ITC DELTACOM INC
DEF 14A, 1998-04-30
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
Previous: MORGAN STANLEY STRATEGIC ADVISER FUND INC, 485BPOS, 1998-04-30
Next: ATLAS ENERGY FOR THE NINETIES PUBLIC NO 6 LTD, 10KSB/A, 1998-04-30



<PAGE>
 
                           SCHEDULE 14A INFORMATION
 
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Filed by the Registrant [X]
 
Filed by a Party other than the Registrant [_]
 
Check the appropriate box:
 
[_] Preliminary Proxy Statement
 
[_] Confidential, for Use of the Commission Only (as permitted by 
Rule 14a-6(e)(2))
 
[X] Definitive Proxy Statement
 
[_] Definitive Additional Materials
 
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
 
                              ITC/\DeltaCom, Inc.
- -------------------------------------------------------------------------------
               (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
- -------------------------------------------------------------------------------
   (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
 
Payment of Filing Fee (Check the appropriate box):
 
[X] No fee required.
 
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
1) Title of each class of securities to which transaction applies:
   ---------------------------------------------------------------------------
 
2) Aggregate number of securities to which transaction applies:
   ---------------------------------------------------------------------------
 
3) Per unit price or other underlying value of transaction computed pursuant
    to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
    calculated and state how it was determined):
   ---------------------------------------------------------------------------
 
4) Proposed maximum aggregate value of transaction:
   ---------------------------------------------------------------------------
 
5) Total fee paid:
   ---------------------------------------------------------------------------
 
[_] Fee paid previously with preliminary materials.
 
[_] Check box if any part of the fee is offset as provided by Exchange Act
    Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
    paid previously. Identify the previous filing by registration statement
    number, or the Form or Schedule and the date of its filing.
 
1) Amount previously paid:
   ---------------------------------------------------------------------------
 
2) Form, Schedule or Registration Statement No.:
   ---------------------------------------------------------------------------
 
3) Filing Party:
   ---------------------------------------------------------------------------
 
4) Date Filed:
   ---------------------------------------------------------------------------
<PAGE>
 
                              ITC/\DELTACOM, INC.
                            1241 O.G. SKINNER DRIVE
                           WEST POINT, GEORGIA 31833
                                (706) 645-3880
 
 
 
                                                          April 30, 1998
 
Dear Stockholder:
 
  On behalf of the Board of Directors of ITC/\DeltaCom, Inc., it is my pleasure
to invite you to the 1998 Annual Meeting of Stockholders (the "Annual
Meeting"). The Annual Meeting will be held on Thursday, June 4, 1998, at 11:00
a.m., local time, at the New Horizons Community Theatre, 411 West 8th Street,
West Point, Georgia.
 
  The Annual Meeting has been called for the following purposes: (1) to elect
three directors to serve on the Board of Directors, each for a three-year
term; (2) to ratify the Board of Directors' appointment of Arthur Andersen LLP
as the Company's independent public accountants for the 1998 fiscal year; and
(3) to transact such other business as may properly come before the Annual
Meeting or any adjournment thereof, all as more fully described in the
accompanying Proxy Statement.
 
  The Board of Directors has approved the matters being submitted by the
Company for stockholder approval at the Annual Meeting and recommends that
stockholders vote "FOR" such proposals. It is important that your views be
represented at the Annual Meeting. Whether or not you plan to attend the
Annual Meeting, please complete, sign and date the enclosed Proxy Card and
promptly return it in the enclosed postage prepaid envelope.
 
                                       Sincerely,
 
                                       /s/ Campbell B. Lanier, III
                                       Campbell B. Lanier, III
                                       Chairman of the Board of Directors
<PAGE>
 
                              ITC/\DELTACOM, INC.
                            1241 O.G. SKINNER DRIVE
                           WEST POINT, GEORGIA 31833
                                (706) 645-3880
 
                   NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                          TO BE HELD ON JUNE 4, 1998
 
  NOTICE IS HEREBY GIVEN that the 1998 annual meeting of stockholders (the
"Annual Meeting") of ITC/\DeltaCom, Inc., a Delaware corporation (the
"Company"), will be held on Thursday, June 4, 1998, at 11:00 a.m., local time,
at the New Horizons Community Theatre, 411 West 8th Street, West Point,
Georgia, for the purpose of considering and voting upon the following matters:
 
    1. To elect three (3) directors to serve on the Board of Directors, each
  for a three-year term and until their respective successors are elected and
  qualified;
 
    2. To ratify the Board of Directors' appointment of Arthur Andersen LLP
  as the Company's independent public accountants for the 1998 fiscal year;
  and
 
    3. To transact such other business as may properly come before the Annual
  Meeting or any adjournment thereof.
 
  The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
 
  Pursuant to the Company's Amended and Restated Bylaws, the Board of
Directors has fixed April 16, 1998, as the record date for the determination
of stockholders entitled to notice of and to vote at the Annual Meeting and at
all adjournments thereof. Only stockholders of record at the close of business
on that date will be entitled to vote at the Annual Meeting and any
adjournment thereof. A list of all stockholders entitled to vote at the Annual
Meeting will be open for examination by any stockholder for any purpose
germane to the Annual Meeting during ordinary business hours for a period of
ten (10) days before the Annual Meeting at the offices of the Company located
at 1241 O.G. Skinner Drive, West Point, Georgia 31833.
 
                                       By Order of the Board of Directors
 
                                       /s/ Campbell B. Lanier, III
                                       Campbell B. Lanier, III
                                       Chairman of the Board of Directors
 
West Point, Georgia
April 30, 1998
 
  WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE. IF YOU SIGN AND RETURN YOUR PROXY CARD WITHOUT
SPECIFYING A CHOICE, YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS. YOU MAY, IF YOU WISH, REVOKE YOUR
PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED BY FILING WITH THE SECRETARY
OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER
DATE, OR BY ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON.
<PAGE>
 
                              ITC/\DELTACOM, INC.
                            1241 O.G. SKINNER DRIVE
                           WEST POINT, GEORGIA 31833
                                (706) 645-3880
 
                               ----------------
 
                                PROXY STATEMENT
                      1998 ANNUAL MEETING OF STOCKHOLDERS
                                 JUNE 4, 1998
 
                               ----------------
 
               SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
 
  This Proxy Statement and the accompanying Proxy Card are furnished to
stockholders of ITC/\DeltaCom, Inc. (the "Company") in connection with the
solicitation by the Company's Board of Directors (the "Board of Directors" or
the "Board") of proxies to be used at the 1998 annual meeting of stockholders
(the "Annual Meeting"), to be held on Thursday, June 4, 1998, at 11:00 a.m.,
local time, at the New Horizons Community Theatre, 411 West 8th Street, West
Point, Georgia, and at any adjournment thereof.
 
  If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with instructions marked thereon. EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED: "FOR" PROPOSAL 1 TO ELECT THE BOARD OF
DIRECTORS' THREE NOMINEES FOR DIRECTOR AND "FOR" PROPOSAL 2 TO RATIFY THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE 1998 FISCAL YEAR. If any other matters properly come
before the Annual Meeting, the persons named in the accompanying proxy will
vote the shares represented by such proxies on such matters in accordance with
their best judgment.
 
  The presence of a stockholder at the Annual Meeting will not automatically
revoke such stockholder's proxy. Stockholders may, however, revoke a proxy at
any time prior to its exercise by filing with the Secretary of the Company a
written revocation or a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
 
  The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its officers, directors or employees, also may solicit
proxies personally or by telephone or other means. Such persons will not be
specifically compensated for such solicitation activities. Arrangements also
will be made with brokerage houses and other custodians, nominees and
fiduciaries for forwarding solicitation materials to the beneficial owners of
shares held of record by such persons, and the Company will reimburse such
persons for their reasonable expenses incurred in that connection.
 
