• Network Gateway failover - the ability to process new calls in less than 180 seconds


• Signaling Gateway failover - the ability to process new calls in less than 100 seconds


• No dropped billing records on failover


• Recovery from a major data network and switch disaster


• Software, firmware, and hardware upgrades can be performed on the standby Network Gateway and Signaling Gateway

• Revenue of $283.9 million, which represented a 91% increase over third quarter 2006 revenue of $148.4 million;
• Adjusted EBITDA* of $53.8 million, which represented a 188% increase over third quarter 2006 adjusted EBITDA of $18.7 million;
• Free cash flow* of $35.5 million, which represented the 19th consecutive quarter in which PAETEC Holding or its predecessor generated positive free cash flow;
• Successful completion on July 10, 2007 of amendments to PAETEC's existing bank credit facility and a $300 million senior notes offering;
• Net loss of $(5.1) million largely due to the expense of $4.3 million on the extinguishment of debt in connection with the senior notes offering, and an increase in depreciation and amortization expense of $8.2 million, due to the catch up of expenses associated with the acquired US LEC intangible assets, compared to a third quarter 2006 net loss of $(1.5) million;
• A quarter-end cash balance of $105.5 million;
• An increase of 120% in the number of access line equivalents in service, from 1.26 million as of December 31, 2006, to 2.76 million as of September 30, 2007; and
• Announced agreements to acquire McLeodUSA Incorporated and Allworx Corp.

Reduces combined company leverage

FAIRPORT, N.Y. and CEDAR RAPIDS, IOWA (September 16, 2007) - PAETEC Holding Corp. (NASDAQ GS: PAET) today announced that it has signed a definitive agreement to acquire McLeodUSA Incorporated, a privately held company, in an all-stock merger for $557 million. The merger price consists of $492 million in PAETEC common stock and $65 million in net debt assumption. The company will become one of the largest nationwide competitive communications service providers focusing on business customers. With this acquisition, PAETEC adds an extensive fiber optic network and 18 states to its footprint, including such key markets as Dallas, Houston, Denver, Detroit, Phoenix, Seattle and Cleveland.

The transaction creates a company with an estimated $2.7 billion enterprise value and is expected to produce cost synergies of approximately $20 million in the first year following the closing, and run-rate synergies of approximately $30 million during the second year post-closing. For the twelve months ended June 30, 2007, on a pro forma basis, the combined company generated approximately $1.6 billion in revenue and $263 million in Adjusted EBITDA¹ , including $30 million in synergies. The combined company expects to have approximately 3.4 million access line equivalents in service and a local presence in 47 of the top 50 Metropolitan Statistical Areas (MSAs) in the country in 2008.

"This transaction is squarely in line with our corporate strategy and positions PAETEC as one of the largest nationwide competitive communications providers serving business customers," said Arunas A. Chesonis, Chairman and Chief Executive Officer of PAETEC. "We'll now have nearly 4,000 employees and we plan to increase our presence into 82 of the top 100 MSAs in 2008. With this combined footprint, we offer a compelling alternative to the legacy carriers. We have industry leading customer service, a comprehensive suite of business services and an extensive switching and fiber network with infrastructure including last mile capabilities. McLeodUSA's management team of industry veterans has built a strong franchise, which we believe positions PAETEC to deliver substantial long-term value to our customers and shareholders."

"This transaction validates the hard work of McLeodUSA employees, who built a strong carrier focused on the underserved needs of businesses," said Royce J. Holland, Chief Executive Officer, McLeodUSA. "I'm proud of what we've accomplished, and the combination with PAETEC offers us the ideal opportunity to accelerate our market penetration of high value integrated access customers to the benefit of our customers, employees, suppliers and partners."

McLeodUSA currently owns and manages one of the largest high-capacity fiber networks in the nation, spanning 20 Midwest, Southwest, Northwest, and Rocky Mountain states. This fiber network contains approximately 13,000 intercity route miles and approximately 4,000 metro route miles. The combined company will operate 77 traditional voice switching facilities and 39 IP soft switches. McLeodUSA has operations in 20 states, while PAETEC operates in 23 states and the District of Columbia.

