1
             1.2.   Time and Place of Closing................................................1
             1.3.   Deliveries by the Seller.................................................2
             1.4.   Deliveries by the Buyer..................................................2

ARTICLE II        REPRESENTATIONS AND WARRANTIES OF THE SELLER
             2.1.   Organization; Etc........................................................2
             2.2.   Capitalization...........................................................3
             2.3.   Authority Relative to this Agreement.....................................4
             2.4.   Consents and Approvals; No Violations....................................4
             2.5.   Financial Statements.....................................................5
             2.6.   No Undisclosed Liabilities...............................................5
             2.7.   Absence of Certain Changes...............................................6
             2.8.   No Default...............................................................6
             2.9.   Litigation...............................................................6
             2.10.  Compliance with Law......................................................6
             2.11.  Employee Benefit Plans...................................................6
             2.12.  Intellectual Property....................................................8
             2.13.  Material Contracts.......................................................9
</Table>

                                       Page 2

<Page>

<Table>
<S>          <C>  <C>                                                                      <C>

             2.14.  Transactions with Affiliates............................................10
             2.15.  Business and Properties.................................................10
             2.16.  Environmental Matters...................................................11
             2.17.  Labor Relations.........................................................11
             2.18.  Title to Assets.........................................................11
             2.19.  Brokers and Finders.....................................................12
             2.20.  Insurance...............................................................12
             2.21.  Taxes...................................................................12
             2.22.  List of Publications....................................................13

ARTICLE III       REPRESENTATIONS AND WARRANTIES OF THE BUYER
             3.1.   Corporate Organization; Etc.............................................13
             3.2.   Authority Relative to this Agreement....................................13
             3.3.   Consents and Approvals; No Violations...................................14
             3.4.   Acquisition of Shares for Investment; Investigation.....................14
             3.5.   Sufficient Funds........................................................14
             3.6.   Brokers and Finders.....................................................15

ARTICLE IV        COVENANTS OF THE PARTIES
             4.1.   Conduct of Business of the Company......................................15
             4.2.   Access to Information...................................................17
             4.3.   Reasonable Efforts......................................................17
             4.4.   Public Announcements....................................................18
             4.5.   Employee Matters........................................................18
             4.6.   Tax Matters.............................................................19
             4.7.   Pre-Closing Insurance...................................................24

</Table>

                                  Page 3

<Page>

<Table>
<S>          <C>  <C>                                                                      <C>
             4.8.   Acquisition Proposals...................................................25
             4.9.   Related Agreements......................................................25
             4.10.  Right of First Offer....................................................25
             4.11.  Subsequent Sale.........................................................27
             4.12.  Headquarters............................................................27
             4.13.  Intercompany Indebtedness; Net Working Capital..........................28
             4.14.  Bankruptcy Matters......................................................29
             4.15.  Leases and Other Obligations............................................29
             4.16.  Real Property...........................................................30

ARTICLE V         CONDITIONS TO CONSUMMATION OF THE STOCK
                  PURCHASE
             5.1.   Conditions to Each Party's Obligations to Consummate the Stock
                    Purchase................................................................30
             5.2.   Further Conditions to the Seller's Obligations..........................30
             5.3.   Further Conditions to the Buyer's Obligations...........................31

ARTICLE VI        TERMINATION AND ABANDONMENT
             6.1.   Termination.............................................................32
             6.2.   Effect of Termination...................................................32

ARTICLE VI        SURVIVAL AND INDEMNIFICATION
             7.1.   Survival Periods........................................................33
             7.2.   Indemnification.........................................................33
             7.3.   Indemnification Amounts.................................................34
             7.4.   Claims..................................................................34
             7.5.   Exclusive Remedy........................................................35
             7.6.   Insurance...............................................................35
</Table>

                                   Page 4

<Page>

<Table>
<S>          <C>  <C>                                                                      <C>

             7.7.   Duplication.............................................................35

ARTICLE VIII MISCELLANEOUS PROVISIONS
             8.1.   Amendment and Modification..............................................35
             8.2.   Extension; Waiver.......................................................35
             8.3.   Entire Agreement; Assignment............................................36
             8.4.   Validity................................................................36
             8.5.   Notices.................................................................36
             8.6.   Governing Law and Jurisdiction..........................................37
             8.7.   Descriptive Headings....................................................37
             8.8.   Counterparts............................................................37
             8.9.   Expenses................................................................38
             8.10.  Parties in Interest.....................................................38
             8.11.  No Waivers..............................................................38
             8.12.  Specific Performance....................................................38
             8.13.  Construction............................................................38
             8.14.  Guarantees..............................................................38
</TABLE>

                          STOCK PURCHASE AGREEMENT

                  STOCK PURCHASE AGREEMENT, dated as of December 3, 2001
(this "Agreement"), by and among McLeodUSA Holdings, Inc., a Delaware
corporation (the "Seller"), and Pubco Acquisition Corp., a Delaware
corporation (the "Buyer"), and McLeodUSA Incorporated, a Delaware
corporation ("Parent") (solely for purposes of Section 8.14.)

                  WHEREAS, the Seller owns all of the outstanding shares of

                                   Page 5

<Page>

capital stock (the "Shares") of McLeodUSA Media Group, Inc., an Iowa
corporation (the "Company"), and the Seller is a wholly-owned subsidiary of
Parent;

                  WHEREAS, Parent is considering a capital restructuring
substantially on the terms described in Exhibit A (the "Restructuring");
and

                  WHEREAS, the Seller desires to sell to the Buyer, and the
Buyer desires to purchase from the Seller, the Shares, upon the terms and
subject to the conditions set forth herein;

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:

                                 ARTICLE I

                               SALE OF STOCK

                  1.1. The Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as hereinafter defined), the
Seller will sell, convey, assign, transfer and deliver to the Buyer, and
the Buyer will purchase, acquire and accept from the Seller the Shares, in
consideration for which, at the Closing, the Buyer will pay to the Seller
for the Shares an amount equal to $535 million by wire transfer of
immediately available funds to an account or accounts designated by the
Seller prior to the Closing (the "Purchase Price"). The transactions
contemplated by this Section 1.1 are sometimes herein referred to as the
"Stock Purchase."

                  1.2. Time and Place of Closing. Upon the terms and
subject to the conditions of this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing") will take place

                                   Page 6

<Page>

at the offices of Skadden, Arps, Slate, Meagher & Flom, LLP, Four Times
Square, New York, New York 10036 at 9:30 a.m. on the business day following
the date on which all of the conditions to each party's obligations
hereunder (other than Section 5.1(c)) have been satisfied or waived and on
the same date and at the same time that the Restructuring is occurring, or
at such other place or time as the parties may agree. The date on which the
Closing occurs and the transactions contemplated hereby become effective is
referred to herein as the "Closing Date."

                  1.3. Deliveries by the Seller. Subject to the terms and
conditions hereof, at the Closing, the Seller will deliver or cause to be
delivered the following to the Buyer:

                  (a) certificates representing the Shares, accompanied by
stock powers duly endorsed in blank or accompanied by duly executed
instruments of transfer and with any and all required documentary stamps
attached;

                  (b) a non-foreign Person Affidavit as provided by Section
1445 of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder;

                  (c) the Operating Agreement, the Transition Services
Agreement and the Telecom Agreement (in each case as defined in Section
4.9); and

                  (d) all other documents, instruments and writings
required to be delivered by the Seller at or prior to the Closing Date
pursuant to this Agreement.

                  1.4. Deliveries by the Buyer. Subject to the terms and
conditions hereof, at the Closing, the Buyer will deliver or cause to be
delivered the following to the Seller:

                                   Page 7

<Page>

                  (a) the Purchase Price, in immediately available funds,
as set forth in Section 1.1 hereof;

                  (b) the Operating Agreement, the Transition Services
Agreement and the Telecom Agreement; and

                  (c) all other documents, instruments and writings
required to be delivered by the Buyer at or prior to the Closing Date
pursuant to this Agreement.

                                 ARTICLE II

                REPRESENTATIONS AND WARRANTIES OF THE SELLER

                  The Seller hereby represents and warrants to the Buyer as
follows:

                  2.1. Organization; Etc. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, and has all
requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted or currently proposed to be
conducted. Except as set forth in Section 2.1 of a disclosure schedule
document being delivered by the Seller to the Buyer concurrently herewith
(the "Disclosure Schedule"), the Company and each of its Subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing would not in the
aggregate have a material adverse effect on the business, operations,
results of operations, assets, or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as whole (a "Company Material Adverse
Effect"); provided, however, that any adverse effects on or changes in

                                   Page 8

<Page>

the Company or any of its Subsidiaries resulting from or relating to (i) the
execution of this Agreement and the announcement of this Agreement and the
transactions contemplated hereby or (ii) the announcement of, and subsequent
disclosures related to, the Restructuring or the commencement or pendency of
proceedings under Title 11 of the United States Code (the "Bankruptcy Code")
by or against Parent and/or its Subsidiaries (including the Company and its
Subsidiaries) shall be excluded from the determination of a Company Material
Adverse Effect. The Seller has heretofore delivered to the Buyer an accurate
and complete copy of the certificate of incorporation of the Company, as
amended to the date of this Agreement. As used in this Agreement, the word
"Subsidiary" means, with respect to any party, any corporation, partnership
or other entity or organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general
partner (excluding such partnerships where such party or any Subsidiary of
such party does not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other Shares
having by their terms ordinary voting power to elect a majority of the Board
of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and one or more of its Subsidiaries.

                  2.2. Capitalization. (a) Section 2.2 of the Disclosure
Schedule sets forth the number of issued and outstanding shares of capital
stock of the Company and each of its Subsidiaries. Except as set forth in
Section 2.2 of the Disclosure Schedule, there are not, and at the Closing
there will not be, any capital stock or other equity interests in the
Company or any of its Subsidiaries issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities

                                   Page 9

<Page>

or other agreements or commitments of any character obligating the Company or
any of its Subsidiaries to offer, issue, transfer or sell, or to acquire or
retire any of its own capital stock or other equity interests or the capital
stock or other equity interests of any of its Subsidiaries, or any
agreements, arrangements, or understandings granting any Person any rights in
the Company or any of its Subsidiaries similar to capital stock or other
equity interests. Except as set forth in Section 2.2 of the Disclosure
Schedule, all of the Shares are owned by the Seller, and all of the
outstanding shares of capital stock of the Company's Subsidiaries are owned
by the Company or the wholly owned direct or indirect Subsidiary of the
Company specified in Section 2.2. of the Disclosure Schedule, in each case,
free and clear of all liens, pledges, charges, claims, security interests or
other encumbrances, whether consensual, statutory or otherwise (collectively,
"Liens"). There are not now, and at the Closing there will not be, any voting
trusts or other agreements or understandings to which the Seller or the
Company is a party or is bound with respect to the voting of the Shares. All
of the Shares were issued by the Company in compliance with all applicable
securities laws. Other than the Subsidiaries listed on Schedule 2.2 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries owns any
equity or other ownership interest in any Person and neither the Company nor
any of its Subsidiaries is a party to any Contract to purchase or provide
funds to or make any investment (in the form of a loan, capital contribution
or otherwise) in any Person. As used in this Agreement, the word "Person"
means any natural person, firm, partnership, joint-venture, association,
corporation, company, trust, entity or organization, including a governmental
authority.

                                   Page 10

<Page>

                  (b) The consummation of the Stock Purchase will convey to
the Buyer good title to the Shares, free and clear of all Liens, except for
those created by the Buyer.

                  2.3. Authority Relative to this Agreement. The Seller has
full power and authority to execute and deliver this Agreement and each of
the agreements, documents and instruments to be executed and delivered in
connection with the transactions contemplated hereby (the "Ancillary
Agreements") to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the applicable Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite action and no other proceedings on the part of
the Seller are necessary to authorize this Agreement or the applicable
Ancillary Agreements or to consummate the transactions contemplated hereby
or thereby. This Agreement has been, and the applicable Ancillary
Agreements will be as of the Closing, duly and validly executed and
delivered by the Seller and, assuming such agreements have been duly
authorized, executed and delivered by the other parties thereto, constitute
a valid and binding agreement of the Seller, enforceable against the Seller
in accordance with its terms, except as such enforcement is limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and for limitations imposed by general
principles of equity.

                  2.4. Consents and Approvals; No Violations. Except for
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act") or as required under the Bankruptcy
Code in connection with the Restructuring, no filing with, and no permit,
authorization, consent or approval of, any public body or governmental
authority, domestic or foreign, is necessary for the consummation by the

                                   Page 11

<Page>

Seller of the transactions contemplated by this Agreement or the Ancillary
Agreements to which the Seller is a party; provided, that no representation
or warranty is made as to any such approval that may be required by reason
of the effect of the transactions contemplated hereby on any permit,
authorization, consent or approval presently held by the Buyer. Neither the
execution and delivery of this Agreement or the Ancillary Agreements by the
Seller nor the consummation by the Seller of the transactions contemplated
hereby or thereby nor compliance by the Seller with any of the provisions
hereof or thereof will (a) conflict with or result in any breach of any
provision of the certificate of incorporation of the Company, any of its
Subsidiaries or the Seller, (b) except as set forth in Section 2.4 of the
Disclosure Schedule, result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration) under, or
require any consent under, any of the terms, conditions or provisions of
any indenture, license, contract, agreement or other instrument or
obligation to which the Company, any of its Subsidiaries or the Seller is a
party or by which any of them or any of their respective properties or
assets may be bound or (c) assuming that the filings under the HSR Act
referred to in the first sentence of this Section 2.4 are duly and timely
made, violate any order, writ, injunction or decree, or any provision of
any federal, state, local or foreign law, statute, treaty, rule, regulation
or ordinance (collectively, "Laws", and individually, a "Law") applicable
to the Company, any of its Subsidiaries or the Seller or any of their
respective properties or assets, except in the case of (b) or (c) for
violations, breaches or defaults which, in the aggregate, would not have a
Company Material Adverse Effect or prevent or materially delay the
consummation of the transactions contemplated hereby.

                                   Page 12

<Page>

                  2.5. Financial Statements. Section 2.5 of the Disclosure
Schedule contains (a) the unaudited consolidated balance sheet of the
Company as of December 31, 1999 and 2000 (the "December Balance Sheets")
and the related unaudited consolidated statements of income and cash flows
for the years then ended and (b) the unaudited consolidated balance sheet
of the Company as of September 30, 2001 (the "September 30 Balance Sheet"
with September 30, 2001 being hereinafter referred to as the "Balance Sheet
Date") and the related unaudited consolidated statements of income and cash
flows for the nine months then ended (individually and collectively, the
"Financial Statements"). Except as disclosed in Section 2.5 of the
Disclosure Schedule, the Financial Statements were prepared in accordance
with United States generally accepted accounting principles ("GAAP"),
consistently applied (except that the financial statements as of the
Balance Sheet Date are subject to normal year-end adjustments, which would
not, in the aggregate, be material except as disclosed in Section 2.5 of
the Disclosure Schedule), and present fairly in all material respects the
financial position, results of operations, and cash flows of the Company
and its Subsidiaries as of the respective dates and for the respective
periods indicated therein. Except as disclosed in Section 2.5 of the
Disclosure Schedule, all related party transactions have been accounted for
by use of consistent accounting policies and methodologies during the
periods involved except as otherwise disclosed in the notes to the
Financial Statements and except for changes in such accounting policies and
methodologies which would not affect the comparability of such financial
information in any material way. The Financial Statements have been derived
from the books and records of the Company, which have been maintained in
accordance with good business practice and all applicable Laws.

                  2.6. No Undisclosed Liabilities. (a) Except as set forth

                                   Page 13

<Page>

in Section 2.6 of the Disclosure Schedule, neither the Company nor any of
its Subsidiaries has any liabilities or obligations of any nature (whether
absolute, accrued, contingent, unasserted, determined, determinable or
otherwise) except (i) liabilities and obligations in the respective amounts
reflected or reserved against in the September 30 Balance Sheet, (ii)
liabilities or obligations which were incurred since the Balance Sheet Date
in the ordinary course of business of the Company and its Subsidiaries
consistent with past practice, (iii) performance obligations under any
Contract which is listed in Section 2.13 of the Disclosure Schedule or
which is not required by the terms of Section 2.13 of this Agreement to be
scheduled, (iv) liabilities with respect to Taxes or Tax Returns (which
liabilities are the subject matter of the representations and warranties
set forth in Section 2.21) and (v) liabilities and obligations that would
not, in the aggregate, have a Company Material Adverse Effect.

                  (b) Except as set forth in Section 2.6(b) of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is the
borrower, obligor or guarantor under any notes, bonds, mortgages or other
debt obligations or obligations for borrowed money.

                  2.7. Absence of Certain Changes. Except as set forth in
Section 2.7 of the Disclosure Schedule, since the Balance Sheet Date, (a)
neither the Company nor any of its Subsidiaries has suffered any adverse
change in its business, operations, results of operations, assets, or
condition (financial or otherwise), except such changes which, in the
aggregate, would not have a Company Material Adverse Effect and (b) neither
the Company nor any of its Subsidiaries has taken any actions which would,
if taken after the date hereof, violate Section 4.1 hereof.

                  2.8. No Default. Except as set forth in Section 2.8 of
the Disclosure Schedule, the Company is not in default, violation or breach

                                   Page 14

<Page>

(and no event has occurred which with notice or the lapse of time or both
would constitute a default, violation or breach by the Company or any of
its Subsidiaries or give rise to any right of termination, cancellation or
acceleration) of any term, condition or provision of (a) its certificate of
incorporation, (b) any Contract or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which it or any of
its properties or assets may be bound, or (c) any order, writ, injunction
or decree, or any Laws, applicable to the Company or any of its
Subsidiaries or any of their properties or assets, which defaults,
violations, breaches or rights would, in the aggregate, have a Company
Material Adverse Effect or prevent or materially delay the consummation of
the transactions contemplated hereby.

                  2.9. Litigation. Except as set forth in Section 2.9 of
the Disclosure Schedule, there is no action, suit, proceeding or, to the
knowledge of the Seller, investigation pending or, to the knowledge of the
Seller, threatened involving the Company or any of its Subsidiaries or
their assets, at law or in equity, or by or before any governmental entity,
which in the aggregate would have a Company Material Adverse Effect or
involves the transactions contemplated by this Agreement.

                  2.10. Compliance with Law. (a) Except as set forth in
Section 2.10 of the Disclosure Schedule, the business of the Company and
its Subsidiaries is not being and has not been conducted in violation of
any applicable Law or any order, writ, injunction or decree of any domestic
or foreign court or governmental entity, except for violations which in the
aggregate would not have a Company Material Adverse Effect.

                  (b) Each of the Company and its Subsidiaries has and has
had at all relevant times, all governmental permits, licenses and

                                   Page 15

<Page>

authorizations (collectively, "Permits") which are necessary to own its
assets and to operate its business as conducted under all applicable Laws,
except for Permits the failure to have, in the aggregate, would not have a
Company Material Adverse Effect. Each of the Company and its Subsidiaries
has complied with and is in compliance with the terms of its Permits,
except where the failure to comply, in the aggregate, would not have a
Company Material Adverse Effect.

                  2.11. Employee Benefit Plans. (a) Section 2.11(a) of the
Disclosure Schedule sets forth (i) each material written and unwritten
plan, program, policy or other arrangement (other than Affected Employee
Agreements as defined in (ii) below) providing for severance, termination
pay, equity-based awards, fringe benefits or other employee benefits
whether formal or informal, and whether funded or unfunded, including
without limitation, each "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), sponsored, maintained, contributed to, or
required to be contributed to, for the benefit of, or with respect to any
current or former employee, consultant, independent contractor, agent or
principal of the Company or any of its Subsidiaries (each an "Affected
Employee" and each such plan, program, policy or arrangement other than any
multiemployer plan an "Affected Employee Plan") and (ii) each material
employment, severance, termination, consulting or similar agreement (except
consulting agreements which can be terminated with 60 days or less notice
without liability) between the Company or any of its Subsidiaries and any
Affected Employee or with respect to which the Company or any of its
Subsidiaries has any liabilities or obligations (each an "Affected Employee
Agreement"). The Seller has delivered to the Buyer current, accurate and
complete copies of all documents embodying each material Affected Employee
Plan and each Affected Employee Agreement.

                                   Page 16

<Page>

                  (b) Except as set forth in Section 2.11(b) of the
Disclosure Schedule, at no time has the Company or any member of the
Controlled Group (as hereinafter defined) contributed to or been required
to contribute to, or incurred any withdrawal liability (within the meaning
of Section 4201 of ERISA) to any "multiemployer plan" (within the meaning
of Section 3(37) of ERISA) and neither the Company nor any of its
Subsidiaries has any liability, contingent or otherwise, with respect to
any multiemployer plan. Except as set forth in Section 2.11(b) of the
Disclosure Schedule, neither the Company nor any member of the Controlled
Group presently sponsors, maintains, contributes to or is required to
contribute to, or has since January 1, 1996, sponsored, maintained,
contributed to or been required to contribute to, a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA), whether domestic or foreign
(other than a plan mandated by the law of a foreign jurisdiction) (each
such plan (other than any multiemployer plan) a "Controlled Group Plan").
There is no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA and Section 412 of the Code, with
respect to any Controlled Group Plan, and the present value of all accrued
benefits under each Controlled Group Plan, determined on a plan termination
basis using the actuarial assumptions established by the Pension Benefit
Guaranty Corporation (the "PBGC") as in effect on the date of
determination, does not exceed the fair market value of the assets (which
shall not include any accrued but unpaid contributions) of such Controlled
Group Plan. Each Affected Employee Plan is and has been operated in
material compliance with the terms of such plan and with all applicable
Laws, including, without limitation, ERISA and the Code, and the Company
and its Subsidiaries have performed all obligations required to be
performed by them under each Affected Employee Plan. Neither the Company
nor any member of its Controlled Group has incurred any liability under

                                   Page 17

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Title IV of ERISA to the PBGC in connection with any Controlled Group Plan
which liability has not been fully paid prior to the date hereof, other
than liability for premiums due the PBGC, which premiums have been or will
be paid when due, and no steps have been taken by the plan sponsor or by
the PBGC to terminate any Controlled Group Plan and no reportable event
(within the meaning of Section 4043 of ERISA) and no event described in
Section 4062 or 4063 of ERISA has occurred with respect to any Controlled
Group Plan. Each Affected Employee Plan intended to be tax qualified under
Sections 401(a) and 501(a) of the Code is so qualified. Except as disclosed
in Section 2.11(a) of the Disclosure Schedule, the Company does not have
any plan or commitment, whether legally binding or not, to establish any
material new employee benefit or compensation plan, program, policy,
practice or arrangement or to modify or terminate any existing Affected
Employee Plan (and has not communicated to any Affected Employee any
intention to do so). Neither the Company nor any member of the Controlled
Group nor any "party-in-interest" or "disqualified person" with respect to
any Affected Employee Plan has engaged in any transaction with respect to
any Affected Employee Plan which has resulted or could result in the
imposition of any tax under Section 4971, 4972, 4975, 4976, 4977, 4979,
4980 or 4980B of the Code that is or could be liabilities of the Company.
There are no actions, proceedings, arbitrations, suits or claims pending,
or to the knowledge of the Seller threatened, against any Affected Employee
Plan, the Company or any plan official with respect to any Affected
Employee Plan (other than routine benefit claims) and no Affected Employee
Plan is under audit or investigation by the Internal Revenue Service, the
Department of Labor or the PBGC and to the knowledge of the Seller no such

                                   Page 18

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audit or investigation is pending. Except as disclosed in Section 2.11(b)
of the Disclosure Schedule, the retiree life insurance, medical and dental
benefits described therein may be modified or terminated by the Company,
subject only to the payment of claims incurred (whether or not reported)
prior to such modification or termination. Except as disclosed in Section
2.11(b) of the Disclosure Schedule, neither the Company nor any member of
the Controlled Group maintains or contributes to any Affected Employee Plan
which provides, or has any liability to provide, life insurance, medical or
dental benefits to any Affected Employee upon his retirement or termination
of employment (except as may be required under Section 601 of ERISA and
Section 4980B of the Code). Except as disclosed in Section 2.11(a) of the
Disclosure Schedule, the execution of, and the performance of transactions
contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Affected Employee Plan, Affected Employee Agreement, trust or
loan that will or may result in any payment (whether of incentive pay,
severance pay or otherwise), acceleration, vesting, distribution or
increase in benefits or obligation to fund benefits or the forgiveness of
indebtedness with respect to any Affected Employee. For purposes of this
Section 2.11, "Controlled Group" shall include, collectively, each
business, entity or other organization which is a member of a "controlled
group," or an "affiliated service group" or under "common control" with the
Company (within the meaning of Sections 414(b), (c), (m) or (o) of the Code
or Section 4001(a)(14) of ERISA).