  The close of business on April 16, 1998 has been fixed by the Board of
Directors as the record date (the "Record Date") for determination of
stockholders entitled to vote at the Annual Meeting. As of the Record Date,
the outstanding voting stock of the Company consisted of 25,373,322 shares of
the Company's common stock, par value $.01 per share (the "Common Stock").
Each holder of Common Stock is entitled to one vote per share with respect to
all matters as to which a vote is taken at the Annual Meeting.
 
  The Amended and Restated Bylaws of the Company (the "Bylaws") provide that
the holders of a majority of the voting rights of the shares of Common Stock
present in person or represented by proxy and entitled to vote shall
constitute a quorum at the Annual Meeting. Stockholders' votes will be
tabulated by persons appointed by the Board of Directors to act as inspectors
of election for the Annual Meeting.
 
  Assuming the presence of a quorum at the Annual Meeting, a plurality of the
votes cast at the Annual Meeting is required for election of directors and a
majority of the votes cast at the Annual Meeting is required to ratify the
appointment of Arthur Andersen LLP as the Company's independent public
accountants. Unless otherwise required by applicable law or the Company's
Certificate of Incorporation or Bylaws, the affirmative
<PAGE>
 
vote of a majority of the votes cast at the Annual Meeting is required to
decide any other matter submitted to a stockholder vote. The Certificate of
Incorporation does not provide for cumulative voting in the election of
directors.
 
  Abstentions and broker non-votes will be treated as shares that are present,
in person or by proxy, and entitled to vote for purposes of determining the
presence of a quorum at the Annual Meeting. Broker non-votes will not be
counted as a vote cast on any matter presented at the Annual Meeting. As a
result, abstentions and broker non-votes will not have any effect on Proposals
1 and 2.
 
  This Proxy Statement, the Notice of Annual Meeting of Stockholders, the
Proxy Card and the Company's Annual Report to Stockholders were first mailed
to stockholders on or about April 30, 1998.
 
  THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
 
                                       2
<PAGE>
 
                             ELECTION OF DIRECTORS
 
                                 (PROPOSAL 1)
 
  The Bylaws provide that the Board of Directors shall consist of not fewer
than five directors nor more than fifteen directors and that the number of
directors, within such limits, shall be determined by resolution of the Board
of Directors. The Board of Directors currently consists of nine directors,
divided into three classes of directors serving staggered three-year terms. At
the Annual Meeting, three directors will be elected, each for a three-year
term. The Board of Directors has nominated for director Donald W. Burton,
Malcolm C. Davenport, V, and William T. Parr to be elected at the Annual
Meeting.
 
  Unless otherwise specified on the Proxy Card, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed Proxy Card for the election as directors of Messrs. Burton, Davenport
and Parr. The Board of Directors believes that such nominees will stand for
election and will serve if elected as directors. However, if any person
nominated by the Board of Directors fails to stand for election or is unable
to accept election, the proxies will be voted for the election of such other
person or persons as the persons named in the accompanying proxy shall
determine in accordance with their best judgment. Pursuant to the Bylaws,
directors are elected by plurality vote.
 
  THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ITS NOMINEES
FOR DIRECTORS.
 
                                       3
<PAGE>
 
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
 
  The following table sets forth certain information regarding the Board of
Directors' three nominees for election as directors and those directors who
will continue to serve as such after the Annual Meeting.
 
<TABLE>
<CAPTION>
                                  AGE AT
                                 MARCH 31, DIRECTOR FOR TERM   POSITION(S) HELD
                                   1998    SINCE(1) TO EXPIRE  WITH THE COMPANY
                                 --------- -------- --------- ------------------
<S>                              <C>       <C>      <C>       <C>
NOMINEES:
Donald W. Burton................    54       1997     2001    Director
Malcolm C. Davenport, V.........    44       1997     2001    Director
William T. Parr(3)..............    61       1997     2001    Director
CONTINUING DIRECTORS:
Campbell B. Lanier, III.........    47       1997     2000    Chairman, Director
Andrew M. Walker................    56       1997     2000    Vice Chairman,
                                                               Chief Executive
                                                               Officer, Director
Robert A. Dolson(2).............    52       1997     1999    Director
O. Gene Gabbard(2)(3)...........    57       1997     1999    Director
William H. Scott, III(3)........    50       1997     1999    Director
William B. Timmerman............    51       1997     2000    Director
</TABLE>
- --------
(1) The Company was incorporated in March 1997.
(2)Member of the Audit Committee.
(3) Member of the Compensation Committee.
 
  The principal occupations for the past five years of each of the three
nominees for director and the six directors whose terms of office will
continue after the Annual Meeting are set forth below.
 
Campbell B. Lanier, III. Campbell B. Lanier, III, has been Chairman of the
Company since March 1997. Mr. Lanier has served as Chairman of the Board and
Chief Executive Officer of ITC Holding Company, Inc., or its predecessor
companies, ("ITC Holding") since its inception in 1985. In addition, Mr.
Lanier serves as an officer and director of several ITC Holding subsidiaries.
He also is a director of KNOLOGY Holdings, Inc. ("KNOLOGY") (a broadband
telecommunications services company) (formerly known as CyberNet Holding,
Inc.), MindSpring Enterprises, Inc. ("MindSpring") (an Internet service
provider), National Vision Associates, Ltd. (a full service optical retailer)
and K&G Men's Centers ("K&G") (a discount retailer of men's clothing), Vice
Chairman of the Board of AvData Systems, Inc. ("AvData") (a company providing
data communications networks) and Chairman of the Board of Powertel, Inc.
(formerly InterCel, Inc.) ("Powertel") (a wireless telecommunications services
company). He served as Chairman of the Board of AvData from 1988 to 1990 and
has served as a Managing Director of South Atlantic Private Equity Fund IV,
Limited Partnership since 1997.
 
Andrew M. Walker. Mr. Walker has been Chief Executive Officer of the Company
since March 1997 and Vice Chairman of the Board of Directors of the Company
since April 1998. He served as President and Chief Executive Officer of the
managing partner of each of Interstate FiberNet and Gulf States FiberNet from
November 1994 until March 1997. Mr. Walker has served as a director of KNOLOGY
since July 1996, and he served as Chief Executive Officer and President of
KNOLOGY from July 1996 to February 1997. Mr. Walker worked for MCI from 1990
to 1994 as Vice President, Carrier Services. From 1986 to 1990, Mr. Walker
served as a Division President for Telecom*USA, Inc. ("Telecom*USA"). Prior to
1986, Mr. Walker held different positions with the Christian Broadcasting
Network, M/A-Com and Comsat Laboratories.
 
Donald W. Burton. Mr. Burton has been a director of the Company since March
1997. He has served as the Managing General Partner of South Atlantic Venture
Funds since 1983 and as the General Partner of The Burton Partnership, Limited
Partnership since 1979. Since 1981, he has served as President of South
Atlantic Capital Corporation. Mr. Burton serves as director of Powertel, K&G,
MTL, Inc. (a bulk transportation service company), the Heritage Group of
Mutual Funds and several private companies.
 
                                       4
<PAGE>
 
Malcolm C. Davenport, V. Mr. Davenport has been a director of the Company
since March 1997. He has operated his own C.P.A. and law practices since 1979
and 1983, respectively. Mr. Davenport has also served as a director of ITC
Holding since 1989 and serves as a director of several of its former
subsidiaries, including Spintek Gaming Technologies, Inc. (a gaming technology
provider) and American Artists Film Corporation (a motion picture production
company).
 
Robert A. Dolson. Mr. Dolson has been a director of the Company since March
1997. He has served as President and Chairman of Continental Water Company (a
holding company for regulated water utilities) since 1982 and 1989,
respectively. He has served as President and Chairman of National Enterprises,
Inc. (the parent company of Continental Water Company) since 1984 and 1989,
respectively. He has served as a director of ITC Holding since December 1993.
He also serves as a director of several private companies.
 