Transaction Terms and Structure
Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, McLeodUSA will become a PAETEC subsidiary. Current McLeodUSA shareholders will receive 1.30 shares of PAETEC common stock for every share of McLeodUSA common stock they own. Approximately 40 million shares of PAETEC common stock will be issued to holders of currently outstanding McLeodUSA stock. PAETEC currently has approximately 102.1 million shares of common stock outstanding. McLeodUSA's employee stock options, of which 2.7 million are outstanding, will be converted into options to purchase PAETEC shares, to the extent not exercised before closing.

The all-stock structure of the transaction is expected to enhance the combined company's financial position by reducing PAETEC's ratio of debt to Adjusted EBITDA¹ from the current level of 3.9x to an estimated ratio of 2.9x upon the closing of the transaction. McLeodUSA's outstanding $104 million senior secured notes will be repaid at closing.

"This transaction offers clear financial and customer benefits, including a significant de-leveraging of our balance sheet and the potential realization of $30 million in annual combined cost and run-rate synergies," said Keith Wilson, Chief Financial Officer of PAETEC. "With McLeodUSA we add 26 of the top 100 MSAs that complement our existing footprint, a network that cost more than $2.5 billion when it was built, and a team of industry-tested managers and employees, all of which we believe will deliver immediate benefits to our customers."

Company Leadership and Headquarters
After the closing, Arunas A. Chesonis will remain Chairman and Chief Executive Officer of the company. Keith Wilson, Chief Financial Officer of PAETEC, and EJ Butler, Jr., Chief Operating Officer of PAETEC, will also remain in their respective roles. PAETEC will continue to be headquartered in Fairport, New York, and will maintain McLeodUSA's operations in Cedar Rapids, Iowa, and other significant regional centers, including Charlotte, North Carolina. After the closing of the transaction, PAETEC's current board of directors will add one director to be designated by McLeodUSA.

Approvals
The transaction is subject to approval by both PAETEC and McLeodUSA shareholders, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approvals by state public service commissions in the states where the combined company will operate, and other customary closing conditions. The companies expect that the transaction will close in the first quarter of 2008.

Additional information about the transaction will be contained in PAETEC's Current Report on Form 8-K to be filed with the SEC.

Advisors
Merrill Lynch & Co. is acting as financial advisor to PAETEC and Hogan & Hartson LLP is acting as legal advisor. Deutsche Bank Securities Inc. and Jefferies & Company, Inc. are acting as financial advisors to McLeodUSA and Ropes & Gray LLP is acting as legal advisor.

Conference Call
PAETEC will host a conference call with the investment community today at 11:00 a.m. ET. PAETEC Chairman and CEO Arunas A. Chesonis, Chief Financial Officer Keith Wilson, and Chief Operating Officer EJ Butler, Jr., will be participating, along with McLeodUSA CEO Royce Holland and Joe Ceryanec, McLeodUSA Chief Financial Officer. Listeners may dial-in to 866-825-3354 (617-213-8063 international), and enter the passcode 57376589. A live Webcast and replay of the call will be available at www.paetec.com.

About PAETEC
PAETEC (NASDAQ GS: PAET) is personalizing business communications for medium-sized and large businesses, enterprise organizations and institutions across the United States. We offer a comprehensive suite of voice, data, and IP services, as well as enterprise communications management software, network security solutions, CPE, and managed services. For more information, visit www.paetec.com.

About McLeodUSA
McLeodUSA provides managed IP-based communications services to small and medium-sized enterprises, and traditional circuit-switched telephony services to commercial customers in the Midwest, Rocky Mountain, Southwest and Northwest regions of the nation. McLeodUSA delivers a wide variety of broadband IP-based voice and data solutions, targeting primarily small and medium-sized enterprises and multilocation commercial customers. For more information, visit www.McLeodUSA.com.

Footnote 1: Adjusted EBITDA, which represents earnings before interest, taxes, depreciation, amortization, and other charges, includes $30 million of run-rate synergies and excludes $6.5 million of one-time costs associated with the US LEC acquisition.