                  2.12. Intellectual Property. (a) Section 2.12(a) of the
Disclosure Schedule sets forth a list of all registered trademarks,
servicemarks and tradenames used in or necessary for the conduct of the

                                   Page 19

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business of the Company and its Subsidiaries as currently conducted (other
than the trademarks, servicemarks and tradenames of advertisers included in
the directories). "Intellectual Property" means (i) all inventions (whether
or not patentable) and all patents and patent applications, (ii) all
trademarks, service marks, trade dress, logos, trade names, business names
and domain names, together with all translations, adaptations, derivations,
and combinations thereof, including the goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith,
(iii) all copyrightable works, all copyrights, and all applications,
registrations, and renewals therewith, (iv) all trade secrets and
confidential business information (including, without limitation, ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer/subscriber lists, supplier lists, pricing and cost
information, and business and marketing plans and proposals), (v) all
computer software (including data and related documentation), (vi) all
other proprietary rights and (vii) all copies and tangible embodiments
thereof (in whatever form or medium).

                  (b) Each of the Company and its Subsidiaries has valid
and enforceable rights to use, whether through ownership thereof or by
license, all Intellectual Property used in or necessary for the conduct of
their businesses as now conducted and as presently planned to be conducted,
except where the failure to have such rights would not, in the aggregate,
have a Company Material Adverse Effect. Each of the Company and its
Subsidiaries has taken all reasonable steps necessary to maintain and
protect each item of its Intellectual Property except where the failure to
do so in the aggregate would not have a Company Material Adverse Effect.
Except as set forth in Section 2.12(b) of the Disclosure Schedule, no claim
is pending or, to the knowledge of the Seller, threatened against the
Company or any of its Subsidiaries to the effect that the rights of the

                                   Page 20

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Company or any of its Subsidiaries in or to any Intellectual Property owned
by it are invalid or unenforceable or that the use by the Company or any of
its Subsidiaries of any Intellectual Property infringes on the rights of
any third party, or which challenges the ownership by the Company or any of
its Subsidiaries of the Intellectual Property which each purports to own or
the validity or effectiveness of any license relating to any Intellectual
Property which each purports to license, except for such claims as would
not, in the aggregate, have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has misappropriated, infringed upon, or
violated any Intellectual Property right of any third party and, to the
knowledge of the Seller, no third party has misappropriated, infringed
upon, or violated any Intellectual Property rights of the Company or any of
its Subsidiaries, except for such misappropriations, infringements or
violations as would not in the aggregate have a Company Material Adverse
Effect.

                  2.13. Material Contracts. Section 2.13 of the Disclosure
Schedule sets forth a complete list, as of the date hereof, of the
following agreements, contracts, arrangements or understandings, whether
written or oral (collectively, "Contracts") to which the Company or any of
its Subsidiaries is a party or by which any of their properties or assets
may be bound:

                  (a) each employment, severance, management, consulting
and other Contract involving compensation for services rendered or to be
rendered, in each case involving payments of more than $150,000 per year or
extending beyond December 31, 2002 (Seller hereby represents that the
Company and its Subsidiaries are not party to more than an aggregate of

                                   Page 21

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$1 million per year of Contracts involving such matters not terminable by the
Company or any of its Subsidiaries on 30 days' or less notice without
liability to the Company or any of its Subsidiaries and not set forth in
Section 2.13 of the Disclosure Schedule) (except for severance payments to
employees pursuant to the severance policy set forth in Section 2.11(a) of
the Disclosure Schedule) ;

                  (b) each lease relating to real property with a term of
one year or longer;

                  (c) each other Contract involving annual payments in
excess of $250,000 per year, unless cancellable on 60 days or less notice
for a nominal payment;

                  (d) each Contract that contains a covenant not to compete
or similar covenants for which the Company or its Subsidiaries is the
obligor thereunder;

                  (e)  each Contract concerning a partnership or joint venture;

                  (f) each Contract containing an earnout or other
provision which has as its purpose the sharing of revenue or profits for
which the aggregate payment thereunder would exceed $25,000, the aggregate
earnout payments for such Contracts not to exceed the amount set forth in
Section 2.13(f) of the Disclosure Schedule subject to the assumptions
contained therein);

                  (g) each Contract creating a Lien securing payment of an
amount in excess of $100,000 per year in any one case or $500,000 in the
aggregate for all such Contracts;

                  (h) each Contract relating to the printing, binding or
distribution of any publication that involves annual payments in excess

                                   Page 22

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of $250,000; and

                  (i) each other Contract which is material to the
operations of the Company and its Subsidiaries.

                  The Seller has made available to the Buyer true and
complete copies of such written Contracts and summaries of such oral
Contracts, or standard forms thereof. Except as set forth in Section
2.13(b) of the Disclosure Schedule, all of such Contracts are valid and
binding obligations of the Company and/or its Subsidiaries and, to the
Seller's knowledge, the other party thereto and neither the Company nor any
of its Subsidiaries nor, to the Seller's knowledge, the other party thereto
is in breach of any such Contract, except for such failures to be valid and
binding and for such breaches as, in the aggregate, would not have a
Company Material Adverse Effect.

                  2.14. Transactions with Affiliates. Except as set forth
in Section 2.14 of the Disclosure Schedule, (i) since December 31, 2000,
there have not been any transactions, and (ii) there are no Contracts,
between the Company or any of its Subsidiaries, on the one hand, and Parent
or any of its affiliates (other than the Company or its Subsidiaries), on
the other hand, in each case other than transactions and Contracts which
are not, in the aggregate, material. This Section 2.14 does not contain any
material misstatement of fact or omit to state any material fact necessary
to make the statements herein, in light of the circumstances under which
they are made, not misleading. For all purposes of this Agreement,
including Article VII hereof, when considering the accuracy of the
representation and warranty set forth in this Section 2.14, benefits from
matters not disclosed in Section 2.14 shall be aggregated and netted
against the aggregate detriments from such matters.

                  2.15. Business and Properties. Except as set forth in
Section 2.15 of the Disclosure Schedule, the business, properties, assets

                                   Page 23

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(tangible or intangible), and rights held, owned or used by the Company or
any of its Subsidiaries and which the Buyer is acquiring indirectly at the
Closing by its purchase of the Shares, constitute all of the business,
properties, assets (tangible or intangible) and rights used in or necessary
for the conduct of the business of the Company and its Subsidiaries as
currently conducted. Except as set forth in Section 2.15 of the Disclosure
Schedule, the interest which the Buyer is acquiring in each of the assets
upon the consummation of the transactions contemplated by this Agreement
will either be an ownership interest in the asset or an interest pursuant
to a legally binding Contract.

                  2.16. Environmental Matters. Except as set forth in
Section 2.16 of the Disclosure Schedule: (a) each of the Company and its
Subsidiaries is in compliance with all applicable federal, state, local and
foreign laws and regulations relating to pollution, protection of human
health or the environment or health and safety of employees (including,
without limitation, ambient air, surface water, ground water, land surface
or subsurface strata) (collectively, "Environmental Laws"), except for any
failure to comply that would not in the aggregate have a Company Material
Adverse Effect, (b) neither the Company nor any of its Subsidiaries has
received written notice of, or, to the knowledge of the Seller, is the
subject of, any action, cause of action, claim, investigation, demand or
notice by any Person or entity alleging liability under or non-compliance
with any Environmental Law which would in the aggregate have a Company
Material Adverse Effect, (c) neither the Company nor any of its
Subsidiaries has entered into or agreed to any consent decree or order, or
is subject to any judgment, decree or judicial order relating to compliance
with, or the cleanup of regulated substances under, any applicable

                                   Page 24

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Environmental Law, and (d) all the real property owned or leased or
otherwise occupied by the Company or any of its Subsidiaries is free from
any Hazardous Substances (except those authorized pursuant to and in
accordance with Environmental Laws) and free of all contamination arising
from, relating to, or resulting from any such Hazardous Substances except
for such Hazardous Substances and contamination that would not in the
aggregate have a Company Material Adverse Effect. For purposes of this
Section 2.16, "Hazardous Substances" shall mean any hazardous substances
within the meaning of Section 101(14) of CERCLA, or any pollutant,
including petroleum or any fractions thereof.

                  2.17. Labor Relations. Except as set forth in Section
2.17 of the Disclosure Schedule, there is no unfair labor practice
complaint or other proceeding against the Company or any of its
Subsidiaries pending before the National Labor Relations Board which, if
adversely decided, in the aggregate would have a Company Material Adverse
Effect. Except as set forth in Section 2.17 of the Disclosure Schedule,
there is no labor strike, work stoppage or arbitration proceeding pending
or involving or, to the knowledge of the Seller, threatened against the
Company or any of its Subsidiaries which in the aggregate would have a
Company Material Adverse Effect. Except as set forth in Section 2.17 of the
Disclosure Schedule, to the Seller's knowledge, there are no organizing
efforts by any union or other group seeking to represent any employees of
the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement.

                  2.18. Title to Assets. Except as set forth in Section
2.18 of the Disclosure Schedule, each of the Company and its Subsidiaries
has good, and, in the case of real property, marketable, title to the
assets it purports to own, free and clear of any Liens, except for (i)
Liens for current taxes not yet due and payable, (ii) Liens which would

                                   Page 25

<Page>

not, in the aggregate, have a Company Material Adverse Effect and (iii)
mechanics', carriers', workers' and other similar Liens arising or incurred
in the ordinary course of business consistent with past practice, none of
which Liens in the case of clauses (i)-(iii), in the aggregate, would
materially interfere with the utilization of such properties or assets for
their intended purposes. A list of all real property owned by the Company
or any of its Subsidiaries is set forth on Section 2.18 of the Disclosure
Schedule.

                  2.19. Brokers and Finders. Neither the Seller nor the
Company nor any of its Subsidiaries has employed any broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement, except for fees and expenses payable to
Credit Suisse First Boston, which will be paid by Parent.

                  2.20. Insurance. Section 2.20 of the Disclosure Schedule
sets forth a list of all material insurance policies presently in effect
(including policies obtained in the past which continue to provide
insurance coverage at present) with respect to the Company or any of its
Subsidiaries. The Seller has heretofore delivered to, or made available for
review by, the Buyer accurate and complete copies of each such policy. All
such policies are valid, outstanding and enforceable; there are no material
claims pending as to which the insurers have denied liability or are
reserving their rights; and all material claims have been timely and
properly filed. Neither the Company nor any of its Subsidiaries (nor Parent
with respect to the Company or its Subsidiaries) has been refused any
insurance with respect to any aspect of the operations of the Company or
any of its Subsidiaries nor has its coverage been limited by any insurance

                                   Page 26

<Page>

carrier to which it has applied for insurance or with which it has carried
insurance during the last three years. No notice of cancellation or
termination has been received by the Company or any of its Subsidiaries
with respect to any such policy.

                  2.21. Taxes. Except as set forth in Section 2.21 of the
Disclosure Schedule:

                  (a) With respect to the Company and its Subsidiaries, (i)
all material returns, statements, reports, estimates, declarations and
forms with respect to Taxes (as defined in Section 4.6) (collectively, "Tax
Returns") required to be filed on or before the Closing Date have been or
will have been, timely filed in accordance with any applicable Laws, (ii)
all Taxes shown to have become due pursuant to such Tax Returns have been
or will be timely paid, and (iii) all Taxes for which a notice of, or
assessment or demand for, payment has been received or which are otherwise
due and payable have been paid or accrued on the financial books and
records of the Company or any of its Subsidiaries. All such Tax Returns are
true, correct and complete in all material respects. As of the Balance
Sheet Date the Company and its Subsidiaries had no material liability for
Taxes in excess of the accruals for Taxes reflected on the September 30
Balance Sheet.

                  (b) With respect to the Company or any of its
Subsidiaries, (i) there is no action, suit, proceeding, audit, written
claim, Lien (other than Liens for Taxes not yet due and payable or which
are being contested in good faith), or assessment pending or proposed with
respect to Taxes or with respect to any Tax Return, (ii) all
material amounts required to be collected or withheld with respect to Taxes
have been duly collected or withheld and any such amounts that are required
to be remitted to any taxing authority have been duly remitted, (iii) no

                                   Page 27

<Page>

extension of time within which to file any Tax Return has been requested
which Tax Return has not since been filed, (iv) there are no material
waivers or extensions of any applicable statute of limitations for the
assessment or collection of Taxes with respect to any Tax Return which
remain in effect, (v) there are no tax rulings, requests for rulings,
applications for change in accounting methods or closing agreements
relating to the Company or any of its Subsidiaries which could reasonably
be expected to affect its liability for Taxes for any period after the
Closing Date, and (vi) none of the Seller, the Company or any of its
Subsidiaries has agreed to, or is required to include in income, any
adjustment pursuant to Section 481(a) or 482 of the Code (or similar
provisions of other Law) (nor has any taxing authority proposed any such
adjustment or change of accounting method).

                  (c) The Company and each of its Subsidiaries is a member
of a U.S. consolidated return filing group of which Parent is the common
parent.

                  2.22. List of Publications. Section 2.22 of the
Disclosure Schedule contains a true and complete list of each telephone
directory to be published by the Company or any of its Subsidiaries at any
time from the date hereof to December 31, 2002 and the respective dates of
delivery.

                                ARTICLE III

                REPRESENTATIONS AND WARRANTIES OF THE BUYER

                  The Buyer hereby represents and warrants to the Seller as
follows:

                  3.1. Corporate Organization; Etc. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to have such

                                   Page 28

<Page>

power or authority is not, in the aggregate, reasonably likely to have a
material adverse effect on the business, operations, results of operations,
assets, condition (financial or otherwise) of the Buyer (a "Buyer Material
Adverse Effect").

                  3.2. Authority Relative to this Agreement. The Buyer has
all requisite corporate authority and power to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby by the
Buyer have been duly and validly authorized by all required corporate
action on the part of the Buyer and no other corporate proceedings on the
part of the Buyer are necessary to authorize this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated hereby
or thereby. This Agreement has been, and the Ancillary Agreements will be
as of the Closing, duly and validly executed and delivered by the Buyer
and, assuming such agreements have been duly authorized, executed and
delivered by the other parties thereto, constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency
and other similar laws affecting the enforcement of creditors' rights
generally and for limitations imposed by general principles of equity.

                  3.3. Consents and Approvals; No Violations. Except for
applicable requirements of the HSR Act, no filing with, and no permit,
authorization, consent or approval of any public body or governmental
authority is necessary for the consummation by the Buyer of the
transactions contemplated by this Agreement or the Ancillary Agreements;
provided that no representation or warranty is made as to any such approval
that may be required by reason of the effect of the transactions

                                   Page 29

<Page>

contemplated hereby on any permit, authorization, consent or approval held
by the Company or any of its Subsidiaries. Neither the execution and
delivery of this Agreement or the Ancillary Agreements by the Buyer nor the
consummation by the Buyer of the transactions contemplated hereby or
thereby nor compliance by the Buyer with any of the provisions hereof or
thereof will (a) conflict with or result in any breach of any provision of
the charter or bylaws of the Buyer, (b) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which the Buyer or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be
bound or (c) assuming that the filings referred to in the first sentence of
this Section 3.3 are duly and timely made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer,
any of its Subsidiaries or any of their properties or assets, except in the
case of (b) and (c) for violations, breaches or defaults which are not in
the aggregate reasonably likely to have a Buyer Material Adverse Effect or
prevent or materially delay the consummation of the transactions
contemplated hereby.

                  3.4. Acquisition of Shares for Investment; Investigation.
The Buyer is acquiring the Shares for investment and not with a view
toward, or for sale in connection with, any distribution thereof, nor with
any present intention of distributing or selling such Shares. The Buyer
agrees that the Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under
the Securities Act of 1933, as amended (the "Act"), and any applicable
state securities laws, except pursuant to an exemption from such
registration under such Act and such laws.

                                   Page 30

<Page>

                  3.5. Sufficient Funds. As of the date hereof, Buyer's
affiliates have binding commitments for, and as of the Closing, the Buyer
will have, sufficient funds available (through immediately available cash
or existing credit facilities) to enable Buyer to consummate the
transactions contemplated hereby. Upon the consummation of the Stock
Purchase, (i) the Buyer will not be insolvent, (ii) the Buyer will not be
left with an unreasonably small capital, (iii) the Buyer will not have
incurred debts beyond its ability to pay such debts as they mature and (iv)
the capital of the Buyer will not be impaired, in each case as a result of
the financing of the Stock Purchase or the financial condition of the Buyer
as of the Closing.

                  3.6. Brokers and Finders. Neither the Buyer nor any of
its Subsidiaries has employed any investment banker, broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement.

                                 ARTICLE IV

                          COVENANTS OF THE PARTIES

                  4.1. Conduct of Business of the Company. Except as set
forth in Section 4.1 of the Disclosure Schedule or as required in
connection with the Restructuring (including in any proceedings required
under the Bankruptcy Code in connection with the Restructuring provided
that Seller has used all reasonable efforts not to limit its ability to
comply with this Section 4.1) or with the prior consent of the Buyer,
during the period from the date of this Agreement to the Closing, the
Seller will cause the Company and its Subsidiaries (i) to conduct their
business and operations in the ordinary course of business consistent with

                                   Page 31

<Page>

past practice except in connection with the transactions contemplated
hereby and (ii) to use all reasonable efforts to preserve intact its
properties, assets and business organization and relationships with third
parties, in each case in the ordinary course of business consistent with
past practice. Without limiting the generality of the foregoing, (and
except as set forth in Section 4.1 of the Disclosure Schedule or as
required in connection with the Restructuring (including in any proceedings
required under the Bankruptcy Code in connection with the Restructuring);
provided that Seller has used all reasonable efforts not to limit its
ability to comply with this Section 4.1), the Seller will cause the Company
and its Subsidiaries not to, prior to the Closing, without the prior
written consent of the Buyer, such consent not to be unreasonably withheld:

                  (a) declare, set aside or make any non-cash distribution
with respect to any of the Shares or shares of capital stock of the
Subsidiaries;

                  (b) transfer any asset included in the calculation of Net
Working Capital pursuant to Section 4.13 (x) as a distribution with respect
to any of the Shares or (y) in payment of any intercompany account;

                  (c) redeem, purchase or otherwise acquire any outstanding
Shares;

                  (d) amend its certificate of incorporation or bylaws;

                  (e) whether or not in the ordinary course of business
consistent with past practice, acquire or dispose of any property or assets
that are in the aggregate material;

                  (f) enter into any Contracts or transactions, except
Contracts or transactions made in the ordinary course of business
consistent with past practice;

                  (g) change in any respect any of the accounting

                                   Page 32

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principles or practices used by it (except as required by GAAP);

                  (h) engage in any transactions with, or enter into any
binding Contracts with, the Seller or their affiliates (other than among
the Company and its Subsidiaries) other than transactions in the ordinary
course of business consistent with past practice;

                  (i) enter into, adopt, amend or terminate any agreement
relating to the compensation or severance of any officer or director of the
Company or any of its Subsidiaries, except to the extent required by law or
any agreements set forth in the Disclosure Schedule;

                  (j) enter into, adopt, amend or terminate any agreement
relating to the compensation or severance of any non-officer or director
employees of the Company or any of its Subsidiaries, other than in the
ordinary course of business, except to the extent required by law or any
agreements set forth in the Disclosure Schedule;

                  (k) grant any increase in compensation or benefits to any
particular employee other than in the ordinary course in connection with a
periodic performance review, or grant any general increase in compensation
or benefits to any group of employees;

                  (l) make any material Tax election (unless required by
applicable Law or consistent with past practice) or settle any material Tax
liability which is the subject of dispute between Parent, the Seller, the
Company or one of its Subsidiaries, on the one hand, and a governmental
entity, on the other hand;

                  (m) fail to maintain in full force and effect its
insurance policies (or comparable insurance policies);

                                   Page 33

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                  (n) establish or adopt any new benefit plan or amend or
terminate any existing benefit plan other than as required by law;

                  (o) modify, amend or terminate, or waive, release or
assign any material rights or claims with respect to, any Contract other
than in the ordinary course of business consistent with past practices;

                  (p) enter into any non-compete Contracts under which the
Company is obligor, or modify or waive any of the Company's rights under
any existing material confidentiality or non-compete Contract under which
it is the beneficiary;

                  (q) change the payment terms available to its customers
(including with respect to discounts and timing) from those currently in
effect, or change the delivery schedule of any of its directories;

                  (r) take any action that would cause any of the
representations and warranties of the Seller to be untrue; or

                  (s) agree to take any of the foregoing actions.

                  Except as set forth in Section 4.1 of the Disclosure
Schedule, prior to the Closing Date, neither the Company nor any of its
Subsidiaries will (x) incur any indebtedness for borrowed money or issue or
sell any debt securities or assume, guarantee or endorse the obligations of
any other Persons or (y) mortgage, encumber or subject to any Lien any of
its material property or assets.

                  4.2.    Access to Information.

                  (a) From the date of this Agreement to the Closing, the
Seller will cause each of the Company and its Subsidiaries to (i) give the
Buyer and its authorized representatives reasonable access to their books,

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records, personnel, offices and other facilities and properties and their
accountants and their accountants' work papers, (ii) permit the Buyer to
make such copies and inspections thereof as the Buyer may reasonably
request and (iii) cause the Company's officers to furnish the Buyer with
such financial and operating data and other information with respect to the
business and properties of each of the Company and its Subsidiaries as the
Buyer may from time to time reasonably request; provided, however, that any
such access shall be conducted at a reasonable time and in such a manner as
not to interfere unreasonably with the operation of the business of the
Company or any or its Subsidiaries.

                  (b) All such information and access will be used solely
for the purpose of evaluating the transactions contemplated hereby and will
not be used for any other business or competitive purpose. The Buyer agrees
that such information will be kept strictly confidential and will not be
disclosed by the Buyer or any of its representatives to any Person, except
as compelled by applicable law, regulation, judicial or governmental order
or other legal process but only after providing the Seller with written
notice of any request or requirement to disclose such information and the
circumstances surrounding such request or requirement so that the Seller
may seek a protective order or other appropriate remedy and if such
protective order or other remedy is not obtained, the Buyer and its
representatives agree to disclose only that portion of the information that
it is legally compelled to disclose. The Buyer agrees to be responsible for
any breach of this Section 4.2(b) by its representatives.

                  (c) From and after the Closing Date, for the purpose of
allowing Buyer to prepare historical financial statements of the Company

                                   Page 35

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and its Subsidiaries, the Seller will, at Buyer's sole cost and expenses,
(i) give the Buyer and its authorized representatives reasonable access to
their books, records and personnel and its accountants and their work
papers, (ii) permit the Buyer to make such copies and inspections thereof
as the Buyer may reasonably request and (iii) cause the Seller's officers
to furnish the Buyer with such historical financial and operating data and
other historical information with respect to the business of each of the
Company and its Subsidiaries as the Buyer may reasonably request; provided,
however, that any such access shall be conducted at a reasonable time and
in such a manner as not to interfere unreasonably with the operation of the
business of the Seller or any of its affiliates; provided, further, that
neither the Seller nor any of its affiliates shall be deemed to make any
representation or warranty as to such financial statements or other
information so provided.

                  4.3. Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable to fulfill the
conditions to the parties' obligations hereunder and to consummate and make
effective the transactions contemplated by this Agreement, including,
without limitation, making all required filings and applications and
complying with or responding to any requests by governmental agencies and
obtaining all consents, approvals, orders, waivers, licenses, permits and
authorizations required in connection with the transactions contemplated
hereby. If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the
parties hereto shall take or cause to be taken all such necessary action,

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including, without limitation, the execution and delivery of such further
instruments and documents as may be reasonably requested by the other party
for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.

                  4.4. Public Announcements. The Seller and the Buyer will
consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated
by this Agreement, and shall not issue any such press release or make any
such public statement without the prior approval of the other party, except
as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange or automated quotation
system.