O. Gene Gabbard. Mr. Gabbard has been a director of the Company since March
1997. He has worked independently as an entrepreneur and consultant since
February 1993. Mr. Gabbard has served as a director of ITC Holding since 1993
and currently serves as Chairman of the Board of KNOLOGY and as a director of
Powertel and MindSpring. He also currently serves as a director of two
telecommunications technology companies, Dynatech Corporation and Adtran, Inc.
From August 1990 through January 1993, he served as Executive Vice President
and Chief Financial Officer of MCI. He served in various senior executive
capacities, including Chairman of the Board, President and Chief Executive
Officer of Telecom*USA, Inc., from December 1988 until Telecom's merger with
MCI in August 1990. From July 1984 to December 1988, he was Chairman and/or
President of SouthernNet, Inc. ("SouthernNet"), a long distance
telecommunications company which was the predecessor to Telecom*USA. Mr.
Gabbard has served as a Managing Director of South Atlantic Private Equity
Fund IV, Limited Partnership since 1997.
 
William T. Parr. Mr. Parr has been a director of the Company since March 1997.
Mr. Parr has served as Vice Chairman of J. Smith Lanier & Co. (an insurance
placement company) since 1980. He has served as a director of ITC Holding
since 1989 and serves as a director of ITC Services Co., Inc. (a management
services company), Valley Telephone, InterCall, Inc. (a conference calling
service provider) and Globe Telecommunications, Inc. ("Globe") (a non-
regulated telecommunications provider), all of which are subsidiaries of ITC
Holding. He also serves as a director of AvData, J. Smith Lanier & Co. and
Industrial Distribution Group, Inc. (a supplier of maintenance, repair,
operating and production products). Mr. Parr previously served as a director
of SouthernNet.
 
William H. Scott, III. Mr. Scott has been a director of the Company since
March 1997. Mr. Scott has served as President of ITC Holding since December
1991 and as a director of ITC Holding since May 1989. Mr. Scott is a director
of Powertel, AvData, KNOLOGY and MindSpring. From 1989 to 1991, he served as
Executive Vice President of ITC Holding. From 1985 to 1989, Mr. Scott was an
officer and director of Async, Inc. Between 1984 and 1988, Mr. Scott held
several offices with SouthernNet, including Chief Operating Officer, Chief
Financial Officer, and Vice President-Administration. He was a director of
SouthernNet from 1984 to 1987.
 
William B. Timmerman. Mr. Timmerman has been a director of the Company since
March 1997. Since 1978 he has served in a variety of management positions at
SCANA Corporation ("SCANA") (a diversified utility company), including Chief
Executive Officer, President, Senior Vice President, Executive Vice President
and Chief Financial Officer. Mr. Timmerman is also director of SCANA
Corporation, Powertel and Liberty Corporation (a life insurance company) and
has served as a director of ITC Holding since 1996.
 
CORPORATE GOVERNANCE AND RELATED MATTERS
 
  The Board of Directors conducts its business through meetings and through
its committees. The Board of Directors acts as a nominating committee for
selecting candidates to stand for election as directors. Pursuant to the
Bylaws, other candidates may also be nominated by any stockholder, provided
such other nomination(s) are submitted in writing and received by the
Secretary of the Company at the principal executive offices of the Company not
less than sixty days prior to the Annual Meeting or, in the event less than
seventy-five days' notice or prior public disclosure of the date of the Annual
Meeting is given or made to stockholders, received not later
 
                                       5
<PAGE>
 
than the close of business on the fifteenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made. No such nominations have been received as of the date hereof in
connection with the Annual Meeting.
 
  The Board of Directors has established an Audit Committee and a Compensation
Committee, each of which was appointed in March 1997, when the Company was
established. The Audit Committee, among other things, recommends the firm to
be appointed as independent accountants to audit the Company's financial
statements, discusses the scope and results of the audit with the independent
accountants, reviews with management and the independent accountants the
Company's interim and year-end operating results, considers the adequacy of
the internal accounting controls and internal audit procedures of the Company
and reviews the non-audit services to be performed by the independent
accountants. The current members of the Audit Committee are Messrs. Dolson and
Gabbard. The Compensation Committee reviews and recommends the compensation
arrangements for the Company's management and administers the Company's stock
option plans. The current members of the Compensation Committee are Messrs.
Gabbard, Parr and Scott.
 
  During the fiscal year ended December 31, 1997, the Board of Directors met
eight times. During the same period, the Audit Committee met one time and the
Compensation Committee met two times. During the fiscal year ended December
31, 1997, no director attended fewer than 75% of the total of all meetings of
the Board of Directors and any committee on which he served with the exception
of William B. Timmerman who attended four of the eight meetings of the Board
of Directors in 1997.
 
DIRECTORS COMPENSATION
 
  Directors of the Company who are also employees of the Company receive no
directors fees. Non-employee directors receive directors fees of $750 for each
Board meeting attended in person, $200 for each Board meeting attended by
telephone and $200 for each Board committee meeting attended (whether in
person or by telephone conference). In addition, directors are reimbursed for
their reasonable out-of-pocket travel expenditures incurred. Directors of the
Company are also eligible to receive grants of stock options under the
Director Stock Option Plan.
 
  The Director Stock Option Plan provides for the "formula" grant of options
that are not intended to qualify as "incentive stock options" under Section
422 of the Internal Revenue Code to directors of the Company who are not
officers or employees of the Company or any subsidiary of the Company (each an
"Eligible Director"). The Director Stock Option Plan authorizes the issuance
of up to 240,750 shares of Common Stock pursuant to options granted under the
Director Stock Option Plan (subject to anti-dilution adjustments in the event
of a stock split, recapitalization or similar transaction). The option
exercise price for options granted under the Director Stock Option Plan will
be 100% of the fair market value of the shares of Common Stock at the close of
business on the date of grant of the option. Under the Director Stock Option
Plan, each Eligible Director will be granted an option to purchase 16,050
shares of Common Stock upon such person's initial election or appointment to
serve as a director. Options granted will generally become exercisable with
respect to 50% of the shares subject to the options on the second anniversary
of the date of grant and with respect to 25% of the shares subject to the
options on each of the third and fourth anniversaries of the date of grant.
The options will expire ten years and 30 days after the date of grant. The
Board of Directors may amend or terminate the Director Stock Option Plan with
respect to shares of Common Stock as to which options have not been granted.
 
  At December 31, 1997, stock options to purchase 96,300 shares of Common
Stock were outstanding pursuant to the Director Stock Option Plan.
 
  Other than the compensation described above, none of the directors received
any other compensation from the Company in 1997 in connection with their
service as directors.
 