Forward-Looking Statements
Except for statements that present historical facts, this release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In some cases, you can identify these statements by such forward-looking words as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "should," "will" and "would," or similar expressions. These statements, which include PAETEC's forecasts of the combined company's total revenue, adjusted EBITDA, merger-related synergies and other financial results, involve known and unknown risks, uncertainties and other factors that may cause the combined company's actual operating results, financial position, levels of activity or performance to be materially different from those expressed or implied by such forward-looking statements. Some of these risks, uncertainties and factors are discussed under the caption "Risk Factors" in PAETEC's 2006 Annual Report on Form 10-K and in PAETEC's subsequently filed SEC reports. They include, but are not limited to, the following risks, uncertainties and other factors: changes in regulation and the regulatory environment; competition in the markets in which PAETEC operates; the continued availability of necessary network elements from competitors; PAETEC's ability to manage and expand its business and execute its acquisition strategy, to adapt its product and service offerings to changes in customer preferences, and to convert its existing network to a network with more advanced technology; effects of network failures, systems breaches, natural catastrophes and other service interruptions; and PAETEC's ability to service its indebtedness and to raise capital in the future. PAETEC disclaims any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information and Where to Find it
PAETEC Holding Corp. will file with the SEC a registration statement on Form S-4, which will contain a proxy statement/prospectus regarding the proposed merger transaction, as well as other relevant documents concerning the transaction. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS AND THESE OTHER DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PAETEC, MCLEODUSA INCORPORATED AND THE PROPOSED TRANSACTION. A definitive proxy statement/prospectus will be sent to PAETEC's stockholders seeking their approval of the transaction and to security holders of McLeodUSA Incorporated. Investors and security holders may obtain a free copy of the registration statement and proxy statement/prospectus (when available) and other documents filed by PAETEC with the SEC at the SEC's web site at www.sec.gov. Free copies of PAETEC's SEC filings are available on PAETEC's web site at www.paetec.com and also may be obtained without charge by directing a request to PAETEC Holding Corp., One PAETEC Plaza, Fairport, New York 14450, Attn: Investor Relations.

• Revenue of $274.5 million, which represented an 89% increase over second quarter 2006 revenue of $145.6 million;
• Adjusted EBITDA* of $52.5 million, which represented a 109% increase over second quarter 2006 adjusted EBITDA of $25.1 million;
• Net income of $6.0 million compared to a $<5.8> million net loss in second quarter 2006;
• Free cash flow* of $31.5 million, which represented the 18th consecutive quarter in which PAETEC Holding or its predecessor generated positive free cash flow;
• Ended the quarter with a cash balance of $84.5 million;
• An increase of 141% in the number of access line equivalents in service, from 1.10 million as of June 30, 2006 to 2.65 million as of June 30, 2007; and
• Successful completion on July 10, 2007 of amendments to PAETEC's existing bank credit facility and a $300 million senior note offering priced at the end of the quarter.

Network Services, which accounted for 83% of PAETEC's second quarter 2007 total revenue, experienced strong growth, increasing 100% year over year to $228 million. US LEC's operations, PAETEC's fast growing MPLS VPN product, and its integrated voice and data T1 sales all contributed to the positive results. Carrier Services represented 14% of second quarter 2007 revenues and grew 75% year over year to $37.5 million, largely reflecting the addition of US LEC's operations as well as solid 19% internal growth. Integrated Services accounted for the remaining 3% of second quarter revenues and experienced an 11% decline year over year. Integrated Services continues to have an annual revenue cycle and tends to provide uneven results on a quarterly basis.

Net income for second quarter 2007 was $6.0 million compared to a net loss of $<5.8> million for the second quarter of 2006. Last year's reported net loss was largely attributable to the company's leveraged recapitalization that resulted in $14.8 million in additional expenses. For second quarter 2007, depreciation and amortization expense was $20.9 million and interest expense was $18.5 million, both up significantly year over year primarily from the depreciation of a larger asset base associated with the merger, as well as increased debt levels as a result of the transaction.

PAETEC ended the second quarter 2007 with 100.9 million common shares outstanding. A fully diluted share count as of the end of the second quarter 2007 also would reflect that the Company had approximately 14.1 million common shares subject to outstanding stock options, 7.5 million common shares represented by outstanding restricted stock units (RSUs), and 2.6 million common shares subject to outstanding warrants, amounting to a total of 24.2 million additional fully diluted common shares. As a result, PAETEC's fully diluted common share count was approximately 125 million as of June 30, 2007.