                  4.5. Employee Matters. (a) From and after the Closing
Date, the active employees of the Company and its Subsidiaries as of the
Closing Date (the "Employees") shall, for the two year period commencing on
the Closing Date, be provided with benefit plans or arrangements which, in
the aggregate, provide substantially comparable benefits (other than the
benefit plans and arrangements set forth in Section 4.5(a) of the
Disclosure Schedule) as were provided to the Employees immediately prior to
the Closing Date. For purposes of this Section 4.5, "active employees"
include, without limitation, employees of the Company who are on short-term
disability, long-term disability and on authorized leave of absence, and
exclude employees who are terminated or retired. Such Employees shall
receive credit for past service with the Company and its predecessors or
affiliates for purposes of eligibility, vesting and vacation accrual under
any such benefit plans and arrangements, including, but not limited to,
satisfaction of any preexisting condition exclusion under any such plan

                                   Page 37

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providing health care coverage, and shall also be given credit for amounts
expended prior to the Closing Date for purposes of deductibles or out of
pocket limitations applicable under such plans. Nothing in this Section
4.5(a) will require the Buyer or the Company or any of its Subsidiaries to
maintain any particular plan or arrangement in effect or to maintain the
employment of any Employee after the Closing.

                  (b) The Seller will take all actions necessary to provide
for the full vesting of all Employees' accounts as of the Closing Date
under the McLeodUSA Incorporated 401(k) Profit Sharing Plan. The Seller
will take all actions necessary (i) to provide for the full vesting of the
accrued benefits of all Employees who are participants in the Illinois
Consolidated Telephone Company Retirement Income Plan for Hourly Employees
(the "ICTC Plan") and (ii) to treat service with Buyer or the Company or
any Subsidiary after the Closing as service with Seller or one of its
Affiliates for purposes of determining an Employee's date of retirement and
eligibility for early retirement benefits (including any subsidized early
retirement benefits) but not for purposes of accruing additional normal
retirement benefits.

                  (c) The Buyer presently intends to adopt an equity-based
plan pursuant to which Buyer in its sole discretion may make grants of
equity based compensation to select senior executives of the Company and
its Subsidiaries.

                  (d) The Seller and the Buyer acknowledge that the Closing
of the Stock Purchase will constitute a termination of the employment of
each current Employee for purposes of Parent's equity-based plans and
arrangements and that, in accordance with the provisions of Parent's equity
plans and arrangements, such employees will have a maximum of 30 days

                                   Page 38

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following the Closing in which to exercise any outstanding, vested Seller
stock options.

                  (e) The Seller shall indemnify and hold harmless the
Buyer and its affiliates, and their successors and assigns, from and
against any liability arising out of the Company or any of its Subsidiaries
being jointly and/or severally liable, on, before or after the Closing,
under Code Sections 412, 4971 or 4980, or ERISA Section 302 or Sections 601
through 609, or Title IV of ERISA, by reason of any of them being
considered to have been a member of a Controlled Group with the Seller or
any other member of Seller's Controlled Group.

                    (f) The Seller shall retain responsibility for and
continue to pay all medical, life insurance, disability and other welfare
plan expenses and benefits for all Employees and former employees of the
Company with respect to claims incurred by such employees or former
employees or their covered dependents on or prior to the Closing Date.
Expenses and benefits with respect to claims incurred by Employees and
their covered dependents after the Closing Date shall be the responsibility
of the Buyer. The Seller shall be responsible for all legally mandated
continuation of health care coverage for all former employees and their
covered dependents who participated in a plan maintained by Parent, the
Seller or any of their affiliates and who had or have a loss of health care
coverage due to a qualifying event (as defined under applicable law)
occurring as of or prior to the Closing Date.

                  (g) Seller agrees that (1) neither Buyer nor any of its
affiliates shall have any liability (A) with respect to that letter
agreement between Parent and Arthur L. Christofferson dated September 20,
1996 providing for severance benefits under certain circumstances following
a change in control, (B) arising out of or relating to the ICTC Plan, the
Illinois Consolidated Retirement Income Plan for Salaried and Affiliated

                                   Page 39

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Employees, the termination of either of such plans or the termination or
waiver of the participation of any employees or former employees of the
Company or any of its affiliates in either such plans, or (C) with respect
to the McLeodUSA Incorporated Deferred Compensation Plan for Certain
Employees and (2) Seller shall indemnify and hold harmless Buyer and its
affiliates against all Damages (as defined in Section 7.2) that relate to,
arise out of, or are the result of any of the foregoing.

                  4.6.    Tax Matters.

                  (a) (i) For all Pre-Closing Periods for which the Company
or any of its Subsidiaries is required or eligible to do so, the Company or
any such Subsidiary shall join in all consolidated, combined or unitary
federal, state or local income Tax or franchise Tax Returns of Parent (or
any Tax Affiliate) ("Parent Tax Returns"), and, in each jurisdiction where
this is required or permissible under applicable law, the taxable year of
the Company and each of its Subsidiaries shall be terminated as of the
Closing Date. Parent and the Seller shall prepare or cause to be prepared
and timely filed all such Parent Tax Returns. Without duplication of
Section 4.6(b), Parent or Seller shall timely pay all Taxes shown to be due
on such Tax Returns.

                           (ii) The Seller shall prepare or cause to be
prepared and the Buyer shall timely file all income Tax Returns of the
Company and its Subsidiaries for all Pre-Closing Periods (other than those
Tax Returns referred to in Section 4.6(a)(i)), which Tax Returns have not
been filed as of the Closing Date. Without duplication of Section 4.6(b),
Parent or Seller shall pay all Taxes due with respect to such Tax Returns.

                           (iii) The Buyer shall prepare or cause to be

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<Page>

prepared and file all Tax Returns (including Tax Returns with respect to
all Straddle Periods) with respect to the Company and the Subsidiaries for
which the Seller or Parent does not have filing responsibility pursuant to
Section 4.6(a)(ii). Upon timely written notice from the Buyer, no later
than ten days prior to the due date for the filing of each Tax Return for a
Straddle Period, the Seller shall pay to the Company the amount of Taxes
shown as due thereon that is attributable to the pre-closing portion of
such Straddle Period determined in accordance with Section 4.6(a)(vi) minus
any amount accrued or reserved for such Taxes in Net Working Capital.

                           (iv) In connection with the preparation of all
Tax Returns referred to in this Section 4.6(a), Parent and the Seller, on
the one hand, and the Buyer and the Company, on the other hand, shall each
fully cooperate with the other and provide such timely assistance to the
other as may be reasonably requested.

                           (v) The Tax Returns referred to in Section
4.6(a)(i), (ii) and the Straddle Period Tax Returns referred to in Section
4.6(a)(iii) shall be prepared in a manner consistent with past practice,
unless a contrary treatment is required by applicable law. The Seller shall
cause any Tax Return that is required to be filed under Section 4.6(a)(i)
or (ii), and the Buyer shall cause any Tax Returns for a Straddle Period
that is required to be filed by the Buyer under Section 4.6(a)(iii), to be
made available to the other party for its review and approval no later than
20 days prior to the due date for the filing of such Tax Return (taking
into account proper extensions); such approval shall not be unreasonably

                                   Page 41

<Page>

withheld or delayed and shall not to be required where such Tax Returns
have been prepared in accordance with past practice (including without
limitation, as to accounting methods and methods of measuring sales,
income, property values or other relevant items), or a contrary treatment
is required by applicable law.

                           (vi) For purposes of this Agreement, (A) the
amount of Taxes attributable to the pre-closing portion of a Straddle
Period shall be determined based on an interim closing of the books as of
the close of the Closing Date, except that the amount of any such Taxes
that are imposed on a periodic basis shall be determined by reference to
the relative number of days in the pre-closing and post-closing portions of
such Straddle Period; and (B) the taxable year of any partnership or other
pass- through entity in which the Company is partner or other beneficial
interest holder shall be deemed to terminate on the Closing Date.

                  (b) (i) Without duplication, Parent and the Seller shall,
jointly and severally, be responsible for and indemnify, defend and hold
the Buyer, the Company and its Subsidiaries harmless from and against any
and all Taxes and other Damages, as incurred, to the extent they consist
of, relate to, arise out of or are the result of (A) Taxes of or
attributable to the Company or any of its Subsidiaries with respect to all
Pre-Closing Periods; (B) Taxes of or attributable to the Company or any of
its Subsidiaries with respect to the pre-closing portion of any Straddle
Period; (C) Taxes payable by the Company or any of its Subsidiaries with
respect to any Pre-Closing Period or any Straddle Period by reason of the
Company or one of its Subsidiaries being severally liable for the Tax of
any Tax Affiliate pursuant to Treasury Regulation Section 1.1502-6 or any

                                   Page 42

<Page>

analogous state or local Tax law; (D) any amount required to be paid by the
Company or any of its Subsidiaries under an indemnification agreement
(other than this Agreement) or on a transferee liability theory, in respect
of any Taxes of any Person, which indemnification agreement or application
of transferee liability theory relates to an acquisition, disposition or
similar transaction occurring on or prior to the Closing Date; (E) to the
extent not included in the other clauses of this Section 4.6(b), by reason
of the breach by Seller or Parent or any of their affiliates of any
representation, warranty, covenant or agreement contained in Section 2.21
or Section 4.6 of this Agreement (without duplication); (F) any Taxes of
the Company or any Subsidiary with respect to Post-Closing Periods or the
post- Closing portion of a Straddle Period resulting from (i.e., that would
not have been incurred in that period but for) any adjustments pursuant to
Section 481(a) of the Code with respect to Pre-Closing Periods or the
pre-Closing portion of a Straddle Period; and (G) receipt of any payments
pursuant to this Section 4.6(b)(i); provided, however, that Seller or
Parent shall be required to indemnify the Buyer pursuant to this Section
4.6(b) only if and to the extent that the amount of such Tax or such other
Damages exceeds the sum of (y) the aggregate amount previously reimbursed
to the Buyer, the Company and its Subsidiaries by the Seller for such Tax
pursuant to Section 4.6(a) and (z) in the case of a Tax other than an
income Tax, the amounts accrued for or reserved for Taxes in computing Net
Working Capital.

                           (ii) Without duplication, the Buyer shall be
responsible for and indemnify, defend and hold Parent and the Seller
harmless from and against any and all Taxes and other Damages, as incurred,
to the extent they consist of, relate to, arise out of or are the result of

                                   Page 43

<Page>

(A) Taxes of or attributable to the Company or any of its Subsidiaries with
respect to all Post-Closing Periods; (B) Taxes of or attributable to the
Company or any of its Subsidiaries with respect to the post-closing portion
of any Straddle Period; (C) any liability for Taxes attributable to breach
by the Buyer or any of its affiliates of any warranty, covenant or
agreement relating to Taxes under Section 4.6 of this Agreement; (D) any
liability for Taxes of or attributable to the Company or any of its
Subsidiaries resulting from an action (other than an action taken by Parent
or Seller or any of their affiliates) of or with respect to the Company or
any of its Subsidiaries after the Closing on the Closing Date which is not
(y) in the ordinary course of business or (z) an action contemplated by
this Agreement or in connection with the Restructuring; and (E) receipt of
any payments pursuant to this Section 4.6(b)(ii); provided, however, that
in the case of clause (A) or (B), Buyer shall not be responsible for Taxes
or other Damages pursuant to this Section 4.6(b)(ii) to the extent that
Parent or the Seller is responsible for such Taxes pursuant to Section
4.6(b)(i)(F).

                           (iii) Any payment required to be made pursuant
to this Section 4.6(b) shall be made promptly, but in no event later than
10 days, after written request therefor, which request shall set forth in
reasonable detail the basis for calculating the amount requested.

                           (iv) In the event that any Person has been
indemnified for any Tax pursuant to this Section 4.6(b) and the payment or
accrual of such Tax results in a deduction which in turn results in an
actual reduction in the Tax liability of the indemnified Person or any
affiliate thereof for any Tax period, then (without duplication for any
such reduction otherwise taken into account) the indemnified Person will

                                   Page 44

<Page>

pay to the indemnifying party the amount of such reduction in Tax liability
at the time such Person actually realizes such reduction in Tax liability
through receipt of a refund of Tax or a credit against Tax liability then
due and payable. For purposes of this paragraph, a payment or accrual of a
Tax liability results in an actual reduction in Person's Tax liability with
respect to a Tax period, only to the extent that the amount of such
Person's Tax liability with respect to such period, taking into account
such accrual or payment, is less than the amount of such liability
determined without regard to such payment or accrual. To the extent
permitted by applicable law, the parties agree to treat all indemnity
payments made pursuant to this Agreement, and all other payments under this
Section 4.6, as adjustments to the Purchase Price or as capital
contributions to the Company, as appropriate, for all income Tax purposes.

                  (c) (i) Each of Parent and the Seller, on the one hand,
and the Buyer and the Company and its Subsidiaries, on the other hand,
shall notify the other party in writing within 15 days of receipt of
written notice of any pending or threatened examination, audit or other
administrative or judicial proceeding (a "Tax Audit") that could reasonably
be expected to result in an indemnification obligation under this Agreement
of such other party pursuant to this Agreement. If the recipient of such
notice of a Tax Audit fails to provide such notice to the other party it
shall not be entitled to indemnification for any Taxes arising in
connection with such Tax Audit, but only to the extent, if any, that such
failure shall have adversely affected the indemnifying party's ability to
defend against, settle, or satisfy any action, suit, or proceeding against
it, or any damage, loss, claim, or demand for which the indemnified party
is entitled to indemnification hereunder.

                           (ii) If a Tax Audit relates to any period

                                   Page 45

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ending on or prior to the Closing Date or to any Taxes for which the Seller
is or may be liable hereunder, the Seller shall at its expense control the
proceeding, defense and settlement of such Tax Audit to the extent it relates
to such Taxes. If such Tax Audit relates to any Post- Closing Period or to
any Taxes for which the Buyer is or may be liable hereunder, the Buyer shall
at its expense control the defense and settlement of such Tax Audit to the
extent that it relates to such Taxes. The party not in control of the defense
shall have the right to observe the conduct of any Tax Audit at its own
expense, including through its own counsel and other professional experts.
The Buyer and the Seller (or Parent) shall jointly represent the Company or
any relevant Subsidiary in any Tax Audit relating to a Straddle Period, and
fees and expenses related to such representation shall be paid equally by the
Buyer and the Seller.

                           (iii) Notwithstanding Section 4.6(c)(ii), to the
extent that an issue raised in any Tax Audit controlled by one party or
jointly controlled could materially affect the liability for Taxes of the
other party, the controlling party shall not, and neither party in the case
of joint control shall, enter into a settlement without the consent of the
other, which consent shall not be unreasonably withheld or delayed. Where a
party withholds its consent to any final settlement, that party may
continue or initiate further proceedings, at its own expense, and the
liability of the party that wished to settle (as between the consenting and
the non-consenting party) shall not exceed the liability that would have
resulted from the proposed final settlement (including interest, additions
to tax and penalties that have accrued at that time), and the
non-consenting party shall indemnify the consenting party for any such
excess.

                                   Page 46

<Page>

                  (d) Any refunds or credits of Taxes (i) of the Company or
any of its Subsidiaries plus any interest received with respect thereto for
any Pre-Closing Period (to the extent not included in the calculation of
Net Working Capital) or (ii) for which Parent or the Seller is otherwise
liable pursuant to Section 4.6(b), shall, in each such case, be for the
account of the Seller and shall be paid by the Buyer or the Company to the
Seller within ten days after such refund is received or after the relevant
Tax Return is filed in which the credit is applied against the Buyer's, the
Company's or the relevant Subsidiary's liability for Taxes for the
Post-Closing Period, net of any Taxes the Buyer, the Company or the
relevant Subsidiary is required to pay on account of the receipt of such
refund or credit, taking into account the deductibility of such payments to
the Seller or Parent. The Seller shall not apply for any refund that will
have an adverse effect on any Post-Closing Period Tax Return or the
post-closing portion of a Straddle Period Tax Return without the consent of
the Buyer, which consent will not be unreasonably withheld or delayed (it
being understood that it would be unreasonable for the Buyer to withhold
consent if Seller or Parent agrees to fully indemnify Buyer for such
adverse effect). Any refunds or credits of Taxes of the Company and its
Subsidiaries for any Straddle Period shall be apportioned between the
Seller and the Buyer in the same manner as the liability for such Taxes is
apportioned pursuant to Section 4.6(a)(vi).

                  (e) Parent and the Seller, on the one hand, and the
Buyer, on the other hand, shall and shall cause their respective affiliates
to provide the other party with such assistance and documents as may be
reasonably requested by such party in connection with (i) the preparation
of any Tax Returns of the Company or its Subsidiaries, (ii) the conduct of

                                   Page 47

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any Tax Audit relating to liability for or refunds or adjustments with
respect to Taxes, and (iii) any other matter related to Taxes that is a
subject of this Agreement. Such cooperation shall be provided to the
requesting party promptly upon its request. Such cooperation and assistance
shall include, without limitation, providing all information, records and
other documents relating to Taxes with respect to the Pre-Closing Periods
and Straddle Periods, preserving all such information until after the
expiration of any applicable statute of limitations (including extensions),
executing and delivering powers of attorney and making employees available
to provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to any Tax Audit.

                  (f) Any Tax sharing Contract between the Company or any
of its Subsidiaries and any other Person shall be terminated as to the
Company or such Subsidiary on, and effective as of, the Closing Date, and
no Person shall have any rights or obligations with respect to the Company
or such Subsidiary under such Tax sharing Contract after such termination,
and no such rights or obligations shall be included in computing Net
Working Capital.

                  (g) At the Parent's or the Seller's request, the Buyer
will, and will cause the Company and any of the Buyer's other Subsidiaries
to, timely make and/or join with Parent in making an election under
Treasury Regulations Section 1.1502-20(g) after the Closing to reattribute
the operating loss carryovers and net capital loss carryovers of the
Company and its Subsidiaries to the Parent. The Buyer will, and will cause
the Company and its Subsidiaries to, take all actions required of the
Buyer, the Company and any of its Subsidiaries by Treasury Regulations
Section 1.1502-20(g) so that such election may be properly made and
preserved.

                  (h) Notwithstanding anything to the contrary in this
Agreement, (i) the representations and warranties contained in Section

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2.21 and the covenants of the parties contained in this Section 4.6 shall
survive the Closing until the date 90 days after the expiration of the
applicable statute of limitations (including extensions) and (ii) the
provisions of this Section 4.6 shall be the sole and exclusive remedy for any
dispute between the parties with respect to Taxes and Damages that may be
suffered or incurred by them in respect of, or relating to, directly or
indirectly thereto. The provisions of Article VII, other than Section 7.7,
shall not apply to matters relating to Taxes.

                  (i)  For purposes of this Agreement:

                  "Pre-Closing Period" means any taxable period ending on
or prior to the Closing Date.

                  "Post-Closing Period" means any taxable period beginning
on the day following the Closing Date.

                  "Straddle Period" means any taxable period that begins
before and ends after the Closing Date.

                  "Tax Affiliate" means any entity that is a member of an
affiliated group of corporations (within the meaning of Section 1504(a) of
the Code) filing a consolidated U.S. federal income Tax Return, and a group
of corporations filing a consolidated or combined Tax Return for state,
local or foreign Tax purposes (each, a "Consolidated Group"), if the
Company or any of its Subsidiaries could be held liable for the Taxes of
such entity or of such Consolidated Group.

                  "Tax" or "Taxes" means any and all taxes, charges, fees,
levies or other assessments, including, without limitation, income, gross
receipts, excise, real or personal property, sales, withholding, social
security, retirement, unemployment, occupation, use, service, net worth,

                                   Page 49

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payroll, franchise, license, gains, customs, transfer and recording taxes,
imposed by any taxing authority, and shall include any interest, penalties
or additions to tax.

                  4.7. Pre-Closing Insurance. With respect to any insurance
policy outstanding prior to the Closing insuring the Company or any of its
Subsidiaries or any aspect thereof, under the terms of which policy an
affiliate of the Company, rather than the Company, is required to file
claims, the Seller shall cause such affiliate to file promptly and
prosecute diligently such claims. To the extent, if any, that any of the
Seller or any of its affiliates receive payment in respect of any such
claim, the Seller shall pay over (or cause such affiliate to pay over) such
amounts to the Company at or after the Closing. The Seller shall procure at
the Buyer's expense (i) directors and officer insurance covering directors
and officers of the Company and its Subsidiaries for pre-Closing matters
and (ii) professional liability coverage and employment practices liability
coverage for pre-Closing matters.

                  4.8. Acquisition Proposals. Notwithstanding anything to
the contrary contained herein, the Buyer acknowledges that, from and after
the date hereof, the Seller will furnish information and access to
(including, without limitation, providing all necessary information in
connection with any filings under the HSR Act), participate in discussions
and negotiate with, and enter into agreements with, third parties
concerning any merger, sale of assets, sale of shares of capital stock or
other alternative transaction involving the Company or any Subsidiary or
division of the Company (an "Alternative Transaction"), provided, that the
Company may only furnish information to, and negotiate or otherwise engage
in discussions with, any Person who enters into a confidentiality and
non-disclosure agreement with the Seller or the Company no less favorable

                                   Page 50

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to the Seller or the Company than the confidentiality provisions contained
in Section 4.2(b). The Buyer covenants not to commence and expressly waives
any claim at law or equity, including any claim for tortious interference,
against the Seller or any other Person related to the activities
contemplated by this Section 4.8, except a claim against the Seller for
breach by the Seller of its obligations under this Section 4.8.

                  4.9. Related Agreements. At the Closing, the parties
hereto shall, and shall cause each of their affiliates to, execute and
deliver the Publishing, Branding and Operating Agreement substantially in
the form of Exhibit B (the "Operating Agreement"), the Telecom Agreement
substantially in the form of Exhibit C attached hereto (the "Telecom
Agreement") and the Transition Services Agreement attached hereto
substantially in the form of Exhibit D attached hereto (the "Transition
Services Agreement").

                  4.10.  Right of First Offer.

                  (a) Except as provided in this Section 4.10, the Buyer
shall not enter into any written definitive acquisition agreement relating
to, or consummate any Sale Transaction (as defined below) within 24 months
of the Closing Date. If at any time during such period, the Buyer desires
to engage in a Sale Transaction (including by reason of the Buyer's receipt
of an unsolicited bona fide offer to engage in a Sale Transaction from an
unrelated third-party) the Buyer shall first offer to the Seller, by way of
written notice (the "Offer Notice"), the opportunity to engage in a Sale
Transaction.

                  (b) The Seller shall have 20 days after the Seller
receives the Offer Notice (the "Offer Period") to deliver a written notice
to the Buyer, (the "Formal Offer") offering to engage in a Sale

                                   Page 51

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Transaction. If Seller delivers an Offer Notice and the Buyer desires to
accept the Formal Offer, the Buyer and the Seller shall negotiate in good
faith to enter into an agreement containing the terms and conditions
specified in the Formal Offer and such other terms and conditions as the
Buyer and the Seller shall mutually agree; provided, however, that such
agreement shall (i) contain representations and warranties that are no more
extensive than those set forth herein, that cover only the period of
ownership of the Company by the Buyer, and that are subject to survival and
indemnification provisions no more extensive than those contained herein
and (ii) contain other covenants, agreements, and conditions (but only
those) substantially similar to those contained herein (other than Sections
4.8, 4.9, 4.10, 4.11 and 6.1(d)).

                  (c) If the Parent does not deliver to the Buyer a Formal
Offer prior to the expiration of the Offer Period or if the Buyer and
Seller fail to enter into a definitive agreement within 10 days after
Buyer's acceptance of a Formal Offer (the "Offer Negotiation Period"), then
the Buyer shall have the right for 180 days following the expiration of the
Offer Period or the expiration of the Offer Negotiation Period, as
applicable, to execute one or more definitive agreements relating to the
consummation of a Sale Transaction at any price and upon any terms and
conditions. If the Buyer has not executed such a definitive agreement
within such 180-day period, the Buyer shall be required to reoffer any
subsequent Sale Transaction to the Seller pursuant to the terms of this
Section.

                  (d) If the Parent delivers to the Buyer a Formal Offer
prior to the expiration of the Offer Period, and the Buyer desires to
reject the Formal Offer, it shall so notify the Parent in writing. The
Buyer shall have the right for 180 days following the receipt of the Formal
Offer to execute one or more definitive agreements relating to the
consummation of a Sale Transaction at a price greater than that specified

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in the Formal Offer and on other terms and conditions no less favorable to
the Buyer than those specified in the Formal Offer, except as to the scope
of the provisions relating to the representations and warranties of the
Buyer. If the Buyer has not executed such a definitive agreement within
such 180-day period, the Buyer shall be required to reoffer any subsequent
Sale Transaction to the Seller pursuant to the terms of this Section.

                  (e) If the Buyer and the Seller enter into a definitive
agreement in connection with a Formal Offer, and the Seller fails to timely
consummate the Sale Transaction for any reason other than the breach by the
Buyer of the definitive agreement, then, in addition to all other remedies
which the Buyer may have by reason of such non-consummation, this Section
4.10 shall be of no further force and effect.

                  (f) The Buyer shall not disclose to any Person that the
Seller has made a Formal Offer or any of the terms thereof except as
required by law.

                  (g) Notwithstanding anything to the contrary contained
herein, Sections 4.10 and 4.11 shall not apply to any underwritten public
offering of equity securities or equity linked securities by the Company or
any of its Subsidiaries and shall terminate upon the closing of the first
such public offering.

                  (h) To facilitate the exercise of the Seller's rights
under this Section 4.10, the Buyer will cause each of the Company and its
Subsidiaries to (i) give the Seller and its authorized representatives
reasonable access to their books, records, personnel, offices and other
facilities and properties and their accountants and their accountants' work

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papers, (ii) permit the Seller to make such copies and inspections thereof
as the Seller may reasonably request and (iii) cause the Company's officers
to furnish the Seller with such financial and operating data and other
information with respect to the business and properties of each of the
Company and its Subsidiaries as the Seller may from time to time reasonably
request, including, without limitation quarterly financial statements;
provided, however, that any such access shall be conducted at a reasonable
time and in such a manner as not to interfere unreasonably with the
operation of the business of the Company or any or its Subsidiaries. Any
such information furnished shall be subject to the same provisions as those
set forth in Section 4.2(b).

                  (i) Notwithstanding anything to the contrary contained
herein, Sections 4.10 and 4.11 shall not apply to any Sale Transaction with
an affiliate of the Buyer which agrees to be bound by the provision of
Sections 4.10 and 4.11 in the place of the Buyer.

                  4.11. Subsequent Sale. The Buyer covenants and agrees
that if (x) the Buyer or its affiliates consummates or enters into a
written definitive acquisition agreement for any Sale Transaction at any
time within 12 months after the Closing Date and (y) the Sale Consideration
exceeds the FL Investment Amount, concurrently with the consummation of
such Sale Transaction, the Buyer shall pay to the Seller by wire transfer
of immediately available funds an amount equal to 50% of such excess. For
purposes of this Agreement, "Sale Transaction" shall mean any sale (whether
in one or a series of transactions) of all or substantially all or the
assets of the Company and its Subsidiaries, taken as a whole, or 50% or
more of the capital stock of the Company, as well as any recapitalization,
restructuring or liquidation of the Company and its Subsidiaries by the
Buyer, a third party or any combination thereof, or any other form of

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transaction or disposition or series of transactions or dispositions which,
directly or indirectly, results in the effective transfer of the business
and operations of the Company and its Subsidiaries by the Buyer and its
affiliates. For purposes of this Agreement, the term "Sale Consideration"
shall mean the total fair market value (on the date or dates of payment) of
all consideration (including cash, securities or other property) paid or
payable, or otherwise to be distributed, directly or indirectly, to the
Buyer, its stockholders or affiliates in connection with the Sale
Transaction, as applicable, net of any fees and expenses paid to third
parties relating to the Sale Transaction; provided, however, that
contingent payments and amounts paid into escrow shall not be included in
the amount of Sale Consideration until such amounts are paid and provided,
further, Buyer shall be entitled to hold back an amount it deems reasonably
necessary for any post-closing purchase price adjustment or indemnification
payments until such amounts are finally determined, at which point any
amounts remaining shall be included in Sale Consideration and paid to
Seller in accordance with this Section 4.11. For purposes of this
Agreement, the term "FL Investment Amount" shall mean the total amount
drawn by affiliates of the Buyer and invested in the Buyer to fund the
acquisition of the Company and its Subsidiaries and the payment of fees and
expenses to third parties relating thereto and funding for the working
capital of the Company and its Subsidiaries.

                  4.12. Headquarters. The Buyer has no present intention to
change the location of the Company's headquarters and principal office and
agrees for a period of at least two years after the Closing Date, that the
Company's headquarters and principal office shall remain at its current
location in Cedar Rapids, Iowa.

                  4.13. Intercompany Indebtedness; Net Working Capital. (a)
Immediately prior to the Closing, Seller shall cause to be contributed

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to the Company as a capital contribution in respect of capital stock, all
indebtedness owed by the Company or its Subsidiaries to Seller or any
affiliate of Seller (other than the Company and its Subsidiaries). (b) Except
as set forth in Section 4.13 of the Disclosure Schedule, the Seller shall
cause the Net Working Capital of the Company and its Subsidiaries as of the
Closing Date to be an amount not less than the amount set forth in Section
4.13 of the Disclosure Schedule.

                  "Net Working Capital" shall mean the amount obtained by
subtracting the Current Liabilities from the Current Assets, in each case
as of the close of business on the day immediately preceding the Closing.

                  "Current Assets" shall mean the sum of (w) cash and cash
equivalents (but not including any proceeds from the sale of the property
located at 1200 Network Centre Drive, Effingham, IL 62401), (x) accounts
receivable, billed and unbilled, of the Company and its Subsidiaries, net
of allowance for bad debts and other adjustments, (y) other receivables,
and (z) prepaid expenses, in each case determined in accordance with GAAP
on a consistent basis with the December Balance Sheets and using consistent
classifications; but excluding (i) any intercompany accounts, (ii) the
asset captioned "deferred expenses" in the December Balance Sheets and
(iii) any income tax asset.

                  "Current Liabilities" shall mean the sum of (w) accounts
payable of the Company and its Subsidiaries (including any outstanding
checks), (x) accrued expenses, (y) an amount for Earn-Out Obligations (as
defined below) equal to the aggregate amount of the Earn-Out Obligations
reflected on the September 30 Balance Sheet, and (z) deposits, determined,
except in the case of the Earn-Out Obligations, in accordance with GAAP on

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a consistent basis with the December Balance Sheets and using consistent
classifications, but excluding (i) any intercompany accounts, (ii) any
income tax liability or (iii) the current maturities of other long term
debt.

                  "Earn-Out Obligations" mean any reserves, liabilities or
similar items recorded in connection with purchase accounting under APB
Opinion No. 16, including, without limitation, contingent payment amounts.

                  In determining the amount of accounts receivable, billed
and unbilled, accounts receivable recorded in the month which includes the
Closing Date (the "Closing Date Month") shall be equal to the amount
determined by multiplying the revenue from such sales recorded in the
Closing Date Month which give rise to accounts receivable by a fraction the
numerator of which is the number of calendar days from the beginning of the
Closing Date Month until the Closing Date and the denominator of which is
the number of calendar days in the Closing Date Month; appropriate
adjustment shall be made for the collection prior to the Closing Date of
accounts receivable that originated in the Closing Date Month and for the
related allowance for bad debts and adjustments. Net Working Capital shall
be determined as if the day preceding the Closing Date were a normal year
end. For purposes of determining Net Working Capital, the amount of Taxes
accrued or reserved for shall be equal to (i) the amount accrued as a
current liability on the September 30 Balance Sheet for Taxes (other than
income Taxes) payable in respect of periods ended on or prior to September
30, 2001, less any amount paid in respect of such Taxes after September 30,
2001 and prior to the Closing Date, plus (ii) the amount that would be
accrued as a current liability on a balance sheet prepared as of the day
immediately prior to the Closing Date in accordance with GAAP consistent

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with past practices to reflect Taxes (other than income Taxes) payable in
respect of ordinary course of business operations conducted during the
period commencing October 1, 2001 and ending on the day immediately prior
to the Closing. For avoidance of doubt, under no circumstances shall the
amount described in clause (ii) above include any accrual for Taxes that
are attributable to any period prior to October 1, 2001.

                  The parties agree that the sole and exclusive remedy for
disputes arising under this Section 4.13 shall be to submit such disputes
for resolution to an independent accounting firm to which the parties may
mutually agree, or failing such agreement, to a firm or a partner at a firm
appointed at the request of any party by the American Arbitration
Association (the "Arbiter"). All proceedings conducted by the Arbiter shall
take place in New York, New York. The Arbiter shall act as an arbitrator to
determine, based solely on the presentations by the Seller and the Buyer,
and not by independent review, whether the Net Working Capital as of the
Closing Date was calculated in the manner provided in this Section 4.13.
The fees, costs and expenses of the Arbiter shall be borne equally by the
Seller and the Buyer. The determination of the Arbiter shall be final and
binding upon the parties.

                  4.14. Bankruptcy Matters. The Buyer hereby agrees that if
proceedings are commenced under the Bankruptcy Code by or against Parent
and/or its Subsidiaries (including the Company and its Subsidiaries) and
the Closing of the transactions contemplated hereby is subject to approval
under Section 363 of the Bankruptcy Code, neither the requirement for such
approval process nor the actions required to be take by such process

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shall not constitute a breach of this Agreement and Buyer shall not be
released from its obligations hereunder as a result thereof.

                  4.15. Leases and Other Obligations. From and after the
date hereof, Buyer shall cooperate with Seller and use all reasonable
efforts to cause the leasing arrangements and other obligations set forth
on Section 4.15 of the Disclosure Schedule to be assigned or otherwise
transferred to the Company and to cause Seller and any of its affiliates
(other than the Company and its Subsidiaries) to be released from any and
all obligations thereunder prior to the Closing Date. In the event such
transfer and release do not occur prior to the Closing, Buyer shall
indemnify Seller and its affiliates and hold Seller and its affiliates
harmless from and against any and all Damages that Seller or any of its
affiliates may incur with respect to such leasing arrangements and other
obligations from and after the Closing, provided, however, that such
damages shall not include any damages to the extent they relate to, arise
out of or are the result of any breach by Seller or any of its affiliates
of, or any other wrongful act or failure to act by, any of them with
respect to any of the foregoing leasing arrangements and other obligations.
Seller shall use reasonable efforts to assign or cause to be assigned to
the Company the rights or assets listed on Schedule 4.15(b); provided,
however, neither Seller nor any of its affiliates shall be required to pay
any amount to the third parties or grant any accommodation financial or
otherwise in connection with such assignment.

                  4.16. Real Property. The Seller and the Buyer agree to
enter into a real estate transfer agreement providing for the transfer of
the fee interest in the buildings and real estate (including parking
spaces) specified in Section 4.16 of the Disclosure Schedule. Such
agreement will provide for appropriate easements and right-of-ways in favor

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of the Seller and the Buyer, as the case may be, to allow for the continued
use of such buildings and real estate in a manner consistent with current
practice. In addition, the parties will enter into a maintenance and care
agreement providing for the equitable allocation of grounds keeping, snow
removal and other costs.

                  The Seller and the Buyer shall share equally the costs of
(a) real estate transfer Taxes required by the State of Iowa or the County
of Linn, (b) document recording fees, (c) formal subdivision (excluding any
survey) of such buildings and real estate, if and to the extent required by
applicable law, and (d) if title insurance is requested by the Buyer, an
ALTA standard form of owner's title insurance. If the Buyer desires (a)
extended title coverage (insuring over the five standard exceptions to
title), (b) title endorsements, or (c) a survey, the Buyer shall promptly
obtain the same at its sole cost and expense.

                                 ARTICLE V

              CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE

                  5.1. Conditions to Each Party's Obligations to Consummate
the Stock Purchase. The respective obligations of each party to consummate
the Stock Purchase is subject to the satisfaction of the following
conditions:

                  (a) no statute, rule, regulation, executive order,
decree, or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental entity which prohibits or restricts
the consummation of the Stock Purchase;

                  (b) all consents, approvals, orders and Permits of, and
registrations, declarations and filings with, any governmental authority

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that shall be legally required in order to enable the Seller and the Buyer
to consummate the transactions contemplated hereby shall have been made or
obtained, and any waiting period applicable to the Stock Purchase under the
HSR Act shall have terminated or expired; and

                  (c) all conditions precedent to the consummation of the
Restructuring shall have been satisfied and the Restructuring shall be
occurring simultaneously with the Closing with such modifications in the
terms of the Restructuring that do not materially deviate from the terms
set forth on Exhibit A.

                  5.2. Further Conditions to the Seller's Obligations. The
obligations of the Seller to consummate the Stock Purchase are further
subject to satisfaction or waiver of the following conditions:

                  (a) the representations and warranties of the Buyer
contained herein shall be true and correct as of the Closing Date as if
made at and as of such date (other than those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate
as of such date or with respect to such period), except where the failure
of such representations and warranties to be so true and accurate (without
giving effect to any limitation as to "materiality" or "Buyer Material
Adverse Effect" set forth therein) would not, individually or in the
aggregate, have a Buyer Material Adverse Effect;

                  (b) the Buyer shall have performed and complied in all
material respects with all agreements, obligations, covenants and
conditions required by this Agreement to be performed or complied with by
it on or prior to the Closing;

                  (c) the Seller shall have received a certificate of an
authorized officer of the Buyer to the effect that the conditions in

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paragraphs (a) and (b) of this Section 5.2 have been satisfied; and

                  (d) all corporate actions, proceedings, instruments and
documents of the Buyer required to carry out the transactions contemplated
by this Agreement or incidental thereto and all other related legal matters
shall be reasonably satisfactory to counsel for the Seller, and such
counsel shall have been furnished with such certified copies of such
corporate actions and proceedings and such other instruments, documents and
opinions as it shall have reasonably requested.

                  5.3. Further Conditions to the Buyer's Obligations. The
obligation of the Buyer to consummate the Stock Purchase are further
subject to the satisfaction or waiver of the following conditions:

                  (a) the representations and warranties of the Seller
contained herein shall be true and correct as of the Closing Date as if
made at and as of such date (other than those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate
as of such date or with respect to such period), except where the failure
of such representations and warranties to be so true and accurate (without
giving effect to any limitation as to "materiality" or "Company Material
Adverse Effect" set forth therein) would not, individually or in the
aggregate, have a Company Material Adverse Effect;

                  (b) the Seller shall have performed and complied in all
material respects with all agreements, obligations, covenants and
conditions required by this Agreement to be performed or complied with by
it on or prior to the Closing;

                  (c) the Buyer shall have received a certificate of an
authorized officer of the Seller to the effect that the conditions in
paragraphs (a) and (b) of this Section 5.3 have been satisfied; and

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                  (d) all actions, proceedings, instruments and documents
of the Seller required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall
be reasonably satisfactory to counsel for the Buyer, and such counsel shall
have been furnished with such certified copies of such actions and
proceedings and such other instruments, documents and opinions as it shall
have reasonably requested.

                                 ARTICLE VI

                        TERMINATION AND ABANDONMENT

                  6.1. Termination. This Agreement may be terminated at any
time prior to the Closing Date:

                  (a) by mutual written consent of the Seller and the
Buyer;

                  (b) by the Seller or the Buyer at any time after August
1, 2002 if the Closing shall not have occurred by such date; provided,
however, that the failure of the transactions contemplated hereby to occur
on or before such date is not the result of the breach of any covenants or
agreements contained herein by the party seeking to terminate this
Agreement;

                  (c) by the Seller or by the Buyer, if any governmental
entity of competent jurisdiction shall have issued an order, decree or
ruling or taken other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree,
ruling or other action shall have become final and nonappealable;

                  (d) by the Seller at any time if the Seller enters into a
definitive agreement for, or otherwise consummates, a Superior Combination;
provided, that on the date of termination, the Seller shall deliver to

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the Buyer a written notice of termination of this Agreement pursuant to this
Section 6.1(d).

             For purposes of this Section 6.1, a "Superior Combination" is
an Alternative Transaction that provides for a purchase price higher than
the Purchase Price on terms substantially similar to the terms of this
Agreement (other than Sections 4.8, 4.11 and 6.1(d)) with such other terms
and conditions as the Seller determines in good faith would not materially
impair or delay Parent's ability to consummate a capital restructuring
approved by the Board of Directors of Parent; provided, that in order to
constitute a Superior Combination, such Alternative Transaction must
contain a condition to the Seller's obligation to complete such a
transaction (which condition may not be waived by the Seller) that such a
restructuring be accomplished on terms that do not materially deviate from
the terms set forth on Exhibit A.

                  6.2. Effect of Termination. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby
by the parties hereto pursuant to Section 6.1 hereof, this Agreement shall
forthwith become null and void and of no further effect, without any
liability on the part of any party or its directors, officers, partners,
affiliates, employees, agents or securityholders, other than the provisions
of Section 4.2(b). Nothing in this Section 6.2 shall relieve any party from
any liability for any willful breach of this Agreement.

                                ARTICLE VII

                        SURVIVAL AND INDEMNIFICATION

                  7.1. Survival Periods. All representations and warranties
of the parties contained in this Agreement shall survive the Closing until

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the date which is 18 months after the Closing Date, except for the
representations and warranties in Sections 2.2, 2.3, 2.19 and 3.2, which
shall survive the Closing without limitation as to time and the
representations and warranties in Section 2.11, which shall survive until 90
days after the expiration of the applicable statute of limitations. The
covenants and agreements of the parties hereto shall survive the Closing in
accordance with their terms without limitation as to time. From and after the
Closing, the Seller shall indemnify and hold harmless the Buyer, the Company
and its Subsidiaries and the Buyer shall indemnify and hold harmless the
Seller, against certain liabilities, in accordance with the terms of this
Article VII. No party providing indemnification pursuant to this Article VII
(an "Indemnifying Party") shall be obligated to provide such indemnification
with respect to representations and warranties to the party seeking
indemnification (the "Indemnified Party") unless the Indemnifying Party shall
have received written notice thereof within the applicable time period for
survival of such representation or warranty, as set forth above.

                  7.2. Indemnification. Subject to the other provisions of
this Article VII, from and after the Closing, the Indemnifying Party shall
indemnify and hold harmless the Indemnified Party from and against any
costs or expenses (including without limitation reasonable attorneys' fees,
and the reasonable out-of- pocket expenses of testifying and preparing for
testimony and responding to document and other information requests,
whether or not a party to such litigation), judgments, fines, losses,
claims (whether or not meritorious) and damages (collectively, "Damages"),
as incurred, to the extent they relate to, arise out of or are the result
of (i) any breach of any representation or warranty or (ii) failure to
perform any covenant or agreement made by the Indemnifying Party under

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this Agreement; provided, however, that any effects on or changes in the
Company or its Subsidiaries resulting from or relating to (A) the execution
of this Agreement and the announcement of this Agreement and the transactions
contemplated hereby or (B) the announcement of, and subsequent disclosures
related to, the Restructuring or the commencement or pendency of proceedings
under Bankruptcy Code by or against Parent and/or its Subsidiaries (including
the Company and its Subsidiaries) shall be excluded from the determination of
the amount of any Damages hereunder. In addition, the Buyer agrees to use all
commercially reasonable efforts to settle or otherwise resolve the items set
forth on Section 2.9 of the Disclosure Schedule, in the ordinary course of
business consistent with the Company's and its Subsidiaries past practice
(including by providing advertising at no-cost). Subject to the preceding
sentence, Seller shall indemnify and hold harmless the Buyer, the Company and
its Subsidiaries against any and all out-of-pocket, cash Damages paid to
third parties, as incurred, to the extent they relate to, arise out of or are
the result of the items set forth on Section 2.9 of the Disclosure Schedules
net of any insurance proceeds ("Litigation Damages") to the extent such
Litigation Damages exceed, in the aggregate, $1,000,000 (the "Litigation
Deductible"), but only to the extent of such excess. To the extent the Buyer,
the Company or any of its Subsidiaries incur any Litigation Damages for which
they are not entitled to indemnification by reason of the Litigation
Deductible, the Deductible (as herein defined) shall be reduced on a dollar
for dollar basis. Notwithstanding the 30-day time limit to assume third party
claims in Section 7.4, Seller shall have the right to assume control of
(consistent with Section 7.4) the litigation set forth in Section 2.9 of the
Disclosure Schedule at any time. Buyers will keep Seller informed, on a
monthly basis or as otherwise reasonably requested, on the status of such

                                   Page 66

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litigation.

                  7.3. Indemnification Amounts. (a) Notwithstanding any
provision to the contrary contained in this Agreement, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party for any
Damages with respect to breaches of representations and warranties (i)
unless and until the amount of Damages arising from or relating to any
single circumstance or related circumstances exceeds $25,000 ("Covered
Damages"), (ii) unless and until the amount of all such Covered Damages
shall in the aggregate equal 2% of Purchase Price (the "Deductible"), and
then only to the extent of such amount in excess of the Deductible, and
(iii) to the extent that the amount of all such payments by the
Indemnifying Party would exceed 25% of Purchase Price; provided, that this
Section 7.3 shall not apply to any indemnification by the Seller for
Damages relating to, arising out of or resulting from any breach of the
representations and warranties contained in Sections 2.2, 2.3, 2.15, 2.19
and 3.2, which indemnification shall not be limited in any respect or by or
to any amount.

                  (b) The Company Material Adverse Effect, Buyer Material
Adverse Effect and materiality (or correlative meaning) qualifications
included in the representations and warranties set forth in Article II or
Article III shall have no effect on any provision in Section 7.2 concerning
the indemnification of the Indemnified Parties with respect to such
representations and warranties, each of which is given as though there were
no Company Material Adverse Effect, Buyer Material Adverse Effect or
materiality qualifications for purposes of such indemnification.

                  7.4. Claims. (a) If an Indemnified Party intends to seek
indemnification pursuant to this Article VII, such Indemnified Party shall
promptly notify the Indemnifying Party, in writing, of such claim
describing such claim in reasonable detail, provided, that the failure

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to provide such notice shall not affect the obligations of the Indemnifying
Party unless and only to the extent it is actually prejudiced thereby,
subject, however, to the time periods specified in Section 7.1 hereof. In the
event that such claim involves a claim by a third party against the
Indemnified Party, the Indemnifying Party shall have 30 days after receipt of
such notice to decide whether it will undertake, conduct and control, through
counsel of its own choosing and at its own expense, the settlement or defense
thereof, and if it so decides, the Indemnified Party shall cooperate with it
in connection therewith, provided, that the Indemnified Party may participate
in such settlement or defense through counsel chosen by it, and provided,
further, that the fees and expenses of such counsel shall be borne by the
Indemnified Party. The Indemnifying Party shall not, without the written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld), settle or compromise any action. If the Indemnifying Party does
not notify the Indemnified Party within 30 days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that it elects
to undertake the defense thereof, the Indemnified Party shall have the right
to contest, settle or compromise the claim but shall not thereby waive any
right to indemnity therefor pursuant to this Agreement. As long as the
Indemnifying Party is contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim without the consent
of the Indemnifying Party (which consent shall not be unreasonably withheld).

                  (b) The Indemnifying Party and the Indemnified Party
shall cooperate fully in all aspects of any investigation, defense,
pre-trial activities, trial, compromise, settlement or discharge of any

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claim in respect of which indemnity is sought pursuant to this Article VII,
including, but not limited to, by providing the other party with reasonable
access to employees and officers (including as witnesses) and other
information.

                  7.5. Exclusive Remedy. Absent fraud, the indemnification
provisions of this Article VII shall be the exclusive remedy following the
Closing for any breaches or alleged breaches of any representation or
warranty contained in this Agreement. Each of the parties hereto agrees not
to bring any actions or proceedings, at law, equity or otherwise, against
any other party or its direct or indirect partners or securityholders in
respect of any breaches or alleged breaches of any representation or
warranty except pursuant to the express provisions of this Article VII. The
parties hereby agree that no party has made any representations or
warranties, express or implied, with respect to this Agreement or the
matters contemplated hereby, except as explicitly set forth in this
Agreement.

                  7.6. Insurance. The Indemnifying Party shall be
subrogated to the rights of the Indemnified Party in respect of any
insurance relating to Damages to the extent of any indemnification payments
made (provided that the Indemnifying Party shall not be entitled to
subrogation to the extent the deductible under Section 7.3(a)(i) hereof or
the cap under Section 7.3(a)(ii) hereof was applied to the indemnification
claim).

                  7.7. Duplication. Any liability for indemnification
hereunder shall be determined without duplication of recovery by reason of
the state of facts giving rise to such liability constituting a breach of
more than one representation, warranty, covenant or agreement; provided,
however, that subject to there being no duplication of recovery, the
Indemnified Party shall be entitled to recover to the maximum extent
provided in this Agreement (e.g., if any Indemnified Party's entitlement to

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indemnification is both by reason of a breach of a representation and
warranty to which the limitations of Section 7.3(a) apply and by reason of
a breach of a representation and warranty to which such limitations do not
apply, the Indemnified Party shall be entitled to indemnification without
such limitations being applied).

                                ARTICLE VIII

                          MISCELLANEOUS PROVISIONS

                  8.1. Amendment and Modification. This Agreement may be
amended or modified at any time by the parties hereto, pursuant to an
instrument in writing signed by all parties.

                  8.2. Extension; Waiver. At any time prior to the Closing
Date, the party entitled to the benefit of any respective term or provision
hereof may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document, certificate or writing delivered pursuant hereto or (c) waive
compliance with any obligation, covenant, agreement or condition contained
herein. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed
by the party entitled to the benefits of such extended or waived term or
provision. The representations, warranties and agreements of any of the
parties provided for in this Agreement, and the parties' obligations
hereunder, shall continue in effect notwithstanding any investigation made
by the other party hereto.

                  8.3. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and

                                   Page 70

<Page>

understandings, both written and oral, between the parties hereto with
respect to the subject matter hereof (other than the Ancillary Agreements
and (b) shall not be assigned, by operation of law or otherwise by a party
hereto, without the prior written consent of the other parties, except that
the Buyer may assign its rights under this Agreement to one or more of its
affiliates, but such assignment shall not relieve the Buyer of its
obligations hereunder.

                  8.4. Validity. The invalidity or unenforceability of any
term or provision of this Agreement in any situation or jurisdiction shall
not affect the validity or enforceability of the other terms or provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.

                  8.5. Notices. Unless otherwise provided herein, all
notices and other communications hereunder shall be in writing and shall be
deemed given upon receipt by the other parties at the following addresses
or telecopy numbers:

                  (a)  if to the Seller and/or Parent, to

                           McLeodUSA Incorporated
                           McLeodUSA Technology Park
                           6400 C Street SW
                           PO Box 3177
                           Cedar Rapids, Iowa 52406-3177
                           Telecopy: (319) 790-7901
                           Attention:  Randall Rings, Esq.
                                  Group Vice President and Chief Legal Officer

                           with a copy to

                           Skadden, Arps, Slate, Meagher & Flom (Illinois)
                           333 West Wacker Drive
                           Chicago, Illinois 60606

                                   Page 71

<Page>

                           Telecopy:  (312) 407-0411
                           Attention:  Peter C. Krupp, Esq.

                  (b)  if to the Buyer, to

                           c/o Forstmann Little & Co.
                           767 Fifth Avenue
                           New York, NY 10153
                           Telecopy No.: (212) 759-9059
                           Attention: Thomas H. Lister

                           with a copy to

                           Fried, Frank, Harris, Shriver & Jacobson
                           One New York Plaza
                           New York, New York 10004
                           Telecopy:  (212) 859-4000
                           Attention:  Aviva Diamant, Esq.

                  8.6. Governing Law and Jurisdiction. This Agreement shall
be governed by, enforced under and construed in accordance with the laws of
the State of Delaware, without giving effect to any choice or conflict of
law provision or rule thereof. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United
States of America in each case located in the County of Delaware for any
litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), and further agrees that service of
any process, summons, notice or document by U.S. registered mail to its
respective address set forth in Section 8.5 shall be effective service of
process for any litigation brought against it in any such court. Each of
the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the
State of Delaware or of the United States of America in each case located
in the County of Delaware and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court

                                   Page 72

<Page>

that any such litigation brought in any such court has been brought in an
inconvenient forum. Notwithstanding the foregoing, in the event that Parent
and/or any of its Subsidiaries commence proceedings under the Bankruptcy
Code, the Buyer and the Seller irrevocably and unconditionally consent to
submit to the jurisdiction of the bankruptcy court in which such proceeding
is commenced for any litigation arising out of or relating to this
Agreement and the transactions contemplated thereby (and agree not to
commence any litigation relating thereto except in such bankruptcy court).

                  8.7. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and shall in no way
be construed to define, limit, describe, explain, modify, amplify, or add
to the interpretation, construction or meaning of any provision of, or
scope or intent of, this Agreement nor in any way affect this Agreement.

                  8.8. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

                  8.9. Expenses. Whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth herein, all costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses. Any transfer, sales, use or any similar taxes payable in
connection with the Stock Purchase shall be borne 50% by the Seller and 50%
by the Buyer. Any Tax Returns relating to such taxes shall be prepared and
filed when due by the party primarily or customarily responsible under
applicable local law for the filing of such Tax Returns. To the extent that
such Tax Returns require an allocation of the purchase price hereunder

                                   Page 73

<Page>

the parties shall use their best efforts to agree on such allocation. The
filing party shall provide drafts of such Tax Returns to the other party for
their review and comment at least two days prior to the due date of the
return.

                  8.10. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
affiliates and nothing in this Agreement, express or implied, is intended
by or shall confer upon any other Person any rights, benefits or remedies
of any nature whatsoever under or by reason of this Agreement.

                  8.11. No Waivers. Except as otherwise expressly provided
herein, no failure to exercise, delay in exercising, or single or partial
exercise of any right, power or remedy by any party, and no course of
dealing between the parties, shall constitute a waiver of any such right,
power or remedy. No waiver by a party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence. No waiver
shall be valid unless in writing and signed by the party against whom such
waiver is sought to be enforced.

                  8.12. Specific Performance. The parties hereto agree that
if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage
would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific

                                   Page 74

<Page>

performance of the terms hereof and immediate injunctive relief, in
addition to any other remedy at law or equity.

                  8.13. Construction. All references herein to the
knowledge of the Seller shall mean the actual knowledge of the executive
officers and General Counsel of Parent, the elected officers of Seller, the
Company and each of its Subsidiaries, and the Corporate Counsel and
Controller of the Company.

                  8.14. Guarantees. Parent unconditionally guarantees the
performance of the obligations of the Seller under this Agreement.

                  IN WITNESS WHEREOF, each of the undersigned has caused
this Agreement to be duly signed as of the date first above written.

                             McLEODUSA HOLDINGS, INC.

                             By: /s/ Chris A. Davis
                                --------------------------------------------
                             Name:   Chris A. Davis
                             Title:  Chief Operating and Financial Officer

                             PUBCO ACQUISITION CORP.

                             By: /s/ Thomas H. Lister
                                --------------------------------------------
                             Name:   Thomas H. Lister
                             Title:  Vice President

                                   Page 75

<Page>

                             Solely for purposes of being bound by
                             the terms of Section 8.14:

                             McLEODUSA INCORPORATED

                             By: /s/ Chris A. Davis
                                --------------------------------------------
                             Name:   Chris A. Davis
                             Title:  Chief Operating and Financial Officer

                                                                 Exhibit A

                      PRINCIPAL TERMS OF RESTRUCTURING
                      --------------------------------
The following is a description of the principal terms for the restructuring
of the Company:

1.       The Company will (A) sell its directory publishing business to
         either (i) Forstmann Little & Co. or its affiliates for a cash
         purchase price of at least $535,000,000 or (ii) such other person
         that submits a higher and better all cash offer and (B) use (i)
         the first $535,000,000 of the gross cash proceeds of such sale and
         (ii) at the Company's option, use the gross cash proceeds in
         excess of $560,000,000 to redeem the outstanding Indenture Debt;

2.       The FL Standby Purchase Agreement shall not provide for any
         break-up fee or any expense reimbursement in favor of the
         purchaser;

                                   Page 76

<Page>

3.       In the event that the Restructuring is consummated through the
         Out-of-Court Alternative, the Indentures governing the Indenture
         Debt will be amended to remove all lien, indebtedness and
         restrictive subsidiary agreements restrictions;

4.       The outstanding shares of Series A Preferred Stock, Series D
         Preferred Stock and Series E Preferred Stock and existing common
         stock of the Borrower will be converted to common stock (the "New
         Common Stock").

5.       Forstmann Little & Co. ("Forstmann Little") and its affiliates
         will make a $100,000,000 all cash investment in a new series of
         preferred stock of the restructured Company, $25,000,000 of such
         investment will be used to pay the Borrower's Indenture Debt,
         $35,000,000 of such investment will be used to prepay the Term
         Borrowings and $40,000,000 of such investment will be retained by
         the Borrower and used for general corporate purposes, including
         capital expenditures. Such preferred stock shall be mandatorily
         convertible into common stock of the Company within 60 days of the
         issuance thereof;

6.       The Borrower may implement the Restructuring either out-of-court
         through an exchange offer for the Indenture Debt and the
         Borrower's Series A, D and E Preferred Stock or in-court through a
         proceeding under Chapter 11 of the United States Bankruptcy Code,
         which in either case shall be consummated on or prior to August 1,
         2002;

7.       If the Restructuring is accomplished through the In-Court
         Alternative, the plan of reorganization for the Restructuring
         shall be confirmed on or prior to August 1, 2002 and shall provide

                                   Page 77

<Page>

         that the liens and claims of the Lenders under the Credit
         Agreement will be unimpaired within the meaning of Section 1124 of
         the Bankruptcy Code;

8.       The Company will redeem at least 95% of its outstanding Indenture
         Debt for (i) cash in the amount of $560,000,000; (ii) common
         equity of the restructured Borrower in an amount acceptable to the
         Arrangers; and (iii) at the Borrower's discretion, the excess, if
         any, of the gross sales proceeds received by the Borrower in the
         sale of its directory publishing business over $560,000,000; and

9.       Upon consummation of the Restructuring, (i) Forstmann Little and
         its affiliates will be entitled to at least two representatives on
         the restructured Borrower's Board of Directors; (ii) Forstmann
         Little and its affiliates will own common stock and warrants of
         the restructured Borrower in an amount representing approximately
         40% of the equity ownership of the restructured Borrower; and
         (iii) Theodore J. Forstmann will be chairman of the Executive
         Committee of the restructured Borrower.

The Company shall be entitled to amend the terms of this Exhibit A without
the consent of Forstmann Little provided that the terms of the amended
Exhibit A do not materially deviate from the terms set forth above.

                                   ANNEX

                                DEFINITIONS

                  "Arrangers" means JPMorgan Chase Bank, Bank of America,
N.A. and Citicorp USA, Inc.

                                   Page 78

<Page>

                  "FL Standby Purchase Agreement" means the standby
purchase agreement entered into among Forstmann Little, certain of its
affiliates and the Borrower on or about the Third Amendment Effective Date
and each other agreement, document, certificate or instrument delivered or
to be delivered in connection therewith, pursuant to which Forstmann Little
or any of such affiliates will, in the event that the Borrower has not
received and accepted a higher and better all cash offer for the sale of
the Publishing Assets on or prior to the Restructuring Date, purchase the
Publishing Assets for cash consideration of $535,000,000 on or prior to the
Restructuring Date.

                  "FL New Preferred Stock Purchase Agreement" means the
stock purchase agreement entered into among Forstmann Little, certain of
its affiliates and the Borrower on or about the Third Amendment Effective
Date and each other agreement, document, certificate or instrument
delivered or to be delivered in connection therewith, pursuant to which
Forstmann Little and such affiliates will make an investment in a new
series of preferred stock (the "New Preferred Stock") of the restructured
Borrower as described in Exhibit A.

                  "Forstmann Little" is defined in Exhibit A.

                  "Indenture Debt" means the outstanding Indebtedness of
the Borrower under the Indentures.

                  "New Common Stock" is defined in Exhibit A.
<Page>
                                                                       Exhibit B

                  PUBLISHING, BRANDING AND OPERATING AGREEMENT

                  This PUBLISHING, BRANDING AND OPERATING AGREEMENT
("AGREEMENT") is made as of the __ day of __, ____, by and among MCLEODUSA
PUBLISHING COMPANY, an Iowa corporation (the "DIRECTORY PUBLISHER"); MCLEODUSA,
INC., a Delaware corporation ("MCLEOD"); MCLEODUSA TELECOMMUNICATIONS SERVICES,
INC., a Delaware corporation (the "TELEPHONE COMPANY"); and PUBCO ACQUISITION
CORP., a Delaware corporation ("NEWCO").

                  WHEREAS, the Directory Publisher is in the business of
publishing and distributing telephone directories (including white pages and
yellow pages, and yellow page advertising) (as further defined in Section 1.3,
the "DIRECTORIES");

                  WHEREAS, McLeod owns the following United States trademark and
service mark registrations (the "REGISTRATIONS") for MCLEOD and design, MCLEOD
USA and design, and MCLEODUSA and design:

<Table>
<Caption>
          Mark                                  Reg. No.
          ------------------------------------- -------------
          <S>                                   <C>
          MCLEOD and Design                     2,097,023
          MCLEOD USA and Design                 2,151,922
          MCLEOD USA and Design                 2,183,393
          MCLEOD USA and Design                 2,183,392
          MCLEODUSA and Design                  2,149,799
          MCLEODUSA and Design                  2,149,798
</Table>

                  WHEREAS, prior to the date hereof, the Directory Publisher has
used the Licensed Marks (as defined in Subsection 6.1(a)) in connection with the
publishing and distributing of the Directories;

                  WHEREAS, on the date hereof Newco is acquiring the Directory
Publisher from McLeodUSA Holdings, Inc., pursuant to that certain Stock Purchase
Agreement dated as of December 3, 2001, by and between McLeodUSA Holdings, Inc.,
and Newco (the "STOCK PURCHASE AGREEMENT");

                  WHEREAS, the Stock Purchase Agreement provides that the
parties hereto enter into this Agreement in order to provide for the continued
publication and distribution of Directories which are currently published by the
Directory Publisher, including in each of the areas where local telephone
service subscribers are served by the Telephone Company, as well as the
publication and distribution of other Directories, following the closing of the
transactions contemplated by the Stock Purchase Agreement;

                  WHEREAS, in connection with the closing of the transactions
contemplated by the Stock Purchase Agreement, McLeod wants to grant, and the
Directory Publisher wants to obtain, a license to use the Licensed Marks subject
to the terms and conditions of this Agreement;

<Page>

                  WHEREAS, in connection with the closing of the transactions
contemplated by the Stock Purchase Agreement, McLeod wants to assign, and the
Directory Publisher wants to obtain, rights McLeod has in and to the Trade Dress
(as defined in Section 7.1) to the Directory Publisher subject to the terms and
conditions set forth in this Agreement; and

                  WHEREAS, the parties hereto desire to set forth certain
additional understandings among themselves to the operation of the Directory
Publisher following the closing of the transactions contemplated by the Stock
Purchase Agreement;

                  NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements set forth in this
Agreement and the consummation of the transactions contemplated by the Stock
Purchase Agreement, the parties hereto agree as follows:

                                   ARTICLE I

                              DIRECTORY PUBLISHING

                  1.1      TELEPHONE COMPANY AND MCLEOD GENERAL OBLIGATIONS. On
the terms and conditions set forth herein, the Telephone Company agrees to
provide to the Directory Publisher Subscriber List Information (as defined in
Section 3.1) and McLeod grants to the Directory Publisher the right to use the
Licensed Marks in publishing and distributing the Directories.

                  1.2      DIRECTORY PUBLISHER GENERAL OBLIGATIONS. On the terms
and conditions set forth herein, the Directory Publisher agrees to publish and
distribute the Directories using the Licensed Marks.

                  1.3      DIRECTORIES AND PUBLICATION SCHEDULE.

                           (a)      EXISTING DIRECTORIES. SCHEDULE 1.3(a), which
will be updated on at least an annual basis, lists the Directories as currently
titled and their scheduled month of publication. The Directory Publisher will
publish one edition of each of the Directories on an annual basis, or if annual
publication is not consistent with the Directory Publisher's past practices with
respect to a particular Directory, then in accordance with such past practices;
PROVIDED that in all cases the Directory Publisher shall publish each Directory
with such frequency as is necessary for the Telephone Company to meet its
regulatory obligations. Subject to compliance with the immediately preceding
sentence, the Directory Publisher may change the titles and months of
publication of the Directories on Schedule 1.3(a) in its sole discretion and
shall give thirty days' prior notice of such changes to the Telephone Company.

                           (b)      OTHER DIRECTORIES. If the Directory
Publisher publishes other telephone directories covering areas within the states
listed on SCHEDULE 1.3(b) during the term, the publication of such directories
shall conform to the provisions of this Agreement and shall be deemed
"Directories" as used in this Agreement. The Directory Publisher shall promptly
notify the Telephone Company if the Directory Publisher intends to publish
additional directories.

                                       2
<Page>

                           (c)      EXCLUSIONS. Notwithstanding the provisions
of Subsections 1.3(a) and 1.3(b), the following categories of telephone
directories shall not be deemed "Directories" for purposes of this Agreement:

                                    (i)      Those telephone directories (the
         "CCD DIRECTORIES") currently published by Consolidated Communications
         Directories, Inc. ("CCD"), which is a subsidiary of the Directory
         Publisher; and

                                    (ii)     Those telephone directories (the
         "EXISTING NEWCO DIRECTORIES"), if any, that were published by Newco or
         its subsidiaries prior to the Effective Date.

                           (d)      NO OTHER PUBLICATION. Newco shall cause all
of its subsidiaries not to publish any telephone directory other than the
Directories, except that (i) CCD may continue to publish the CCD Directories,
(ii) Newco (or the relevant Newco subsidiary) may continue to publish the
Existing Newco Directories, and (iii) Newco (or the relevant Newco subsidiary)
may publish telephone directories that cover areas outside the states listed on
Schedule 1.3(b).

                  1.4      MAINTENANCE AND DISCONTINUANCE OF DIRECTORIES. The
Directory Publisher shall continue to publish and maintain each Directory that
was listed on Schedule 1.3(a) as of the Effective Date until it has published at
least three annual editions. In the event the Directory Publisher decides to
discontinue any such Directory after having published three annual editions, or
in the event the Directory Publisher decides to discontinue any other Directory,
it shall provide the Telephone Company with at least one year's notice prior to
the next regularly scheduled publication date for such Directory after the last
edition of such Directory to be published by the Directory Publisher hereunder
(the "DISCONTINUANCE NOTICE"). Upon receipt of the Discontinuance Notice:

                           (a)      The Directory Publisher grants to the
Telephone Company a perpetual, royalty-free, transferable (but only pursuant to
Section 11.3) and sublicensable right and license to use the Trade Dress in
connection with the business of the publication and distribution of, and the
sale of advertising in, telephone directories in the areas covered by the
Directory being discontinued pursuant to the Discontinuance Notice. This license
is exclusive except that the Directory Publisher may continue to use the Trade
Dress in such areas to fulfill its obligations under Section 4.2 until the first
anniversary of the discontinuance of such Directory;

                           (b)      The license for the Licensed Marks granted
to the Directory Publisher pursuant to Subsection 6.1(a) shall terminate with
respect to the areas covered by the discontinued Directory; PROVIDED that the
Directory Publisher may continue to use the Licensed Marks in such areas to
fulfill its obligations under Section 4.2 until the first anniversary of the
discontinuance of such Directory;

                           (c)      McLeod and its subsidiaries shall be
relieved entirely from compliance with the provisions of Subsection 10.2(b) with
respect to the areas covered by the discontinued Directory;

                                       3
<Page>

                           (d)      Newco and its subsidiaries shall not, for
the remainder of the term of this Agreement, directly or indirectly, through one
or more subsidiaries, engage or have an interest, alone or in association with
others, as a partner or stockholder or through the investment of capital,
lending of money or property, or otherwise, in any business that publishes
directories in the area covered by the discontinued Directory; PROVIDED that the
Directory Publisher's fulfillment of its obligations under Section 4.2 until the
first anniversary of the discontinuance of such Directory is permitted; and

                           (e)      The amount payable by the Telephone Company
pursuant to Section 5.2 in respect of advertising space provided by the
Directory Publisher on the cover and spine, shall be reduced by multiplying such
amount by a fraction, (i) the numerator of which is the number of customers
served by the Telephone Company in areas covered by all of the Directories that
were on Schedule 1.3(a) as of the Effective Date then being published hereunder
other than the discontinued Directory, and (ii) the denominator of which is the
number of customers served by the Telephone Company in areas covered by all of
the Directories that were on Schedule 1.3(a) as of the Effective Date then being
published hereunder, including the discontinued Directory; PROVIDED, however,
that no fee reduction for the amount payable by the Telephone Company pursuant
to Section 5.2 shall be made if the discontinued Directory was not on Schedule
1.3(a) as of the Effective Date. The Telephone Company shall calculate such
fraction in its reasonable good-faith judgment using existing operating data as
of a date that is as close as practicable to the date on which the
Discontinuance Notice was received.

Nothing in this Section 1.4 shall restrict the Directory Publisher from
reformatting or rescoping the directories in Schedule 1.3(a) in any market other
than the markets covered by discontinued Directories.

                  1.5      TELEPHONE COMPANY MARKET EXPANSION. The Telephone
Company may request from time to time that the Directory Publisher initiate a
new Directory in areas that the Telephone Company or its affiliates plan to
provide telecommunications service (the "REQUESTED AREAS"). If, within sixty
days after such request, the Directory Publisher does not agree to publish a new
Directory covering the Requested Areas, or expand coverage of an existing
Directory to cover the Requested Areas, in accordance with a mutually agreed
upon initial publication schedule:

                           (a)      The license for the Licensed Marks granted
to the Directory Publisher pursuant to Subsection 6.1(a) shall terminate with
respect to the Requested Areas;

                           (b)      McLeod and its subsidiaries shall be
relieved entirely from compliance with the provisions of Subsection 10.2(b) with
respect to the Requested Areas;

                           (c)      If the Telephone Company establishes a
directory in the Requested Area within twelve months of the Directory
Publisher's declining to enter the Requested Areas, Newco and its subsidiaries
shall not, for the remainder of the term of this Agreement, directly or
indirectly, through one or more subsidiaries, engage or have an interest, alone
or in association with others, as a partner or stockholder or through the
investment of capital, lending of money or property, or otherwise, in any
business that publishes directories in such Requested Areas; and

                                       4
<Page>

                           (d)      To the extent the Requested Areas are in the
states listed on Schedule 1.3(d), the Directory Publisher grants to the
Telephone Company a perpetual, royalty-free, exclusive, transferable (but only
pursuant to Section 11.3) and sublicensable right and license to use the Trade
Dress in connection with the business of the publication and distribution of,
and the sale of advertising in, telephone directories in the Requested Areas
within the states listed on Schedule 1.3(d). This license is exclusive except
that the Directory Publisher may continue to use the Trade Dress in such areas
to fulfill its obligations under Section 4.2 until the first anniversary of the
discontinuance of such Directory.

                                   ARTICLE II

                              TERM AND TERMINATION

                  2.1      EFFECTIVENESS. This Agreement will become effective
as of the date hereof (the "EFFECTIVE DATE") and will apply to the publication
of each Directory that occurs after that date during the term.

                  2.2      TERM; AUTOMATIC RENEWAL. Unless terminated earlier in
accordance with Section 2.3, this Agreement will remain in effect until the
fifth anniversary of the Effective Date. Unless a party provides written notice
of termination to the other parties prior to the fourth anniversary of the
Effective Date, thereafter this Agreement shall be renewed for successive
one-year terms, unless a party provides written notice of termination to the
other parties not less than one year prior to the end of the then-current term.

                  2.3      TERMINATION.

                           (a)      If the Telephone Company or McLeod
materially breaches its obligations hereunder and fails to cure such material
breach within sixty days after the Directory Publisher or Newco provides notice
to the Telephone Company and McLeod of such breach, specifying in reasonable
detail the nature of the alleged breach, then the Directory Publisher or Newco
may, in addition to all other rights and remedies they may have under law or
pursuant to this Agreement, terminate this Agreement upon notice to the
Telephone Company and McLeod effective upon the completion of the distribution
of the Directories, sales for which had begun before the notice of termination.

                           (b)      If the Directory Publisher or Newco
materially breaches its obligations hereunder and fails to cure such material
breach within sixty days after the Telephone Company or McLeod provides notice
to the Directory Publisher and Newco of such breach, specifying in reasonable
detail the nature of the alleged breach, then the Telephone Company and McLeod
may, in addition to all other rights and remedies they may have under law or
pursuant to this Agreement, terminate this Agreement upon notice to the
Directory Publisher and Newco effective upon the completion of the distribution
of the Directories, sales for which had begun before the notice of termination.