                                       6
<PAGE>
 
                 EXECUTIVE COMPENSATION AND OTHER INFORMATION
 
SUMMARY COMPENSATION TABLE
 
  The following table sets forth certain information concerning the cash and
non-cash compensation paid during the periods indicated to the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company whose combined salary and bonus exceeded $100,000 during the fiscal
year ended December 31, 1997 (the "Named Executive Officers").
<TABLE>
<CAPTION>
                                                     LONG TERM
                                                    COMPENSATION
                                                       AWARDS
                                                    ------------
                                       ANNUAL
                                    COMPENSATION
                                  -----------------
                                                     SECURITIES
NAME AND PRINCIPAL                                   UNDERLYING    ALL OTHER
POSITION                  YEAR(1)  SALARY  BONUS(2)  OPTIONS(3)  COMPENSATION
- ------------------        ------- -------- -------- ------------ -------------
<S>                       <C>     <C>      <C>      <C>          <C>
Andrew M. Walker.........  1997   $147,063 $99,069    200,625    $12,837.67(4)
 Vice Chairman, Chief Ex-
 ecutive Officer,
 Director
Foster O. McDonald.......  1997   $133,606 $69,351    120,375     32,912.23(5)
 President
J. Thomas Mullis.........  1997   $124,033 $35,239     64,200      4,071.41(6)
 Senior Vice President--
 General Counsel,
 Secretary
Roger F. Woodward........  1997   $123,708 $11,538     80,250     32,474.35(7)
 Senior Vice President--
 Sales, Marketing
 and Customer Support
Steven D. Moses..........  1997   $103,444 $51,722     80,250      6,971.18(8)
 Senior Vice President--
 Network Services
</TABLE>
 
- --------
(1) Under rules promulgated by the Securities and Exchange Commission (the
    "SEC" or the "Commission"), since the Company was not a reporting company
    during the three immediately preceding fiscal years, only information with
    respect to the most recent completed fiscal year is noted in the Summary
    Compensation Table. Information presented is for the full fiscal year. For
    the period prior to the Company's formation, the Named Executive Officers
    were compensated by entities that became subsidiaries of the Company.
(2) Bonuses paid in fiscal year 1997 by the Company were based on both
    individual and corporate performance during fiscal year 1996.
(3) Excludes options granted by ITC Holding prior to the formation of the
    Company on March 24, 1997.
(4) Represents $3,287.67 in life insurance premiums paid by the Company on
    behalf of Mr. Walker, $4,750.00 in matching contributions made by the
    Company to the ITC^DeltaCom, Inc. 401(k) Plan (the "401(k) Plan") on
    behalf of Mr. Walker, and an automobile allowance of $4,800.00 paid to Mr.
    Walker by the Company.
(5) Represents $4,653.13 in matching contributions made by the Company on
    behalf of Mr. McDonald to the 401(k) Plan, an automobile allowance of
    $6,600.00 paid to Mr. McDonald by the Company and the reimbursement by the
    Company of $21,659.10 in moving expenses incurred during 1997 by Mr.
    McDonald.
(6) Represents $4,071.41 in matching contributions made by the Company to the
    401(k) Plan on behalf of Mr. Mullis.
(7) Represents an automobile allowance of $6,600.00 paid to Mr. Woodward by
    the Company as well as the reimbursement by the Company of $25,874.35 in
    moving expenses incurred during 1997 by Mr. Woodward.
(8) Represents $925.18 in life insurance premiums paid by the Company on
    behalf of Mr. Moses, $4,750.00 in matching contributions made by the
    Company to the 401(k) Plan on behalf of Mr. Moses, and the value of the
    personal use of a Company vehicle calculated under Internal Revenue
    Service regulations to be $1,296.00.
 
 
                                       7
<PAGE>
 
OPTION GRANTS
 
  The following table sets forth information with respect to grants of stock
options to each of the Named Executive Officers during the year ended December
31, 1997.
 
<TABLE>
<CAPTION>
                                              INDIVIDUAL GRANTS(1)
                         --------------------------------------------------------------
                                                                                            POTENTIAL REALIZED
                                                                                                 VALUE AT
                                     PERCENTAGE                                               ASSUMED ANNUAL
                         NUMBER OF    OF TOTAL                                                RATES OF STOCK
                         SECURITIES   OPTIONS                                               PRICE APPRECIATION
                         UNDERLYING  GRANTED TO                                             FOR OPTION TERM(2)
                          OPTIONS   EMPLOYEES IN EXERCISE                  EXPIRATION   ---------------------------
NAME                      GRANTED   FISCAL YEAR   PRICE     GRANT DATE        DATE           5%           10%
- ----                     ---------- ------------ -------- -------------- -------------- ------------ --------------
<S>                      <C>        <C>          <C>      <C>            <C>            <C>          <C>
Andrew M. Walker........  200,625       15.3%     $ 4.49  March 24, 1997 March 25, 2007 $ 565,762.50 $ 1,436,475.00
Foster O. McDonald......  120,375        9.4      $ 4.49  March 24, 1997 March 25, 2007 $ 339,457.50 $   861,885.00
J. Thomas Mullis........   64,200        5.2      $ 4.49  March 24, 1997 March 25, 2007 $ 181,044.00 $   459,672.00
Roger F. Woodward.......   80,250        5.9      $ 4.49  March 24, 1997 March 25, 2007 $ 226,305.00 $   574,590.00
Steven D. Moses.........   80,250        6.3      $ 4.49  March 24, 1997 March 25, 2007 $ 226,305.00 $   574,590.00
</TABLE>
- --------
(1) All options granted to the Named Executive Officers were granted pursuant
    to the Company's 1997 Stock Option Plan ("1997 Plan"). All options are
    exercisable for shares of Common Stock and all options will become
    exercisable with respect to one-half of the shares subject to such options
    on the second anniversary of the date of the grant of the options, with an
    additional one-quarter becoming exercisable on each of the third and
    fourth anniversaries of the date of grant of the options.
(2) Based on exercise price.
 
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END VALUES
 
  The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal year 1997,
the number of securities underlying unexercised options at the end of 1997 and
the year-end value of all unexercised in-the-money options held by such
individuals.
 
<TABLE>
<CAPTION>
                                                NUMBER OF UNEXERCISED      VALUE OF UNEXERCISED
                                               OPTIONS AT FISCAL YEAR-     IN-THE-MONEY OPTIONS
                           SHARES                      END(1)              AT FISCAL YEAR-END(2)
                         ACQUIRED ON  VALUE   ------------------------- ---------------------------
                          EXERCISE   REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE  UNEXERCISABLE
                         ----------- -------- ----------- ------------- ------------ --------------
<S>                      <C>         <C>      <C>         <C>           <C>          <C>
Andrew M. Walker........       0      $ 0.00    28,919       281,228    $ 352,202.30 $ 3,215,326.83
Foster O. McDonald......       0      $ 0.00         0       176,299    $       0.00 $ 2,018,276.89
J. Thomas Mullis........       0      $ 0.00         0       107,078    $       0.00 $ 1,209,535.55
Roger F. Woodward.......       0      $ 0.00         0       116,973    $       0.00 $ 1,301,531.43
Steven D. Moses.........       0      $ 0.00    39,252       102,053    $ 547,244.80 $ 1,212,816.75
</TABLE>
- --------
(1) Includes grants of stock options by the Company of 200,625, 120,375,
    64,200, 80,250, and 80,250 to Messrs. Walker, McDonald, Mullis, Woodward
    and Moses, respectively, pursuant to the 1997 Plan. Messrs. Walker,
    McDonald, Mullis, Woodward and Moses were granted options to purchase
    109,522, 55,924, 42,878, 36,723 and 61,055 shares of common stock of ITC
    Holding, respectively, under ITC Holding's incentive stock option plan,
    which are also included. In connection with the corporate reorganization
    that immediately preceded the Company's initial public offering of Common
    Stock, options outstanding under such ITC Holding stock option plan were
    assumed by the Company and were converted into options to purchase shares
    of Common Stock. These options will continue to vest according to the
    schedule set forth in each Named Executive Officer's respective stock
    option agreement unless such Named Executive Officer's employment with the
    Company is terminated, in which case options that have not vested at that
    time will terminate. The corporate reorganization is discussed in greater
    detail in the Company's Annual Report on Form 10-K for the year ended
    December 31, 1997, which has been filed with the SEC (Commission File No.
    0-23253).
(2) Represents the difference between the exercise price and the closing price
    of the Common Stock on The Nasdaq National Market at fiscal year-end on
    December 31, 1997.
 
                                       8
<PAGE>
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  The current members of the Compensation Committee are Messrs. Gabbard, Parr
and Scott.
 
  For a description of certain other transactions, see "--Certain
Transactions."
 
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
  The Compensation Committee of the Board of Directors has prepared the
following report on the Company's policies with respect to the compensation of
executive officers for 1997.
 