Pro Forma Quarterly Performance
Total revenue for second quarter 2007 increased 9% to $274.5 million over the pro forma revenue of $252.3 million that the combined company would have had for second quarter 2006 assuming the US LEC merger had occurred on April 1, 2006 (without giving effect to any pro forma adjustments or unrealized synergies). Adjusted EBITDA for second quarter 2007 increased 31% to $52.5 million over the adjusted EBITDA of $40.2 million that the combined company would have generated for the second quarter 2006 on the same pro forma basis. Adjusted EBITDA margin of 19.1% for second quarter 2007 increased from a pro forma adjusted EBITDA margin of 15.9% for second quarter 2006, largely as a result of merger-related synergies and continued operating leverage of the company's network and employee base. Net income for second quarter 2007 was $6.0 million compared to a pro forma net loss of <$8.9> million for second quarter of 2006. Last year's pro forma net loss was largely attributable to PAETEC's June 2006 leveraged recapitalization that resulted in $14.8 million in additional expenses. For second quarter 2007, depreciation and amortization expense increased 1% from second quarter 2006 pro forma depreciation and amortization expense to $20.9 million. Interest expense nearly doubled to $18.5 million from the pro forma interest expense for second quarter 2006.

Integration Update
Integration efforts related to the US LEC merger to date have focused on network consolidation, the segmentation of sales distribution channels, the rebranding of marketing materials, and the integration of job functions and personnel policies. The majority of synergies were expected from savings in network costs and streamlining of certain SG&A components, which have largely been completed. PAETEC continues to expect that it will be able to realize a total of $25 million in merger-related synergies for 2007, as well as an additional $15 million for 2008.

"Integration with the former US LEC is proceeding very well, with several milestones - such as the June merger of our respective data networks - occurring faster than anticipated," said EJ Butler, Jr., chief operating officer for PAETEC. "Our focus now and for the balance of the year is on the integration of systems, back office processes, and employee training. Continued progress should bring the availability of our entire product suite over the combined company footprint during the fourth quarter."

Capital Expenditures PAETEC continues to invest in the enhancement of its network and product offerings. Capital expenditures for second quarter 2007 increased to $21.0 million, or 8% of total revenue, from $9.8 million, or 7% of total revenue, for second quarter 2006. Capital expenditures increased 26% from the $16.7 million in pro forma combined capital expenditures applied by PAETEC and US LEC in second quarter 2006 (or 7% of total combined revenues). Capital expenditures for second quarter 2007 were associated with investments in the PAETEC network, including expansion in the switching and information technology infrastructure.

Cash flow, Financing, and Liquidity
PAETEC reported second quarter 2007 free cash flow of $31.5 million, which increased 106% from $15.3 million in second quarter 2006. PAETEC also ended the quarter with a cash balance of $84.5 million, up from a first quarter 2007 level of $53.4 million, largely due to increased cash flow from operations as well as cash received from the exercise of stock options. Cash flow provided by operations was $36.0 million in second quarter 2007 and $<3.7> million used in operations in second quarter 2006.

As of June 30, 2007, PAETEC's $50 million revolver remained undrawn and $798 million was outstanding under its credit facility term loan. On July 10, 2007, PAETEC closed on two advantageous financing transactions that did not result in any increase in total debt. PAETEC completed its sale of $300 million 9.5% Senior Notes due 2015 and used the proceeds from this issue to pay down its existing term loan from $798 to $498 million. In conjunction with the paydown, PAETEC amended its existing credit facility to consist of a $50 million revolver and a $500 million term loan.

With these transactions, PAETEC:

• Introduced itself to a new debt investor class-the high yield bond market;
• Layered in long-term debt to better position its balance sheet for growth;
• Reduced its overall cost of capital, with the expectation that its annual interest expense will decrease by approximately $3 million;
• Increased its incremental term loan facility permitted under its bank credit facility from $100 million to $225 million; and
• Obtained debt covenant modifications that provide it with additional operational and financial flexibility.