                                       5
<Page>

                           (c)      In the event that the Directory Publisher
fails to adhere to the quality standards set forth in Subsection 6.2(a), and
fails to cure such failure as provided for in Subsection 6.2(c), the licenses
granted in Article VI hereof may be terminated by McLeod.

                           (d)      The Telephone Company and McLeod shall have
the right, but not the obligation, to terminate this Agreement, immediately upon
notice:

                                    (i)      if the Directory Publisher or Newco
         shall make a general assignment for the benefit of creditors or
         acknowledges that it cannot pay its debts as they become due;

                                    (ii)     if the Directory Publisher or Newco
         files a petition for adjudication as a bankrupt, for reorganization or
         for an arrangement under any bankruptcy or insolvency law, or if any
         involuntary petition under such law is filed against the Directory
         Publisher or Newco, individually, and not dismissed within ninety days
         thereafter; or

                                    (iii)    if there is Change of Control of
         the Directory Publisher or Newco.

         "CHANGE OF CONTROL" means any transaction or event, whether voluntary
         or involuntary, that results in, or as a consequence of which any
         person or group acquires directly or indirectly beneficial ownership of
         more than fifty percent of the capital stock of a party or a party's
         direct or indirect parent or more than fifty percent of that party's
         assets; PROVIDED, however, that a public offering of a party or any
         entity including all or substantially all of such party's assets will
         not be considered "Change of Control."

                  (e)      The Directory Publisher and Newco shall have the
right, but not the obligation, to terminate this Agreement, immediately upon
notice:

                           (i)      if there is a Change of Control of the
         Telephone Company and the Telephone Company or its successor thereafter
         does not use the McLeodUSA brand, or a substantially similar brand, in
         marketing telecommunications services in the same areas where the
         Telephone Company currently provides local telephone service; or

                           (ii)     if, following the completion of corporate
         restructuring that the Telephone Company and its affiliates are
         currently engaged in or considering, the Telephone Company files an
         additional petition for adjudication as a bankrupt, for reorganization
         or for an arrangement under any bankruptcy or insolvency law, or if any
         involuntary petition under such law is filed against the Directory
         Publisher, individually, and not dismissed within ninety days
         thereafter.

                                       6
<Page>

                  2.4      EFFECT OF TERMINATION.

                           (a)      Upon the termination of this Agreement and
upon the condition that the Telephone Company continues to own rights in the
Licensed Marks, the Directory Publisher will publish only those issues of the
Directories that are scheduled to be published before this Agreement terminates,
and shall not conduct any solicitation of any advertising or undertake any other
publishing activities using the Licensed Marks with respect to any of the issues
of the Directories that are not scheduled to be published before such
termination. Once any Directories scheduled to be published have been published,
the Directory Publisher shall promptly:

                                    (i)      change its corporate name or d/b/a
         to delete therefrom all references to the Licensed Marks (to the extent
         that such corporate name use was permitted hereunder);

                                    (ii)     cease all use of, and destroy or
         effectively remove, the Licensed Marks and all references thereto from
         any products offered by the Directory Publisher, as well as any
         advertising, marketing materials and similar items; and

                                    (iii)    refrain from further use of or
         reference to the Licensed Marks, or any other trademark, service mark,
         trade name, design or logo that is confusingly similar to the Licensed
         Marks;

         PROVIDED, however, that the Directory Publisher may continue to use the
         Licensed Marks until the first anniversary of the termination of this
         Agreement but solely in connection with the distribution, in accordance
         with the provision of Section 4.2, of Directories published prior to
         the termination of this Agreement or at the printers in anticipation of
         publication at the time of termination.

                           (b)      Upon the termination of this Agreement, all
rights granted to the Directory Publisher hereunder in and to the Licensed
Marks, together with any interest in and to the Licensed Marks which the
Directory Publisher may have or may have acquired pursuant to this Agreement or
otherwise, shall forthwith, without further act or instrument, be assigned to
and revert to McLeod. In addition, the Directory Publisher will execute any
instruments requested by McLeod that are necessary to accomplish or confirm the
foregoing.

                           (c)      In the event of termination, notwithstanding
the provisions of Section 10.2, both the Telephone Company and the Directory
Publisher may begin to market advertising in, and make other preparations for
the publication and distribution of, telephone directories that are scheduled to
be published following termination.

                           (d)      The Directory Publisher acknowledges and
admits that there would be no adequate remedy at law for its failure to cease
use of the Licensed Marks upon termination of this Agreement. The Directory
Publisher agrees that, in the event of such failure, the Telephone Company shall
be entitled to equitable relief by the way of temporary, preliminary

                                       7
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and permanent injunction and such other and further relief as any court with
jurisdiction may deem just and proper.

                                  ARTICLE III

                           SUBSCRIBER LIST INFORMATION

                  3.1      CERTAIN DEFINITIONS.

                           (a)      "SUBSCRIBER LIST INFORMATION" is information
identifying the names of subscribers to the local telephone services provided by
the Telephone Company and such subscribers' telephone numbers and, where the
Telephone Company is reasonably able to include such information, the addresses
and/or primary advertising classifications for business subscribers (as such
classifications are assigned at the time of the establishment of such service)
of each of the Telephone Company's local telephone service subscribers (other
than information pertaining to such subscribers who have elected not to have
their information published or listed). Subscriber List Information does not
include any information that the Telephone Company is required by law or by
contract (including tariff) to keep private or confidential, or not to publish
or allow to be published in the Directories.

                           (b)      "BASE FILE SUBSCRIBER LIST INFORMATION"
means the Subscriber List Information as of the first date on which such
information is provided to the Directory Publisher pursuant to this Agreement.

                           (c)      "UPDATED SUBSCRIBER LIST INFORMATION" means
changes to the Subscriber List Information occurring between specified dates.

                  3.2      PROVISION OF BASE FILE SUBSCRIBER LIST INFORMATION.
Within thirty days following the date after a request from the Directory
Publisher, the Telephone Company will provide to the Directory Publisher the
Base File Subscriber List Information in Telephone Company's standard format for
the purpose of allowing the Directory Publisher to create a database for
publishing the Directories. Alternatively, Telephone Company may provide
Directory Publisher with a release sufficient to enable Directory Publisher to
obtain such a list from a third party.

                  3.3      PROVISION OF UPDATED SUBSCRIBER LIST INFORMATION. The
Telephone Company will provide to the Directory Publisher, within thirty days of
a request by the Directory Publisher, Updated Subscriber List Information for
dates specified by the Directory Publisher. At the least, the Directory
Publisher shall request Updated Subscriber List Information (or request new Base
File Subscriber List Information pursuant to Section 3.2) for each Directory
within a reasonable time prior to the publication of such Directory so as to
allow the Directory to include as much Updated Subscriber List Information as is
reasonably practicable.

                  3.4      RATES FOR SUBSCRIBER LIST INFORMATION. The Directory
Publisher shall pay to the Telephone Company $0.04 per listing for Base File
Subscriber List Information and $0.06 per listing for Updated Subscriber List
Information provided to the Directory Publisher by the

                                       8
<Page>

Telephone Company. The Telephone Company may from time to time alter the rates
charged by it hereunder for Subscriber List Information upon notice to the
Directory Publisher; PROVIDED that such rates shall not exceed the maximum rates
allowed by law for such Subscriber List Information.

                  3.5      PAYMENT TERMS. The Directory Publisher shall pay all
amounts stated in each invoice from the Telephone Company for Subscriber List
Information within thirty days following the date of such invoice, in the manner
specified in the invoice. Interest will accrue monthly on past-due amounts at an
annual rate equal to the lesser of the prime lending rate announced by JP Morgan
Chase, or its equivalent, as then in effect plus two percent and the highest
interest rate allowed by law.

                  3.6      USE OF SUBSCRIBER LIST INFORMATION.

                           (a)      NON-PUBLISHED OR UNLISTED LISTINGS. The
Directory Publisher shall not publish in the Directories or otherwise disclose
any information concerning subscribers designated as "non-published" or
"unlisted" or the like. The Directory Publisher shall not solicit the people or
entities so identified in connection with the sale of advertising in the
Directories.

                           (b)      RESTRICTED USE. The Directory Publisher may
only use information, including Subscriber List Information, provided by the
Telephone Company hereunder for the purposes of carrying out its obligations
hereunder and shall not use such information in any other manner or in any way
that interferes with the proper and efficient furnishing of services by the
Telephone Company or that adversely affects the relationship between the
Telephone Company and its customers and the public or that would otherwise
violate applicable law.

                  3.7      THIRD-PARTY REQUESTS FOR INFORMATION. The Directory
Publisher will refer any requests it receives for, or questions about,
Subscriber List Information directly to the Telephone Company for response by
the Telephone Company. The Directory Publisher will not enter into or divulge
any agreements pertaining to the purchase of or per-listing charge for the
Telephone Company's Subscriber List Information or any other information about
the Telephone Company's Subscriber List Information. The Telephone Company shall
have sole authority over the decision to sell its listings to any third parties,
and any agreements regarding same shall be solely between the Telephone Company
and any applicable third party. The Directory Publisher will not be a party to
any such agreements or transactions.

                                   ARTICLE IV

                     OBLIGATIONS OF THE DIRECTORY PUBLISHER

                  4.1      PUBLISHING OF DIRECTORIES.

                           (a)      The Directory Publisher shall be responsible
for (including through the selection of contractors):

                                    (i)      the printing of the Directories,
         including their covers;

                                       9
<Page>

                                    (ii)     the compilation, composition and
         layout of the Directories;

                                    (iii)    the purchasing of paper and other
         materials for the Directories;

                                    (iv)     the creation, maintenance and
         production of telephone and directory services pages and any pages or
         information that may be necessary to permit the Telephone Company to
         meet its regulatory obligations, in each case as reasonably specified
         by the Telephone Company for inclusion within the Directories, in
         accordance with the past practices of the Telephone Company and the
         Directory Publisher with respect to such pages;

                                    (v)      the promotion of usage of the
         Directories;

                                    (vi)     the selling of advertising in the
         yellow pages of the Directories;

                                    (vii)    the preparation of art for
         advertisers as requested by them in the Directories;

                                    (viii)   billing and collections, including
         the handling of claims and uncollectibles, related to advertising in
         the Directories; and

                                    (ix)     other miscellaneous matters related
         to the Directories.

                           (b)      The Directory Publisher shall carry out its
obligations hereunder, including those set forth in Subsection 4.1(a), in a
professional and workmanlike fashion in accordance with quality standards
generally observed by reputable firms in the directory publishing industry and
in a manner that does not interfere with the proper and efficient furnishing of
services by the Telephone Company or that adversely affects the relationship
between the Telephone Company and its customers and the public.

                  4.2      DELIVERY. The Directory Publisher will arrange for
one of the Directories (or two, where white pages and yellow pages are in
separate Directories) to be delivered, in the manner specified by the Directory
Publisher and at its sole expense, to each of the Telephone Company's local
telephone service subscribers during the dates of delivery as scheduled pursuant
to Subsection 1.3(a). The Directory Publisher shall also provide to the
Telephone Company, at the Telephone Company's request, additional copies of each
of the Directories to allow the Telephone Company to provide such Directories to
new subscribers, as replacements, and for the Telephone Company's use consistent
with past practices. The obligations of the Directory Publisher under this
Section 4.2 with respect to Directories published prior to the termination of
this Agreement shall survive the termination of this Agreement until the first
anniversary of such termination.

                                       10
<Page>

                  4.3      YELLOW PAGES LISTINGS. Unless otherwise requested by
a subscriber to local business telephone services, the Directory Publisher will
provide without charge in the yellow pages of the Directories under a
classification in the approved heading structure best describing the
subscriber's business one light-face standard listing representing the primary
listing of each subscriber to business telephone service as accepted by the
Telephone Company for publication in the white pages of the Directories where
applicable. Nothing herein shall constitute an obligation for the Directory
Publisher to produce white pages; PROVIDED that, should the Directory Publisher
cease publication of white pages in any market in which the Telephone Company
offers local service, the Directory Publisher will provide twelve months' prior
written notice to the Telephone Company.

                                   ARTICLE V

                          DIRECTORY FORMAT AND POLICIES

                  5.1      POLICIES. The Directory Publisher will formulate all
policies (including telemarketing policies) relating to advertising in and the
publishing and delivery of the Directories and will use commercially reasonable
efforts to advise the Telephone Company of material changes in these policies.
All of the policies related to the Directories shall not interfere with the
proper and efficient furnishing of services by the Telephone Company and shall
not adversely affect the relationship between the Telephone Company and its
customers and the public. Nothing in this Agreement will be interpreted as a
limitation of the generality of the obligations undertaken by the Directory
Publisher in this Section 5.1.

                  5.2      DIRECTORY COVER. Attached hereto is EXHIBIT 5.2,
which is a representative copy of a Directory cover that will serve as the basis
for interpreting the obligations set forth in this Section 5.2. During the term
hereof, and unless otherwise expressly agreed to in writing by the parties
hereto, the name and logo of the Telephone Company and/or one or more of the
Licensed Marks will appear clearly and conspicuously across the outside bottom
quartile of the front cover and the spine of the Directories in the format and
style, and in the location, specified by the Telephone Company consistent with
past practice. Additionally, the Telephone Company may advertise its products
and/or services in the upper right-hand corner of each Directory in the "tab" or
"dog ear" (as such terms are used in Section 7.1) in a manner consistent with
past practice. Specifically, such space shall be of a color, size and placement
that is consistent with past practice. The Telephone Company shall specify the
content (including copy and font size) of such advertisements. In consideration
of the advertising space provided by the Directory Publisher pursuant to this
Section 5.2 and pursuant to Section 5.3, the Telephone Company will pay the
Directory Publisher an annual advertising fee of $ [o]million in equal monthly
installments.

                           (a)      SALE OF COVER AND SPINE SPACE TO THIRD
PARTIES. In those markets in which the Telephone Company does not provide
telephone services, the Directory Publisher and the Telephone Company may agree
in writing to sell the space on the front cover and spine otherwise allocated to
the Telephone Company to any third party(ies); PROVIDED, however, that, in the
event the Directory Publisher wants to use the Trade Dress in connection with
such

                                       11
<Page>

Directories, the Directory Publisher may not use the McLeod Star (as defined in
Section 7.2). In the event that the Directory Publisher wants to display a star
in connection with the Trade Dress, the Directory Publisher must utilize a
different-shape star that is not the same size as the McLeod Star and that, if a
shade of yellow, must be a shade of yellow that is at least two Pantone Matching
System(R) colors away from the yellow of the McLeod Star. Any revenues derived
from the sale of advertising space to third parties as provided for in this
Subsection 5.2(a) shall be divided equally between the Directory Publisher on
the one hand and the Telephone Company on the other hand.

                           (b)      SALE OF REMAINING COVER AND SPINE SPACE TO
THIRD PARTIES. The Directory Publisher may sell the remaining space on the front
cover, spine and back cover of the Directories to third parties; PROVIDED,
however, that such third parties may not be competitive or incumbent (voice or
data) telecommunications service providers (including, without limitation,
competitive local exchange carriers, long-distance service providers and the
Bell companies) or providers of dial Internet access services.

                  5.3      INITIAL PAGES OF DIRECTORY. Attached hereto is
EXHIBIT 5.3, which is a representative copy of the initial-pages insert in a
Directory that will serve as the basis for interpreting the obligations set
forth in this Section 5.3. The Telephone Company may specify the content
(including copy, layout, color and paper type consistent with past practice) of
up to the first eight pages (for markets in which the Telephone Company provides
competitive local telephone services) or up to four pages, consistent with the
Directory Publisher's past practices (for markets in which the Telephone Company
does not offer competitive local telephone services), as applicable, of each
Directory (different content may be specified for different Directories).
Notwithstanding the foregoing, the Telephone Company may specify more initial
pages for inclusion than is consistent with the Directory Publisher's past
practices; PROVIDED that the costs incurred by the Directory Publisher in
connection with the printing of such additional pages, relative to historical
practice in each market, will be paid by the Telephone Company at market rates
(in addition to the fees paid pursuant to Section 5.2). The Directory Publisher
shall include and publish such initial pages as specified by the Telephone
Company without alteration. Notwithstanding the foregoing, the Directory
Publisher will not be obligated to publish any content that is contrary to its
reasonable publishing standards or any content that primarily promotes a party
other than McLeod and its affiliates, except in accordance with past practices.
The Directory Publisher may not sell or otherwise provide advertising space to
any competitive or incumbent (voice or data) telecommunications service provider
(including, without limitation, competitive local exchange carriers,
long-distance service providers and the Bell companies) or a provider of dial
Internet access services, except for advertising space sold or otherwise
provided within the white and yellow pages under the classification in the
approved heading structure best describing such provider's business.

                  5.4      TERMINATION OF COVER AND INITIAL PAGES ADVERTISING
RIGHT. In the event that a state public utility regulatory commission issues a
final order levying a material fine against the Telephone Company as the result
of a finding that the Telephone Company provided poor-quality services, the
Directory Publisher shall be excused from performing its obligations under
Sections 5.1 and 5.2 with respect to Directories published and distributed
within that state.

                                       12
<Page>

In such an event the amount payable by the Telephone Company pursuant to Section
5.2 in respect of advertising space provided by the Directory Publisher on the
cover and spine shall be reduced by multiplying such amount by a fraction, (i)
the numerator of which is the number of customers served by the Telephone
Company in areas covered by all of the Directories being published prior to such
action other than the customers served by the Telephone Company in areas within
the states where the state public utility regulatory commission takes such
action, and (ii) the denominator of which is the number of customers served by
the Telephone Company in areas covered by all of the Directories being published
hereunder prior to such action, including such states. The Telephone Company
shall calculate such fraction in its reasonable good-faith judgment using
existing operating data as of a date that is as close as practicable to the date
on which the Discontinuance Notice was received.

                  5.5      TELEPHONE COMPANY ADVERTISING. In addition to the
advertising provided pursuant to Sections 5.2 and 5.3, the Directory Publisher
shall provide to the Telephone Company advertising space in each Directory
(white pages and yellow pages), priced at the Directory Publisher's cost for
such advertising. Such space shall be of the same quantity, size and placement
as provided by the Directory Publisher prior to the Effective Date. EXHIBIT 5.5
is a representative sample of the advertising space provided by the Directory
Publisher prior to the Effective Date. The Directory Publisher may not sell or
otherwise provide advertising space to any competitive or incumbent (voice or
data) telecommunications service provider (including, without limitation,
competitive local exchange carriers, long-distance service providers and the
Bell companies) or a provider of dial Internet access services, except for
advertising space sold or otherwise provided within the white and yellow pages
under the classification in the approved heading structure best describing such
provider's business.

                  5.6      DIRECTORY CONTENT. The Directory Publisher will
include in the white-pages sections of the Directories the Subscriber List
Information provided hereunder and all other listings that the Telephone Company
notifies the Directory Publisher that the Telephone Company is required to
publish for its subscribers by state regulation.

                                   ARTICLE VI

                   TRADEMARK LICENSE AND USE OF LICENSED MARKS

                  6.1      USE OF LICENSED MARKS.

                           (a)      Subject to the terms and conditions of this
Agreement, McLeod hereby grants to the Directory Publisher a personal,
non-transferable, non-sublicensable license to use the Licensed Marks during the
term of this Agreement in connection with the business of the publication and
distribution of, and the sale of advertising in, the Directories. For purposes
of this Agreement, the "LICENSED MARKS" refer exclusively to the McLeod,
McLeodUSA and McLeod USA names and to the McLeod Star. The license to the
Licensed Marks is nonexclusive with respect to all uses of the Licensed Marks
except for the publication of white page and yellow page directories, in
connection with which the Directory Publisher is granted an exclusive license
for the term of this Agreement. The license granted in this Section 6.1 only
extends to the use of the Licensed Marks in connection with the business of the
publication and

                                       13
<Page>

distribution of, and sale of advertising in, the Directories, where such use is
approved by McLeod and in accordance with such approval. To the extent that
McLeod engages in the publication of white page and yellow page directories
pursuant to the terms of Section 10.2 during the term of this Agreement, it will
not use the Licensed Marks in connection with the marketing or publication of
such directories in any markets in which the Directory Publisher publishes
competing directories.

                           (b)      Throughout the term of this Agreement and
for any renewals and extensions thereof, the Directory Publisher shall be
obligated to use the Licensed Marks in connection with the business of the
publication and distribution of, and sale of advertising in, Directories, except
as otherwise provided under this Agreement. Other than in connection with
publishing and distribution of, and sale of advertising in, Directories, the
Directory Publisher may not use the Licensed Marks in connection with any
service or product, including without limitation any telecommunications
services, Internet services (except for Internet directories specifically
approved in writing by the Telephone Company) or cable services.

                  6.2      QUALITY STANDARDS.

                           (a)      The Directory Publisher acknowledges that
the Licensed Marks have established extremely valuable goodwill and reputation,
and are well recognized among the Telephone Company's customers, and that it is
of great importance that this goodwill and reputation be maintained. Accordingly
the Directory Publisher shall, in its operation of its business after the
Effective Date, adhere to a level of quality at least as high as that
established for its business as operated by the Directory Publisher prior to the
Effective Date.

                           (b)      The Directory Publisher shall provide to
McLeod for review and approval representative samples of the Directory
Publisher's proposed use of the Licensed Marks whenever such samples are not
consistent with the use of such Licensed Marks prior to the Effective Date, and
upon McLeod's reasonable request. In the event that McLeod does not notify the
Directory Publisher within thirty days of its receipt of any such samples that
it disapproves of the Directory Publisher's proposed use of the Licensed Marks,
McLeod shall be deemed to have approved of such use. McLeod acknowledges that
the review and approval requirement set forth in this Subsection 6.2(b) is only
for the purposes of ascertaining compliance with the quality standards set forth
in this Agreement.

                           (c)      In the event that McLeod reasonably believes
that the business operated by the Directory Publisher, any Directory or any
other product or service offered in connection with such business or any
advertising or other materials associated with such business does not reasonably
conform with the quality standards set forth in Subsection 6.2(a), McLeod may
notify the Directory Publisher of such non-conformance. The Directory Publisher
shall cure each such non-conformance with respect to all Directories that are
printed following such notice.

                                       14
<Page>

                  6.3      OWNERSHIP AND PROTECTION.

                           (a)      OWNERSHIP. The Directory Publisher shall not
have any right, title or interest, express or implied, in and to the Licensed
Marks under this Agreement other than the license set forth in Section 6.1. The
Directory Publisher acknowledges that McLeod owns the Licensed Marks and the
goodwill associated therewith. All uses of the Licensed Marks by the Directory
Publisher, and the goodwill generated thereby, shall inure to the benefit of
McLeod and shall not vest in the Directory Publisher any ownership interest in
the Licensed Marks. For purposes of registration, all uses of the Licensed Marks
by the Directory Publisher shall be deemed to have been made for the benefit of
McLeod.

                           (b)      USAGE. The Directory Publisher shall use the
Licensed Marks in accordance with reasonable trademark and trade name usage
principles and in accordance with all applicable laws and regulations, including
without limitation all laws and regulations relating to the maintenance of the
validity and enforceability of the Licensed Marks, and the Directory Publisher
shall not use the Licensed Marks in any manner that does or is reasonably likely
to tarnish, disparage or reflect adversely on McLeod, Telephone Company or the
Licensed Marks.

                           (c)      NO CHALLENGE. The Directory Publisher shall
not, during the term and thereafter for so long as McLeod continues to own
rights in the Licensed Marks, (i) challenge McLeod's title or rights in and to
the Licensed Marks or the validity of the Licensed Marks in any jurisdiction or
(ii) contest the fact that the Directory Publisher's rights under this Agreement
are solely those of a licensee.

                           (d)      INFRINGEMENT. The Directory Publisher shall
promptly notify McLeod in writing of any uses that may be unauthorized uses,
infringements or dilutions by others of the Licensed Marks that may come to the
Directory Publisher's attention. McLeod shall have the sole right to take, and
to determine whether or not to take, any actions it deems appropriate in its
sole discretion with respect to any unauthorized use, infringement or dilution
of the Licensed Marks. Any actions taken pursuant to this Subsection 6.3(d)
shall be at McLeod's expense, and all recovery in the form of monetary damages
or settlement shall belong to McLeod.

                                  ARTICLE VII

                            ASSIGNMENT OF TRADE DRESS

                  7.1      ASSIGNMENT. Subject to the terms and conditions of
this Agreement, McLeod hereby irrevocably assigns to the Directory Publisher,
for its own use and enjoyment, and for the use and enjoyment of its successors,
assigns and other legal representatives, McLeod's entire right, title and
interest in the United States, all foreign countries and jurisdictions, and
throughout the universe, in the Trade Dress, together with the goodwill
symbolized by and associated with the business conducted under said Trade Dress,
and all income, royalties, damages and payments now or hereafter due or payable
in respect thereto, and in and to all causes of action (either in law or in
equity) and the right to sue, counterclaim and recover for past, present and/or
future infringement, damages or other unauthorized use of the

                                       15
<Page>

rights assigned to the Directory Publisher pursuant to this Section 7.1. For
avoidance of doubt, this assignment survives the termination of this Agreement,
regardless of the reason for such termination. "TRADE DRESS" shall mean the
Directory covers which consist of a cover with a black background, a yellow star
in center of the cover, a map of the region covered by the Directory in the
center of the star, the names of the towns covered by the Directory in white on
the left of the cover, the date of the Directory in white in the upper left
corner of the cover, the names of the primary towns covered by the Directory in
white on the upper left and on the spine, and a yellow "tab" or "dog ear" on the
upper right of cover. An illustrative example of the Directory cover is included
as Exhibit 5.2. McLeod explicitly acknowledges that the trademarks, service
marks and trade dress owned or used by the Directory Publisher, including those
marks associated with Telecom*USA, other than the Licensed Marks, belong
exclusively to Directory Publisher or are licensed to Directory Publisher by
third parties, and that this Agreement does not create any right, title or
interest in and to such marks by McLeod or the Telephone Company (other than any
licenses that may be granted hereunder to the Trade Dress).

                  7.2      RIGHT TO USE THE MCLEOD STAR. For the sake of
clarity, the parties acknowledge and agree that the Trade Dress does not include
the stylized yellow star which is the subject of the Registrations and which is
among the Licensed Marks licensed to the Directory Publisher hereunder (the
"MCLEOD STAR"). Accordingly the Directory Publisher acknowledges and agrees
that, immediately upon the termination or expiration of this Agreement, it must
cease all use of the McLeod Star except as expressly permitted under this
Agreement and, in the event it wants to continue using a star in connection with
the Trade Dress, must utilize a different-shape star that is not the same size
as the McLeod Star and that, if a shade of yellow, must be a shade of yellow
that is at least two Pantone Matching System(R) colors away from the yellow of
the McLeod Star.

                                  ARTICLE VIII

                              INTERNET DIRECTORIES

                  8.1      INTERNET DIRECTORIES. Each of the parties
acknowledges that Internet operations represent a significant part of each
party's business activities. Accordingly McLeod agrees that, following the
transition period described above and for the duration of this Agreement, it
will establish and maintain a hypertext link between the McLeod web site and the
Directory Publisher's web site in connection with the provision of white and
yellow page listings; during the same period the Directory Publisher will
establish and maintain a hypertext link between the Directory Publisher's web
site in connection with the provision of telecommunications services, in each
case consistent with past practice.

                                       16
<Page>

                                   ARTICLE IX

                                 INDEMNIFICATION

                  9.1      Indemnification.

                           (a)      DIRECTORY PUBLISHER INDEMNITY. The Directory
Publisher shall defend, hold harmless and indemnify McLeod, the Telephone
Company and each of their affiliates, officers, directors, shareholders,
employees, contractors, agents and representatives from and against any and all
claims, demands, actions, liabilities, damages, losses, fines penalties, costs
and expenses (including all attorneys' fees) of any kind (collectively "LOSSES")
to the extent actually or allegedly resulting from (i) any errors, omissions,
refusals to accept advertising, misclassification or misuse of information,
claimed or actual, concerning any of the Directories; (ii) any other claims by
advertisers in the Directories; (iii) any breach of this Agreement by the
Directory Publisher or Newco; (iv) the Directory Publisher's and Newco's
activities with respect to the publishing of the Directories; and (v) the use of
the Licensed Marks by the Directory Publisher in violation of this Agreement, in
each case except for such Losses as are caused solely by the gross negligence,
fraud or willful misconduct of McLeod or the Telephone Company, or errors,
omissions or misclassifications caused by the Telephone Company in the
Subscriber List Information.

                           (b)      MCLEOD INDEMNITY. The Telephone Company
shall defend, hold harmless and indemnify the Directory Publisher, Newco and
each of their affiliates, officers, directors, shareholders, employees,
contractors, agents and representatives from and against any and all Losses to
the extent actually or allegedly resulting from (i) any errors, omissions or
misclassifications negligently or willfully caused by the Telephone Company in
the Subscriber List Information; (ii) any breach of this Agreement by the
Telephone Company or McLeod, in either case except for such Losses as are caused
solely by the gross negligence, fraud or willful misconduct of the Directory
Publisher or Newco. It is expressly agreed that any liability of McLeod and the
Telephone Company arising under clause 9.1(b)(i) hereunder will be limited, on a
listing-by-listing basis, to the amount paid by the Directory Publisher to the
Telephone Company for that listing out of which any liability arose.

                                   ARTICLE X

                              ADDITIONAL COVENANTS

                  10.1     BOARD OF DIRECTORS OF DIRECTORY PUBLISHER. During the
term of this Agreement, the Telephone Company shall have the right to designate
one member to the Directory Publisher's Board of Directors or other similar
governing body; PROVIDED that such designee shall have been approved by Newco,
which approval shall not to be unreasonably withheld or delayed. Newco will take
all actions necessary to have such designee elected to the Board of Directors.
Such designee shall have the same access to information concerning the business
and operations of the Directory Publisher and its subsidiaries and at the same
time as other directors of the Directory Publisher.

                                       17
<Page>

                  10.2     NON-COMPETE AND NON-SOLICITATION.

                           (a)      During the term of this Agreement Newco
agrees that it shall not, directly or indirectly, through one or more
subsidiaries, engage or have an interest, alone or in association with others,
as a partner or stockholder or through the investment of capital, lending of
money or property, or otherwise, in any business that competes with the products
and services provided by McLeod and its subsidiaries (other than the Directory
Publisher and its subsidiaries) as of the Effective Date; PROVIDED, however,
that it shall not be a violation of this Subsection 10.2(a) for Newco or any of
its subsidiaries to invest in, own an interest in or acquire, in a single
transaction or a series of transactions, all or a majority of the equity
interests in, or assets of, any person whose primary business is not the
provision of any voice or data telecommunications service (including, without
limitation, competitive local exchange carriers, long-distance service providers
and the Bell companies) or dial Internet access services. Through the first
anniversary of the Effective Date, Newco shall not, directly or indirectly,
through one or more of its subsidiaries, on behalf of itself or any other
person, (i) recruit or otherwise solicit or induce any person who is an employee
as to whom the employer is exempt from legal obligations to pay overtime
(referred to as an "exempt employee") of McLeod or any of its subsidiaries
(other than the Directory Publisher and its subsidiaries) or any of their
successors to terminate his or her employment relationship with McLeod or its
subsidiaries (other than the Directory Publisher and its subsidiaries) or (ii)
offer employment to or employ a person who is at that time an exempt employee of
McLeod or its subsidiaries (other than the Directory Publisher and its
subsidiaries) or who was such an employee within ninety days of the time of such
offer of employment. The foregoing shall not, however, prohibit Newco or any of
its subsidiaries from publishing any general public solicitation of employment
opportunities.

                           (b)      During the term of this Agreement, McLeod
agrees that it shall not, directly or indirectly, through one or more
subsidiaries, engage or have an interest, alone or in association with others,
as partner or stockholder or through the investment of capital, lending of money
or property, or otherwise, in any business that competes with the products and
services provided by the Directory Publisher and its subsidiaries as of the
Effective Date; PROVIDED, however, that it shall not be a violation of this
Subsection 10.2(b) for McLeod or any of its subsidiaries to (i) invest in
securities representing less than ten percent of the outstanding capital stock
of any person, the securities of which are publicly traded or listed on any
securities exchange or automated quotation system, or (ii) invest in, own an
interest in or acquire, in a single transaction or series of transactions, all
or a majority of the equity interests in, or assets of, any person whose primary
business is not the business of the publication of telephone directories.
Through the first anniversary of the Effective Date, McLeod shall not, directly
or indirectly, through one or more of its subsidiaries, on behalf of itself or
any other person, (i) recruit or otherwise solicit or induce any person who is
an exempt employee of Newco and its subsidiaries or any of their successors to
terminate his or her employment relationship with Newco and its subsidiaries or
(ii) offer employment to or employ a person who is at that time an exempt
employee of Newco or its subsidiaries or who was such an employee within ninety
days of the time of such offer of employment. The foregoing shall not, however,
prohibit the Telephone Company or any of its subsidiaries from publishing any
general public solicitation of employment opportunities.

                                       18
<Page>

                  10.3     PROVISION OF ADVERTISING DATA. Upon the request of
the Telephone Company, the Directory Publisher shall, on the first day of each
calendar month, provide to the Telephone Company a copy of the Directory
Publisher's then-current list of persons who purchased advertising in the
Directories during the preceding month. The Telephone Company may use such
information to solicit customers for telephone and other telecommunications
services and for related purposes.

                  10.4     CONFIDENTIAL INFORMATION. Each of the parties (in
such capacity, the "RECIPIENT") agrees that all information relating to the
business, customers and operations of the other parties and their affiliates
that is obtained in connection with the subject matter of this Agreement (except
Subscriber List Information, which is subject to the restrictions on use
contained in Section 3.6) is the confidential information ("CONFIDENTIAL
INFORMATION") of the party as to which such information relates (the
"DISCLOSER"). The Recipient shall not, without the prior written consent of the
Discloser, use Confidential Information of the Discloser other than in
connection with the performance of its obligations hereunder or disclose or
permit access to any Confidential Information by any third party. The Recipient
shall use the same degree of care that it uses with respect to its own
confidential information and take the same action as it does with respect to its
own confidential information to cause its officers, employees, agents and
representatives to take such action as shall be necessary or advisable to
preserve and protect the confidentiality of Confidential Information of the
Discloser. The Recipient shall not be obligated to treat as confidential
pursuant to this Section 10.4 any information that (a) is rightfully known to
the Recipient prior to its disclosure by the Discloser; (b) is released by the
Discloser or its affiliate to any other person, firm or entity without a
confidentiality restriction; (c) is independently developed by the Recipient
without any reliance on Confidential Information of the Discloser; or (d) is or
later becomes publicly available without violation of this Agreement or other
confidentiality restriction. In the event that the Recipient is required to
produce Confidential Information of the Discloser in compliance with applicable
law or a court order, it shall provide the Discloser immediate notice of such
required disclosure such that the Discloser shall have an opportunity to object
to and/or attempt to limit such production.

                  10.5     RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION.
All Confidential Information, including any copies thereof, shall be returned to
the Discloser or, at the Discloser's request, destroyed, within ten days of the
termination of this Agreement.

                                   ARTICLE XI

                               GENERAL PROVISIONS

                  11.1     REPRESENTATIONS AND WARRANTIES.

                           (a)      GENERAL REPRESENTATIONS AND WARRANTIES. Each
of the parties represents and warrants to the others that it has and shall
continue to have throughout the term of this Agreement the full right to enter
into this Agreement and perform its obligations hereunder and that this
Agreement is a legal, valid and binding obligation of it, enforceable in
accordance with its terms.

                                       19
<Page>

                           (b)      DISCLAIMER. SUBSCRIBER LIST INFORMATION AND
OTHER INFORMATION, THE LICENSED MARKS AND THE TRADE DRESS ARE PROVIDED ON AN
"AS-IS" BASIS. EXCEPT FOR THE REPRESENTATION AND WARRANTY SET FORTH IN
SUBSECTION 11.1(a), NEITHER MCLEOD NOR THE TELEPHONE COMPANY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND HEREUNDER,
INCLUDING WITHOUT LIMITATION AS TO THE ACCURACY OF THE SUBSCRIBER LIST
INFORMATION OR OTHER INFORMATION PROVIDED BY THE TELEPHONE COMPANY HEREUNDER, OR
THE VALIDITY, ENFORCEABILITY, REGISTRABILITY OR RIGHTS TO USE THE LICENSED
MARKS, THE TRADE DRESS, THE SUBSCRIBER LIST INFORMATION OR ANY OTHER SUCH
INFORMATION.

                  11.2     AMENDMENT AND MODIFICATION. This Agreement may be
amended or modified at any time by the parties hereto, pursuant to an instrument
in writing signed by all parties.

                  11.3     ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties hereto with respect to
the subject matter hereof and (b) shall not be assigned, by operation of law or
otherwise by a party hereto, without the prior written consent of the other
parties; PROVIDED that the Telephone Company may assign its rights and delegate
its duties under this Agreement to a purchaser of all or substantially all of
the Telephone Company's assets (although such a transaction may be grounds for
termination under paragraph 2.3(e)(i)), and McLeod may assign its rights and
delegate its duties under this Agreement to a purchaser of the Licensed Marks.

                  11.4     VALIDITY. The parties intend that this Agreement
complies with and does not violate any law or regulation applicable to the
Telephone Company. The invalidity or unenforceability of any term or provision
of this Agreement in any situation or jurisdiction shall not affect the validity
or enforceability of the other terms or provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. In the event that any term of this Agreement or other
provision thereof should be held to be unenforceable or invalid for any reason,
such term or provision thereof shall be modified in such a manner as to make
this Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws. The parties shall negotiate in good faith to replace such
term or provision with an appropriate legal and enforceable term or provision.

                  11.5     NOTICES. Unless otherwise provided herein, all
notices and other communications hereunder shall be in writing and shall be
deemed given upon receipt by the other parties at the following addresses or
facsimile numbers, or at such other address and facsimile number as may be
specified by a party by giving notice to the other parties of such change:

                                       20
<Page>

                           (a)      if to the Directory Publisher and/or Newco,
                                    to

                                     McLeodUSA Publishing Company
                                     McLeodUSA Technology Park
                                     6400 C Street SW
                                     Building 1
                                     Cedar Rapids, IA 52406
                                     Facsimile: (319) 368-1311
                                     Attention:  General Counsel

                           (b)      if to McLeod and/or the Telephone Company,
                                    to

                                     McLeodUSA Telecommunications Services, Inc.
                                     McLeodUSA Technology Park
                                     6400 C Street SW
                                     Building 2
                                     Cedar Rapids, IA 52406
                                     Facsimile:  (319) 790-7901
                                     Attention:  President

                  with a copy to the attention of the General Counsel at the
                  same address, facsimile: (319) 790-7901.

                  11.6     GOVERNING LAW. This Agreement shall be governed by,
enforced under and construed in accordance with the laws of the State of
Delaware, without giving effect to any choice- or conflict-of-law provision or
rule thereof.

                  11.7     DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and shall in no way be construed
to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of any provision of, or scope or intent
of, this Agreement nor in any way affect this Agreement.

                  11.8     COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

                  11.9     EXPENSES. Except as otherwise provided herein, each
party shall bear its own costs in negotiating, performing and enforcing this
Agreement.

                  11.10    PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its affiliates,
and nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.

                  11.11    NO WAIVERS. Any of the terms or conditions of this
Agreement that may be lawfully waived may be waived in writing at any time by
the party that is entitled to the

                                       21
<Page>

benefits thereof. No failure to exercise, delay in exercising or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing among the parties, shall constitute a waiver of any such right, power or
remedy. No waiver by a party of any breach of this Agreement, whether
intentional or not, shall be deemed to extend to any prior or subsequent breach
or affect in any way any rights arising by virtue of any prior or subsequent
such occurrence. No waiver shall be valid unless in writing and signed by the
party against whom such waiver is sought to be enforced.

                  11.12    SPECIFIC PERFORMANCE. The parties hereto agree that
if any of the provisions of this Agreement are not performed in accordance with
their specific terms or are otherwise breached, irreparable damage will occur,
no adequate remedy at law will exist and damages will be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, as well as immediate injunctive relief, in addition to any other remedy
at law or equity.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                       22
<Page>

                  IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly signed as of the date first above written.

                          MCLEODUSA PUBLISHING COMPANY

                                    By:_________________________________
                                        Name:
                                        Title:

                                    MCLEODUSA, INC.

                                    By:__________________________________
                                        Name:
                                        Title:

                                    MCLEODUSA TELECOMMUNICATIONS SERVICES, INC.

                                    By:___________________________________
                                        Name:
                                        Title:

                                    PUBCO ACQUISITION CORP.

                                    By:___________________________________
                                        Name:
                                        Title:

<Page>

                                                                 SCHEDULE 1.3(a)
                                         DIRECTORY LIST AND PUBLICATION SCHEDULE

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------
   #    STATE  MARKET NAME                                                                       DATE
----------------------------------------------------------------------------------------------------------
<S>      <C>   <C>                                                                              <C>
   1      AR   Harrison/Mountain Home                                                            Jun
----------------------------------------------------------------------------------------------------------
   2      AR   Little Rock/North Little Rock                                                     Jun
----------------------------------------------------------------------------------------------------------
   3      AR   Searcy                                                                            Sep
----------------------------------------------------------------------------------------------------------
   4      AR   Batesville/Greers Ferry                                                           Nov
----------------------------------------------------------------------------------------------------------
   5      AR   Jonesboro/Paragould/Kennett                                                       Nov
----------------------------------------------------------------------------------------------------------
   6      CO   Denver & West Suburbs                                                             Mar
----------------------------------------------------------------------------------------------------------
   7      CO   South Suburban Denver                                                             Mar
----------------------------------------------------------------------------------------------------------
   8      CO   Pueblo/Canon City                                                                 Apr
----------------------------------------------------------------------------------------------------------
   9      CO   North Suburban Denver                                                             May
----------------------------------------------------------------------------------------------------------
  10      CO   Salida/Leadville/Gunnison/Buena Vista                                             Jun
----------------------------------------------------------------------------------------------------------
  11      CO   Grand Junction                                                                    Jul
----------------------------------------------------------------------------------------------------------
  12      CO   Aurora/Montbello                                                                  Sep
----------------------------------------------------------------------------------------------------------
  13      CO   Boulder/Longmont                                                                  Sep
----------------------------------------------------------------------------------------------------------
  14      CO   Craig/Granby/Steamboat Springs                                                    Oct
----------------------------------------------------------------------------------------------------------
  15      CO   Greeley                                                                           Oct
----------------------------------------------------------------------------------------------------------
  16      CO   Aspen/Carbondale/Glenwood Springs/Rifle/Snowmass Village                          Nov
----------------------------------------------------------------------------------------------------------
  17      CO   Fort Collins/Loveland/Estes Park                                                  Nov
----------------------------------------------------------------------------------------------------------
  18      CO   Summit County                                                                     Nov
----------------------------------------------------------------------------------------------------------
  19      CO   Vail                                                                              Nov
----------------------------------------------------------------------------------------------------------
  20      CO   Colorado Springs                                                                  Dec
----------------------------------------------------------------------------------------------------------
  21      FL   Naples/Marco Island                                                               Jan
----------------------------------------------------------------------------------------------------------
  22      FL   Venice/Englewood/North Port                                                       Feb
----------------------------------------------------------------------------------------------------------
  23      FL   Sun City Center Membership                                                        Mar
----------------------------------------------------------------------------------------------------------
  24      FL   Tampa                                                                             Apr
----------------------------------------------------------------------------------------------------------
  25      FL   New Port Richey/Hudson/Spring Hill                                                Jun
----------------------------------------------------------------------------------------------------------
  26      FL   Fort Myers/Cape Coral                                                             Aug
----------------------------------------------------------------------------------------------------------
  27      FL   Dade City/Zephyrhills                                                             Oct
----------------------------------------------------------------------------------------------------------
  28      FL   Punta Gorda/Port Charlotte                                                        Oct
----------------------------------------------------------------------------------------------------------
  29      FL   Sarasota/Bradenton                                                                Nov
----------------------------------------------------------------------------------------------------------
  30      FL   St. Petersburg / Clearwater                                                       Nov
----------------------------------------------------------------------------------------------------------
  31      FL   Tarpon Springs                                                                    Dec
----------------------------------------------------------------------------------------------------------
  32      IA   Cedar Rapids/Marion                                                               Mar
----------------------------------------------------------------------------------------------------------
  33      IA   Clinton/Camanche                                                                  Mar
----------------------------------------------------------------------------------------------------------
  34      IA   Muscatine                                                                         Mar
----------------------------------------------------------------------------------------------------------
  35      IA   Sioux City                                                                        Mar
----------------------------------------------------------------------------------------------------------
  36      IA   Spencer/Storm Lake                                                                Mar
----------------------------------------------------------------------------------------------------------
  37      IA   Ft. Dodge/Algona/Humbolt/Webster City                                             Apr
----------------------------------------------------------------------------------------------------------
  38      IA   Marshalltown/Newton/Grinnell                                                      Apr
----------------------------------------------------------------------------------------------------------
</Table>

                                    1.3(a)-1
<Page>

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------
   #    STATE  MARKET NAME                                                                       DATE
----------------------------------------------------------------------------------------------------------
<S>      <C>   <C>                                                                              <C>
----------------------------------------------------------------------------------------------------------
  39      IA   Mason City                                                                        May
----------------------------------------------------------------------------------------------------------
  40      IA   Waterloo/Cedar Falls                                                              Jun
----------------------------------------------------------------------------------------------------------
  41      IA   Charles City/Decorah/Oelwein                                                      Jul
----------------------------------------------------------------------------------------------------------
  42      IA   Ottumwa/Oskaloosa                                                                 Jul
----------------------------------------------------------------------------------------------------------
  43      IA   Carroll/Denison/Jefferson/Perry                                                   Aug
----------------------------------------------------------------------------------------------------------
  44      IA   Council Bluffs                                                                    Aug
----------------------------------------------------------------------------------------------------------
  45      IA   Dubuque                                                                           Aug
----------------------------------------------------------------------------------------------------------
  46      IA   Quad Cities                                                                       Sep
----------------------------------------------------------------------------------------------------------
  47      IA   Ames/Boone/Nevada                                                                 Oct
----------------------------------------------------------------------------------------------------------
  48      IA   Des Moines                                                                        Nov
----------------------------------------------------------------------------------------------------------
  49      IA   Iowa City/Coralville                                                              Nov
----------------------------------------------------------------------------------------------------------
  50      IA   Burlington/Mt. Pleasant/Ft. Madison/Keokuk                                        Dec
----------------------------------------------------------------------------------------------------------
  51      ID   Twin Falls                                                                        Mar
----------------------------------------------------------------------------------------------------------
  52      ID   Boise/Nampa/Caldwell                                                              Apr
----------------------------------------------------------------------------------------------------------
  53      ID   Idaho Falls/Pocatello                                                             Jun
----------------------------------------------------------------------------------------------------------
  54      ID   Ontario/Emmett                                                                    Oct
----------------------------------------------------------------------------------------------------------
  55      IL   Chester/Sparta                                                                    Jan
----------------------------------------------------------------------------------------------------------
  56      IL   Gurnee/Highland Park/Libertyville/Vernon Hills/Waukegan                           Jan
----------------------------------------------------------------------------------------------------------
  57      IL   Orland Park/Tinley Park/Palos Hills/Frankfort                                     Jan
----------------------------------------------------------------------------------------------------------
  58      IL   Galesburg/Monmouth                                                                Feb
----------------------------------------------------------------------------------------------------------
  59      IL   Champaign/Urbana                                                                  Mar
----------------------------------------------------------------------------------------------------------
  60      IL   Litchfield/Hillsboro                                                              Mar
----------------------------------------------------------------------------------------------------------
  61      IL   Mt. Vernon/Centralia                                                              Apr
----------------------------------------------------------------------------------------------------------
  62      IL   Robinson/Newton                                                                   Apr
----------------------------------------------------------------------------------------------------------
  63      IL   Rockford/Belvidere/Loves Park/Machesney Park                                      Apr
----------------------------------------------------------------------------------------------------------
  64      IL   Arlington Heights/Barrington/Buffalo Grove/Hoffman Estates/Palatine/Schaumburg    May
----------------------------------------------------------------------------------------------------------
  65      IL   Canton/Macomb                                                                     May
----------------------------------------------------------------------------------------------------------
  66      IL   Joliet/Bolingbrook                                                                May
----------------------------------------------------------------------------------------------------------
  67      IL   Madison & St. Clair Counties                                                      May
----------------------------------------------------------------------------------------------------------
  68      IL   Danville                                                                          Jun
----------------------------------------------------------------------------------------------------------
  69      IL   Freeport/Monroe                                                                   Jun
----------------------------------------------------------------------------------------------------------
  70      IL   La Salle/Peru/Ottawa                                                              Jul
----------------------------------------------------------------------------------------------------------
  71      IL   Aurora/Naperville/St. Charles                                                     Aug
----------------------------------------------------------------------------------------------------------
  72      IL   Harrisburg/Carmi                                                                  Aug
----------------------------------------------------------------------------------------------------------
  73      IL   Kankakee                                                                          Aug
----------------------------------------------------------------------------------------------------------
  74      IL   Lincoln/Havana/Mason City                                                         Aug
----------------------------------------------------------------------------------------------------------
  75      IL   Mt. Carmel/Olney/Fairfield/Flora                                                  Aug
----------------------------------------------------------------------------------------------------------
  76      IL   Peoria/Pekin/Metamora                                                             Aug
----------------------------------------------------------------------------------------------------------
  77      IL   Taylorville/Pana                                                                  Aug
----------------------------------------------------------------------------------------------------------
  78      IL   Algonquin/Elgin/Crystal Lake/Harvard/McHenry/Wonder Lake/Woodstock                Sep
----------------------------------------------------------------------------------------------------------
</Table>

                                    1.3(a)-2
<Page>

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------
   #    STATE  MARKET NAME                                                                       DATE
----------------------------------------------------------------------------------------------------------
<S>      <C>   <C>                                                                              <C>
  79      IL   Effingham                                                                         Sep
----------------------------------------------------------------------------------------------------------
  80      IL   Jerseyville/Carrollton                                                            Sep
----------------------------------------------------------------------------------------------------------
  81      IL   Southeast Cook County                                                             Sep
----------------------------------------------------------------------------------------------------------
  82      IL   Decatur                                                                           Oct
----------------------------------------------------------------------------------------------------------
  83      IL   Dekalb/Sauk Valley                                                                Oct
----------------------------------------------------------------------------------------------------------
  84      IL   Vandalia/Greenville                                                               Oct
----------------------------------------------------------------------------------------------------------
  85      IL   Bloomington/Normal                                                                Nov
----------------------------------------------------------------------------------------------------------
  86      IL   Downers Grove/Elmhurst/Glen Ellyn/ La Grange/Oak Brook/Wheaton                    Nov
----------------------------------------------------------------------------------------------------------
  87      IL   Mattoon/Charleston                                                                Nov
----------------------------------------------------------------------------------------------------------
  88      IL   Shelbyville                                                                       Nov
----------------------------------------------------------------------------------------------------------
  89      IL   Springfield                                                                       Nov
----------------------------------------------------------------------------------------------------------
  90      IL   Jacksonville/Beardstown                                                           Dec
----------------------------------------------------------------------------------------------------------
  91      IL   Quincy                                                                            Dec
----------------------------------------------------------------------------------------------------------
  92      IN   Anderson/Muncie/New Castle                                                        Jan
----------------------------------------------------------------------------------------------------------
  93      IN   Bloomington/Bedford                                                               Feb
----------------------------------------------------------------------------------------------------------
  94      IN   Greater Indianapolis- South Edition                                               Feb
----------------------------------------------------------------------------------------------------------
  95      IN   South Bend/Mishawaka/Elkhart                                                      Feb
----------------------------------------------------------------------------------------------------------
  96      IN   Washington                                                                        Feb
----------------------------------------------------------------------------------------------------------
  97      IN   Huntington/Columbia City                                                          Mar
----------------------------------------------------------------------------------------------------------
  98      IN   Warsaw                                                                            Mar
----------------------------------------------------------------------------------------------------------
  99      IN   Crawfordsville/Greencastle                                                        Apr
----------------------------------------------------------------------------------------------------------
  100     IN   Fort Wayne                                                                        Apr
----------------------------------------------------------------------------------------------------------
  101     IN   LaPorte/Michigan City                                                             Apr
----------------------------------------------------------------------------------------------------------
  102     IN   Marion                                                                            Apr
----------------------------------------------------------------------------------------------------------
  103     IN   Plymouth                                                                          May
----------------------------------------------------------------------------------------------------------
  104     IN   Evansville/Henderson                                                              Jul
----------------------------------------------------------------------------------------------------------
  105     IN   Portage/Valparaiso                                                                Jul
----------------------------------------------------------------------------------------------------------
  106     IN   Greater Indianapolis- North Edition                                               Aug
----------------------------------------------------------------------------------------------------------
  107     IN   Vincennes/Lawrenceville                                                           Aug
----------------------------------------------------------------------------------------------------------
  108     IN   Angola/Auburn/Kendallville                                                        Sep
----------------------------------------------------------------------------------------------------------
  109     IN   Peru/Wabash                                                                       Sep
----------------------------------------------------------------------------------------------------------
  110     IN   Richmond                                                                          Sep
----------------------------------------------------------------------------------------------------------
  111     IN   Lafayette/West Lafayette                                                          Oct
----------------------------------------------------------------------------------------------------------
  112     IN   Logansport                                                                        Oct
----------------------------------------------------------------------------------------------------------
  113     IN   Northwest Indiana                                                                 Oct
----------------------------------------------------------------------------------------------------------
  114     IN   Kokomo                                                                            Nov
----------------------------------------------------------------------------------------------------------
  115     IN   Terre Haute                                                                       Dec
----------------------------------------------------------------------------------------------------------
  116     KS   Leavenworth/Lansing/Bonner Springs                                                Jan
----------------------------------------------------------------------------------------------------------
  117     KS   Lawrence/Ottawa                                                                   Mar
----------------------------------------------------------------------------------------------------------
  118     KS   Manhattan/Junction City                                                           Apr
----------------------------------------------------------------------------------------------------------
</Table>

                                    1.3(a)-3
<Page>

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------
   #    STATE  MARKET NAME                                                                       DATE
----------------------------------------------------------------------------------------------------------
<S>      <C>   <C>                                                                              <C>
  119     KS   Overland Park/ Olathe/Shawnee/Mission/Lenexa/Prairie Village/Leawood              Sep
----------------------------------------------------------------------------------------------------------
  120     KS   Topeka                                                                            Oct
----------------------------------------------------------------------------------------------------------
  121     MI   Bad Axe/Caro/Cass City/Marlette/Sandusky/Vassar                                   Feb
----------------------------------------------------------------------------------------------------------
  122     MI   Battle Creek/Marshall                                                             Feb
----------------------------------------------------------------------------------------------------------
  123     MI   Grand Rapids                                                                      Feb
----------------------------------------------------------------------------------------------------------
  124     MI   Big Rapids/Fremont/Newaygo                                                        Mar
----------------------------------------------------------------------------------------------------------
  125     MI   Cadillac                                                                          Mar
----------------------------------------------------------------------------------------------------------
  126     MI   East Area Metro Detroit                                                           Mar
----------------------------------------------------------------------------------------------------------
  127     MI   Hastings                                                                          Mar
----------------------------------------------------------------------------------------------------------
  128     MI   North Woodward                                                                    Mar
----------------------------------------------------------------------------------------------------------
  129     MI   Grand Traverse Area                                                               Apr
----------------------------------------------------------------------------------------------------------
  130     MI   Marquette                                                                         Apr
----------------------------------------------------------------------------------------------------------
  131     MI   Cheboygan/Petoskey                                                                May
----------------------------------------------------------------------------------------------------------
  132     MI   Holland/Grand Haven                                                               May
----------------------------------------------------------------------------------------------------------
  133     MI   Lansing/East Lansing                                                              May
----------------------------------------------------------------------------------------------------------
  134     MI   Saginaw/Bay City/Midland/Mt. Pleasant                                             May
----------------------------------------------------------------------------------------------------------
  135     MI   Beulah/Frankfort                                                                  Jun
----------------------------------------------------------------------------------------------------------
  136     MI   Muskegon/Norton Shores/Muskegon Heights                                           Jun
----------------------------------------------------------------------------------------------------------
  137     MI   Escanaba/Iron Mountain/Manistique                                                 Jul
----------------------------------------------------------------------------------------------------------
  138     MI   Kalamazoo/Portage                                                                 Jul
----------------------------------------------------------------------------------------------------------
  139     MI   Ludington/Manistee                                                                Jul
----------------------------------------------------------------------------------------------------------
  140     MI   North Oakland                                                                     Jul
----------------------------------------------------------------------------------------------------------
  141     MI   Sturgis/Three Rivers                                                              Jul
----------------------------------------------------------------------------------------------------------
  142     MI   Detroit Down River                                                                Aug
----------------------------------------------------------------------------------------------------------
  143     MI   Greenville/Belding/Ionia                                                          Aug
----------------------------------------------------------------------------------------------------------
  144     MI   West Northwest Detroit Area                                                       Aug
----------------------------------------------------------------------------------------------------------
  145     MI   South Haven/Paw Paw                                                               Sep
----------------------------------------------------------------------------------------------------------
  146     MI   Allegan/Otsego/Plainwell                                                          Oct
----------------------------------------------------------------------------------------------------------
  147     MI   Gaylord/Grayling/Houghton Lake                                                    Oct
----------------------------------------------------------------------------------------------------------
  148     MI   Benton Harbor/St. Joseph/Niles/Dowagiac                                           Nov
----------------------------------------------------------------------------------------------------------
  149     MI   Flint/Lapeer                                                                      Nov
----------------------------------------------------------------------------------------------------------
  150     MI   Sault Ste. Marie/Eastern Upper Peninsula                                          Nov
----------------------------------------------------------------------------------------------------------
  151     MI   West Branch /Oscoda/Standish/Tawas City                                           Nov
----------------------------------------------------------------------------------------------------------
  152     MI   Alpena                                                                            Dec
----------------------------------------------------------------------------------------------------------
  153     MN   Albert Lea/Austin/Owatonna                                                        Jan
----------------------------------------------------------------------------------------------------------
  154     MN   Brainerd Lakes                                                                    Feb
----------------------------------------------------------------------------------------------------------
  155     MN   Rochester                                                                         Feb
----------------------------------------------------------------------------------------------------------
  156     MN   Thief River Falls/Crookston/Roseau                                                Mar
----------------------------------------------------------------------------------------------------------
  157     MN   Bemidji                                                                           May
----------------------------------------------------------------------------------------------------------
  158     MN   New Ulm/Redwood Falls                                                             May
----------------------------------------------------------------------------------------------------------
  159     MN   Alexandria/Glenwood/Morris/Sauk Centre                                            Jun
----------------------------------------------------------------------------------------------------------
</Table>

                                    1.3(a)-4
<Page>

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------
   #    STATE  MARKET NAME                                                                       DATE
----------------------------------------------------------------------------------------------------------
<S>      <C>   <C>                                                                              <C>
  160     MN   Faribault/Northfield/Red Wing                                                     Jun
----------------------------------------------------------------------------------------------------------
  161     MN   St. Cloud                                                                         Jun
----------------------------------------------------------------------------------------------------------
  162     MN   Stillwater/Hudson/River Falls                                                     Jun
----------------------------------------------------------------------------------------------------------
  163     MN   Crow River Area                                                                   Jul
----------------------------------------------------------------------------------------------------------
  164     MN   Detroit Lakes/Fergus Falls/Wahpeton                                               Jul
----------------------------------------------------------------------------------------------------------
  165     MN   Marshall/Worthington                                                              Aug
----------------------------------------------------------------------------------------------------------
  166     MN   Minneapolis/St. Paul                                                              Aug
----------------------------------------------------------------------------------------------------------
  167     MN   Willmar/Montevideo/Olivia/Paynesville                                             Aug
----------------------------------------------------------------------------------------------------------
  168     MN   Duluth/Superior                                                                   Sep
----------------------------------------------------------------------------------------------------------
  169     MN   The Greater Twin Cities- South Edition                                            Oct
----------------------------------------------------------------------------------------------------------
  170     MN   Cambridge/Chisago Lakes/East Bethel/Forest Lake/Mora/North Branch/Pine City       Nov
----------------------------------------------------------------------------------------------------------
  171     MN   Elk River/Buffalo/Monticello                                                      Nov
----------------------------------------------------------------------------------------------------------
  172     MN   Hibbing/Virginia/Grand Rapids/Chisholm                                            Dec
----------------------------------------------------------------------------------------------------------
  173     MN   Mankato                                                                           Dec
----------------------------------------------------------------------------------------------------------
  174     MO   City of St. Louis and North St. Louis County                                      Jan
----------------------------------------------------------------------------------------------------------
  175     MO   Columbia/Jefferson City                                                           Jan
----------------------------------------------------------------------------------------------------------
  176     MO   Farmington/Park Hills                                                             Jan
----------------------------------------------------------------------------------------------------------
  177     MO   Cape Girardeau                                                                    Feb
----------------------------------------------------------------------------------------------------------
  178     MO   Joplin                                                                            Feb
----------------------------------------------------------------------------------------------------------
  179     MO   Moberly/Macon                                                                     Feb
----------------------------------------------------------------------------------------------------------
  180     MO   St. Charles/St. Peters/O'Fallen                                                   Apr
----------------------------------------------------------------------------------------------------------
  181     MO   Hannibal                                                                          May
----------------------------------------------------------------------------------------------------------
  182     MO   The Lake of the Ozarks                                                            May
----------------------------------------------------------------------------------------------------------
  183     MO   Gladstone/Liberty/Parkville                                                       Jun
----------------------------------------------------------------------------------------------------------
  184     MO   Jefferson County                                                                  Jul
----------------------------------------------------------------------------------------------------------
  185     MO   Springfield/Branson                                                               Jul
----------------------------------------------------------------------------------------------------------
  186     MO   Aurora/Monett                                                                     Sep
----------------------------------------------------------------------------------------------------------
  187     MO   Sedalia                                                                           Sep
----------------------------------------------------------------------------------------------------------
  188     MO   West Plains/Mountain Grove                                                        Sep
----------------------------------------------------------------------------------------------------------
  189     MO   City of St. Louis and South St. Louis County                                      Oct
----------------------------------------------------------------------------------------------------------
  190     MO   Nevada/Fort Scott                                                                 Oct
----------------------------------------------------------------------------------------------------------
  191     MO   Poplar Bluff/Sikeston                                                             Oct
----------------------------------------------------------------------------------------------------------
  192     MO   St. Joseph/Atchison/Maryville                                                     Oct
----------------------------------------------------------------------------------------------------------
  193     MO   Franklin/Gasconade Regional/Washington/Sullivan/Union                             Nov
----------------------------------------------------------------------------------------------------------
  194     MO   Ft. Leonard Wood/Lebanon/Rolla                                                    Nov
----------------------------------------------------------------------------------------------------------
  195     MO   Kirksville                                                                        Nov
----------------------------------------------------------------------------------------------------------
  196     MO   City of St. Louis and West St. Louis County                                       Dec
----------------------------------------------------------------------------------------------------------
  197     MO   Lee's Summit/Blue Springs                                                         Dec
----------------------------------------------------------------------------------------------------------
  198     MS   The Original De Soto Area-Wide Phone Book                                         Aug
----------------------------------------------------------------------------------------------------------
  199     MT   Great Falls/Havre/Lewistown                                                       Mar
----------------------------------------------------------------------------------------------------------
  200     MT   Bozeman                                                                           Apr
----------------------------------------------------------------------------------------------------------
</Table>

                                    1.3(a)-5
<Page>

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------
   #    STATE  MARKET NAME                                                                       DATE
----------------------------------------------------------------------------------------------------------
<S>      <C>   <C>                                                                              <C>
  201     MT   Missoula                                                                          Jun
----------------------------------------------------------------------------------------------------------
  202     MT   Billings/Sheridan/Cody                                                            Aug
----------------------------------------------------------------------------------------------------------
  203     MT   Butte/Helena                                                                      Dec
----------------------------------------------------------------------------------------------------------
  204     ND   Jamestown/Valley City                                                             Mar
----------------------------------------------------------------------------------------------------------
  205     ND   Bismarck/Mandan/Dickinson                                                         Jun
----------------------------------------------------------------------------------------------------------
  206     ND   Grand Forks/East Grand Forks                                                      Jul
----------------------------------------------------------------------------------------------------------
  207     ND   Minot/Williston                                                                   Sep
----------------------------------------------------------------------------------------------------------
  208     ND   Fargo/Moorhead/West Fargo                                                         Dec
----------------------------------------------------------------------------------------------------------
  209     NE   Fremont                                                                           Feb
----------------------------------------------------------------------------------------------------------
  210     NE   Kearney                                                                           Apr
----------------------------------------------------------------------------------------------------------
  211     NE   Omaha                                                                             May
----------------------------------------------------------------------------------------------------------
  212     NE   Columbus                                                                          Sep
----------------------------------------------------------------------------------------------------------
  213     NE   Grand Island/Hastings                                                             Nov
----------------------------------------------------------------------------------------------------------
  214     NE   Lincoln                                                                           Nov
----------------------------------------------------------------------------------------------------------
  215     OH   Dayton                                                                            Jan
----------------------------------------------------------------------------------------------------------
  216     OH   Toledo                                                                            Mar
----------------------------------------------------------------------------------------------------------
  217     OH   Troy/Piqua/Sidney/Tipp City                                                       Mar
----------------------------------------------------------------------------------------------------------
  218     OH   Lebanon                                                                           Apr
----------------------------------------------------------------------------------------------------------
  219     OH   Bowling Green                                                                     May
----------------------------------------------------------------------------------------------------------
  220     OH   Fremont                                                                           May
----------------------------------------------------------------------------------------------------------
  221     OH   Middletown                                                                        May
----------------------------------------------------------------------------------------------------------
  222     OH   Celina/Greenville/Portland/Winchester                                             Jun
----------------------------------------------------------------------------------------------------------
  223     OH   Columbus                                                                          Jun
----------------------------------------------------------------------------------------------------------
  224     OH   Lima                                                                              Jun
----------------------------------------------------------------------------------------------------------
  225     OH   Springfield                                                                       Jul
----------------------------------------------------------------------------------------------------------
  226     OH   Beaver Creek/Fairborn/Xenia                                                       Aug
----------------------------------------------------------------------------------------------------------
  227     OH   Defiance/Bryan/Napoleon                                                           Sep
----------------------------------------------------------------------------------------------------------
  228     OH   Van Wert/Paulding                                                                 Sep
----------------------------------------------------------------------------------------------------------
  229     OH   Eaton/Oxford/Brookville/New Lebanon                                               Nov
----------------------------------------------------------------------------------------------------------
  230     OR   Klamath Falls                                                                     Feb
----------------------------------------------------------------------------------------------------------
  231     OR   Eugene                                                                            Apr
----------------------------------------------------------------------------------------------------------
  232     OR   Medford/Grants Pass                                                               Sep
----------------------------------------------------------------------------------------------------------
  233     OR   Coos Bay                                                                          Nov
----------------------------------------------------------------------------------------------------------
  234     OR   Roseburg                                                                          Dec
----------------------------------------------------------------------------------------------------------
  235     SD   Rapid City/Gillette                                                               Jan
----------------------------------------------------------------------------------------------------------
  236     SD   Aberdeen/Watertown                                                                Feb
----------------------------------------------------------------------------------------------------------
  237     SD   Huron/Mitchell/Pierre                                                             Feb
----------------------------------------------------------------------------------------------------------
  238     SD   Sioux Falls/Brookings/Vermillion/Yankton                                          Jul
----------------------------------------------------------------------------------------------------------
  239     TN   Dyersburg                                                                         Apr
----------------------------------------------------------------------------------------------------------
  240     TN   Memphis Area Wide                                                                 Apr
----------------------------------------------------------------------------------------------------------
  241     TN   Jackson                                                                           Dec
----------------------------------------------------------------------------------------------------------
</Table>

                                    1.3(a)-6
<Page>

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------
   #    STATE  MARKET NAME                                                                       DATE
----------------------------------------------------------------------------------------------------------
<S>      <C>   <C>                                                                              <C>
  242     WI   Janesville/Beloit                                                                 Jan
----------------------------------------------------------------------------------------------------------
  243     WI   Door County                                                                       Feb
----------------------------------------------------------------------------------------------------------
  244     WI   Manitowoc/Two Rivers                                                              Feb
----------------------------------------------------------------------------------------------------------
  245     WI   Rice Lake/Amery/Grantsburg/Hayward/Ladysmith/ Osceola/Spooner/ Saint Croix Falls  Feb
----------------------------------------------------------------------------------------------------------
  246     WI   Wausau                                                                            Feb
----------------------------------------------------------------------------------------------------------
  247     WI   La Crosse/Winona                                                                  Mar
----------------------------------------------------------------------------------------------------------
  248     WI   Oshkosh/Berlin/Ripon/Wautoma                                                      Mar
----------------------------------------------------------------------------------------------------------
  249     WI   Ashland/Ironwood                                                                  Apr
----------------------------------------------------------------------------------------------------------
  250     WI   Rhinelander/Eagle River/Minoqua/Lac Du Flambeau/Tomahawk/Woodruff                 Apr
----------------------------------------------------------------------------------------------------------
  251     WI   Baraboo/Portage/Reedsburg/Mauston/Sauk City/ Wisconsin Dells                      May
----------------------------------------------------------------------------------------------------------
  252     WI   Madison                                                                           May
----------------------------------------------------------------------------------------------------------
  253     WI   Burlington/Delavan/Elkhorn/Lake Geneva/Mukwonago/Twin Lakes                       Jun
----------------------------------------------------------------------------------------------------------
  254     WI   Waupaca/Shawano Counties                                                          Jun
----------------------------------------------------------------------------------------------------------
  255     WI   Watertown/Whitewater/Fort Atkinson/Jefferson                                      Jul
----------------------------------------------------------------------------------------------------------
  256     WI   Appleton/Fox Cities                                                               Aug
----------------------------------------------------------------------------------------------------------
  257     WI   Marshfield/Stevens Point/Wisconsin Rapids                                         Aug
----------------------------------------------------------------------------------------------------------
  258     WI   Prairie Du Chien/Dodgeville/Richland Center/Viroqua                               Sep
----------------------------------------------------------------------------------------------------------
  259     WI   Fond Du Lac/Beaver Dam/Columbus/Hartford/Mayville/Waupun                          Oct
----------------------------------------------------------------------------------------------------------
  260     WI   Green Bay/De Pere                                                                 Nov
----------------------------------------------------------------------------------------------------------
  261     WI   Marinette/Menominee                                                               Nov
----------------------------------------------------------------------------------------------------------
  262     WI   Eau Claire                                                                        Dec
----------------------------------------------------------------------------------------------------------
  263     WI   Sheboygan County                                                                  Dec
----------------------------------------------------------------------------------------------------------
  264     WY   Cheyenne/Laramie/Rawlins/Wheatland                                                Feb
----------------------------------------------------------------------------------------------------------
  265     WY   Casper                                                                            May
----------------------------------------------------------------------------------------------------------
  266     WY   Rock Springs                                                                      Dec
----------------------------------------------------------------------------------------------------------
  267     MI   Ann Arbor                                                                         Oct
----------------------------------------------------------------------------------------------------------
</Table>

                                    1.3(a)-7
<Page>

                                                                 SCHEDULE 1.3(b)
                                                           MCLEOD SERVICE STATES

1.       Arizona
2.       Arkansas
3.       Colorado
4.       Idaho
5.       Illinois
6.       Indiana
7.       Iowa
8.       Kansas
9.       Louisiana
10.      Michigan
11.      Minnesota
12.      Missouri
13.      Montana
14.      Nebraska
15.      New Mexico
16.      North Dakota
17.      Ohio
18.      Oklahoma
19.      Oregon
20.      South Dakota
21.      Texas
22.      Utah
23.      Washington
24.      Wisconsin
25.      Wyoming

<Page>

                                                                     EXHIBIT 5.2
                                                          DIRECTORY COVER SAMPLE

<Page>

                                                                     EXHIBIT 5.3
                                                     INITIAL PAGES INSERT SAMPLE

<Page>

                                                                     EXHIBIT 5.5
                                       WHITE AND YELLOW PAGES ADVERTISING SAMPLE

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