  The Board of Directors appointed the Compensation Committee in March 1997.
Since that time, decisions on compensation of the Company's executive officers
have been made by the Compensation Committee. The Compensation Committee also
administers the Company's stock option plans and stock purchase plan. No
member of the Compensation Committee is an employee of the Company. During
1997, the Compensation Committee consisted of Messrs. Gabbard, Parr and Scott.
 
Compensation Policies Toward Executive Officers
 
  The compensation policies of the Company are designed to (i) attract,
motivate and retain experienced and qualified executives, (ii) increase the
overall performance of the Company, (iii) increase stockholder value, and (iv)
increase the performance of individual executives. The Compensation Committee
seeks to provide competitive salaries based upon individual performance
together with annual cash bonuses awarded based on the Company's overall
performance relative to corporate objectives, taking into account individual
contributions, teamwork and performance levels. In addition, it is the policy
of the Company to grant stock options to executives upon their commencement of
employment with the Company and annually thereafter in order to strengthen the
alliance of interest between such executives and the Company's stockholders
and to give executives the opportunity to reach the top compensation levels of
the competitive market depending on the Company's performance (as reflected in
the market price of the Common Stock).
 
  The following describes in more specific terms the elements of compensation
that implement the Compensation Committee's compensation policies, with
specific reference to compensation reported for 1997.
 
  Base Salaries. Base salaries of executives are initially determined by
evaluating the responsibilities of the position, the experience and knowledge
of the individual, and the competitive marketplace for executive talent,
including a comparison to base salaries for comparable positions at peer
public companies in the Company's geographic region. Base salaries for
executive officers are reviewed annually by the Compensation Committee based
upon, among other things, individual performance and responsibilities.
 
  Annual salary adjustments are recommended by the Chief Executive Officer and
President by evaluating the performance of each executive officer after
considering new responsibilities and the previous year's performance. The
Compensation Committee performs the same review of the Chief Executive
Officer's and President's performance. Individual performance ratings take
into account such factors as achievement of specific goals that are driven by
the Company's strategic plan and attainment of specific individual objectives.
The factors affecting base salary levels are not assigned specific weights but
are subject to adjustments by the Compensation Committee.
 
  Bonuses. The Company's annual bonuses to its executive officers are based on
both corporate and individual performance, as measured by reference to factors
which reflect objective performance criteria over which management generally
has the ability to exert some degree of control. These corporate performance
factors consist of revenue and earnings targets established in the Company's
annual budget. Bonuses for 1996 (paid in 1997) and for 1997 (paid in 1998) are
based upon the achievement of such financial and operating factors.
 
  Stock Options. A third component of executive officers' compensation is the
1997 Plan, pursuant to which the Company grants executive officers and other
key employees options to purchase shares of Common Stock.
 
                                       9
<PAGE>
 
  The Compensation Committee grants stock options to the Company's executives
in order to align their interests with the interests of the stockholders.
Stock options are considered by the Compensation Committee to be an effective
long-term incentive because the executives' gains are linked to increases in
the value of the Common Stock, which in turn provides stockholder gains. The
Compensation Committee generally grants options to new executive officers and
other key employees upon their commencement of employment with the Company and
annually thereafter. The options generally are granted at an exercise price
equal to the closing market price of the Common Stock at the date of the
grant. Options granted to executive officers typically vest over a period of
two to four years following the date of grant. The maximum option term is ten
years. The full benefit of the options is realized upon appreciation of the
stock price in future periods, thus providing an incentive to create value for
the Company's stockholders through appreciation of stock price. Management of
the Company believes that stock options have been helpful in attracting and
retaining skilled executive personnel.
 
  Stock option grants made to executive officers in 1997 reflect significant
individual contributions relating to the Company's operations and
implementation of the Company's development and growth programs. Certain
newly-hired executive officers also received stock option grants at the time
of their employment with the Company. During 1997, the Company granted stock
options to purchase an aggregate of 1,344,396 shares of Common Stock to 267
employees, including options to purchase an aggregate of 545,700 shares of
Common Stock to the Company's five most highly compensated executive officers.
The per share option exercise prices of such options ranged from $4.4859 to
$17.50, which generally equaled the fair market value of a share of Common
Stock on the respective dates of grant.
 
  Other. The Company has adopted a contributory retirement plan (the "401(k)
Plan") for all of its employees (including executive officers) age 21 and over
with at least one year of service to the Company. The 401(k) Plan provides
that each participant may contribute up to 15% of his or her salary (not to
exceed the annual statutory limit). The Company generally makes matching
contributions to each participant's account equal to 100% of the first 2% and
50% of the next 4% of such participant's annual contribution by salary and/or
bonus deferral to the 401(k) Plan.
 
Chief Executive Officer Compensation
 
  The executive compensation policy described above is applied in setting Mr.
Walker's compensation. Mr. Walker generally participates in the same executive
compensation plans and arrangements available to the other senior executives.
Accordingly, his compensation also consists of annual base salary, annual
bonus, and long-term equity-linked compensation. The Compensation Committee's
general approach in establishing Mr. Walker's compensation is to be
competitive with peer companies, but to have a large percentage of his target
compensation based upon the long-term performance of the Company, as reflected
in part in the market price of the Common Stock.
 
  Mr. Walker's compensation for the year ended December 31, 1997 included
$147,063 in base salary and a $99,069 cash bonus. Mr. Walker's salary and
bonus payments for 1997 were based on, among other factors, the Company's
performance and the 1996 compensation of chief executive officers of
comparable companies, although his compensation was not linked to any
particular group of these companies.
 
Compensation Deductibility Policy
 
  Under Section 162(m) of the Internal Revenue Code, and applicable Treasury
regulations, no tax deduction is allowed for annual compensation in excess of
$1 million paid to any of the Company's five most highly compensated executive
officers. However, performance-based compensation that has been approved by
stockholders is excluded from the $1 million limit if, among other
requirements, the compensation is payable only upon attainment of pre-
established, objective performance goals and the board committee that
establishes such goals consists only of "outside directors" as defined for
purposes of Section 162(m). All of the members of the Compensation Committee
qualify as "outside directors." The Compensation Committee intends to
 
                                      10
<PAGE>
 
maximize the extent of tax deductibility of executive compensation under the
provisions of Section 162(m) so long as doing so is compatible with its
determinations as to the most appropriate methods and approaches for the
design and delivery of compensation to the Company's executive officers.
 
                                       Respectfully submitted,
 
                                       Compensation Committee
 
                                       O. Gene Gabbard
                                       William T. Parr
                                       William H. Scott, III
 
                                      11
<PAGE>
 
COMPARATIVE STOCK PERFORMANCE
 
  The following chart sets forth comparative information regarding the
Company's cumulative stockholder return on its Common Stock since the Company
completed its initial public offering on October 29, 1997 through December 31,
1997. Total stockholder return is measured by dividing total dividends
(assuming dividend reinvestment) plus share price change for a period by the
share price at the beginning of the measurement period. The Company's
cumulative stockholder return based on an investment of $100 at October 24,
1997, when the Common Stock was first traded on The Nasdaq National Market, at
its opening price of $16.50, is compared to the cumulative total return of the
Standard & Poor's 500 Stock Index and the Nasdaq Telecommunications Index,
comprised of publicly traded companies which are principally in the
telecommunications business, during that same period.
 