• School Readiness - ensuring that every child in central Maryland enters school fully ready to learn.
• Youth Achieving Potential - helping youth in the region develop their full potential as individuals and responsible members of society.
• Family Safety - making people across the region safe from violence and abuse in their relationships
• Basic Needs - connecting people who lack life's essentials - food, shelter, clothing - with resources to bring them out of crisis.

• Increasingly active Intra/extranet web sites
• Data or document storage and retrieval
• Distance training/collaboration between sites
• Remote access via Internet using VPNs

Members of the Awards' Board of Distinguished Judges & Advisors and their staffs selected Stevie winners from among the Finalists. Finalists were chosen by business professionals nationwide during preliminary judging in April and May.

• Revenue of $194.0 million, which represented a 37.8% increase over first quarter 2006 revenue of $140.8 million;
• Adjusted EBITDA* of $34.2 million, which represented a 52.5% increase over 2006 first quarter adjusted EBITDA of $22.4 million;
• Net loss of <$5.8> million versus $12.5 million in net income in 2006 first quarter;
• Free cash flow of $19.0 million, which represented the 17th consecutive quarter in which PAETEC Holding or its predecessor generated positive free cash flow; and
• 145.4% increase in the number of access lines in service, from 1,038,024 as of March 31, 2006, to 2,547,456 as of March 31, 2007.

Adjusted EBITDA of $34.2 million for 2007 first quarter represented a 33.8% increase over adjusted EBITDA for the 2006 fourth quarter, also reflecting the addition of US LEC results for March 2007, as well as solid expense management coupled with the strong revenue growth.

Capital Expenditures
PAETEC Holding continues to invest in the enhancement of its network and product offerings. Capital expenditures for the 2007 first quarter increased to $15.2 million from $12.3 million in the 2006 first quarter. Approximately $2.1 million in capital expenditures resulted from the inclusion of US LEC's capital expenditures for March 2007. The remaining capital expenditures for the 2007 first quarter were associated with investments in the PAETEC Holding network, including expansion in the switching and information technology infrastructure. The 2006 quarter included the implementation of the new 5ESS switch in Newark N.J. during that period.

Financing and Liquidity Update
Concurrently with the closing of the merger, PAETEC Holding closed on its new $850 million credit facility consisting of a $50 million five-year revolving credit facility and an $800 million six-year term loan facility. As of March 31, 2007, the revolver remained undrawn, there was $800 million outstanding under the term loan and PAETEC Holding had $53.4 million of cash on hand.

Pro Forma Financial Snapshot
If the historical results of operations of PAETEC Corp. were combined with the historical results of operations of US LEC Corp. as if the merger had occurred on January 1, 2006, and without giving effect to any pro forma adjustments or unrealized synergies, PAETEC Holding's revenue would have increased to $267.6 million for the 2007 first quarter from $243.6 million for the 2006 first quarter, yielding a growth rate of 9.9%. Adjusted EBITDA would have demonstrated an increase of $11.4 million, or 30.6%, from $37.2 million in the 2006 first quarter to $48.6 million in the 2007 first quarter, reflecting solid expense management coupled with the revenue growth as well as some initial synergies achieved as a result of the US LEC merger. The increase in pro forma adjusted EBITDA also would have resulted in an increase in pro forma adjusted EBITDA margins, from 15.3% in the 2006 first quarter to 18.1% in the 2007 first quarter.

Full Year 2007 Outlook
If the merger had occurred on January 1, 2007 and, accordingly, US LEC's operations were included for all of 2007, PAETEC Holding anticipates that for the full year 2007 the combined company would generate the full year 2007 results below.

• Network Firewall


• Network Firewall with Web Anti-Virus and Anti-Spyware


• Network Firewall with Web Anti-Virus, Anti-Spyware, and Web URL Filtering

Additionally, centralized reporting capabilities are available across the network, meaning the health of the entire network can be reported on; not just segments. Customers can also access NPR reports and the NPR Web View remotely through PAETEC Online, the company's online customer portal.

PAETEC's Network Performance Reporting was designed in conjunction with Fluke Networks' Visual UpTime Select probes, and is available in three tiers:

Tier One - Basic
Includes Service Summary, Network Troubleshooting, Back-in-Time, and Maintenance.

Tier Two - Preferred
Includes Tier One capabilities, as well as Traffic Capture and Class-of-Service.

Under the terms of the merger agreement, US LEC stockholders are receiving one share of PAETEC common stock for each share of US LEC common stock, and PAETEC Corp. stockholders are receiving 1.623 shares of PAETEC common stock for each share of PAETEC Corp. common stock. US LEC and PAETEC Corp. stockholders holding stock certificates will soon receive share exchange instructions.

PAETEC obtained $850 million of new credit facilities at the closing of the merger transaction. PAETEC Corp. and US LEC, which became PAETEC subsidiaries as a result of the merger transaction, used $800 million of facility proceeds and cash on hand to refinance substantially all of their senior secured indebtedness and to repurchase all outstanding shares of US LEC convertible preferred stock.

The combination, which was announced August 14, 2006, was approved by both companies' stockholders at meetings held on February 28, 2007. The companies had previously received the necessary regulatory approvals from the Federal Communications Commission and applicable state regulatory agencies, and the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 had expired.

PAETEC executives are expected to ring the opening bell at the NASDAQ Stock Market on Thursday, March 1.

Company Leadership and Headquarters
Arunas A. Chesonis will continue to serve PAETEC as Chief Executive Officer and Chairman of the Board. EJ Butler will continue as Chief Operating Officer, and Keith Wilson will continue as Chief Financial Officer and as a member of the Board.

Richard T. Aab, co-founder of US LEC, will serve as vice Chairman of the Board. Other board members include H. Russell Frisby, Jr., partner-in-charge of the Telecom Group of the law firm of Fleischman and Walsh, L.L.P., Tansukh V. Ganatra, co-founder of and immediate past US LEC interim CEO, James A. Kofalt, President of KOCOM Communications, Inc., William R. McDermott, President and CEO SAP America, Inc., Michael C. Mac Donald, President of Global Accounts and Marketing Operations for Xerox Corp., and Mark Zupan, Dean of the William E. Simon Graduate School of Business Administration at the University of Rochester.

• 2006 fourth quarter revenue of $151.5 million, which represented a 12.9% increase over 2005 fourth quarter revenue of $134.2 million


• Fiscal 2006 revenue of $586.3 million, which represented a 15.1% increase over fiscal 2005 revenue of $509.4 million


• A 28.9% increase in access lines in service from December 31, 2005, to 1,256,904 access line equivalents in service at December 31, 2006

Fiscal Year 2006 Performance
Total revenue for 2006 of $586.3 million increased 15.1% over 2005 revenue. The growth resulted from increases of 14.9% in Network Services revenue, 15.1% in Carrier Services revenue and 17.6% in Integrated Solutions revenue. Core revenue growth was driven by continued increases in revenue generated by PAETEC's MPLS VPN product offering and other enhanced IP services, including Voice over IP, IP Hoot & Holler services, and Ethernet and other broadband solutions.

Adjusted EBITDA for 2006 increased 11.9% over 2005 to $91.8 million. The increase was primarily due to the continued growth in service revenue and related operating leverage. Adjusted EBITDA for 2006 included the following two non-recurring recapitalization transaction charges totaling $6.1 million: $1.1 million in financing costs; and the $5.0 million employee compensation-related charge from the 2006 third quarter, previously noted.

Net income was $7.8 million for 2006 compared to $14.5 million for 2005. The decrease was primarily attributable to increased interest expense associated with the indebtedness incurred in connection with the June 2006 leveraged recapitalization, as well as $10.5 million in one-time recapitalization transaction charges.

Capital Expenditures
PAETEC continued to invest in expansion of its network and product offerings during 2006. Capital expenditures for 2006 increased to $49.3 million from $38.2 million in 2005. Approximately $8.0 million in capital expenditures was used for new switching infrastructure investments in Newark, New Jersey, and Tampa, Florida, as well as investments in expanding the MPLS and Voice over IP networks. The year-over-year increase also included approximately $3.1 million in operating leases that had been refinanced as capital leases shortly before the June 2006 recapitalization. These leases were subsequently re-financed with the $400 million senior secured credit facility obtained as part of the recapitalization.