                    COMPARISON OF CUMULATIVE TOTAL RETURNS
               Comparison of Two Month Cumulative Total Return*
              Among ITC/\DeltaCom, Inc., The S&P 500 Stock Index
                    and The Nasdaq Telecommunications Index
 
 

                 COMPARISON OF 3-YEAR CUMULATIVE TOTAL RETURN
                              AMONG ITC/\DELTACOM
         S&P 500 STOCK INDEX AND NASDAQ TELECOMMUNICATION/STOCK INDEX
 
<TABLE> 
<CAPTION>
                                               S&P 500      Nasdaq
                                               Stock        Telecommunications
Measurement Period           ITC/\DeltaCom     Index        Stock Index
- ---------------------        ---------------   ---------    ------------------
<S>                          <C>               <C>          <C>  
Pt. 10/24/1998               $100.00           $100.00      $100.00
Pt. 11/03/1998               $117.00           $101.00      $103.00
Pt. 12/31/1998               $100.00           $104.00      $109.00

</TABLE> 


- --------
* $100 invested on October 24, 1997, including reinvestment of dividends.
  Fiscal year ended December 31, 1997.
 
                                      12
<PAGE>
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
  Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, officers and beneficial
owners of more than 10% of the Common Stock to file with the SEC initial
reports of ownership of the Company's equity securities and to file subsequent
reports when there are changes in such ownership. Officers, directors and
beneficial owners of more than 10% of the Common Stock are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports
they file.
 
  Based on its review of these reports and on written representations from the
reporting persons that no other reports were required, the Company believes
that during the fiscal year ended December 31, 1997, the Company's officers,
directors and greater than ten percent beneficial owners complied with all
applicable Section 16(a) filing requirements with the exception of one Form 4
for William H. Scott, III which was filed late.
 
CERTAIN TRANSACTIONS
 
  The Company has adopted a policy requiring that any material transactions
between the Company and persons or entities affiliated with officers,
directors or principal stockholders of the Company be on terms no less
favorable to the Company than reasonably could have been obtained in arm's-
length transactions with independent third parties.
 
  The following is a summary of certain transactions and relationships (i)
between the Company and ITC Holding prior to the corporate reorganization that
immediately preceded the Company's initial public offering (the
"Reorganization"), (ii) between the Company and other entities in which ITC
Holding prior to the Reorganization held more than 10% of the equity
interests, and (iii) among the Company and its directors, executive officers
and stockholders and its associated entities. In connection with the
Reorganization, ITC Holding merged with and into the Company.
 
  The Company entered into an arrangement in January 1998 to lease its
executive offices in West Point, Georgia from KNOLOGY for approximately
$11,000 per month.
 
  The Company, through Interstate FiberNet, Inc. (and formerly through
Interstate FiberNet, a Georgia general partnership), sells capacity on its
fiber optic network to several former ITC Holding subsidiaries and affiliates,
including Powertel and Powertel PCS, Inc., Globe, InterCall, KNOLOGY and
MindSpring. Together, these entities paid Interstate FiberNet, Inc.,
approximately $1,739,000, $422,000 and $316,000 for such capacity for the
years ended December 31, 1997, 1996 and 1995, respectively.
 
  Since 1996, the Company, through ITC/\DeltaCom Communications, Inc.
("DeltaCom"), has provided long distance and carrier switched long distance
service to several former ITC Holding subsidiaries and affiliates, including
KNOLOGY, InterCall, Interstate Telephone, Valley Telephone, Powertel and
MindSpring. Together, these entities paid DeltaCom approximately $1.4 million
for the year ended December 31, 1996 and $4,254,000 for the year ended
December 31, 1997. Since 1996, DeltaCom has also earned commissions by serving
as agent for certain interexchange carriers doing business with Powertel,
InterCall, Eastern Telecom, Inc. (dba InterQuest) and MindSpring. Under these
agreements, DeltaCom contracts with the interexchange carrier and rebills the
appropriate access charges plus a margin to Powertel, InterCall and
MindSpring. Together, Powertel, InterCall and MindSpring paid DeltaCom
commissions totaling approximately $514,000 for the year ended December 31,
1996, and $735,000 for the year ended December 31, 1997.
 
  In 1995, the Company, through Interstate FiberNet and Gulf States FiberNet,
constructed a fiber route on behalf of KNOLOGY. KNOLOGY reimbursed the Company
for approximately $62,000 worth of construction expenses. The Company also
provided certain engineering and construction-related management services,
estimated to have a value of $50,000, to KNOLOGY in 1995. The Company did not
charge KNOLOGY for these services.
 
                                      13
<PAGE>
 
  In addition to his responsibilities with the Company, Mr. Walker also served
as President and Chief Executive Officer of KNOLOGY for the period from July
15, 1996 through February 20, 1997. He served in this capacity at the request
of KNOLOGY and ITC Holding and received no compensation from KNOLOGY. The
Company estimates the value of services provided to be approximately $20,000.
 
  In 1996, Interstate FiberNet provided certain engineering and construction-
related management services to Powertel. Interstate FiberNet charged
approximately $57,000 for these services.
 
  In 1995, the Company provided certain network optimization services for
InterCall. InterCall paid $24,000 for such services.
 
  The Company, through Interstate FiberNet, Inc. (and formerly through
InterQuest), provides directory assistance and operator service to Powertel,
Interstate Telephone and Valley Telephone. Revenues recorded by the Company
for these services were approximately $1,005,000, $433,000 and $245,000 for
the years ended December 31, 1997, 1996 and 1995, respectively.
 
  Since 1996, the Company has purchased feature group access and other
services from Interstate Telephone, Valley Telephone and InterCall totaling
approximately $762,000 in 1996 and $238,000 in 1997.
 
  Since 1995, InterCall has provided conference calling services to Interstate
FiberNet (and now to Interstate FiberNet, Inc.) and (beginning in 1996) to
DeltaCom. The Company paid approximately $40,000, $80,000 and $1,000 for such
services for the years ended December 31, 1997, 1996 and 1995, respectively.
 
  ITC Holding, through certain of its subsidiaries, from time to time provided
the Company (and its subsidiaries) with administrative and staff services. The
amounts paid by the Company to ITC Holding and its affiliates for these
services for the years ended December 31, 1997, 1996 and 1995 were $166,000,
$19,000 and $5,000, respectively.
 
  The Company paid $300,000 in 1997 to Mr. Sidney L. McDonald, a stockholder
of DeltaCom's predecessor and the father of Foster McDonald, President of the
Company, to provide management services to the Company under a contract that
was completed on December 31, 1997. In addition, the Company leases real
property from entities controlled by Mr. Sidney L. McDonald. Under the lease
agreements, the Company paid approximately $174,000 in 1997 and is obligated
to pay approximately $180,000 annually from 1998 through 2005. The lease
agreements are cancelable by either of the parties with 24 months notice.
 
  Since 1995, ITC Holding advanced funds to InterQuest at a variable rate
equal to the rate paid by ITC Holding through its credit facility with First
Union and CoBank, plus .5%. For the years ended December 31, 1995, 1996 and
1997, InterQuest recorded interest expenses to ITC Holding of approximately
$123,000, $97,000 and $51,000, respectively. For the years ended December 31,
1996 and 1997, DeltaCom advanced excess funds from its operations to ITC
Holding at an annual interest rate of 8.25% and DeltaCom recorded interest
income of approximately $78,000 and $7,000, respectively. The advance is
repayable on demand.
 
  The Company leased office space in West Point, Georgia from ITC Holding
beginning in January 1995. Under its lease, the Company paid ITC Holding rent
in the amount of approximately $2,500 per month. The lease was terminable by
either party on 90 days' notice. Amounts charged to the Company related to
these leases for the years ended December 31, 1995 and 1996 were $21,669 and
$62,762, respectively. In 1996, the Company paid ITC Holding an additional
$7,000 in tax reimbursement payments for 1995 and 1996.
 
  In 1996, InterQuest purchased certain switching equipment located in West
Point, Georgia from Globe for approximately $120,000. During the year ended
December 31, 1997, DeltaCom sold equipment and services to KNOLOGY for
$262,000.
 
                                      14
<PAGE>
 
                        RATIFICATION OF THE APPOINTMENT
                OF THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
                                 (PROPOSAL 2)
 
  During the fiscal year ended December 31, 1997, and the interim period
subsequent to December 31, 1997, there have been no disagreements with Arthur
Andersen LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which would have caused
Arthur Andersen LLP to make reference in their report to such disagreements if
not resolved to their satisfaction.
 
  Arthur Andersen LLP's report on the financial statements of the Company for
the fiscal year ended December 31, 1997, contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
 
  Stockholder ratification of Proposal 2 is not required by the Bylaws or
otherwise. However, the Board of Directors is submitting Proposal 2 to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify Proposal 2, the Board of Directors will reconsider
whether or not to retain Arthur Andersen LLP. Even if Proposal 2 is ratified,
the Board of Directors in its discretion may direct the appointment of a
different independent accountant at any time during the year if the Board of
Directors determines that such a change would be in the best interests of the
Company and its stockholders.
 
  Representatives of Arthur Andersen LLP will be present at the Annual Meeting
and will have the opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
 
  The affirmative vote of a majority of the votes cast at the Annual Meeting
is required to approve Proposal 2.
 
          THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
 
                                      15
<PAGE>
 
                           STOCK OWNED BY MANAGEMENT
 
  The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of the Record Date by (i) each director and
nominee for director of the Company, (ii) each Named Executive Officer and
(iii) all executive officers and directors as a group.
 
<TABLE>
<CAPTION>
                                                          AMOUNT OF
                                                          BENEFICIAL
                                                          OWNERSHIP  PERCENTAGE
NAME OF BENEFICIAL OWNER                                      (A)(B)  OF CLASS
- ------------------------                                  ---------- ----------
<S>                                                       <C>        <C>
Donald W. Burton (c).....................................  1,197,731     4.7%
Malcolm C. Davenport, V (d)..............................    340,789     1.3
Robert A. Dolson (e).....................................  2,009,632     7.9
O. Gene Gabbard..........................................    101,705       *
Campbell B. Lanier, III (f)..............................  4,339,199    17.1
Foster O. McDonald (g)...................................    252,582     1.0
Steven D. Moses (h)......................................     51,643       *
J. Thomas Mullis.........................................     20,315       *
William T. Parr (i)......................................    128,906       *
Sara L. Plunkett.........................................     14,362       *
William H. Scott, III (j)................................  1,050,860     4.1
Douglas A. Shumate (k)...................................     75,445       *
William B. Timmerman (l).................................  1,778,919     7.0
Andrew M. Walker (m).....................................     59,088       *
Roger F. Woodward........................................      6,793       *
All executive officers and directors as a group (15 per-
 sons)................................................... 11,544,330    45.5%
</TABLE>
- --------
*  Less than one percent.
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
    as amended (the "Exchange Act"), a person is deemed to be the beneficial
    owner, for purposes of this table, of any shares of common stock if such
    person has or shares voting power or investment power with respect to such
    security, or has the right to acquire beneficial ownership at any time
    within 60 days from the Record Date. As used herein, "voting power" is the
    power to vote or direct the voting of shares and "investment power" is the
    power to dispose or direct the disposition of shares. Unless otherwise
    indicated, each stockholder listed has sole voting and investment power
    with respect to the shares shown as beneficially owned by such
    stockholder.
(b) Includes the following shares that the individuals named below have the
    right to purchase within 60 days from the Record Date pursuant to options:
<TABLE>
<S>                                                                      <C>
    O. Gene Gabbard.....................................................   3,620
    Campbell B. Lanier, III............................................. 255,874
    Foster O. McDonald..................................................  19,279
    Steven D. Moses.....................................................  46,962
    J. Thomas Mullis....................................................  14,689
    Sara L. Plunkett....................................................  10,098
    William H. Scott, III............................................... 298,232
    Douglas A. Shumate..................................................  59,215
    Andrew M. Walker....................................................  32,045
                                                                         -------
      Total............................................................. 740,014
                                                                         =======
</TABLE>
(c) Includes 61,919 shares held of record by The Burton Partnership, Limited
    Partnership, of which Mr. Burton is the sole general partner; 108,648
    shares held of record by South Atlantic Venture Fund II, Limited
    Partnership, of which South Atlantic Venture Partners II, Limited
    Partnership is the sole general partner, of which Mr. Burton is the
    managing general partner; 562,690 shares held of record by South Atlantic
    Venture
 
                                      16
<PAGE>
 
   Fund III, Limited Partnership, of which South Atlantic Venture Partners
   III, Limited Partnership is the sole general partner, of which Mr. Burton
   is the managing partner; 180,758 shares held of record by South Atlantic
   Venture Fund IV, L.P., of which Mr. Burton is a general partner; and
   278,286 shares held of record by South Atlantic Venture Fund IV (QP), L.P.,
   of which Mr. Burton is a general partner. Also includes 2,715 unexercised
   but vested options held of record by South Atlantic Venture Fund II,
   Limited Partnership.
(d) Includes 298,311 shares held of record by the Malcolm C. Davenport, V
    Family Trust, of which Mr. Davenport is co-trustee.
(e) Includes 2,008,632 shares held of record by National Enterprises, Inc., of
    which Mr. Dolson is President.
(f) Includes 1,206 shares in the aggregate held of record by Mr. C. Lanier,
    III's wife; 128,837 shares held of record by the Lanier Family Foundation,
    of which Mr. C. Lanier, III, is co-trustee; and 57,380 shares held of
    record by the Campbell Lanier, Jr. Irrevocable Life Insurance Trust, of
    which Mr. C. Lanier, III, is co-trustee.
(g) Includes 175,809 shares held of record by three McDonald family trusts, of
    which Mr. McDonald is trustee and 114 shares held of record by Mr.
    McDonald's wife.
(h) Includes 275 shares held of record by Mr. Moses' wife.
(i) Includes 1,000 shares held of record by Mr. Parr's wife.
(j) Includes 1,262 shares held of record by Mr. Scott's wife; 229 shares held
    of record by Mr. Scott's minor daughter; 128,837 shares held of record by
    the Lanier Family Foundation, of which Mr. Scott is co-trustee; 57,380
    shares held by the Campbell Lanier, Jr. Irrevocable Life Insurance Trust,
    of which Mr. Scott is co-trustee; 404,714 shares held of record by
    Campbell B. Lanier, III Charitable Remainder Trust, of which Mr. Scott is
    trustee; 23,581 shares held in trust for Mr. Scott's minor daughter, of
    which Mr. Scott's wife is co-trustee.
(k) Includes 1,211 shares held of record by Mr. Shumate's wife and 22 shares
    held of record by Mr. Shumate's son.
(l) Includes 1,777,919 shares held of record by SCANA Communications Inc., a
    wholly owned subsidiary of SCANA. Mr. Timmerman is Chief Executive Officer
    of SCANA.
(m) Includes 114 shares held of record by Mr. Walker's wife.
 