US LEC Merger
The merger has received all necessary material regulatory approvals to close the transaction, the syndication to raise $850 million in debt financing required to close the transaction has been completed, and shareholder meetings have been scheduled for February 28, 2007. Subject to shareholder approval by PAETEC and US LEC shareholders and satisfaction of other closing conditions, the parties anticipate that the closing would occur shortly following the shareholder meetings.

US LEC will hold a conference call today, February 21, 2007, at 11:00 a.m. Eastern Time. Members of PAETEC's management will participate in a portion of the call, which will include a discussion of matters relating to the combined company. A live broadcast of the call will be available online at www.uslec.com and www.fulldisclosure.com. To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. A telephone replay and a replay via web cast will be available shortly after the call through February 28, 2007.

About PAETEC Communications
PAETEC Communications, Inc., is an innovative supplier of communications solutions to medium and large businesses and institutions. With the belief that every customer has unique needs, PAETEC offers personalized solutions that include a comprehensive suite of Voice over Internet Protocol (VoIP) services delivered over its Private-IP MPLS network. With more than 1,100,000 access line equivalents in service, PAETEC serves more than 15,000 core business customers across the U.S. by offering a full line of telecommunications and Internet services, enterprise communications management software, security solutions, and managed services. The company was the recipient of the 2005 American Business Ethics Award for a mid-size company, presented by the Society of Financial Services Professionals. PAETEC is headquartered in Fairport, N.Y. More information about the company can be found by visiting www.paetec.com.

Forward-Looking Statements
Some of the statements in this announcement constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, financial position, levels of activity, performance or achievements of PAETEC to be materially different from any future results, financial position, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The risks and uncertainties include, but are not limited to, the following

• changes in regulation and the regulatory environment;


• competition in the markets in which the company operates;


• the continued availability of necessary network elements from competitors of the company;


• the ability of the company to raise capital in the future;


• the ability of the company to manage and expand their business and execute their acquisition strategy;


• changes in customer preferences and the ability of the company to adapt the company's product and service offerings;


• the ability of the company to convert its existing network into a network with more advanced technology;


• effects of network failures, system breaches and natural catastrophes, terrorism and other interruptions;


• the ability of the company to service its indebtedness;


• covenants in agreements governing the indebtedness of the company that limits the discretion of the company's management in the operation of its business; and


• the costs associated with being a public company, if applicable.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Festival officials announced the new event at a news conference this morning at Baltimore's City Hall hosted by newly elected Mayor Sheila Dixon.

"Considering the enduring history that jazz has in Baltimore, this is indeed a great day for the City," said Mayor Sheila Dixon. "I'm proud to partner with the PAETEC Jazz Festival's producers, John Nugent and Marc Iacona, and commend Arunas Chesonis of PAETEC for helping showcase Baltimore through this great new event. We're inviting jazz lovers from around the globe to experience a musical encounter unlike anything that's ever happened in Baltimore. From Billie Holliday to Cab Calloway, jazz has set the musical tone for Baltimore for decades and the PAETEC Jazz Festival gives us yet another opportunity to highlight the offerings of our world class city."

PAETEC Jazz Festival Baltimore, will be held in multiple indoor venues and outdoor stages set against the impressive backdrop of Baltimore's Inner Harbor and downtown area. A diverse program of more than 40 concerts will embrace all genres of creative improvised music and feature Grammy-winning headliners as well as some of the world's finest emerging artists. Venues confirmed to date include Pier 6 and Power Plant Live! The complete artist lineup, schedule, and ticket sale information will be announced in May.

PAETEC Jazz Festival Baltimore was conceived by PAETEC Communications, Inc., Chairman and CEO Arunas A. Chesonis, the Baltimore-born entrepreneur whose telecommunications and information technology company has achieved remarkable growth since it was founded in 1998. PAETEC is headquarted in Rochester, NY, and has offices from coast to coast including in Baltimore and nearby Washington DC.

To produce PAETEC Jazz Festival Baltimore, Chesonis, 44, has tapped the rising star festival producer team of John Nugent and Marc Iacona, who have carefully nurtured two growing and highly successful festivals. The Rochester International Jazz Festival, now in its sixth year and attracting record audiences topping 80,000 in 2006, and the Stockholm Jazz Festival, now entering its 24th year, drawing more than 50,000 music fans, have brought significant positive recognition and economic impact to the host communities.

"Baltimore has always been an important market for PAETEC as well as being the home of one of the most beautiful waterfronts in the nation," said Chesonis. "We're honored to be a part of what should become an anticipated cultural event in Baltimore, and I personally look forward to hearing some amazing music while enjoying what this city has to offer."

"We are very excited to bring PAETEC Jazz to the great city of Baltimore," said Marc Iacona, Co-producer and Executive Director. "John and I are extremely impressed with Arunas's vision and leadership in helping establish this important new event. Baltimore is a thriving urban center, alive with activity, and will be a spectacular setting for our diverse festival lineup. We look forward to delivering a top level event that will also have a positive economic impact on the region."

Artistic Director John Nugent said, "Having produced festivals in different parts of the world, my focus and my joy is in putting together talent - creating a musical painting that meshes new musical ideas from emerging artists with music that is familiar and loved. That is what helps build a festival atmosphere that is electrifying. We have been fortunate to create that in Rochester and Stockholm, and now look forward to accomplishing the same high-level quality event for Baltimore. There is so much talent and so many broad creative styles of creative improvised music to choose from. When our new festival canvas comes together in Baltimore, it will be special."

Sponsor Opportunities A variety of sponsorship opportunities are available. For information visit www.paetecjazz.com or contact Marc Iacona, marc@paetecjazz.com.

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About PAETEC Communications
PAETEC Communications, Inc., is an innovative supplier of communications solutions to medium and large businesses and institutions. With the belief that every customer has unique needs, PAETEC offers personalized solutions that include a comprehensive suite of Voice over Internet Protocol (VoIP) services delivered over its Private-IP MPLS network. With more than 1,100,000 access line equivalents in service, PAETEC serves more than 15,000 core business customers across the U.S. by offering a full line of telecommunications and Internet services, enterprise communications management software, security solutions, and managed services. The company was the recipient of the 2005 American Business Ethics Award for a mid-size company, presented by the Society of Financial Services Professionals. PAETEC is headquartered in Fairport, N.Y. More information about the company can be found by visiting www.paetec.com.

About the Producers PAETEC Jazz Festival Baltimore is Sponsored by PAETEC Communications, Inc., and produced by John Nugent, Artistic Director, and Marc Iacona, Executive Director, principals in RIJF, LLP, based in Rochester, NY. The team also produces the critically acclaimed and growing Rochester International Jazz Festival, which will feature more than 600 musicians and more than 120 concerts during the nine day event June 8-16, 2007.

Nugent also produces The Stockholm Jazz Festival, which this year celebrates its 24th year July 17-21. As a performer, Nugent, a noted tenor sax player, has traveled the world with many jazz artists including Tony Bennett, Ella Fitzgerald, Rosemary Clooney, Clark Terry, The Woody Herman Orchestra and The Vanguard Jazz Orchestra.

Mr. Chesonis began his career at Rochester Telephone Corporation. He went on to serve as President, Chief Operating Officer, and Director of ACC Corp., the parent company for all ACC-owned operations in the United States, Canada, Germany, and the United Kingdom, from 1994 until 1998.

He holds a B.S. in Civil Engineering from Massachusetts Institute of Technology, an MBA from the William E. Simon Graduate School of Business at the University of Rochester, and an Honorary Doctorate of Laws from the University of Rochester

David Dorsey is the author of "The Force," which was selected as one of the ten best business books of the 1994 by BusinessWeek. He is also author of "The Cost of Living," a novel. He has contributed to magazines such as Fast Company, Worth, Inc., and Esquire.

Availability
"It Isn't Just Business, It's Personal" is available through:

• RIT Cary Graphic Arts Press (http://wally.rit.edu/cary/CP_publications/CP_PAETEC.html or 585-475-6766)


• www.amazon.com