                                      17
<PAGE>
 
                    PRINCIPAL HOLDERS OF VOTING SECURITIES
 
  The following table sets forth information as of the Record Date with
respect to the ownership of shares of Common Stock by each person believed by
management to be the beneficial owner of more than five percent of the
Company's outstanding Common Stock. The information is based on the most
recent Schedule 13D or 13G filed with the SEC on behalf of such persons or
other information made available to the Company. Except as otherwise
indicated, the reporting persons have stated that they possess sole voting and
sole dispositive power over the entire number of shares reported.
<TABLE>
<CAPTION>
                                                          AMOUNT OF
                                                          BENEFICIAL  PERCENTAGE
                NAME OF BENEFICIAL OWNER                 OWNERSHIP(A)  OF CLASS
                ------------------------                 ------------ ----------
<S>                                                      <C>          <C>
SCANA Communications, Inc. (b)..........................  1,777,919       7.2%
National Enterprises, Inc. (c)..........................  2,008,632       8.1
J. Smith Lanier (d).....................................  1,945,280       7.7
Robert A. Dolson (e)....................................  2,009,632       8.1
Campbell B. Lanier, III (f).............................  4,339,199      18.5
William B. Timmerman (g)................................  1,778,919       7.2
</TABLE>
- --------
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
    as amended (the "Exchange Act"), a person is deemed to be the beneficial
    owner, for purposes of this table, of any shares of common stock if such
    person has or shares voting power or investment power with respect to such
    security, or has the right to acquire beneficial ownership at any time
    within 60 days from the Record Date. As used herein, "voting power" is the
    power to vote or direct the voting of shares and "investment power" is the
    power to dispose or direct the disposition of shares. Unless otherwise
    indicated, each stockholder listed has sole voting and investment power
    with respect to the shares shown as beneficially owned by such
    stockholder.
(b) Excludes 1,480,771 shares of Common Stock issuable upon conversion of the
    1,480,771 shares of Series A Convertible Preferred Stock held of record by
    SCANA Communications, Inc. The address of SCANA Communications, Inc. is
    440 Knox Abbott Drive, Suite 240, Cayce, SC 29033.
(c) The address of National Enterprises, Inc. is 535 North New Ballas Road,
    St. Louis, MO 63141.
(d) Includes 324,399 shares held of record by Mr. J. Smith Lanier's wife;
    128,837 shares held of record by the Lanier Family Foundation, of which
    Mr. J. Smith Lanier is co-trustee; 57,380 shares held of record by the
    Campbell Lanier, Jr. Irrevocable Life Insurance Trust, of which Mr. J.
    Smith Lanier is co-trustee; and 300,000 shares held of record by the J.
    Smith Lanier Charitable Remainder Trust.
(e) Includes 2,008,632 shares held of record by National Enterprises, Inc., of
    which Mr. Dolson is President.
(f) Includes 1,206 shares in the aggregate held of record by Mr. C. Lanier,
    III's wife; 128,837 shares held of record by the Lanier Family Foundation,
    of which Mr. C. Lanier, III, is co-trustee; and 57,380 shares held of
    record by the Campbell Lanier, Jr. Irrevocable Life Insurance Trust, of
    which Mr. C. Lanier, III, is co-trustee. Also includes 255,874 shares of
    Common Stock that Mr. C. Lanier, III, has the right to purchase within 60
    days from the Record Date pursuant to options.
(g) Includes 1,777,919 shares held of record by SCANA. Mr. Timmerman is the
    Chief Executive Officer of SCANA Corporation, SCANA's parent company.
 
INVESTMENT AGREEMENTS
 
  The Company, its directors and executive officers and certain other
stockholders, who together owned more than 80% of the Common Stock outstanding
immediately prior to the Company's initial public offering in October 1997,
entered into "lock-up" agreements with the underwriters for the Company's
initial public offering that provided that, except for specified limited
transactions, such stockholders would not (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common
Stock, or (ii) enter
 
                                      18
<PAGE>
 
into any swap or other agreement that transfers to another, in whole or in
part, any of the economic consequences of ownership of such shares of Common
Stock, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such other securities, in cash or
otherwise, for a period ending 180 days after October 23, 1997, without the
prior written consent of Morgan Stanley & Co. Incorporated.
 
            SUBMISSION OF STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
 
  Any proposal or proposals by a stockholder intended to be included in the
Company's proxy statement and form of proxy relating to the 1999 annual
meeting of stockholders must be received by the Company no later than December
29, 1998, pursuant to the proxy solicitation rules of the SEC. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to the 1999 annual meeting of stockholders any
stockholder proposal which may be omitted from the Company's proxy materials
pursuant to applicable regulations of the SEC in effect at the time such
proposal is received.
 
             OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
 
  The Board of Directors of the Company does not know of any other matters to
be presented for a vote at the Annual Meeting. If, however, any other matter
should properly come before the Annual Meeting or any adjournment thereof, the
persons named in the accompanying proxy will vote such proxy in accordance
with their best judgment.
 
                                       By Order of the Board of Directors
 
                                       /s/ Campbell B. Lanier, III

                                       Campbell B. Lanier, III
                                       Chairman of the Board of Directors
 
West Point, Georgia
April 30, 1998
 
A COPY OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997, ACCOMPANIES THIS PROXY STATEMENT. THE COMPANY IS REQUIRED TO FILE,
AND HAS FILED, AN ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1997, WITH THE SEC, WHICH IS AVAILABLE BY ACCESSING THE SEC'S WORLD WIDE WEB
SITE AT HTTP://WWW.SEC.GOV. STOCKHOLDERS MAY OBTAIN, FREE OF CHARGE, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K BY WRITING TO ITC/\DELTACOM, INC.,
1241 O. G. SKINNER DRIVE, WEST POINT, GEORGIA 31833, ATTENTION: CORPORATE
SECRETARY. THE COMPANY WILL PROVIDE COPIES OF THE EXHIBITS TO THE FORM 10-K
UPON PAYMENT OF A REASONABLE FEE.
 
                                      19
<PAGE>
 
                               ITC/\DELTACOM, INC.

                    PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
                                  JUNE 4, 1998

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of ITC/\DeltaCom, Inc. (the "Company") hereby
appoints Douglas A. Shumate and J. Thomas Mullis, Jr., or either of them, with
full power of substitution, as proxies to cast all votes, as designated below,
which the undersigned stockholder is entitled to cast at the 1998 annual meeting
of stockholders (the "Annual Meeting") to be held on Thursday, June 4, 1998, at
11:00 a.m., local time, at the New Horizons Community Theatre, 411 West 8th
Street, West Point, Georgia, and at any adjournment thereof, upon the following
matters and any other matter as may properly come before the Annual Meeting or
any adjournments thereof.

Proposal 1:   TO ELECT THREE DIRECTORS TO SERVE ON THE BOARD OF DIRECTORS, EACH
- ----------                                                                     
FOR A THREE-YEAR TERM AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND
QUALIFIED.

<TABLE>
<S>                                     <C> 
FOR all nominees listed                  WITHHOLD AUTHORITY
(except as marked to the                 to vote for all nominees listed
contrary below)
 
        [_]                                     [_]
</TABLE>

Nominees:        Donald W. Burton
                 Malcolm C. Davenport, V
                 William T. Parr

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)

- ------------------------------------------------------------------------------
Proposal 2:   TO RATIFY THE BOARD OF DIRECTORS' APPOINTMENT OF ARTHUR ANDERSEN
- ----------                                                                    
LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 1998 FISCAL YEAR.

 
FOR:     [_]         AGAINST:         [_]           ABSTAIN:      [_]

This proxy, when properly executed, will be voted as directed by the undersigned
stockholder and in accordance with the best judgment of the proxies as to other
matters.  IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES
LISTED IN PROPOSAL 1, "FOR" PROPOSAL 2, AND IN ACCORDANCE WITH THE BEST JUDGMENT
OF THE PROXIES AS TO OTHER MATTERS.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL
1, AND "FOR" PROPOSAL 2.

The undersigned stockholder hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement relating to the Annual Meeting and
hereby revokes any proxy or proxies heretofore given.  The undersigned
stockholder may revoke this proxy at any time before it is voted by filing with
the Secretary of the Company a written notice of revocation or a duly executed
proxy bearing a later date, or by attending the Annual Meeting and voting in
person.
<PAGE>
 
If you receive more than one proxy card, please date, sign and return all cards
in the accompanying envelope.



                                 Dated:
                                       --------------------------------------

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

                                 --------------------------------------------  
                                 (Please date and sign here exactly as name
                                 appears at left.  When signing as attorney,
                                 executor, administrator, trustee, guardian or
                                 other fiduciary, give full title as such; and
                                 when stock has been issued in the name of two
                                 or more persons, all should sign.)

PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
POSTAGE PREPAID ENVELOPE.

                                       2


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission