<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY ____, 1999
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________
ITC/\DELTACOM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 4813 58-2301135
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
1241 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-3880
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
_______________
ANDREW M. WALKER
CHIEF EXECUTIVE OFFICER
ITC/\DELTACOM, INC.
1241 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
(706) 645-3880
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
_______________
COPIES TO:
NANCY J. KELLNER, ESQ.
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004
(202) 637-5600
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
_______________
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
_______________
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=============================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER NOTE(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 3/4% Senior Notes Due November 15, $125,000,000 100% $125,000,000 $34,750
2008
=============================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
________________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION DATED FEBRUARY ___, 1999
PROSPECTUS
ITC/\DELTACOM
$125,000,000
OFFER TO EXCHANGE ALL OUTSTANDING
9 3/4% SENIOR NOTES DUE NOVEMBER 15, 2008
FOR 9 3/4% SENIOR NOTES DUE NOVEMBER 15, 2008 OF
ITC/\DELTACOM, INC.
INTEREST PAYABLE MAY 15 AND NOVEMBER 15, COMMENCING MAY 15, 1999
MATERIAL TERMS OF THE EXCHANGE OFFER
. In the Exchange Offer, we are offering to exchange, for all Outstanding
Notes that are validly tendered and not validly withdrawn before the
expiration of the Exchange Offer, an equal amount of a new series of notes
which are registered under the Securities Act of 1933.
. The terms of the Exchange Notes to be issued are substantially identical to
the Outstanding Notes, except for some of the transfer restrictions and
registration rights relating to the Outstanding Notes.
. You may tender Outstanding Notes only in denominations of $1,000 and
multiples of $1,000.
. You may withdraw tenders of Outstanding Notes at any time prior to the
expiration of the Exchange Offer.
. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[APRIL __,] 1999, UNLESS EXTENDED.
. The exchange of notes should not be a taxable exchange for U.S. federal
income tax purposes.
. ITC/\DeltaCom will not receive any proceeds from the Exchange Offer.
. Affiliates of ITC/\DeltaCom may not participate in the Exchange Offer.
. The Exchange Offer is subject to customary conditions, including the
condition that the Exchange Offer not violate applicable law or any
applicable interpretation of the Staff of the Securities and Exchange
Commission.
HOLDERS OF OUTSTANDING NOTES SHOULD CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 11 OF THIS PROSPECTUS IN CONNECTION WITH THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
WE ARE NOT MAKING THIS EXCHANGE OFFER IN ANY STATE OR JURISDICTION WHERE IT IS
NOT PERMITTED.
THE DATE OF THIS PROSPECTUS IS __________, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
----
<S> <C>
Where You Can Find More Information............................. ii
Certain Information About This Prospectus....................... iii
Cautionary Note Regarding Forward-Looking Statements............ iv
Prospectus Summary.............................................. 1
Risk Factors.................................................... 13
The Exchange Offer.............................................. 28
Use of Proceeds................................................. 36
Capitalization.................................................. 37
Description of Certain Indebtedness............................. 38
Description of the Exchange Notes............................... 42
Plan of Distribution............................................ 67
Certain United States Federal Tax Considerations................ 68
Legal Matters................................................... 72
Experts......................................................... 72
</TABLE>
i
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. You may read and copy any of the information
we file with the SEC at the SEC's public reference rooms at:
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<S> <C> <C>
Room 1024 7 World Trade Center Citicorp Center
450 Fifth Street, N.W. 13th Floor 500 West Madison Street, Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
</TABLE>
You also can obtain copies of filed documents by mail from the Public
Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. You may call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference rooms.
We file information electronically with the SEC. Our SEC filings also are
available to the public at the SEC's web site at http://www.sec.gov, which
contains reports, proxy and information statements, registration statements and
other information regarding issuers that file electronically.
Our Common Stock, $.01 par value per share, is quoted on The Nasdaq
National Market under the symbol "ITCD," and such reports, proxy statements and
other information concerning our Company also can be inspected at the offices of
Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
We are required by the indenture that governs the Outstanding Notes and
which will govern the Exchange Notes to furnish the trustee for the notes with
annual reports containing consolidated financial statements audited by our
independent public accountants and with quarterly reports containing unaudited
condensed consolidated financial statements for each of the first three quarters
of each fiscal year. The trustee for the notes is United States Trust Company of
New York.
ii
<PAGE>
CERTAIN INFORMATION ABOUT THIS PROSPECTUS
We have filed with the SEC a Registration Statement under the Securities
Act of 1933, as amended, covering the Exchange Notes to be issued in exchange
for the Outstanding Notes pursuant to this prospectus. As permitted by SEC
rules, this prospectus omits certain information included in the Registration
Statement. For further information pertaining to the Exchange Notes, reference
is made to the Registration Statement, including its exhibits. Any statement
made in this prospectus concerning the contents of any contract, agreement or
other document is not necessarily complete. If we have filed any such contract,
agreement or other document as an exhibit to the Registration Statement, you
should read the exhibit for a more complete understanding of the document or
matter involved. Each statement regarding a contract, agreement or other
document is qualified in its entirety by reference to the actual document.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that we
have previously filed with the SEC. These documents contain important
information about us and our financial condition.
. Our Annual Report on Form 10-K for our fiscal year ended December
31, 1997, filed with the SEC on March 30, 1998;
. Our Current Reports on Form 8-K, filed with the SEC on March 5,
1998 and July 31, 1998;
. Our Proxy Statement, filed with the SEC on April 30, 1998; and
. Our Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1998, June 30, 1998 and September 30, 1998, filed
with the SEC on May 15, 1998, August 14, 1998 and November 16,
1998, respectively.
In addition, this prospectus incorporates by reference any future filings
we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, until the offering of securities covered by this prospectus is completed.
WE WILL PROVIDE A COPY OF THE INFORMATION WE INCORPORATE BY REFERENCE, AT NO
COST, TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED. TO REQUEST A COPY OF
ANY OR ALL OF THIS INFORMATION, YOU SHOULD CONTACT US AT THE FOLLOWING ADDRESS
AND TELEPHONE NUMBER:
ITC/\DELTACOM, INC.
1241 O.G. SKINNER DRIVE
WEST POINT, GEORGIA 31833
ATTENTION: INVESTOR RELATIONS
TELEPHONE NUMBER: (706) 645-3880
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED
IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF
THIS PROSPECTUS.
iii
<PAGE>
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it, as well
as any prospectus supplement that accompanies it, include "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. We intend the forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements in these sections.
All statements regarding our expected financial position and operating results,
our business strategy and our financing plans are forward-looking statements.
These statements can sometimes be identified by our use of forward-looking words
such as "may," "will," "anticipate," "estimate," "expect" or "intend." These
statements are subject to known and unknown risks, uncertainties and other
factors that could cause the actual results to differ materially from those
contemplated by the statements. The forward-looking information is based on
various factors and was derived using numerous assumptions. Although we believe
that our expectations in such forward-looking statements are reasonable, we
cannot promise that our expectations will turn out to be correct. Our actual
results could be materially different from and worse than our expectations.
IMPORTANT FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO BE MATERIALLY DIFFERENT
FROM OUR EXPECTATIONS INCLUDE THOSE DISCLOSED IN THIS PROSPECTUS UNDER THE
CAPTION "RISK FACTORS," BEGINNING ON PAGE 13, AND ELSEWHERE THROUGHOUT THIS
PROSPECTUS.
iv
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights selected information from this prospectus and
may not contain all of the information that is important to you. You should read
the entire prospectus, including our financial statements and the notes to those
statements, and the other financial data contained or incorporated by reference
in this prospectus. You should carefully consider the factors set forth under
the caption "Risk Factors," and you should read the entire Letter of
Transmittal. Unless otherwise indicated, dollar amounts over $1 million have
been rounded to one decimal place and dollar amounts less than $1 million have
been rounded to the nearest thousand.
ABOUT ITC/\DELTACOM
We provide integrated voice and data telecommunications services on a retail
basis to mid-sized and major regional businesses in the southern United States.
We are also a leading regional provider of wholesale long-haul services to other
telecommunications companies. In connection with these businesses, we own,
operate and manage an extensive fiber optic network in the southern United
States.
OUR RETAIL SERVICES SEGMENT
We provide integrated retail telecommunications services to mid-sized and
major regional businesses in a bundled package tailored to the business
customer's specific needs. These Retail Services include:
. local exchange telephone services;
. long distance services;
. calling, calling card and operator services;
. Asynchronous Transfer Mode, or "ATM," frame relay, high
capacity broadband private line services;
. Internet, Intranet and Web page hosting and development
services; and
. customer premise equipment sales, installation and repair.
As of September 30, 1998, we provided Retail Services to over 10,000 business
customers in 21 metropolitan areas. As of the same date, we had sold
approximately 33,200 access lines, of which approximately 25,500 had been
installed. Over the next five years, we intend to provide a full range of Retail
Services in a total of approximately 40 metropolitan areas throughout the
southern United States.
In connection with offering local exchange services, we have entered into
interconnection agreements with the following incumbent local exchange carriers:
. BellSouth Telecommunications, Inc., for all of its
markets;
. GTE Corporation, for its Alabama market; and
. Sprint Corporation, for its Florida markets.
The interconnection agreements allow us to resell the local exchange services
of the incumbent carrier and to interconnect our network with their networks.
This allows us to offer local exchange services to our current customer base and
to enter new markets with minimal capital expenditures. We intend to complete
interconnection agreements with GTE, SBC and Sprint for other markets that we
serve or intend to serve.
1
<PAGE>
OUR CARRIERS' CARRIER SERVICES SEGMENT
We also provide wholesale long-haul services, which we call our "Carriers'
Carrier Services," to other telecommunications carriers. This means we sell
capacity on our network to, and switch and transport telecommunications traffic
for, such carriers. Our Carriers' Carrier customers include AT&T Corp., MCI
WorldCom, Inc., Sprint Corporation, Cable & Wireless Communications, Inc., and
Allnet Communications Services, Inc. d/b/a Frontier Communications Services. As
of September 30, 1998, we had approximately $129.6 million of remaining future
long-term contract commitments for our Carriers' Carrier Services. These
contracts expire on various dates through 2006 and are expected to generate
approximately $107.8 million in revenues for the Company through 2002.
SUMMARY OF ITC/\DELTACOM REVENUES BY BUSINESS SEGMENT
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<CAPTION>
YEARS ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------------------------------------
1996 1997 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
RETAIL SERVICES $59.9 million $ 83.6 million $61.2 million $ 86.7 million
CARRIERS' CARRIER
SERVICES $ 6.6 million $ 31.0 million $21.6 million $ 36.5 million
TOTAL $66.5 million $114.6 million $82.8 million $123.2 million
------------------------------------------------------------------------------------------
</TABLE>
OUR FIBER OPTIC NETWORK
Our fiber optic network reaches over 70 points of presence, or POPs, in the
following ten southern states: Alabama, Arkansas, Florida, Georgia, Louisiana,
Mississippi, North Carolina, South Carolina, Tennessee and Texas. The network
extends approximately 7,850 route miles from Florida to Texas. We own
approximately 4,170 miles of our network. Approximately 3,680 miles are owned
and operated principally by three public utilities and managed and marketed by
us. The public utilities are Duke Power Company, Florida Power & Light Company
and Entergy Technology Company. We expect to add approximately 1,200 route
miles to our fiber optic network by the end of the second quarter of 1999
through a combination of construction and long-term dark fiber leases. Our
network includes seven Nortel DMS-500 voice switches, one Nortel DMS-250 voice
switch, thirteen Ascend 9000 frame relay switches and five ATM switches.
OUR BUSINESS STRATEGY
Our objectives are to maintain our position as a leading provider of Carriers'
Carrier Services and to become a leading provider of Retail Services in the
southern United States. To achieve these objectives, we intend to increase our
market share in existing markets and expand into new markets.
The principal elements of our business strategy are to:
. Provide Integrated Telecommunications Services, Including Local Telephone
Exchange Services, to Our Existing Base of Mid-sized and Major Regional
Business Customers
We expect to increase our revenues at relatively low incremental cost by
providing additional telecommunications services, such as local telephone
exchange services, to our existing long distance customers. We are able to
bundle the customer's selection of a variety of telecommunications
services, and present the customer with a single, integrated monthly
billing statement for all of those services. We believe this capability
will allow us to penetrate our target markets rapidly and build customer
loyalty.
We provide local exchange services by reselling the services of incumbent
local exchange carriers and, in some of our markets, by using our own local
switching facilities. Over time, we expect to provide local exchange
services by primarily using our own switching facilities and our existing
regional fiber optic network, supplemented by unbundled facilities of
incumbent local exchange carriers or other competitive local exchange
carriers. To access the unbundled network elements of incumbent local
exchange carriers,
2
<PAGE>
we collocate our access nodes in the incumbent local exchange carrier's
central office. These access nodes operate in conjunction with our Nortel
DMS-500 switches to provide facilities-based local services. To date, we
have collocated 30 such access nodes. Because access nodes are less
expensive to purchase and install than Nortel DMS-500 switches and can be
installed more quickly than Nortel DMS-500 switches, we believe that we
will be able to enter new markets at less expense than many of our
competitors. At present, we do not plan to construct intra-city local loop
facilities.
. Take Advantage of Our Extensive Fiber Optic Network
. We intend to take advantage of our extensive fiber optic network, which
currently reaches over 70 POPs, by:
- continuing to provide switched and transport services to other
communications carriers throughout our region to enable such carriers to
diversify their routes and expand their networks;
- targeting customers that need to transmit large amounts of data within
our service region, such as banks and local and state governments; and
- offering local exchange services to our business customers as part of
our integrated package of telecommunications services.
. Focus on the Southern United States
We intend to continue to focus on the southern United States. We believe
that our regional focus and the regional concentration of our network will
enable us to:
- take advantage of economies of scale in management, network operations
and sales and marketing;
- increase opportunities for improved margins because a large portion of
our customers' telecommunications traffic originates and terminates
within the region; and
- build on our long-standing customer and business relationships in the
region.
. Build Market Share Through Personalized Customer Service
We believe that the key to revenue growth in our target markets is
capturing and retaining customers by emphasizing marketing, sales and
customer service. We believe that customers prefer one company to be
accountable for their telecommunications services. We also believe that a
consultative, face-to-face sales and service strategy is the most effective
method of acquiring and maintaining a high quality customer base. We seek
to obtain long-term commitments from our business customers by responding
rapidly and creatively to their telecommunications needs.
We currently operate 23 branch offices in 22 markets in Alabama, Arkansas,
Florida, Georgia, Louisiana, Mississippi, North Carolina and South
Carolina. Each branch office is staffed by personnel capable of marketing
all of our products and providing comprehensive support to our customers.
As part of our strategy to continue to grow our Retail Services business,
we plan to open branch offices in Texas by the end of 1999 and increase our
provision of local exchange services to Internet service providers. In the
future, we expect to expand significantly our direct sales force and open
branch offices in additional major and secondary population centers in the
southern United States.
3
<PAGE>
. Expand Our Fiber Optic Network and Switching Facilities
We expect to expand our fiber optic telecommunications network and
switching facilities to include additional markets within the southern
United States. We currently own and operate approximately 4,170 route miles
of fiber optic network extending from Florida to Texas and we plan to add
approximately 1,200 miles to our network by the end of the second quarter
of 1999. We expect our expanded network will include Austin and San
Antonio.
We also market and manage capacity on approximately 3,680 additional
network route miles through our strategic relationships principally with
public utilities. We have a buy-sell agreement with Carolinas Fibernet,
LLC, which manages fiber optic facilities in North Carolina and South
Carolina. This agreement enables the parties to buy and sell capacity on
each other's networks and allows us to provide customers with access to
points of presence throughout those states.
We believe that, by continuing to combine our own network with the networks
of public utilities and adding switching facilities throughout our network,
we will be able to achieve capital efficiencies and rapidly expand our
network in a cost-effective manner.
. Benefit From the Experience of Our Proven Management Team
Our management team consists of experienced telecommunications managers.
These individuals have previously been successful in implementing a
customer-focused long distance telecommunications strategy in the southern
United States.
A BRIEF OVERVIEW OF OUR HISTORY
March 24, 1997 ITC/\DeltaCom was incorporated as a wholly owned subsidiary
of ITC Holding Company, Inc.
June 3, 1997 We completed the sale of $200.0 million principal amount of
our 11% Senior Notes due 2007.
July 25, 1997 to As part of a reorganization of ITC Holding, we became a
October 20, 1997 separate company from ITC Holding. The main steps in this
reorganization were:
. ITC Holding contributed to us certain of its
subsidiaries, which became our wholly owned subsidiaries,
Interstate FiberNet, Inc. and ITC/\DeltaCom
Communications, Inc.
. ITC Holding then transferred all of its assets, other
than its ownership of shares of our common stock, and all
of its liabilities, to another entity.
. ITC Holding then merged with us. We were the surviving
corporation in the merger.
October 29, 1997 We completed our initial public offering, in which we issued
5,750,000 shares of our common stock, par value $.01 per
share, at a price of $16.50 per share. After giving effect
to the two-for-one stock split that we completed in the
third quarter of 1998, our initial public offering would
have been of 12,500,000 shares at a per share price of
$8.25.
March 3, 1998 We completed the sale at a price of 99.9% of $160.0 million
principal amount of our 8-7/8% Senior Notes due 2008.
April 2, 1998 We redeemed $70.0 million of our 11% Senior Notes due 2007,
at a redemption price of $77.7 million plus accrued and
unpaid interest on the redeemed notes of approximately $2.6
million.
July 29, 1998 We announced a two-for-one stock split to be effected in the
form of a stock dividend on our common stock. The record
date for the stock split was August 18, 1998 and the payment
date was September 4, 1998.
4
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November 5, 1998 We completed the sale of $125.0 million principal amount of
our 9-3/4% Senior Notes due 2008. These are the notes we are
offering to exchange in this Exchange Offer.
RISK FACTORS
You should read and consider carefully the "Risk Factors" section of this
prospectus, beginning on page 13, before tendering your Outstanding Notes for
Exchange Notes.
OUR PRINCIPAL EXECUTIVE OFFICES, TELEPHONE NUMBER AND INTERNET ADDRESS
Our headquarters are located at 1241 O.G. Skinner Drive, West Point,
Georgia 31833, our telephone number at this address is (706) 645-3880 and our
Internet site is located at http://www.itcdeltacom.com. Information contained on
our website is not, and should not be deemed to be, a part of this prospectus.
5
<PAGE>
INTRODUCTION TO THE EXCHANGE OFFER
THE EXCHANGE OFFER................ In this Exchange Offer, we are offering to
exchange $1,000 principal amount of our 9
3/4% Senior Notes due November 15, 2008.
These Exchange Notes have been registered
under the Securities Act of 1933, as
amended, for each $1,000 principal amount
of our outstanding 9 3/4% Senior Notes due
November 15, 2008. As of the date of this
prospectus, $125.0 million in aggregate
principal amount of these Outstanding Notes
are outstanding. In this prospectus, we
sometimes use the term "Notes" to refer to
the Exchange Notes together with the
Outstanding Notes.
Outstanding Notes may be tendered for
exchange in whole or in part in integral
multiples of $1,000 principal amount.
REGISTRATION RIGHTS AGREEMENT..... We are making the Exchange Offer to satisfy
our obligations under a Registration Rights
Agreement relating to the Outstanding
Notes, dated November 5, 1998, that we
entered into with Morgan Stanley & Co.
Incorporated and First Union Capital
Markets, a division of Wheat First
Securities, Inc., who were the Initial
Purchasers of the Outstanding Notes. For a
description of the procedures for tendering
Outstanding Notes, see "The Exchange Offer
--Procedures for Tendering Outstanding
Notes."
EXPIRATION DATE................... The Exchange Offer will expire at 5:00
p.m., New York City time, on [April __],
1999, unless we extend the Exchange Offer,
in which case the term "Expiration Date"
will mean the latest date and time to which
the Exchange Offer is extended. See "The
Exchange Offer--Expiration Date;
Extensions; Amendments ."
CONDITIONS TO THE EXCHANGE OFFER.. The Exchange Offer is subject to
conditions, some of which we may waive at
our sole discretion. The Exchange Offer is
not conditioned upon any minimum aggregate
principal amount of Outstanding Notes being
tendered.
We reserve the right, in our sole and
absolute discretion, subject to applicable
law, at any time and from time to time to:
. delay the acceptance of the Outstanding
Notes;
. terminate the Exchange Offer if
specified conditions have not been
satisfied;
. extend the Expiration Date of the
Exchange Offer and retain all
Outstanding Notes tendered pursuant to
the Exchange Offer, subject, however,
to the right of holders of Outstanding
Notes to withdraw their tendered
Outstanding Notes prior to such
extended Expiration Date; and
. waive any condition or otherwise amend
the terms of the Exchange Offer in any
respect.
See "The Exchange Offer--Conditions to the
Exchange Offer" and "The Exchange Offer--
Expiration Date; Extensions; Amendments."
WITHDRAWAL RIGHTS................. You may withdraw the tender of your
Outstanding Notes at any time prior to the
Expiration Date by delivering a written
notice of your withdrawal to the Exchange
Agent for this Exchange Offer in conformity
with the procedures set forth below under
"The Exchange Offer--Withdrawal Rights."
6
<PAGE>
PROCEDURES FOR TENDERING
OUTSTANDING NOTES................. If you wish to tender your Outstanding
Notes for exchange in the Exchange Offer,
you must complete and sign a Letter of
Transmittal according to its instructions
and forward the same by mail, facsimile
transmission or hand delivery, together
with any other required documents, to the
Exchange Agent, either with the Outstanding
Notes to be tendered or in compliance with
the specified procedures for guaranteed
delivery of Outstanding Notes.
Certain brokers, dealers, commercial banks,
trust companies and other nominees may also
effect tenders by book-entry transfer.
If your Outstanding Notes are registered in
the name of a broker, dealer, commercial
bank, trust company or other nominee, we
urge you to contact such nominee promptly
if you wish to tender your Outstanding
Notes pursuant to the Exchange Offer. See
"The Exchange Offer--Procedures for
Tendering Outstanding Notes."
Please do not send your Letter of
Transmittal or the certificate representing
your Outstanding Notes to us. You should
only send those documents to the Exchange
Agent. You should direct questions
regarding how to tender Outstanding Notes
and requests for information to the
Exchange Agent. See "The Exchange Offer--
Exchange Agent."
RESALES OF EXCHANGE NOTES......... We believe that the Exchange Notes issued
in the Exchange Offer may be offered for
resale, resold and otherwise transferred by
you without compliance with the
registration and prospectus delivery
requirements of the Securities Act,
provided that:
. you acquire the Exchange Notes issued in
the Exchange Offer in the ordinary
course of your business;
. you are not participating, and have no
arrangement or understanding with any
person to participate, in the
distribution, as that term is defined
under the Securities Act, of the
Exchange Notes; and
. you are not an affiliate of
ITC/\DeltaCom within the meaning of Rule
405 under the Securities Act.
Our belief is based upon interpretations by
the staff of the SEC, as set forth in no-
action letters issued to third parties
unrelated to ITC/\DeltaCom. The staff of
the SEC has not considered the Exchange
Offer in the context of a no-action letter,
and we cannot assure you that the staff of
the SEC would make a similar determination
with respect to this Exchange Offer.
If our belief is inaccurate and you
transfer an Exchange Note without
delivering a prospectus meeting the
requirements of the Securities Act or
without an exemption from registration of
your Exchange Notes from such requirements,
you may incur liability under the
Securities Act. We do not and will not
assume or indemnify you against such
liability.
Each broker-dealer that receives Exchange
Notes for its own account in exchange for
Outstanding Notes which were acquired by
such broker-dealer as a result of market-
making or other trading activities must
7
<PAGE>
acknowledge that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any
resale of such Exchange Notes.
EXCHANGE AGENT.................... The Exchange Agent with respect to the
Exchange Offer is United States Trust
Company of New York. The address, telephone
number and facsimile number of the Exchange
Agent are set forth in this prospectus
under "The Exchange Offer--Exchange Agent"
and in the Letter of Transmittal.
USE OF PROCEEDS................... We will not receive any cash proceeds from
the issuance of the Exchange Notes offered
hereby. See "Use of Proceeds."
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES........... Your acceptance of the Exchange Offer and
the related exchange of your Outstanding
Notes for Exchange Notes will not be a
taxable exchange for United States federal
income tax purposes. You should not
recognize any taxable gain or loss or any
interest income as a result of such
exchange. See "Certain United States
Federal Income Tax Consequences."
See "The Exchange Offer" for more detailed information concerning the Exchange
Offer.
8
<PAGE>
INTRODUCTION TO THE EXCHANGE NOTES
The Exchange Offer relates to the exchange of up to $125.0 million
principal amount of Exchange Notes for up to an equal principal amount of
Outstanding Notes. The form and terms of the Exchange Notes are the same as the
form and terms of the Outstanding.Notes, except that the Exchange Notes will be
registered under the Securities Act. Therefore, the Exchange Notes will not be
subject to some of the transfer restrictions, registration rights and other
provisions providing for an increase in the interest rate of the Outstanding
Notes under certain circumstances.relating to the registration of the Exchange
Notes. The Exchange Notes issued.in the Exchange Offer will evidence the same
debt as the Outstanding Notes, which they will replace, and both the Outstanding
Notes and the Exchange Notes are governed by the same Indenture.
SECURITIES OFFERED................ $125.0 million principal amount of 9 3/4%
Senior Notes due November 15, 2008.
INTEREST.......................... Interest on the Exchange Notes will accrue
at the rate of 9 3/4% per annum and will be
payable semi-annually in cash and in
arrears on each May 15 and November 15,
commencing on May 15, 1999.
RANKING........................... The Exchange Notes will not be secured by
any assets and:
. will be effectively subordinated to any
of our and our subsidiaries' existing
and future secured indebtedness,
including secured indebtedness under our
$50.0 million Credit Facility with
NationsBank, N.A. of Texas, to the
extent of the value of the assets
securing such indebtedness;
. will be effectively subordinated to all
existing and future liabilities of our
subsidiaries, including trade payables;
. will rank equal in right of payment with
all of our existing and future senior
unsecured indebtedness; and
. will rank senior in right of payment to
all of our existing and future
subordinated indebtedness.
At September 30, 1998, as adjusted to
reflect the issuance of the Outstanding
Notes as if it had occurred on that date:
. ITC/\DeltaCom, on an unconsolidated
basis, had $414.8 million of
subordinated indebtdeness and $289.8
million of outstanding indebtedness that
would rank equal in right of payment
with the Exchange Notes;
. our subsidiaries had approximately $44.9
million of liabilities, excluding
intercompany payables, including
approximately $3.3 million of
indebtedness, including capital leases;
and
. neither we nor our subsidiaries had any
outstanding secured indebtedness,
including under the Credit Facility.
To date, we have not borrowed any amounts
under the Credit Facility. See
''Description of the Exchange Notes--
General'' and "Description of Certain
Indebtedness--Credit Facility."
OPTIONAL REDEMPTION............... The Exchange Notes may be redeemed at our
option, in whole or in part, at any time on
or after November 15, 2003, at the
redemption prices set forth herein, plus
accrued and unpaid interest thereon, if
any, to the date of redemption. In
addition, at any time prior to November 15,
2001, we may redeem up to 35% of the
principal amount of the Exchange Notes with
the proceeds of one or more Public Equity
Offerings, at any time or from time to time
in part, at a redemption
9
<PAGE>
price of 109.750% of their principal
amount, plus accrued and unpaid interest;
provided, that at least $81.25 million
aggregate principal amount of the Exchange
Notes must remain outstanding after each
such redemption.
CHANGE OF CONTROL............... Upon a Change of Control, as defined in the
Indenture, we will be required to make an
offer to purchase the Exchange Notes at a
purchase price equal to 101% of their
principal amount, plus accrued interest.
However, we cannot assure you that we will
have sufficient funds available at the time
of any Change of Control to repurchase the
Exchange Notes. See "Description of the
Exchange Notes--Repurchases of Exchange
Notes upon a Change of Control" and
"Description of the Exchange Notes--Certain
Definitions."
RESTRICTIVE COVENANTS........... The Indenture contains restrictive
covenants that, among other things, limit
our ability to:
. incur indebtedness;
. pay dividends;
. prepay subordinated
indebtedness;
. repurchase capital stock;
. make investments;
. engage in transactions with
stockholders and affiliates;
. create liens;
. sell assets; and
. engage in mergers and
consolidations.
These covenants, however, are subject to a
number of important qualifications and
exceptions. See "Description of the
Exchange Notes--Covenants."
10
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
You should read the following summary historical financial and operating data
together with the section entitled "Use of Proceeds" included elsewhere in this
prospectus, and our consolidated financial statements and notes thereto, and the
other financial data incorporated by reference into this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1995 1996(A) 1997(B)(C)
------------ --------------- -----------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Operating revenues...................................................... $ 5,750,587 $66,518,585 $114,589,998
----------- ----------- ------------
Operating expenses:
Cost of service........................................................ 3,149,231 38,756,287 54,550,348
Selling, operations and administration expense......................... 1,626,678 18,876,572 38,254,893
Depreciation and amortization.......................................... 1,267,882 6,438,074 18,332,451
----------- ----------- ------------
Total operating expenses.............................................. 6,043,791 64,070,933 111,137,692
----------- ----------- ------------
Operating income (loss)................................................. (293,204) 2,447,652 3,452,306
Equity in losses of unconsolidated subsidiaries......................... (258,242) (1,589,812) --
Interest expense........................................................ (297,228) (6,172,421) (21,367,351)
Interest and other income............................................... 41,734 171,514 4,251,088
Other expense........................................................... -- -- --
----------- ----------- ------------
Loss before income taxes, preacquisition losses and extraordinary
item................................................................... (806,940) (5,143,067) (13,663,957)
Income tax benefit...................................................... (302,567) (1,233,318) (3,324,466)
Preacquisition losses................................................... -- -- 74,132
----------- ----------- ------------
Loss from continuing operations......................................... (504,373) (3,909,749) (10,265,359)
Extraordinary item (net of tax benefit)................................. -- -- (507,515)
----------- ----------- ------------
Net loss................................................................ $ (504,373) $(3,909,749) $(10,772,874)
=========== =========== ============
Basic and diluted net loss per common share:
Before extraordinary loss.............................................. $ (0.01) $ (0.10) $ (0.26)
Extraordinary loss..................................................... -- -- (0.01)
----------- ----------- ------------
Net loss............................................................... $ (0.01) $ (0.10) $ (0.27)
=========== =========== ============
Basic weighted average common shares
outstanding (d)........................................................ 38,107,350 38,107,350 40,249,816
Diluted weighted average common shares
outstanding (d)........................................................ 38,203,852 38,203,852 40,249,816
OTHER FINANCIAL DATA:
Capital expenditures.................................................... $ 1,805,742 $ 6,172,660 $ 43,873,990
Cash flows provided by operating activities............................. 1,437,317 8,188,618 6,302,123
Cash flows used in investing activities................................. 1,478,758 72,693,282 93,854,836
Cash flows provided by financing activities............................. 180,000 65,149,983 180,624,908
EBITDA, as adjusted (e)................................................. 974,678 8,885,726 21,784,757
Pro forma interest expense.............................................. -- -- 42,104,795(f)
Ratio of earnings to fixed charges (h).................................. -- -- --
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30,
-------------
1997(B)(C) 1998
---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Operating revenues.................................................. $ 82,804,136 $123,222,398
------------ ------------
Operating expenses:
Cost of service.................................................... 39,292,394 58,619,396
Selling, operations and administration expense..................... 27,058,041 46,290,548
Depreciation and amortization...................................... 12,791,330 21,434,941
------------ ------------
Total operating expenses.......................................... 79,141,765 126,344,885
------------ ------------
Operating income (loss)............................................. 3,662,371 (3,122,487)
Equity in losses of unconsolidated subsidiaries..................... -- --
Interest expense.................................................... (14,917,907) (23,322,107)
Interest and other income........................................... 1,860,476 7,359,160
Other expense....................................................... -- (2,824,501)
------------ ------------
Loss before income taxes, preacquisition losses and extraordinary
item............................................................... (9,395,060) (21,909,935)
Income tax benefit.................................................. (2,191,974) (5,611,225)
Preacquisition losses............................................... 74,132 --
------------ ------------
Loss from continuing operations..................................... (7,128,954) (16,298,710)
Extraordinary item (net of tax benefit)............................. (507,515) (8,436,170)
------------ ------------
Net loss............................................................ $ (7,636,469) $(24,734,880)
============ ============
Basic and diluted net loss per common share:
Before extraordinary loss.......................................... $ (0.19) $ (0.32)
Extraordinary loss................................................. (0.01) (0.17)
------------ ------------
Net loss........................................................... $ (0.20) $ (0.49)
============ ============
Basic weighted average common shares
outstanding (d).................................................... 38,107,350 50,861,035
Diluted weighted average common shares
outstanding (d).................................................... 38,203,852 50,861,035
OTHER FINANCIAL DATA:
Capital expenditures................................................ $ 25,251,029 $ 95,555,491
Cash flows provided by operating activities......................... 7,171,364 8,392,779
Cash flows used in investing activities............................. 87,384,575 72,261,182
Cash flows provided by financing activities......................... 105,896,838 77,144,296
EBITDA, as adjusted (e)............................................. 16,453,701 18,312,454
Pro forma interest expense.......................................... -- 33,039,579(g)
Ratio of earnings to fixed charges (h).............................. -- --
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1998
----------------------------------------
HISTORICAL PRO FORMA
---------- ---------
CONSOLIDATED CONSOLIDATED(I)
------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital...................................................................... $109,730,814 $231,355,814
Property and equipment, net.......................................................... 222,967,810 222,967,810
Total assets......................................................................... 469,276,355 594,276,355
Long-term debt and capital lease obligations, including current portions............. 293,117,449 418,117,449
Total stockholders' equity........................................................... 127,639,028 127,639,028
</TABLE>
11
<PAGE>
(a) On January 29, 1996, ITC Holding purchased DeltaCom, Inc. (which is now
called ITC/\DeltaCom Communications, Inc.), an Alabama corporation
("DeltaCom"). DeltaCom became our wholly owned subsidiary in the
reorganization of ITC Holding. DeltaCom's results of operations are
included in the historical consolidated statement of operations data
since the date of acquisition.
(b) On March 27, 1997, we purchased certain fiber and fiber-related assets,
including a significant customer contract for network services in
Georgia (the "Georgia Fiber Assets"). The results of operations for the
Georgia Fiber Assets were included in the consolidated statements of
operations beginning March 27, 1997. See Note 15 to the financial
statements.
(c) On March 27, 1997, we purchased the remaining 64% partnership interest
in Gulf States FiberNet, a partnership between ITC Holding and SCANA
Communications, Inc. Gulf States FiberNet's revenues and expenses have
been included in the consolidated statement of operations effective
January 1, 1997 with the preacquisition losses attributable to the
previous owner from January 1, 1997 through March 27, 1997 deducted to
determine our consolidated net loss for the year ended December 31,
1997.
(d) Pursuant to Staff Accounting Bulletin ("SAB") 98, for periods prior to
the Initial Public Offering, basic net loss per share is computed using
the weighted average number of shares of common stock outstanding during
the period. Diluted net loss per share is computed using the weighted
average number of shares of common stock outstanding during the period
and nominal issuances of common stock and common stock equivalents,
regardless of whether they are anti-dilutive. For 1997 and for the nine
months ended September 30, 1998, the effect of the Company's potential
common stock equivalents is not included in the computation of diluted
net loss per share as their effect is anti-dilutive.
(e) EBITDA, as adjusted, represents earnings before extraordinary item,
preacquisition (earnings) losses, other income (expense), equity in
losses of unconsolidated subsidiaries, net interest, income taxes,
depreciation and amortization. EBITDA, as adjusted, is provided because
it is a measure commonly used in the industry. EBITDA, as adjusted, is
not a measurement of financial performance under generally accepted
accounting principles and should not be considered an alternative to net
income as a measure of performance or to cash flow as a measure of
liquidity. EBITDA, as adjusted, is not necessarily comparable with
similarly titled measures for other companies .
(f) Reflects (i) the sale by us of $200.0 million principal amount of our
11% Senior Notes due 2007 (the "1997 Senior Notes") after giving effect
to the redemption of $70.0 million principal amount of the 1997 Senior
Notes (the "Redemption"), (ii) the sale by us of $160.0 million
principal amount of our 8 7/8% Senior Notes due 2008 (the "March 1998
Senior Notes"), (iii) the sale by us of the Outstanding Notes and (iv)
the elimination of (A) indebtedness incurred by ITC Holding in 1996 to
finance the acquisition of DeltaCom, and to refinance existing DeltaCom
debt and (B) indebtedness incurred by Gulf States Fiber Net, as if each
had occurred on January 1, 1997. After giving effect to (i) these
adjustments to interest expense, (ii) a pro forma adjustment to reduce
interest income relating to the release of restricted assets after
giving effect to the Redemption, and (iii) an adjustment for the related
pro forma income tax effects, as if each had occurred on January 1,
1997, pro forma net loss per share before extraordinary items would have
been $(0. 58).
(g) Reflects (i) the sale by us of the March 1998 Senior Notes, (ii) the
Redemption, and (iii) the sale by us of the Outstanding Notes, as if
each had occurred on January 1, 1997. After giving effect to: (i) these
adjustments to interest expense, (ii) the elimination of the non-
recurring charge of $1,864,171 net of tax, or $(0.04) per share, related
to reclassifying our interest rate swap from a hedge of an anticipated
transaction to a trading security as a result of the issuance of the
March 1998 Senior Notes (the "March 1998 Senior Notes Offering"),
(iii) a pro forma adjustment to reduce interest income relating to the
release of restricted assets after giving effect to the Redemption, and
(iv) an adjustment for the related pro forma income tax effects, as if
each had occurred on January 1, 1997, the pro forma net loss per share
before extraordinary items would have been $(0.42).
(h) Earnings consist of income before income taxes, plus fixed charges.
Fixed charges consist of interest charges and amortization of debt
issuance costs and the portion of rent expense under operating leases
representing interest (estimated to be one-third of such expense).
Earnings were insufficient to cover fixed charges for the years ended
December 31, 1995, 1996, and 1997 and the nine months ended September
30, 1997 and 1998 by $.8 million, $5.1 million, $13.7 million, $9.4
million, and $21.9 million, respectively. For the year ended December
31, 1997 and the nine months ended September 30, 1998, as adjusted to
reflect the issuance of the Outstanding Notes as if it had occurred at
the beginning of the period, earnings would have been insufficient to
cover fixed charges by $34.7 million and $29.2 million, respectively.
(i) Reflects the sale by us of the Outstanding Notes, net of estimated
underwriting discounts and other offering costs of $3.4 million.
12
<PAGE>
RISK FACTORS
You should read and carefully consider the following risk factors and the
other information in this prospectus before tendering your Outstanding Notes for
Exchange Notes. You should also consider the additional information set forth
in our SEC Reports on Forms 10-K, 10-Q and 8-K and in the other documents
incorporated by reference into this prospectus.
WE EXPECT TO CONTINUE TO HAVE OPERATING LOSSES AND NEGATIVE CASH FLOW AFTER
CAPITAL EXPENDITURES WHICH MAY RESULT IN OUR FAILURE TO MEET OUR WORKING CAPITAL
AND DEBT SERVICE REQUIREMENTS, INCLUDING OUR OBLIGATIONS UNDER THE NOTES
As we have implemented our business strategy to expand our telecommunications
service offerings, expand our fiber optic network and enter new markets, we have
experienced operating losses and negative cash flow after capital expenditures.
We expect this will continue during the next several years as we continue to
expand our business and make substantial capital expenditures. If we cannot
achieve or sustain operating profitability and positive net cash flow, we may
not be able to obtain the funds necessary to continue our operations or to repay
amounts due on our outstanding indebtedness, including the Exchange Notes. We
cannot assure you that we will achieve or sustain profitability or positive net
cash flow in the future. See "--We May Not Have, or Be Able to Obtain, the
Significant Amounts of Capital That We Need to Expand Our Network, Operations
and Services as Planned."
WE MAY NOT HAVE, OR BE ABLE TO OBTAIN, THE SIGNIFICANT AMOUNTS OF CAPITAL THAT
WE NEED TO EXPAND OUR NETWORK, OPERATIONS AND SERVICES AS PLANNED
We need significant capital to expand our network, operations and services in
accordance with our business plans. We currently estimate that our capital
expenditures will total approximately $130.0 million in 1999. In addition, we
expect to make substantial capital expenditures after 1999 and are in the
process of evaluating those requirements. If our estimates are inaccurate
and/or we do not have access to the capital that we require, we will need to
change our business plans. This could have a material adverse effect on our
business, financial condition and results of operations, and on our ability to
repay the Exchange Notes.
Our planned capital expenditures primarily will be for:
. continued development and construction of our fiber optic network,
including transmission equipment;
. continued addition of facilities-based local telephone service to our
bundle of integrated telecommunications services, including
acquisition and installation of switches and related equipment;
. the addition of switching capacity, electrical equipment and
additional collocation space in connection with the expansion of our
provision of local telecommunications services to Internet service
providers;
. market expansion; and
. infrastructure enhancements, principally for information systems.
We expect to have sufficient funds to enable us to expand our business as
currently planned through 2002. We believe that these funds will be provided
by:
. approximately $121.6 million in net proceeds from the sale of the
Outstanding Notes;
. cash on hand, which amounted to approximately $107.6 million at
September 30, 1998;
. cash flow from operations; and
. borrowings available under our $50.0 million Credit Facility with
NationsBank, assuming we are able to negotiate amendments to the
Credit Facility that are satisfactory to us.
However, we cannot assure you that our capital resources will permit us to
fund the planned expansion of our network, operations and services. We are in
the process of negotiating significant amendments to our Credit Facility, in
order to accommodate adjustments we have made and are anticipating making to our
business plans. In particular, we have continued to accelerate expansion of our
fiber optic network and our Retail Services segment for which we have made
substantial capital expenditures. During 1998, we made capital expenditures of
approximately $148 million on a consolidated basis. This amount exceeds by
approximately $18 million the maximum capital expenditures for 1998 currently
permitted under the Credit Facility. NationsBank has indicated its willingness
to waive this technical default, but a waiver has not yet been signed by all the
parties that are required to sign. We currently expect the waiver to be
13
<PAGE>
included among the other amendments to the Credit Facility that we are in the
process of negotiating. Unless and until we obtain such a waiver, we will be
unable to borrow any amounts under the Credit Facility. To date, no amounts
have been borrowed under the Credit Facility and we do not expect to borrow
under the Credit Facility during 1999.
If our current sources of funds, including the Credit Facility, are
unavailable to fund our business plans, we may need to seek additional funds.
These additional funds may come from public and private equity and debt
financings, but we cannot assure you that we will be able to obtain any
additional funds on a timely basis, on terms that are acceptable to us or at
all. Our inability to obtain the capital that we need to implement our current
business plans could have a material adverse effect on our business, financial
condition and results of operations, and on our ability to repay the Exchange
Notes. See "Description of Certain Indebtedness."
After 2002, or sooner if our estimates are not accurate for any reason, we may
need to seek additional financing:
. to fund capital expenditures;
. for working capital;
. to fund new business activities related to our current and planned
businesses; and
. to acquire, or enter into joint ventures and strategic alliances with,
other businesses.
These additional funds may come from public and private equity and debt
financings, or from borrowing from one or more lenders. We cannot assure you
that we will be able to obtain any additional funds on a timely basis, on terms
that are acceptable to us, or at all. If we cannot generate or obtain these
additional funds, we may have to delay or abandon some or all of our future
plans or expenditures. This could have a material adverse effect on our
business, financial condition and results of operations, and on our ability to
repay the Exchange Notes.
Our estimate of future capital requirements is a "forward-looking statement"
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The actual amount and timing of our future
capital requirements may differ substantially from our estimate due to factors
such as:
. regulatory, technological, or competitive developments;
. unforeseen delays;
. cost overruns;
. changes in demand for our services; and
. new market developments and opportunities.
14
<PAGE>
WE HAVE SIGNIFICANT DEBT AND WE MAY BE UNABLE TO SERVICE THAT DEBT
We have significant debt. Set forth below are some of our recent results on a
consolidated basis, adjusted to reflect our issuance of the Outstanding Notes as
if it had occurred on the date, or at the beginning of the periods, shown.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
YEAR ENDED NINE MONTHS ENDED
---------- -----------------
AT SEPTEMBER 30, 1998
---------------------
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
Indebtedness of $418.1 Earnings insufficient to cover Earnings insufficient to cover
million fixed charges by $34.7 million fixed charges by $29.2 million
-------------------------------------------------------------------------------------------------------------------
Stockholders' equity of EBITDA, as adjusted, less capital EBITDA, as adjusted, less capital
$127.6 million expenditures and interest expense expenditures and interest expense
of negative $64.2 million of negative $110.3 million
-------------------------------------------------------------------------------------------------------------------
</TABLE>
See "Summary Financial and Operating Data."
We cannot assure you that we will be able to improve our earnings before fixed
charges or that we will be able to meet our debt service obligations, including
our obligations to repay the Exchange Notes. We will be in default under the
terms of our debt obligations if (1) we are unable to generate sufficient cash
flow or otherwise obtain funds necessary to make required payments or (2) we
otherwise fail to comply with the various covenants in our debt obligations. A
default would permit the holders of the indebtedness to accelerate its maturity.
This, in turn, could cause defaults under our other indebtedness and would have
a material adverse effect on our business, financial condition and results of
operations, and on our ability to repay the Exchange Notes. See "Description of
Certain Indebtedness."
Even if we are able to meet our debt service obligations, the amount of debt
we have could adversely affect us in a number of ways, including by:
. limiting our ability to obtain any necessary financing in the future
for working capital, capital expenditures, debt service requirements
or other purposes;
. limiting our flexibility in planning for, or reacting to, changes in
our business;
. placing us at a competitive disadvantage relative to our competitors
who have lower levels of debt;
. making us more vulnerable to a downturn in our business or the economy
generally; and
. requiring us to use a substantial portion of our cash flow from
operations to pay principal and interest on our debt, instead of
contributing those funds to other purposes, such as working capital
and capital expenditures.
To be able to meet our debt service requirements, including our obligations
under the Exchange Notes, we must successfully implement our business strategy.
Therefore, we will need to:
. expand our network;
. obtain and retain a significant number of customers; and
. experience significant and sustained growth in our cash flow.
We cannot assure you that we will successfully implement our business strategy
or that we will be able to generate sufficient cash flow from operating
activities to meet our debt service obligations and working capital
requirements. Our ability to meet our obligations will be dependent upon our
future performance, which will be subject to prevailing economic conditions and
to financial, business and other factors.
If the implementation of our business strategy is delayed or unsuccessful, or
if we do not generate sufficient cash flow to meet our debt service and working
capital requirements, we may need to seek additional financing. If we are
unable to obtain such financing on terms that are acceptable to us, we could be
forced to dispose of assets to make up for any shortfall in the payments due on
our indebtedness under circumstances that might not be favorable to realizing
the highest price for those assets. A substantial portion of our assets consist
of intangible assets, the value of which will depend upon a variety of factors,
including without limitation the success of our business. As a result, we
cannot assure you that our assets could be sold quickly enough, or for amounts
sufficient, to meet our obligations.
15
<PAGE>
OUR CURRENT INDEBTEDNESS CONTAINS RESTRICTIVE COVENANTS
We are subject to restrictions under:
. the Indenture;
. the indenture pursuant to which our $160.0 million principal amount of
8 7/8% Senior Notes due March 1, 2008 were issued (the "March 1998
Note Indenture");
. the indenture pursuant to which our $200.0 million principal amount of
11% Senior Notes due June 1, 2007 were issued (the "1997 Note
Indenture"); and
. the Credit Facility.
These restrictions affect, and in certain cases significantly limit or prohibit,
among other things, our ability and the ability of our subsidiaries to:
. incur additional indebtedness;
. create liens;
. make investments;
. issue stock ; and
. sell assets.
The indentures restrict our ability to incur indebtedness, other than
indebtedness to finance the acquisition of equipment, inventory or network
assets, by requiring compliance with specified leverage ratios. In addition,
the Credit Facility requires us to maintain certain financial ratios. We cannot
assure you that we will be able to maintain the required ratios. In addition,
these restrictive covenants may adversely affect our ability to finance our
future operations or capital needs, or to engage in other business activities
that may be in our interest. See "Description of Certain Indebtedness."
WE MAY NOT BE ABLE TO MANAGE OUR GROWTH SUCCESSFULLY
The expansion and development of our business will depend upon, among other
things, our ability to:
. successfully implement our sales and marketing strategy;
. evaluate markets;
. design fiber routes;
. secure financing;
. install facilities;
. acquire rights of way;
. obtain any required government authorizations;
. interconnect to, and collocate with, facilities owned by incumbent
local exchange carriers; and
. obtain appropriately priced unbundled network elements and wholesale
services from the incumbent local exchange carriers.
These all must be accomplished in a timely manner, at reasonable cost and on
satisfactory terms and conditions. Our rapid growth, particularly in the
provision of Retail Services, has placed, and the growth we anticipate in our
other services may in the future also place, a significant strain on our
administrative, operational and financial resources. Our ability to continue to
manage our growth successfully will require us to:
. enhance our operational, management, financial and information systems
and controls; and
. hire and retain qualified sales, marketing, administrative, operating
and technical personnel.
We cannot assure you that we will be able to do so. In addition, as we
increase our service offerings and expand our targeted markets, there will be
additional demands on customer support, sales and marketing, administrative
resources and network infrastructure. These demands will be intensified if we
continue to accelerate our expansion plans. Our inability to manage our growth
effectively could have a material adverse effect on our business, results of
operations and financial condition, and on our ability to repay the Exchange
Notes.
16
<PAGE>
DEVELOPMENT AND EXPANSION OF OUR BUSINESS, INCLUDING THROUGH ACQUISITIONS, IS
SUBJECT TO REGULATORY AND MARKET RISKS
The successful implementation of our business strategy to provide an
integrated bundle of telecommunications services and expand our operations will
be subject to a variety of risks, including:
. competition and pricing;
. the availability of capital on favorable terms;
. regulatory uncertainties;
. operating and technical problems;
. the need to establish and maintain interconnection and collocation
arrangements with incumbent local exchange carriers in our target
markets; and
. the potential difficulties of offering local exchange services.
In addition, the expansion of our business may involve acquisitions of other
telecommunications businesses and assets that, if made, could divert our
resources and management time and could require integration with our existing
operations. We cannot assure you that any acquisitions could be successfully
integrated into our operations or that any acquired business will perform as
expected. Our failure to implement our expansion and growth strategy
successfully would have a material adverse effect on our business, results of
operations and financial condition, and on our ability to repay the Exchange
Notes.
OUR BUSINESS IS SUBJECT TO SIGNIFICANT COMPETITIVE PRESSURES
Our industry is highly competitive, and the level of competition, particularly
with respect to pricing, is increasing. For example, prices for long distance
services and for data transmission services have declined substantially in
recent years . These prices are expected to continue to decline, which will
adversely affect our gross margins as a percentage of revenues. In addition,
many of our existing and potential competitors have financial, technical and
other resources and customer bases and name recognition far greater than our
own. We cannot assure you that we will be able to achieve or maintain adequate
market share or revenues, or compete effectively in any of our markets.
We Face Intense Competition From Incumbent Local Exchange Carriers, Especially
BellSouth
Local telephone and intraLATA long distance services substantially similar to
those that we offered are also offered by the incumbent local exchange carriers
serving the markets that we serve or plan to serve. BellSouth is the incumbent
local exchange carrier and a particularly strong competitor in most of these
markets. BellSouth and other incumbent local exchange carriers already have
relationships with every customer. These carriers may be able to subsidize
services of the type we offer from service revenues not subject to effective
competition, which could result in even more intense price competition.
Other Competitors and Technologies in Our Industries May Further Increase
Competition
Providers of Long Distance Services and Carriers' Carrier Services. We
------------------------------------------------------------------
compete with long distance carriers in the provision of interLATA long distance
services and Carriers' Carrier Services. The interLATA long distance market
consists of three major competitors, AT&T, MCI WorldCom and Sprint. Other
companies operate or are building networks in the southern United States and
other geographic areas. Our other competitors in the long distance services and
Carriers' Carrier Services markets are likely to include Regional Bell Operating
Companies providing out-of-region and, with the future removal of regulatory
barriers, in-region long distance services, other competitive local exchange
carriers, microwave and satellite carriers, and private networks owned by large
end-users. We also compete with direct marketers, equipment vendors and
installers, and telecommunications management companies with respect to certain
portions of our business.
Wireless Providers. In the future, providers of wireless services may offer
------------------
products that increasingly become a substitute for, rather than only supplement,
a customer's wireline communications services. Competition with providers of
wireless telecommunications services may be intense. Many of our potential
wireless competitors have substantially greater financial, technical, marketing,
sales, manufacturing and distribution resources than our own. In recent years,
the Federal Communications Commission, or "FCC," has made additional spectrum
available through public auction for use in wireless communications, including
broadband local loops.
New Transmission Technologies. We also may increasingly face competition from
-----------------------------
companies offering long distance data and voice services over the Internet.
Such companies could enjoy a significant cost advantage because at present they
do not pay carrier access charges or universal service fees. Other competitors
are also deploying new transmission
17
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technologies in their networks to upgrade capacity and reduce costs. For
example, in June 1998, Sprint announced its intention to offer voice, data and
video services over its nationwide ATM network, which Sprint anticipates will
significantly reduce its cost to provide such services. Sprint plans to bill its
customers based upon the amount of traffic carried, without regard to the time
required to send the traffic or the traffic's destination. Other advanced
networks are being deployed by other carriers.
Competitive Local Exchange Carriers. We will face competition in the markets
-----------------------------------
in which we operate from one or more competitive local exchange carriers
operating fiber optic networks, in some cases in conjunction with the local
cable television operator. AT&T, MCI WorldCom, Sprint and others have begun to
offer local telecommunications services, either directly or in conjunction with
other competitive local exchange carriers in certain locations, and are expected
to expand that activity as opportunities created by the Telecommunications Act
develop. BellSouth has announced plans to provide local service in areas of its
region where it is not the incumbent local exchange carrier, and to establish
its own less regulated "competitive local exchange carrier" subsidiaries.
Business Combinations and Strategic Alliances May Increase Competition
A continuing trend toward business combinations and strategic alliances in the
telecommunications industry may further increase competition. For example, the
national long distance carrier WorldCom has merged with MCI. WorldCom also has
acquired competitive local exchange carriers, including MFS Communications
Company, Inc. and Brooks Fiber Properties, Inc. AT&T has acquired another
competitive local exchange carrier, Teleport Communications Group Inc., and has
announced plans to acquire Tele-Communications, Inc., a major cable television
operator. AT&T has also announced plans to enter into a joint venture with
British Telecommunications plc to combine the international assets and
operations of each company, including their existing international networks. On
May 11, 1998, SBC and Ameritech announced their merger which, if approved, would
mean that the seven original Regional Bell Operating Companies have been reduced
to four. Additionally, in June 1998, Qwest acquired LCI, which combination
created the nation's fourth-largest long distance carrier, and, in July 1998,
Bell Atlantic announced its intention to acquire GTE. These types of strategic
alliances and business combinations could put us at a significant competitive
disadvantage.
Recent Legislation and Regulation May Also Increase Competition
Long Distance Services. The Telecommunications Act of 1996 creates the
----------------------
foundation for increased competition in the long distance market from the
incumbent local exchange carriers. Such competition could affect the successful
implementation of our business plans. For example, certain provisions of the
Telecommunications Act eliminate previous prohibitions on the provision of both
retail and carriers' carrier interLATA long distance services by the Regional
Bell Operating Companies, subject to compliance by such companies with
requirements set forth in the Telecommunications Act and implemented by the FCC.
The FCC has rejected Regional Bell Operating Company applications to provide
interLATA services, including applications from BellSouth covering the states of
South Carolina and Louisiana. However, the FCC, states and other parties are
actively considering actions that could expedite approval of interLATA service.
BellSouth has filed new applications to provide such service in Alabama,
Georgia, Kentucky and North Carolina and is expected to apply for authority in
other states in the near future. In addition, legislation to relax the interLATA
restriction is expected to be introduced in the next session of Congress. We
could be adversely affected if the Regional Bell Operating Companies, and
particularly BellSouth, are allowed to provide wireline interLATA long distance
services within their own regions before local competition is established.
InterLATA Data or Enhanced Broadband Local Services. The FCC has recently
---------------------------------------------------
considered requests by the Regional Bell Operating Companies for relief from the
in-region interLATA service restrictions and interconnection requirements of the
Telecommunications Act and related regulation insofar as they are providing
interLATA data services or enhanced broadband local services. The FCC denied the
Regional Bell Operating Companies' requests, affirmed that the
Telecommunications Act provisions apply equally to voice and data services, and
proposed new rules to strengthen collocation and interconnection obligations of
incumbent local telephone companies to facilitate broadband data service
competition. However, the FCC also has proposed new rules that would give the
major incumbent local exchange carriers more freedom in these areas if they
offer such services through separate subsidiaries. Specifically, incumbent local
exchange carriers would be allowed to offer advanced data services through such
subsidiaries without dominant carrier regulation and without the obligation to
make network facilities and services of that affiliate available to competitors.
The FCC is expected to take action on this matter in early 1999. We are
evaluating how such actions would impact our ability to compete with BellSouth
and other incumbent local exchange carriers.
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Additional Flexibility for Incumbent Local Exchange Carriers. The FCC is
------------------------------------------------------------
considering proposed new policies and rules that would grant the incumbent local
exchange carriers additional flexibility in the pricing of interstate access
services, and states are considering or are expected to consider incumbent local
exchange carrier requests for similar regulatory relief with respect to
intrastate services. Such flexibility is likely to come first for services
offered in the business market. Any pricing flexibility or other significant
deregulation of the incumbent local exchange carriers could have a material
adverse effect on ITC/\DeltaCom. If the incumbent local exchange carriers are
permitted to engage in increased volume and discount pricing practices prior to
full competition in local services, or if the incumbent local exchange carriers
seek to delay implementation of interconnection by competitors to their networks
or charge excessive interconnection fees, our results of operations and
financial condition could be adversely affected.
Access Charges; Universal Service. We also could be adversely affected by FCC
---------------------------------
or state regulatory decisions affecting access charges and universal service.
Such decisions could increase our costs of providing service or limit our
ability to recover those costs from rates charged to customers. The effect on
ITC/\DeltaCom would be particularly adverse to the extent that it bears a
disproportionate share of these costs compared to its competitors. These
matters are the subject of ongoing regulation, and important issues regarding
the future of access and universal service charges remain to be resolved.
WE FACE SIGNIFICANT CHALLENGES IN OFFERING LOCAL SERVICES, INCLUDING THE NEED TO
MAKE SIGNIFICANT INVESTMENTS AND COMPETE WITH ESTABLISHED PROVIDERS
We will have to continue to make significant operating and capital
investments, and address numerous operating complexities, to implement our local
exchange services strategy. We are required to:
. develop new products, services and systems;
. develop new marketing initiatives;
. train our sales force in connection with selling these services; and
. implement the necessary billing and collecting systems for these
services.
In addition, we expect to continue to face significant pricing and product
competition from the Regional Bell Operating Companies, whose core business is
providing local dial tone service and who are currently the dominant providers
of services in their markets. We also will face significant competitive product
and pricing pressures from other incumbent local exchange carriers and from
other companies like us which attempt to compete in the local services market.
We also expect that the addition of local service to our bundle of
telecommunications services will continue to have a negative impact on our gross
margin as a percentage of revenues. This is because the gross margin on the
resale of local services through incumbent local exchange carrier facilities is
lower than the gross margin on our other lines of business. Gross margin means
gross revenues less cost of services.
THE LONG DISTANCE TRANSMISSION INDUSTRY IS SUBJECT TO PRICING PRESSURES AND
RISKS OF INDUSTRY OVER-CAPACITY
Since shortly after the AT&T divestiture in 1984, the long distance
transmission industry generally has experienced over-capacity and declining
prices. These trends have exerted downward pressure affecting our Carriers'
Carrier Services and we anticipate that prices for our Carriers' Carrier
Services will continue to decline over the next several years. Dramatic and
substantial price reductions in the long distance industry could force us to
reduce our prices significantly, which could have a material adverse effect on
our business, financial condition and results of operations, including our
ability to repay the Exchange Notes.
We expect these price declines will occur because:
. some long distance carriers are expanding their capacity generally;
. other existing long distance carriers and potential new carriers are
constructing new fiber optic and other long distance transmission
networks in the southern United States;
19
<PAGE>
. expansion and new construction of transmission networks is likely to
create substantial excess capacity relative to demand in the short or
medium term. Persons building such lines are likely to install fiber
that provides substantially more transmission capacity than will be
needed because the cost of the actual fiber is a relatively small
portion of the overall cost of constructing new lines;
. recent technological advances may also greatly expand the capacity of
existing and new fiber optic cable;
. the marginal cost of carrying an additional call over existing fiber
optic cable is extremely low;
An increase in the capacity of our competitors could adversely affect our
business, even if we are also able to increase our capacity. If industry
capacity expands so much that available capacity exceeds overall demand along
any of our routes, severe additional pricing pressure could develop. See "--Our
Business is Subject to Significant Competitive Pressures."
THE LOCAL AND LONG DISTANCE INDUSTRIES ARE SUBJECT TO SIGNIFICANT GOVERNMENT
REGULATION, AND THE REGULATIONS MAY CHANGE
We are required to obtain authorizations from the FCC and state public utility
commissions to offer some of our telecommunications services. We are also
required to file tariffs for many of our services and to comply with local
license or permit requirements relating to installation and operation of our
network. Any of the following could have a material adverse effect on our
business, results of operations and financial condition, and on our ability to
repay the Exchange Notes:
. failure to maintain proper federal and state tariffs;
. failure to maintain proper state certifications;
. failure to comply with federal, state or local laws and regulations;
. failure to obtain and maintain required licenses and permits;
. burdensome license or permit requirements to operate in public rights-
of-way; and
. burdensome or adverse regulatory requirements or developments.
In addition, we recently entered the newly-created competitive local
telecommunications services industry. The local telephone services market was
opened to competition through the passage of the Telecommunications Act in 1996
and subsequent state and federal regulatory actions arising from the
Telecommunications Act. Because the FCC and the states are still implementing
many of the rules and policies necessary for local telephone competition, and
addressing other related issues, it is uncertain how successful the
Telecommunications Act will be in creating local competition. There is little
practical experience under the decisions that have been made to date. If we are
required to change or delay our offering of local services as a result of
changes in regulatory requirements, we may experience adverse effects on our
business, results of operations and financial condition, and on our ability to
repay the Exchange Notes.
WE DEPEND ON ACCESS SERVICE FROM INCUMBENT LOCAL EXCHANGE CARRIERS TO PROVIDE
LONG DISTANCE AND INTEREXCHANGE PRIVATE SERVICES, AND WE COULD BE ADVERSELY
AFFECTED IF WE DO NOT BENEFIT FROM REDUCED ACCESS CHARGES AT LEAST AS MUCH AS
OUR COMPETITORS
We depend on incumbent local exchange carriers to provide access service for
the origination and termination of our toll long distance traffic and
interexchange private lines. Historically, charges for such access service have
made up a significant percentage of the overall cost of providing long distance
service. In 1998, the FCC implemented changes to its interstate access rules
that, among other things, have reduced per-minute access charges and substituted
new per-line flat rate monthly charges. The FCC also approved reductions in
overall access rates, and established new rules to recover subsidies to support
universal service and other public policies. Additional access charge
adjustments will be implemented in the future. The impact of these changes on us
or our competitors is not yet clear. We could be adversely affected if we do
not experience access cost reductions proportionally equivalent to those of our
competitors. Insofar as new Internet-based competitors continue to be exempt
from these charges, they could enjoy a significant cost advantage in this area.
20
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IF WE ARE UNABLE TO INTERCONNECT WITH BELLSOUTH AND INCUMBENT LOCAL EXCHANGE
CARRIERS ON ACCEPTABLE TERMS, OUR ABILITY TO OFFER LOCAL TELEPHONE SERVICES WILL
BE ADVERSELY AFFECTED
In August 1996, the FCC adopted rules and policies (1) implementing the local
competition provisions of the Telecommunications Act and (2) imposing
obligations on the incumbent local exchange carriers, including the Regional
Bell Operating Companies, to enter into interconnection agreements with new
competitive entrants like ITC/\DeltaCom. In January 1999, the Supreme Court
upheld the FCC's authority to adopt and implement these rules, but many aspects
of such implementation remain to be determined. Those obligations include
requirements that these local exchange carriers:
. offer wholesale local services for resale;
. sell their local network elements to competing carriers; and
. interconnect their networks with competitors' networks.
Incumbent local exchange carriers meet these requirements under interconnection
agreements negotiated with competitive local exchange carriers under regulatory
supervision. Such agreements have been the subject of ongoing disputes, and key
issues remain open, including:
. whether the incumbent local exchange carriers retain the right to
receive the access revenues associated with local service when a local
service provider obtains all necessary elements, including loops and
switches, from the incumbent local exchange carrier; and
. whether competitive local exchange carriers should receive reciprocal
compensation from the incumbent local exchange carriers when the
competitive carriers terminate traffic to Internet service providers.
Our ability to successfully negotiate interconnection agreements on a timely
basis and on favorable terms is critical to our ability to provide local
services on a competitive and profitable basis. We cannot assure you that we
will be able to enter into or renew interconnection agreements that permit us to
offer local services at rates that are both profitable and competitive. Any
successful effort by the incumbent local exchange carriers to deny or
substantially limit our access to their network elements or wholesale services
would have a material adverse effect on our ability to provide local telephone
services. This would have a material adverse effect on our business, results of
operations, and financial condition, and on our ability to repay the Exchange
Notes.
We depend on our interconnection agreements with incumbent local exchange
carriers such as BellSouth, GTE and Sprint to:
. provide local telephone service through access to local loops,
termination service and, in some markets, central office switches of
such carriers;
. resell local telephone services that we obtain from the incumbent
local exchange carriers on a wholesale basis; and
. obtain operational support to ensure timely delivery to us of network
elements and wholesale services from the incumbent local exchange
carriers.
Our interconnection agreement with BellSouth is our most significant
interconnection agreement, enabling us to provide local services in all nine
markets in which BellSouth operates. That agreement currently allows us to
provide local service on a resale basis or by purchasing all unbundled network
elements required to provide local service on a facilities basis, without having
to buy or build our own facilities. The terms of that interconnection
agreement, including interim pricing terms to which we and BellSouth have
agreed, have been approved by state regulatory authorities in all states in
which BellSouth operates. These interim pricing terms remain subject to review
and modification by such authorities. In addition, the BellSouth
interconnection agreement does not resolve all operational issues. We and
BellSouth are continuing to negotiate to resolve those issues.
The BellSouth interconnection agreement expires on July 1, 1999. We have begun
negotiations with BellSouth to renew the terms of the interconnection agreement.
In the event we fail to agree with BellSouth on renewal terms by July 1, 1999,
the agreement provides that the parties will continue to exchange traffic under
the current agreement until such time as renewal terms, conditions and prices
are ordered by a state commission or negotiated by the parties. The new terms,
conditions and prices would then be effective retroactive to July 1, 1999. We
cannot assure you that we will be able to renew the interconnection agreement
with BellSouth on favorable terms, or at all.
Under the Telecommunications Act, the Regional Bell Operating Companies will
not be permitted to provide in-region interLATA long distance services until
there is adequate competition in the local services industry. This provides
21
<PAGE>
some incentive to the Regional Bell Operating Companies to provide access to
their facilities to competitive new entrants like ITC/\DeltaCom. We cannot
assure you, however, that once BellSouth or other Regional Bell Operating
Companies are permitted to offer long distance service, they will continue to be
willing to enter into interconnection agreements with us that will enable us to
provide local services on competitive and profitable terms.
WE ARE DEPENDENT UPON RIGHTS OF WAY AND OTHER THIRD PARTY AGREEMENTS TO EXPAND
AND MAINTAIN OUR FIBER OPTIC NETWORK
To construct and maintain our fiber optic network, we have obtained easements,
rights of way, franchises and licenses from various private parties, including
actual and potential competitors and local governments. We cannot assure you
that we will continue to have access to existing rights of way and franchises
after the expiration of our current agreements, or that we will obtain
additional rights necessary to extend our network on reasonable terms. If a
franchise, license or lease agreement were terminated and we were forced to
remove or abandon a significant portion of our network, such termination could
have a material adverse effect on our business, results of operations, and
financial condition, and on our ability to repay the Exchange Notes. Similarly,
our business plans could be adversely affected if our network expansion is
hindered through delays or denials of rights of way, easements or related
licenses on competitive terms.
WE ARE DEPENDENT ON OUR NETWORK INFRASTRUCTURE, PORTIONS OF WHICH WE DO NOT OWN
Network Agreements May be Terminated. We have effectively extended our
------------------------------------
network with minimal capital expenditures by entering into marketing and
management agreements with three southern public utility companies to sell long-
haul private line services on the fiber optic networks owned by these companies.
Under these agreements, which have remaining terms ranging from three to six
years, we generally earn a commission based upon a percentage of the gross
revenues generated by the sale of capacity on the utility's networks. We also
have an agreement to buy and sell capacity with Carolinas Fibernet, which
manages fiber optic facilities in North Carolina and South Carolina.
Cancellation or non-renewal of any of these agreements could materially
adversely affect our business, results of operations, and financial condition,
and our ability to repay the Exchange Notes.
Some of Our Agreements are Non-Exclusive. In addition, two of our three
----------------------------------------
agreements with the public utility companies are nonexclusive, and we may
encounter competition for capacity on the utilities' networks from other service
providers that enter into comparable arrangements with the utilities. Any
reduction in the amount of capacity that is made available to us could adversely
affect us. To the extent that we are unable to establish similar arrangements
in new markets, we may be required to make additional capital expenditures to
extend our fiber optic network.
We May Experience Network Equipment Failures or Cable Cuts. Our business also
-----------------------------------------------------------
could be materially adversely affected by a cable cut or equipment failure in
our fiber optic network. A substantial portion of our owned and managed fiber
optic network is not protected by electronic redundancy in the event of a total
cable cut. Electronic redundancy enables us to reroute traffic to another fiber
in the same fiber sheath in the event of a partial fiber cut or electronics
failure.
WE ARE DEPENDENT ON CERTAIN LARGE CUSTOMERS FOR A SIGNIFICANT PERCENTAGE OF OUR
REVENUES AND WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO RETAIN THOSE CUSTOMERS
The table below sets forth, for the year ended December 31, 1997 and the nine
months ended September 30, 1998, the percentage of our consolidated revenues
accounted for by our two largest Carriers' Carrier customers and our five
largest Retail Services customers.
<TABLE>
<CAPTION>
----------------------------------------------------------
YEAR ENDED NINE MONTHS ENDED
---------- -----------------
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
<S> <C> <C>
-------------------------------------------------------------------------------------
Two Largest Carriers' Approximately 12.5% of Approximately 10.8% of
Carrier Customers consolidated revenues consolidated revenues
-------------------------------------------------------------------------------------
Five Largest Retail Approximately 10.0%% of Approximately 11.7% of
Services Customers consolidated revenues consolidated revenues
-------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
We cannot assure you that we will be able to retain our customers. The loss
of, or a significant decrease of business from, any of our largest customers
would have a material adverse effect on our business, results of operations and
financial condition, and on our ability to repay the Exchange Notes.
For both Carriers' Carrier Services and Retail Services, our customers
generally have concurrent arrangements with more than one service provider.
This enables our customers to reduce their use of our services and switch to
other providers without incurring significant expense. Our agreements with our
customers generally provide that the customer may terminate service without
penalty in the event of specified types of outages in service and for other
defined causes. As of September 30, 1998, our Carriers' Carrier business had
remaining future long-term contract commitments totaling approximately $129.6
million. Some of those contractual commitments provide that, if the customer is
offered lower pricing with respect to any circuit by another carrier, the
customer's commitment to us will be reduced to the extent we do not match the
price for such circuit and the customer purchases such circuit from the other
carrier.
WE ARE DEPENDENT ON SOPHISTICATED BILLING, CUSTOMER SERVICE AND INFORMATION
SYSTEMS
We depend on sophisticated information and processing systems to grow, monitor
costs, bill customers, provision customer orders and achieve operating
efficiencies. As we increase our provision of dial tone and switched local
access services, the need for enhanced billing and information systems will also
increase. Our inability to identify adequately all of our information and
processing needs, or to upgrade systems as necessary, could have a material
adverse effect on our ability to reach our objectives and on our financial
condition and results of operations, and on our ability to repay the Exchange
Notes.
FAILURE TO OBTAIN YEAR 2000 COMPLIANCE MAY HAVE ADVERSE EFFECTS ON THE COMPANY
The Year 2000 issue is the result of computer programs using two digits,
rather than four, to define the applicable year. Because of this programming
convention, software, hardware or firmware may recognize a date using ''00'' as
the year 1900 rather than the year 2000. This could result in system failures,
miscalculations or errors causing disruptions of operations or other business
problems, including, among others, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
Our Year 2000 readiness program is described below. However, we cannot know the
actual effects of the Year 2000 issue on our business and operations until the
Year 2000. If we and/or our major vendors, third party network service
providers, and other material service providers and customers fail to adequately
address our respective Year 2000 issues in a timely manner, this could have a
material adverse effect on our business, results of operations, and financial
condition, and on our ability to repay the Exchange Notes.
We have undertaken a comprehensive program to address the Year 2000 issue with
respect to the following:
. our information technology and operating systems, including our
network switching, customer service, call detail and billing systems;
. our non-information technology systems, such as buildings, plant,
equipment and other infrastructure systems that may contain embedded
microcontroller technology;
. the systems of our major vendors, third party network service
providers and other material service providers, insofar as they relate
to our business; and
. our major Carriers' Carrier and Retail Services customers.
Our Year 2000 program involves:
. a wide-ranging assessment of the Year 2000 problems that may affect
us;
. the development of remedies to address the problems discovered in the
assessment phase;
. testing of the remedies; and
. the preparation of contingency plans to deal with worst case
scenarios.
As part of the assessment phase of this program, we have identified
substantially all of the major components of the systems described above. To
determine the extent to which those systems are vulnerable to the Year 2000
issue, we:
. evaluated our internally developed software applications; and
23
<PAGE>
. made inquiries of substantially all of our significant hardware,
software and other equipment vendors, third party network service
providers, other material service providers and material customers
requesting detailed, written information related to Year 2000
compliance.
To date, we have received and analyzed responses from a substantial majority
of our major vendors and service providers and from our significant Carriers'
Carrier and Retail Services customers. We are investigating, and intend to
closely monitor, the Year 2000 readiness of the three public utilities that own
and operate approximately 3,680 miles of our approximately 7,850-mile fiber
optic network. All of those utilities have indicated that they are addressing
the issue. In addition, we have begun to follow up with respect to those
entities that have not yet responded to our Year 2000 inquiries.
Based upon the results to date of our assessment efforts, we have begun our
remediation and testing phase. We intend to complete this phase by the second
quarter of 1999. After we complete our internal, integrated systems testing, we
intend to conduct laboratory-simulated integrated systems testing in an effort
to demonstrate Year 2000 compliance of our systems as they interface with
external systems and equipment of major vendors, third party network providers,
other material service providers and customers. We have begun to develop
contingency plans to handle our most reasonably-likely worst case Year 2000
scenarios, which have not yet been identified fully. We intend to complete our
determination of worst case scenarios after we have received and analyzed
responses to substantially all of the inquiries we have made. Following that
phase, we intend to develop a timetable for completing our contingency plans.
Through the end of 1998, we incurred approximately $1.1 million in costs for
our Year 2000 program. We currently estimate that, in 1999, we will incur
additional expenses which are not expected to exceed approximately $1.0 million
to complete our Year 2000 compliance work. These costs, which may vary from the
estimates, have been, and will continue to be, expensed as incurred.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH RAPID CHANGES IN TECHNOLOGY
The telecommunications industry is subject to rapid and significant changes in
technology. In addition, we may be required to select in advance one emerging
technology over another, but it will be impossible to predict with any
certainty, at the time we are required to make our investment, which technology
will prove to be the most economic, efficient or capable of attracting customer
usage. Unexpected developments, or our failure to adapt to them, could have a
material adverse effect on our business, results of operations, financial
condition, and our ability to repay the Exchange Notes.
WE ARE A HOLDING COMPANY AND WE ARE DEPENDENT ON OUR SUBSIDIARIES FOR CASH
FLOWS, INCLUDING TO PAY INTEREST AND PRINCIPAL ON THE NOTES; THE NOTES ARE
SUBORDINATED TO DEBT OF OUR SUBSIDIARIES
We are a holding company with no direct operations and no significant assets
other than the stock of our subsidiaries. We conduct all of our operations
through our subsidiaries. We are therefore dependent on cash flows from our
subsidiaries to meet our obligations, including the payment of interest and
principal on the Notes. Our subsidiaries are separate legal entities that have
no obligation to pay any amounts due on the Notes. They also have no obligation
to make any funds available to us for such purposes, whether by dividends, loans
or other payments.
The Exchange Notes will be effectively subordinated in right of payment to all
liabilities of our subsidiaries. This means that in the event of a bankruptcy,
liquidation or reorganization, our subsidiaries must pay their creditors in full
before we could use their assets to pay you. If and to the extent we are a
creditor of a subsidiary, our claims would still be effectively subordinated to
any security interest in the assets of such subsidiary held by other creditors.
At September 30, 1998, our subsidiaries had approximately $44.9 million of
liabilities, excluding intercompany payables. These liabilities include
approximately $3.3 million of indebtedness, including capital leases.
OUR SECURED DEBT IS SENIOR TO THE EXCHANGE NOTES
The Exchange Notes will be unsecured and will be subordinated to our secured
debt. This means if we default on any of our secured debt, or if we are the
subject of a bankruptcy, liquidation, dissolution, reorganization or similar
proceeding, our secured creditors could foreclose on their collateral and
receive payment out of the proceeds of that collateral before we could use those
assets to pay you. If the value of the collateral is less than the amount owed,
our secured creditors would have equal rights with you to our remaining assets.
As a result, if our obligations to pay on the
24
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Exchange Notes are accelerated because we have defaulted under the Exchange
Notes, there may only be a limited amount of assets available to satisfy any
claims by holders of the Exchange Notes.
The indentures permit us and our subsidiaries to incur an unlimited amount of
debt to finance the acquisition of equipment, inventory and network assets and
to secure such debt. The indentures permit us and our subsidiaries to incur
additional secured debt -- up to $100 million under the 1997 Note Indenture,
and up to $150 million under the Indenture and the 1998 Note Indenture, which
may be increased to $250 million under conditions specified in the indentures.
If we are able to amend our Credit Facility as we anticipate, we will have
available borrowings of $50.0 million, subject to compliance with the Credit
Agreement. Our Credit Facility is secured by substantially all of the assets of
our subsidiaries.
OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL
Our business is currently managed by a small number of key management and
operating personnel. We do not have any employment agreements with, nor do we
maintain "key man" insurance on, these employees. The loss of the services of
key personnel, or the inability to attract, recruit and retain sufficient or
additional qualified personnel, could have a material adverse effect on our
business, results of operations and financial condition, and on our ability to
repay the Exchange Notes.
OUR OPERATING RESULTS COULD VARY SIGNIFICANTLY FROM PERIOD TO PERIOD PRIMARILY
DUE TO HIGH EXPENSES
Our revenues and operating results could vary significantly from period to
period for many reasons, including:
. significant expenses associated with the construction and expansion of
our network and services;
. competition and regulatory developments;
. changes in market growth rates for our products and services;
. availability or announcement of alternative technologies; and
. general economic conditions.
These factors and any resulting fluctuations in our operating results will
make period to period comparisons of our financial condition less meaningful and
could have a material adverse effect on our business, results of operations,
financial condition and our ability to repay the Exchange Notes.
IF YOU ARE AN AFFILIATE OF ITC/\DELTACOM OR A BROKER-DEALER, YOUR ABILITY TO
TRANSFER THE EXCHANGE NOTES MAY BE RESTRICTED
You may generally sell the Exchange Notes without complying with the
registration requirements of the Securities Act, unless you are:
. an "affiliate" of ITC/\DeltaCom within the meaning of Rule 405 under
the Securities Act;
. a broker-dealer that acquired Outstanding Notes as a result of market-
making or other trading activities; or
. a broker-dealer that acquired Outstanding Notes directly from us for
resale pursuant to Rule 144A or another available exemption under the
Securities Act.
"Affiliates" of ITC/\DeltaCom may sell Exchange Notes only in compliance with
the provisions of Rule 144 under the Securities Act or another available
exemption. The broker-dealers described above must deliver a prospectus in
connection with any resale of Exchange Notes. See "Plan of Distribution."
THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES
The Exchange Notes will constitute a new issue of securities for which there
is no established trading market. Although we have been advised by Morgan
Stanley & Co. Incorporated and First Union Capital Markets, the placement agents
for the Outstanding Notes, that, following completion of the Exchange Offer,
they intend to make a market in the Exchange Notes, they are not obligated to do
so and any market-making activities with respect to the Exchange Notes may be
discontinued at any time without notice.
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If a market for the Exchange Notes develops, any such market may cease at any
time. In addition, if a public trading market for the Exchange Notes develops,
future trading prices of the Exchange Notes will depend on many factors,
including, among other things:
. prevailing interest rates;
. the market for similar securities;
. our financial conditions and results of operations; and
. other factors beyond our control, including general economic
conditions.
We do not intend to list the Exchange Notes on any national securities exchange
or seek approval for quotation through any automated quotation system.
Accordingly, we cannot assure you:
. that an active public or other market will develop for the Exchange
Notes; or
. of the liquidity of any trading market for the Exchange Notes
following the Exchange Offer.
If a trading market does not develop or develops but is not maintained, holders
of the Exchange Notes may experience difficulty in reselling the Exchange Notes
or may be unable to sell them at all.
IF YOU DO NOT EXCHANGE YOUR OUTSTANDING NOTES, YOUR OUTSTANDING NOTES WILL
REMAIN SUBJECT TO TRANSFER RESTRICTIONS
We have not registered nor do we intend to register any of the Outstanding
Notes under the Securities Act or any state securities laws. Therefore, you may
not offer, sell or otherwise transfer any Outstanding Notes that remain
outstanding after consummation of the Exchange Offer:
. unless you comply with the registration requirements of the Securities
Act and any other applicable securities laws; or
. pursuant to an exemption from all applicable laws or in a transaction
not subject to those laws.
In each case, you must comply with other applicable conditions and restrictions.
Outstanding Notes that remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting these restrictions on transfer.
In addition, if you do not exchange your Outstanding Notes pursuant to the
Exchange Offer, you will have no right to require us to register Outstanding
Notes, except under certain limited circumstances. To the extent that you do not
successfully tender your Outstanding Notes in the Exchange Offer, your ability
to sell Outstanding Notes could be adversely affected.
YOU BEAR THE RISKS OF NOT COMPLYING WITH EXCHANGE OFFER PROCEDURES
You are responsible for complying with all Exchange Offer procedures. You
will only receive Exchange Notes in exchange for your Outstanding Notes if,
prior to the Expiration Date, you deliver to the Exchange Agent:
. your Outstanding Notes or a book-entry confirmation of a book-entry
transfer of the Outstanding Notes into the Exchange Agent's account at
The Depository Trust Company, or "DTC";
. the Letter of Transmittal, or a facsimile thereof, properly completed
and duly executed by you, with any required signature guarantees; and
. any other documents required by the Letter of Transmittal.
You should allow sufficient time to ensure that the Exchange Agent receives all
required documents prior to the Expiration Date. Neither we nor the Exchange
Agent has any duty to inform you of defects or irregularities with respect to
the tender of your Outstanding Notes for exchange. See "The Exchange Offer."
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Outstanding Notes, we entered into the
Registration Rights Agreement with Morgan Stanley & Co. Incorporated and First
Union Capital Markets, the placement agents for the Outstanding Notes (the
"Placement Agents"). Pursuant to the Registration Rights Agreement, we agreed to
file and to use our best efforts to cause to become effective with the
Securities and Exchange Commission (the "SEC" or "Commission") a registration
statement with respect to the exchange of the Outstanding Notes for Exchange
Notes with terms identical in all material respects to the terms of the
Outstanding Notes. A copy of the Registration Rights Agreement has been filed as
an exhibit to the Registration Statement of which this prospectus is a part (the
"Registration Statement"). The Exchange Offer is being made to satisfy our
contractual obligations under the Registration Rights Agreement.
By tendering Outstanding Notes in exchange for Exchange Notes, each holder
will represent to us that:
(i) any Exchange Notes to be received by such holder will be acquired
in the ordinary course of such holder's business;
(ii) such holder has no arrangement or understanding with any person
to participate in a distribution (within the meaning of the
Securities Act) of the Exchange Notes;
(iii) such holder is not an "affiliate" of ITC/\DeltaCom (within the
meaning of Rule 405 under the Securities Act), or if such holder
is an affiliate, that such holder will comply with the
registration and prospectus delivery requirements of the
Securities Act to the extent applicable;
(iv) such holder has full power and authority to tender, exchange,
sell, assign and transfer the tendered Outstanding Notes;
(v) we will acquire good, marketable and unencumbered title to the
tendered Outstanding Notes, free and clear of all liens,
restrictions, charges and encumbrances; and
(vi) the Outstanding Notes tendered for exchange are not subject to
any adverse claims or proxies.
Each tendering holder also will warrant and agree that such holder will, upon
request, execute and deliver any additional documents that we or the Exchange
Agent deem to be necessary or desirable to complete the exchange, sale,
assignment, and transfer of the Outstanding Notes tendered pursuant to the
Exchange Offer. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Outstanding Notes, where such Outstanding Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. See "Plan of Distribution."
The Exchange Offer is not being made to, nor will we accept tenders for
exchange from, holders of Outstanding Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Outstanding Notes are
registered on the books of ITC/\DeltaCom or any other person who has obtained a
properly completed bond power from the registered holder, or any participant in
DTC whose name appears on a security position listing as a holder of Outstanding
Notes (which, for purposes of the Exchange Offer, include beneficial interests
in the Outstanding Notes held by direct or indirect participants in DTC and
Outstanding Notes held in definitive form).
TERMS OF THE EXCHANGE OFFER
ITC/\DeltaCom hereby offers, upon the terms and subject to the conditions set
forth in this prospectus and in the accompanying Letter of Transmittal, to
exchange $1,000 principal amount of Exchange Notes for each $1,000 principal
amount of Outstanding Notes properly tendered prior to the Expiration Date and
not properly withdrawn in accordance with the procedures described below.
Holders may tender their Outstanding Notes in whole or in part in integral
multiples of $1,000 principal amount.
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The form and terms of the Exchange Notes will be the same as the form and
terms of the Outstanding Notes except that:
(i) the Exchange Notes will have been registered under the Securities
Act and therefore will not be subject to certain restrictions on
transfer applicable to the Outstanding Notes; and
(ii) holders of the Exchange Notes will not be entitled to certain
rights of holders of the Outstanding Notes under the Registration
Rights Agreement.
The Exchange Notes will evidence the same indebtedness as the Outstanding
Notes (which they will replace) and will be issued pursuant to, and entitled to
the benefits of, the Indenture.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Outstanding Notes being tendered for exchange. We reserve the right,
in our sole discretion, to purchase or make offers for any Outstanding Notes
that remain outstanding after the Expiration Date or, as set forth under "--
Conditions to the Exchange Offer," to terminate the Exchange Offer. We also
reserve the right, to the extent permitted by applicable law, to purchase
Outstanding Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer. As of the date of this prospectus, $125.0 million
aggregate principal amount of Outstanding Notes is outstanding.
Holders of Outstanding Notes do not have any appraisal or dissenters' rights
in connection with the Exchange Offer. Outstanding Notes that are not tendered,
or are tendered but not accepted, in connection with the Exchange Offer will
remain outstanding and continue to accrue interest in accordance with their
terms, but will not retain any rights under the Registration Rights Agreement.
See "Risk Factors--If You Do Not Exchange Your Outstanding Notes, Your
Outstanding Notes Will Remain Subject to Transfer Restrictions."
If any tendered Outstanding Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Outstanding Notes will be
returned, without expense, to the tendering holder thereof promptly after the
Expiration Date.
Holders who tender Outstanding Notes in connection with the Exchange Offer
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of Outstanding Notes in connection with the Exchange Offer. The Company
will pay all charges and expenses, other than certain applicable taxes described
below, in connection with the Exchange Offer. See "--Fees and Expenses."
THE BOARD OF DIRECTORS OF ITC/\DELTACOM MAKES NO RECOMMENDATION TO HOLDERS OF
OUTSTANDING NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY
PORTION OF THEIR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION,
NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
OUTSTANDING NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OUTSTANDING NOTES TO TENDER
AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH
THEIR ADVISERS, IF ANY, BASED ON THEIR FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS, AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on _________,
1999, unless we extend the Exchange Offer (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended).
We expressly reserve the right, in our sole and absolute discretion, subject
to applicable law, at any time and from time to time:
(i) to delay the acceptance of the Outstanding Notes for exchange;
(ii) to terminate the Exchange Offer (whether or not any Outstanding
Notes have theretofore been accepted for exchange) if we determine,
in our sole and absolute discretion, that any of the events or
conditions referred to under "--Conditions to the Exchange Offer"
has occurred or exists or has not been satisfied;
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(iii) to extend the Expiration Date of the Exchange Offer and retain
all Outstanding Notes tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Outstanding Notes to
withdraw their tendered Outstanding Notes as described under "--
Withdrawal Rights"; and
(iv) to waive any condition or otherwise amend the terms of the
Exchange Offer in any respect (whether or not any Outstanding
Notes have theretofore been accepted for exchange).
If the Exchange Offer is amended in a manner that we determine constitutes a
material change, or if we waive a material condition of the Exchange Offer, we
will promptly disclose such amendment by means of a prospectus supplement that
will be distributed to the registered holders of the Outstanding Notes, and we
will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Any such delay in acceptance, termination, extension or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent (any
such oral notice to be promptly confirmed in writing) and by making a public
announcement thereof, and such announcement in the case of an extension will be
made no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date. Without limiting the manner in which
we may choose to make any public announcement, and subject to applicable laws,
we will have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, we will
exchange, and will issue to the Exchange Agent, Exchange Notes for Outstanding
Notes validly tendered and not withdrawn (pursuant to the withdrawal rights
described under "--Withdrawal Rights") promptly after the Expiration Date.
In all cases, delivery of Exchange Notes in exchange for Outstanding Notes
tendered and accepted for exchange pursuant to the Exchange Offer will be made
only after timely receipt by the Exchange Agent of:
(i) Outstanding Notes or a book-entry confirmation of a book-entry
transfer of Outstanding Notes into the Exchange Agent's account
at DTC;
(ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature
guarantees; and
(iii) any other documents required by the Letter of Transmittal.
Accordingly, the delivery of Exchange Notes might not be made to all tendering
holders at the same time, and will depend upon when Outstanding Notes, book-
entry confirmations with respect to Outstanding Notes and other required
documents are received by the Exchange Agent.
The term "book-entry confirmation" means a timely confirmation of a book-entry
transfer of Outstanding Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, we will be deemed
to have accepted for exchange, and thereby exchanged, Outstanding Notes validly
tendered and not withdrawn as, if and when we give oral or written notice to the
Exchange Agent (any such oral notice to be promptly confirmed in writing) of our
acceptance of such Outstanding Notes for exchange pursuant to the Exchange
Offer. Our acceptance for exchange of Outstanding Notes tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering holder and ITC/\DeltaCom upon the terms and subject to the
conditions of the Exchange Offer. The Exchange Agent will act as our agent for
the purpose of receiving tenders of Outstanding Notes, Letters of Transmittal
and related documents, and as agent for tendering holders for the purpose of
receiving Outstanding Notes, Letters of Transmittal and related documents and
transmitting Exchange Notes to holders who validly tendered Outstanding Notes.
Such exchange will be made promptly after the Expiration Date. If for any reason
whatsoever the acceptance for exchange or the exchange of any Outstanding Notes
tendered pursuant to the Exchange Offer is delayed (whether before or after our
acceptance for exchange of Outstanding Notes), or if we extend the Exchange
Offer or are unable to accept for exchange or exchange Outstanding Notes
tendered pursuant to the Exchange Offer, then, without prejudice to our rights
set forth in this prospectus, the Exchange Agent may, nevertheless, on our
behalf and subject to Rule 14e-1(c) under the Exchange Act,
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retain tendered Outstanding Notes and such Outstanding Notes may not be
withdrawn except to the extent tendering holders are entitled to withdrawal
rights as described under "--Withdrawal Rights."
PROCEDURES FOR TENDERING OUTSTANDING NOTES
Valid Tender. Except as set forth below, in order for Outstanding Notes to be
validly tendered pursuant to the Exchange Offer, either (i) (a) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at the address set forth under "--Exchange Agent"
prior to the Expiration Date and (b) tendered Outstanding Notes must be received
by the Exchange Agent, or such Outstanding Notes must be tendered pursuant to
the procedures for book-entry transfer set forth below and a book-entry
confirmation must be received by the Exchange Agent, in each case prior to the
Expiration Date, or (ii) the guaranteed delivery procedures set forth below must
be complied with.
If less than all of the Outstanding Notes held by a holder are tendered by
such holder, such holder should fill in the amount of Outstanding Notes being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Outstanding Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and unless waived by us, evidence satisfactory
to us, in our sole discretion, of such person's authority to so act must be
submitted.
Any beneficial owner of Outstanding Notes that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO
LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Book-Entry Transfer. The Exchange Agent will make a request to establish an
account with respect to the Outstanding Notes at DTC for purposes of the
Exchange Offer within two business days after the date of this prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Outstanding Notes by
causing DTC to transfer such Outstanding Notes into the Exchange Agent's account
at DTC in accordance with DTC's procedures for transfers. However, although
delivery of Outstanding Notes may be effected through book-entry transfer into
the Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth under "--Exchange
Agent" prior to the Expiration Date, or the guaranteed delivery procedure set
forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
Signature Guarantees. Certificates for Outstanding Notes need not be endorsed
and signature guarantees on a Letter of Transmittal or a notice of withdrawal,
as the case may be, are unnecessary unless (a) a certificate for Outstanding
Notes is registered in a name other than that of the person surrendering the
certificate or (b) a registered holder completes the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (a) or (b) above, such certificates for Outstanding
Notes must be duly endorsed or accompanied by a properly executed bond power,
with the endorsement or signature on the bond power and on the Letter of
Transmittal or the notice of withdrawal, as the case may be, guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank;
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(ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
(iii) a credit union;
(iv) a national securities exchange, registered securities association
or clearing agency; or
(v) a savings association that is a participant in a Securities
Transfer Association (each an "Eligible Institution"), unless
surrendered on behalf of such Eligible Institution.
See Instructions 2 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Outstanding Notes pursuant
to the Exchange Offer and the certificates for such Outstanding Notes are not
immediately available or time will not permit all required documents to reach
the Exchange Agent before the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Outstanding Notes may
nevertheless be tendered, provided that all of the following guaranteed delivery
procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form
accompanying the Letter of Transmittal, setting forth the name and
address of the holder of Outstanding Notes and the amount of
Outstanding Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange
trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered
Outstanding Notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required
by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent. The Notice of Guaranteed
Delivery may be delivered by hand, or transmitted by facsimile or
mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery; and
(iii) the certificates (or book-entry confirmation) representing all
tendered Outstanding Notes, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal,
with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the
Exchange Agent within three New York Stock Exchange trading days
after the date of execution of the Notice of Guaranteed Delivery.
Determination of Validity. We will make, in our sole discretion, all
determinations regarding the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered Outstanding Notes.
Our determination shall be final and binding on all parties. We reserve the
absolute right, in our sole and absolute discretion, to reject any and all
tenders we determine are not in proper form or the acceptance for exchange of
which may, in the view of our counsel, be unlawful. We also reserve the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer as set forth under "--Conditions to the Exchange Offer" or any defect or
irregularity in any tender of Outstanding Notes of any particular holder whether
or not similar defects or irregularities are waived in the case of other
holders.
Our interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties. No tender of Outstanding Notes will be deemed to
have been validly made until all defects or irregularities with respect to such
tender have been cured or waived. Neither we, any of our affiliates or assigns,
the Exchange Agent or any other person shall be under any duty to give any
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
RESALES OF EXCHANGE NOTES
Based on interpretations by the staff of the Commission, as set forth in no-
action letters issued to third parties unrelated to ITC/\DeltaCom, we believe
that holders of Outstanding Notes (other than any holder that is (i) a broker-
dealer that acquired Outstanding Notes as a result of market-making activities
or other trading activities or (ii) an "affiliate" of ITC/\DeltaCom within the
meaning of Rule 405 under the Securities Act) who exchange their Outstanding
Notes for Exchange Notes pursuant to the Exchange Offer may offer for resale,
resell and otherwise transfer such Exchange Notes
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without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holders' business and such holders have no arrangement
or understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Notes. Any holder who tenders
Outstanding Notes in the Exchange Offer with the intention to participate, or
for the purpose of participating, in a distribution of the Exchange Notes or who
is an affiliate of ITC/\DeltaCom may not rely upon such interpretations by the
staff of the Commission and, in the absence of an exemption therefrom, must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale transaction. Failure to
comply with such requirements in such instance may result in such holder
incurring liabilities under the Securities Act for which the holder is not
indemnified by ITC/\DeltaCom. The staff of the Commission has not considered the
Exchange Offer in the context of a no-action letter, and there can be no
assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Outstanding Notes, where such
Outstanding Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. We have agreed that, for
a period not to exceed 180 days after the Expiration Date, we will furnish
additional copies of this prospectus, as amended or supplemented, to any broker-
dealer that reasonably requests such documents for use in connection with any
such resale. See "Plan of Distribution."
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at its address set forth under "--Exchange Agent" prior to the
Expiration Date. Any such notice of withdrawal must specify the name of the
person who tendered the Outstanding Notes to be withdrawn, the aggregate
principal amount of Outstanding Notes to be withdrawn, and (if certificates for
such Outstanding Notes have been tendered) the name of the registered holder of
the Outstanding Notes as set forth on the Outstanding Notes, if different from
that of the person who tendered such Outstanding Notes. If certificates for
Outstanding Notes have been delivered or otherwise identified to the Exchange
Agent, the notice of withdrawal must specify the certificate number on the
particular Outstanding Notes to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Outstanding Notes tendered for the account of an Eligible Institution. If
Outstanding Notes have been tendered pursuant to the procedures for book-entry
transfer set forth in "--Procedures for Tendering Outstanding Notes," the notice
of withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Outstanding Notes and must otherwise comply with
the procedures of DTC. Withdrawals of tenders of Outstanding Notes may not be
rescinded. Outstanding Notes properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any
subsequent time prior to the Expiration Date by following any of the procedures
described above under "--Procedures for Tendering Outstanding Notes."
We will make, in our sole discretion, all determinations regarding the
validity, form and eligibility (including time of receipt) of such withdrawal
notices. Our determination shall be final and binding on all parties. Neither
ITC/\DeltaCom, any affiliates of ITC/\DeltaCom, the Exchange Agent or any other
person shall be under any duty to give any notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Outstanding Notes which have been tendered but
which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes will accrue at the rate of 9 3/4% per annum and
will be payable in cash semi-annually on May 15 and November 15 of each year,
commencing May 15, 1999.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer or any extension of
the Exchange Offer, we will not be required to accept for exchange, or to
exchange, any Outstanding Notes for any Exchange Notes, and may, at any time and
from time to time, terminate the Exchange Offer or waive any conditions to or
amend the Exchange Offer in any
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respect (whether or not any Outstanding Notes have theretofore been accepted for
exchange), if we determine, in our sole and absolute discretion, that the
Exchange Offer violates applicable law or any applicable interpretation of the
staff of the Commission.
If such waiver or amendment constitutes a material change to the Exchange
Offer, we will promptly disclose such waiver by means of a prospectus supplement
that will be distributed to the registered holders of the Outstanding Notes, and
we will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The exchange of the Outstanding Notes for the Exchange Notes will not be a
taxable exchange for federal income tax purposes, and holders of Outstanding
Notes should not recognize any taxable gain or loss or any interest income as a
result of such exchange.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Delivery of the Letters of Transmittal and any
other required documents, questions, requests for assistance, and requests for
additional copies of this prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as follows:
BY FACSIMILE
(212) 780-0592
Attention: Customer Service
Confirm by telephone: (800) 548-6565
BY MAIL
United States Trust Company of New York
P.O. Box 843
Cooper Station
New York, New York 10276
Attention: Corporate Trust Services
BY HAND BEFORE 4:30 P.M. (E.S.T.)
United States Trust Company of New York
111 Broadway
New York, New York 10006
Attention: Lower Level Corporate Trust Window
BY OVERNIGHT COURIER AND BY HAND AFTER 4:30 P.M. (E.S.T.)
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBER WILL NOT
CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
ITC/\DeltaCom will bear all of the expenses of soliciting tenders. The
principal solicitation is being made by mail. Additional solicitation may be
made personally or by telephone or other means by officers, directors or
employees of ITC/\DeltaCom.
We have not retained any dealer-manager or similar agent in connection with
the Exchange Offer. We will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. We have agreed to pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection with such services. We will
also pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
prospectus and related documents to the beneficial owners of Senior Notes, and
in handling or tendering for their customers.
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<PAGE>
Holders who tender their Outstanding Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that if
Exchange Notes are to be delivered to, or are to be issued in the name of, any
person other than the registered holder of the Outstanding Notes tendered, or if
a transfer tax is imposed for any reason other than the exchange of Outstanding
Notes in connection with the Exchange Offer, then the amount of any such
transfer tax (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
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USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain obligations of
ITC/\DeltaCom under the Registration Rights Agreement. We will not receive any
proceeds from the issuance of the Exchange Notes offered hereby. In
consideration for issuing the Exchange Notes as contemplated in this prospectus,
we will receive, in exchange, an equal number of Outstanding Notes in like
principal amount. The form and terms of the Exchange Notes will be identical in
all material respects to the form and terms of the Outstanding Notes, except as
otherwise described herein under "The Exchange Offer--Terms of the Exchange
Offer."
The net proceeds to ITC/\DeltaCom from the sale of the Outstanding Notes
were approximately $121.6 million, after deducting the estimated underwriting
discounts and commissions and other expenses payable by us in connection with
the offering of the Outstanding Notes. We intend to use the net proceeds from
the offering of the Outstanding Notes, as follows:
. to fund an accelerated market expansion of our telecommunications
business, including expansion of our fiber optic network, expansion of
our Internet Service Provider (ISP) local telecommunications services
and the opening of new sales offices; and
. for additional working capital and other general corporate purposes.
We currently intend to allocate substantial proceeds to each of the foregoing
uses. The precise allocation of funds among these uses, however, will depend on
future technological, regulatory and other developments in or affecting our
business, the competitive climate in which we operate and the emergence of
future opportunities.
As part of our business strategy, we intend to continue to evaluate
potential acquisitions, joint ventures and strategic alliances in areas such as
wireline and wireless services, network construction and infrastructure and
Internet access. We have no definitive agreement with respect to any
acquisition, although from time to time we have discussions with other companies
and assess opportunities on an on-going basis. A portion of the net proceeds
from the offering of the Outstanding Notes may be used to fund any such
acquisitions, joint ventures and strategic alliances.
Pending the foregoing uses, we have invested the net proceeds of the
offering of the Outstanding Notes in short-term, interest-bearing, investment
grade securities.
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<PAGE>
CAPITALIZATION
The following table sets forth, as of September 30, 1998, (i) the actual
consolidated capitalization of ITC/\DeltaCom and (ii) the consolidated
capitalization of ITC/\DeltaCom as adjusted for the offering of the Outstanding
Notes. The data set forth below should be read in conjunction with "Use of
Proceeds," the financial statements and notes thereto and the other financial
data included elsewhere, or incorporated by reference, in this prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------------------
HISTORICAL AS ADJUSTED (a)
----------------- -----------------
(UNAUDITED)
<S> <C> <C>
Long term debt and capital lease obligations:
Capital lease obligations, including current portion of $752,470.................. $ 2,934,544 $ 2,934,544
1997 Senior Notes................................................................. 130,000,000 130,000,000
March 1998 Senior Notes........................................................... 159,849,331 159,849,331
Outstanding Notes................................................................. -- 125,000,000
Other, current.................................................................... 333,574 333,574
------------ ------------
Total long-term debt and capital lease obligations, including current
portion...................................................................... 293,117,449 418,117,449
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, $7.40 liquidation preference, 5,000,000
shares authorized; 1,480,771 shares issued and outstanding at September 30, 1998.... 14,808 14,808
Common Stock, $.01 par value, 90,000,000 shares authorized;
51,284,782 shares issued and outstanding at September 30, 1998 (b).............. 512,848 512,848
Additional paid-in capital........................................................ 166,855,588 166,855,588
Accumulated deficit............................................................... (39,744,216) (39,744,216)
------------ ------------
Total stockholders' equity..................................................... 127,639,028 127,639,028
------------ ------------
Total capitalization........................................................... $420,756,477 $545,756,477
============ ============
</TABLE>
_________________________________
(a) Includes the offering of the Outstanding Notes.
(b) Excludes 9,424,948 shares of Common Stock issuable upon the exercise of
options outstanding as of September 30, 1998.
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<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT FACILITY
Our wholly owned subsidiary, Interstate FiberNet, Inc. (the
"Borrower"), has a credit agreement with NationsBank and certain other lenders
(the "Credit Agreement"), which provides for a $50.0 million revolving Credit
Facility to be used for working capital and other purposes, including capital
expenditures and permitted acquisitions.
To date, no amounts have been borrowed under the Credit Facility and we do
not expect to borrow under the Credit Facility during 1999. We are, however, in
the process of negotiating with NationsBank substantial amendments to the Credit
Agreement, in order to accommodate adjustments we have made and are anticipating
making to our business plans. In particular, we have continued to accelerate
expansion of our fiber optic network and our retail services segment. This
accelerated expansion has required us to make substantial capital expenditures.
During 1998, we made capital expenditures of approximately $148 million on a
consolidated basis, which exceeds the maximum capital expenditures for 1998
currently permitted under the Credit Agreement by approximately $18 million.
NationsBank has indicated its willingness to waive this technical default, but a
waiver has not yet been signed by all the parties required to sign under the
Credit Agreement. Unless and until such waiver is received, we will be unable to
borrow any amounts under the Credit Facility. We currently expect that this
waiver will be included as part of the more comprehensive amendments to the
Credit Agreement that we are in the process of discussing with NationsBank.
However, we cannot assure you that the waiver or the amendments will be
completed on a timely basis, or at all.
Set forth below is a summary of the material provisions of the Credit
Facility. The following summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the Credit Agreement. If
the Credit Facility is amended, as we currently anticipate, its terms may differ
materially from those described below. Certain capitalized terms used in this
description of the Credit Facility are defined at the end of this section.
Amounts drawn under the Credit Facility will bear interest, at the
Borrower's option, at either the Base Rate or the LIBOR Rate, plus an Applicable
Margin. The Applicable Margin will be an annual rate which will fluctuate based
on the Borrower's Total Leverage Ratio and which will be between 1.125% and 0%
for Base Rate borrowings and between 2.125% and 1.0% for LIBOR Rate borrowings.
The Credit Agreement requires the Borrower to repay indebtedness
outstanding under the Credit Facility with the net cash proceeds from sales of
assets by ITC/\DeltaCom, the Borrower or the Borrower's subsidiaries other than
in the ordinary course of business and from certain public or private issuances
of equity securities or debt securities by ITC/\DeltaCom, the Borrower or the
Borrower's subsidiaries.
The Borrower's obligations under the Credit Facility are guaranteed by
ITC/\DeltaCom and the Borrower's subsidiaries and are secured by a first
priority lien on all current and future assets and properties of the Borrower
and its subsidiaries, except for certain contract rights and interests in real
estate, and by a first priority pledge of the stock of the Borrower and its
subsidiaries.
The Credit Agreement contains negative covenants limiting the ability of
the Borrower, the Borrower's current and future subsidiaries and ITC/\DeltaCom
to incur debt, create liens, pay dividends, make distributions or stock
repurchases, make investments or capital expenditures, change their business,
issue capital stock, engage in transactions with affiliates, sell assets, engage
in mergers and acquisitions and assume or make guaranties. In addition, the
Credit Agreement contains affirmative covenants, including covenants requiring
compliance with laws, maintenance of corporate existence, licenses, properties
and insurance, payment of taxes and performance of other material obligations
and the delivery of financial and other information.
The Credit Agreement restricts the Borrower from declaring and paying
dividends or other distributions to ITC/\DeltaCom. However, the Borrower is
permitted to pay dividends to ITC/\DeltaCom to pay scheduled interest on (i) the
1997 Senior Notes beginning after the sixth scheduled interest payment, (ii) the
March 1998 Senior Notes, and (iii) the Notes, unless at the time of such
dividend or distribution an event of default (other than an event of default
resulting solely from the breach of a representation or warranty) under the
Credit Agreement exists or would be caused by such dividend or distribution;
provided that, with respect to any event of default (other than a payment
default, a bankruptcy event with respect to ITC/\DeltaCom, the Borrower or (with
respe ct to the March 1998 Senior Notes and the Notes) any Significant
Subsidiary of ITC/\DeltaCom, or an event in which any portion of the assets of
the Borrower and its subsidiaries that has
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<PAGE>
generated more than 5% of the Operating Cash Flow for the most recently
completed twelve-month period shall not be operating for a period in excess of
30 days), the Borrower will not be prohibited for more than 180 days from paying
dividends to ITC/\Deltacom to pay scheduled cash interest due and payable on the
1997 Senior Notes, the March 1998 Senior Notes and the Notes.
The Credit Agreement also requires the Borrower to comply with certain
financial tests and to maintain certain financial ratios on a consolidated
basis. The Borrower must maintain:
(i) a Total Leverage Ratio no greater than 9.5:1.0 through June 30,
1999, 8.75 to 1.0 from July 1, 1999 to June 30, 2000, 7.5 to 1.0
from July 1, 2000 to June 30, 2001, 6.0 to 1.0 from July 1, 2001 to
June 30, 2002 and 4.5 to 1.0 from July 1, 2002 and thereafter;
(ii) a Senior Leverage Ratio no greater than 2.75:1.0 through June 30,
2000 and 2.25:1.0 thereafter;
(iii) an Interest Coverage Ratio no less than 1.50:1.0 (or, in the event
the Borrower does not redeem 35% of the 1997 Senior Notes within 60
days after the closing date of the Credit Agreement, 1.75:1.0)
through June 30, 2000 and 1.75:1.0 thereafter; and
(iv) capital expenditures no greater than $105,000,000 for fiscal year
1998, $100,000,000 for fiscal year 1999, $50,000,000 for fiscal
year 2000, $45,000,000 for fiscal year 2001 and for each fiscal
year thereafter;
provided, that (A) to the extent that less than such amount is used for any
fiscal year, the limitation on capital expenditures for succeeding fiscal years
may be increased by the amount of such unused amount and (B) the Borrower may
add $25,000,000 in the aggregate to the maximum amounts set forth above,
provided that at the time the Borrower elects to increase the maximum amount by
any portion of the $25,000,000, there exists no event of default.
Failure to satisfy any of the financial covenants constitutes an event of
default under the Credit Facility, notwithstanding the ability of the Borrower
to meet its debt service obligations. The Credit Agreement also includes other
customary events of default, including, without limitation, a cross-default to
other indebtedness, material undischarged judgments, bankruptcy and a change of
control.
As used in this section:
"Annualized Operating Cash Flow" means Operating Cash Flow for the six-
month period most recently ended, multiplied by two.
"Interest Coverage Ratio" means, for ITC/\DeltaCom on a consolidated basis
for any period, the ratio of Annualized Operating Cash Flow to the aggregate
amount of interest due and payable by ITC/\DeltaCom, the Borrower and the
Borrower's subsidiaries with respect to Total Debt during such period net of
interest on the 1997 Senior Notes funded by pledged securities, interest income
for such period, interest actually paid-in-kind, any one-time facility fees paid
in connection with the Credit Facility and in connection with any pre-existing
debt of ITC/\DeltaCom, the Borrower or the Borrower's subsidiaries, up to $9.5
million of accrued interest paid by the Borrower to ITC Holding prior to
September 17, 1987, one-time prepayment penalties incurred as a result of the
extinguishment on the closing date of the Credit Agreement of interest rate
protection agreements of the Borrower in an amount not in excess of $2,800,000
and any interest expense associated exclusively with the mark to market on such
closing date of interest rate protection agreements of the Borrower in an amount
not in excess of $2,800,000.
"Operating Cash Flow" for any period means the consolidated net income
(loss) of ITC/\DeltaCom, the Borrower and the Borrower's subsidiaries for such
period plus the following amounts for such period, to the extent included in the
determination of such income (loss): depreciation expense, amortization expense
and other non-cash charges reducing income, net interest expense, and income tax
expense.
"Senior Leverage Ratio" means, for the Borrower on a consolidated basis at
any date, the ratio of Senior Debt (Total Debt minus the aggregate outstanding
principal amount, and accrued and unpaid interest, on the March 1998 Senior
Notes and the 1997 Senior Notes plus aggregate cash balances in excess of
$5,000,000) to Annualized Operating Cash Flow.
"Total Debt" means the aggregate indebtedness of ITC/\DeltaCom for borrowed
money on a consolidated basis.
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"Total Leverage Ratio" means at any date, for ITC/\DeltaCom on a
consolidated basis, the ratio of Total Debt (net of cash balances in excess of
$5,000,000 plus the balance of pledged securities securing the 1997 Senior
Notes) on such date to Annualized Operating Cash Flow.
1997 SENIOR NOTES
On June 3, 1997, we completed the sale of $200.0 million principal amount
of our 11% Senior Notes due 2007. Interest on the 1997 Senior Notes is payable
semiannually in cash, on each June 1 and December 1.
The 1997 Senior Notes are unsubordinated indebtedness of ITC/\DeltaCom,
ranking pari passu in right of payment with all of our existing and future
unsubordinated indebtedness, including the March 1998 Senior Notes and the
Notes. At September 30, 1998, approximately $26.8 million of the net proceeds
from the sale of the 1997 Senior Notes were being held in a pledged account as
security for and to fund the balance of the first six interest payments on the
1997 Senior Notes.
The 1997 Senior Notes will mature on June 1, 2007. The 1997 Senior Notes
are redeemable at our option, in whole or in part, at any time on or after June
1, 2002, initially at 105.5% of their principal amount, declining ratably to
100% of their principal amount, plus accrued interest, on or after June 1, 2004.
Upon a "Change of Control" of ITC/\DeltaCom (as defined in the 1997 Note
Indenture), we will be required to make an offer to purchase the 1997 Senior
Notes at a purchase price equal to 101% of their principal amount, plus accrued
interest.
The 1997 Note Indenture contains certain covenants that affect, and in
certain cases significantly limit or prohibit, among other things, our ability
to incur indebtedness, pay dividends, prepay subordinated indebtedness,
repurchase capital stock, make investments, engage in transactions with
stockholders and affiliates, create liens, sell assets and engage in mergers and
consolidations. If we fail to comply with these covenants, our obligation to
repay the 1997 Senior Notes may be accelerated. However, these limitations are
subject to a number of important qualifications and exceptions. In particular,
while the 1997 Note Indenture restricts our ability to incur additional
indebtedness by requiring compliance with specified leverage ratios, it permits
us and our subsidiaries to incur an unlimited amount of additional indebtedness
to finance the acquisition of equipment, inventory and network assets and up to
$100.0 million of additional indebtedness.
1998 SENIOR NOTES
On March 3, 1998, we completed the sale of $160.0 million principal amount
of its 8 7/8% Senior Notes due 2008. Interest on the March 1998 Senior Notes is
payable semiannually in cash, on each March 1 and September 1.
The March 1998 Senior Notes are unsubordinated indebtedness of
ITC/\DeltaCom, ranking pari passu in right of payment with all of our existing
and future unsubordinated indebtedness, including the 1997 Senior Notes and the
Notes.
The March 1998 Senior Notes will mature on March 1, 2008. The March 1998
Senior Notes are redeemable at our option, in whole or in part, at any time on
or after March 1, 2003, initially at 104.4375% of their principal amount,
declining ratably to 100% of their principal amount, plus accrued interest, on
or after March 1, 2006.
Upon a "Change of Control" of ITC/\DeltaCom (as defined in the 1998 Note
Indenture), we will be required to make an offer to purchase the March 1998
Senior Notes at a purchase price equal to 101% of their principal amount, plus
accrued interest.
The March 1998 Note Indenture contains certain covenants that affect, and
in certain cases significantly limit or prohibit, among other things, our
ability to incur indebtedness, pay dividends, prepay subordinated indebtedness,
repurchase capital stock, make investments, engage in transactions with
stockholders and affiliates, create liens, sell assets and engage in mergers and
consolidations. If we fail to comply with these covenants, our obligation to
repay the March 1998 Senior Notes may be accelerated. However, these limitations
are subject to a number of important qualifications and exceptions. In
particular, while the March 1998 Note Indenture restricts our ability to incur
additional indebtedness by requiring compliance with specified leverage ratios,
it permits us and our subsidiaries to incur an unlimited amount of
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<PAGE>
additional indebtedness to finance the acquisition of equipment, inventory and
network assets and up to $150.0 million of additional indebtedness.
40
<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
The Outstanding Notes were, and the Exchange Notes will be, issued under
the Indenture, dated as of November 5, 1998 between ITC/\DeltaCom and United
States Trust Company of New York, trustee under the Indenture (the "Trustee"). A
copy of the Indenture is available from us upon request. The following summary
contains a description of certain provisions of the Indenture, but does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions of
certain terms in the Indenture and those terms made a part of the Indenture by
operation of the Trust Indenture Act of 1939, as amended. For definitions of
certain capitalized terms used in the following summary, see "--Certain
Definitions."
GENERAL
The terms of the Exchange Notes will be identical in all material respects
to the Outstanding Notes, except that (i) the Exchange Notes will have been
registered under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Outstanding Notes and (ii) Holders of
the Exchange Notes will not be entitled to certain rights of Holders of
Outstanding Notes under the Registration Rights Agreement.
The Exchange Notes will be unsecured unsubordinated obligations of
ITC/\DeltaCom, initially limited to $125,000,000 aggregate principal amount, and
will mature on November 15, 2008. Each Exchange Note will bear interest at the
rate of 9 3/4% from the Closing Date or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable semiannually (to
Holders of record at the close of business on the May 1 or November 1
immediately preceding the Interest Payment Date) on May 15 and November 15 of
each year, commencing May 15, 1999.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of
ITC/\DeltaCom in the Borough of Manhattan, The City of New York (which initially
will be the corporate trust office of the Trustee at 114 West 47th Street, New
York, New York 10036-1532); provided that, at our option, payment of interest
may be made by check mailed to the Holders at their addresses as they appear in
the Security Register.
The Exchange Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 of principal amount and any integral
multiple thereof. See "--Book-Entry; Delivery and Form." No service charge will
be made for any registration of transfer or exchange of Notes, but we may
require payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
Subject to the covenants described below under "Covenants" and applicable
law, we may issue additional Notes under the Indenture. The Exchange Notes
offered hereby and any additional Notes subsequently issued would be treated as
a single class for all purposes under the Indenture.
OPTIONAL REDEMPTION
The Exchange Notes will be redeemable, at our option, in whole or in part,
at any time or from time to time, on or after November 15, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing March 1 of the
years set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ------------------
<S> <C>
2003............................................................................................... 104.875%
2004............................................................................................... 103.250
2005............................................................................................... 101.625
2006 and thereafter................................................................................ 100.000
</TABLE>
In addition, at any time prior to November 15, 2001, we may redeem up to
35% of the principal amount of the Notes with the proceeds of one or more Public
Equity Offerings, at any time or from time to time in part, at a Redemption
Price (expressed as a percentage of principal amount) of 109.750%, plus accrued
and unpaid interest to the Redemption Date (subject to the rights of Holders of
record on the relevant Regular Record Date that is prior to the Redemption Date
to receive interest due on an Interest Payment Date); provided, that at least
$81.25 million aggregate principal amount of Notes remains outstanding after
each such redemption.
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<PAGE>
If less than all of the Notes are to be redeemed at any time, the Trustee
will select the Notes, or portions thereof, for redemption in compliance with
the requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not listed on a national securities
exchange, on a pro rata basis, by lot or by such other method as the Trustee in
its sole discretion shall deem to be fair and appropriate; provided that no Note
of $1,000 in principal amount or less shall be redeemed in part. If any Note is
to be redeemed in part only, the notice of redemption relating to such Note
shall state the portion of the principal amount thereof to be redeemed. A new
Note in principal amount equal to the unredeemed portion thereof will be issued
in the name of the Holder thereof upon cancellation of the original Note.
EXCHANGE OFFER; REGISTRATION RIGHTS
We entered into the Registration Rights Agreement with the Placement
Agents, for the benefit of the holders of Outstanding Notes. Pursuant to the
Registration Rights Agreement, we agreed to file the Registration Statement (of
which this prospectus is a part) with the Commission. The Registration Rights
Agreement provides that we will, at our cost, use our best efforts to cause the
Registration Statement to be filed with the Commission not later than 60 days
after the Closing Date (as defined in the Purchase Agreement attached as an
exhibit to the Registration Statement of which this prospectus is a part) and
declared effective under the Securities Act. Upon the effectiveness of the
Registration Statement, we will offer the Exchange Notes in exchange for
surrender of the Outstanding Notes. We have agreed to keep the Exchange Offer
open for not less than 20 business days after the date notice of the Exchange
Offer is mailed to the holders of Outstanding Notes. For each Outstanding Note
surrendered to us pursuant to the Exchange Offer, the holder of such Outstanding
Note will receive an Exchange Note having a principal amount equal to that of
the surrendered Outstanding Note. Under existing Commission interpretations, the
Exchange Notes would be freely transferable by holders other than affiliates of
ITC/\DeltaCom after the Exchange Offer without further registration under the
Securities Act if the holder of the Exchange Notes represents that it is
acquiring the Exchange Notes in the ordinary course of its business, that it has
no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes and that it is not an affiliate of
ITC/\DeltaCom, as such terms are interpreted by the Commission; provided that
broker-dealers ("Participating Broker-Dealers") receiving Exchange Notes in the
Exchange Offer will have a prospectus delivery requirement with respect to
resales of such Exchange Notes. The Commission has taken the position that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to Exchange Notes with the prospectus contained in the Registration
Statement under certain circumstances. Under the Registration Rights Agreement,
we are required to allow Participating Broker-Dealers and other persons, if any,
with similar prospectus delivery requirements to use this prospectus in
connection with the resale of such Exchange Notes.
A holder of Outstanding Notes who wishes to exchange such Outstanding Notes
for Exchange Notes in the Exchange Offer will be required to represent that,
among other things, any Exchange Notes to be received by it will be acquired in
the ordinary course of its business and that at the time of the commencement of
the Exchange Offer it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of the
Exchange Notes and that it is not an "affiliate" of ITC/\DeltaCom, as defined in
Rule 405 of the Securities Act, or if it is an affiliate, that it will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable.
We have filed the Registration Statement (of which this prospectus is a
part) and will commence the Exchange Offer pursuant to the Registration Rights
Agreement. In the event that applicable interpretations of the staff of the
Commission do not permit us to effect the Exchange Offer, or under certain other
circumstances, we have agreed, at our cost, to use our best efforts to file and
cause to become effective a shelf registration statement (the "Shelf
Registration Statement") with respect to resales of the Outstanding Notes and to
keep the Shelf Registration Statement effective until the expiration of the time
period referred to in Rule 144(k) under the Securities Act or such shorter
period that will terminate when all Outstanding Notes covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. We have agreed, in the event a Shelf Registration Statement is filed,
among other things, to provide to each holder for whom such Shelf Registration
Statement was filed copies of the prospectus which is a part of the Shelf
Registration Statement, to notify each such holder when the Shelf Registration
Statement has become effective and to take certain other actions as are required
to permit unrestricted resales of the Outstanding Notes. A holder selling such
Outstanding Notes pursuant to the Shelf Registration Statement generally would
be required to be named as a selling security holder in the related prospectus
and to deliver a prospectus to purchasers, will be subject to certain of the
civil liability provisions under the Securities Act in connection with such
sales and will be bound by the provisions of the Registration Rights Agreement
which are applicable to such holder (including certain indemnification
obligations).
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<PAGE>
In the event the Exchange Offer is not consummated and a Shelf Registration
Statement is not declared effective on or prior to the date that is six months
after the Closing Date, the interest rate on the Outstanding Notes will be
increased by .5% per annum until the Exchange Offer is consummated or the Shelf
Registration is declared effective.
Outstanding Notes not tendered in the Exchange Offer shall accrue interest at
the rate of 9 3/4% per annum and be subject to all of the terms and conditions
specified in the Indenture and to the transfer restrictions described in
"Transfer Restrictions."
This summary of certain provisions of the Registration Rights Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Rights Agreement, a copy
of which has been filed as an exhibit to the Registration Statement of which
this prospectus is a part.
RANKING
The Indebtedness evidenced by the Notes will rank pari passu in right of
payment with all existing and future unsubordinated indebtedness of
ITC/\DeltaCom and senior in right of payment to all existing and future
subordinated indebtedness of ITC/\DeltaCom. At September 30, 1998, as adjusted
to reflect the issuance of the Outstanding Notes as if it had occurred on that
date, ITC/\DeltaCom (on an unconsolidated basis) had $414.8 million of
subordinated indebtedness, and $289.8 million of outstanding indebtedness that
would rank equal in right of payment with the Notes. Under the Indenture, we are
permitted to incur additional indebtedness to finance the acquisition of
equipment, inventory and other assets and up to $150 million of other
indebtedness (which may be increased to $250 million under certain conditions)
and are permitted to secure any such indebtedness. The Notes will be effectively
subordinated to such security interests to the extent of such security
interests. At September 30, 1998, as adjusted to reflect the issuance of the
Outstanding Notes as if it had occurred on that date, neither we nor our
subsidiaries had any outstanding secured indebtedness, including under the
Credit Facility.
ITC/\DeltaCom is a holding company. We conduct substantially all of our
business through subsidiaries. Our subsidiaries will have no direct obligation
to pay amounts due on the Notes and will not guarantee the Notes. As a result,
the Notes will be effectively subordinated to all existing and future
indebtedness and other liabilities (including trade payables) of our
subsidiaries. As of September 30, 1998, our subsidiaries had approximately $44.9
million of liabilities (excluding intercompany payables), including
approximately $3.3 million of indebtedness (including capital leases). We will
be dependent upon access to the cash flow or assets of our subsidiaries to make
payments on the Notes and our ability to obtain such access may be limited by
law. See ''Risk Factors--We are a Holding Company and We are Dependent on Our
Subsidiaries for Cash Flows, Including to Pay Interest and Principal on the
Notes; The Notes are Subordinated to Debt of Our Subsidiaries.''
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. You should refer to the
Indenture for the definition of any other capitalized term used herein for which
no definition is provided.
"Acquired Assets" means (i) the Capital Stock of any Person that becomes a
Restricted Subsidiary after the Closing Date and (ii) the real or personal
property (including tangible and intangible assets) of any Person that becomes a
Restricted Subsidiary after the Closing Date.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by a Restricted Subsidiary; provided that Indebtedness of such
Person which is redeemed, defeased, retired or otherwise repaid at the time of
or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of ITC/\DeltaCom and its Restricted Subsidiaries for such
period determined in conformity with GAAP; provided that the following items
shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of any Person (other than a
Restricted Subsidiary) in which any Person (other than ITC/\DeltaCom or any of
its Restricted Subsidiaries) has a joint interest and the net income (or loss)
of any Unrestricted Subsidiary, except (x) with respect to net income, to the
extent of the amount of dividends or other distributions actually paid to
ITC/\DeltaCom or any of its
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Restricted Subsidiaries by such other Person or such Unrestricted Subsidiary
during such period and (y) with respect to net losses, to the extent of the
amount of cash contributed by ITC/\DeltaCom or any Restricted Subsidiary to such
Person during such period; (ii) solely for the purposes of calculating the
amount of Restricted Payments that may be made pursuant to clause (C) of the
first paragraph of the "Limitation on Restricted Payments" covenant described
below (and in such case, except to the extent includable pursuant to clause (i)
above), the net income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with
ITC/\DeltaCom or any of its Restricted Subsidiaries or all or substantially all
of the property and assets of such Person are acquired by ITC/\DeltaCom or any
of its Restricted Subsidiaries; (iii) the net income of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is not at the
time permitted by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary; (iv) any gains or losses (on an after-
tax basis) attributable to Asset Sales; (v) except for purposes of calculating
the amount of Restricted Payments that may be made pursuant to clause (C) of the
first paragraph of the "Limitation on Restricted Payments" covenant described
below, any amount paid or accrued as dividends on Preferred Stock (other than
accrued dividends which, pursuant to the terms of the Preferred Stock, will not
be payable prior to the first anniversary after the Stated Maturity of the
Notes) of ITC/\DeltaCom or any Restricted Subsidiary owned by Persons other than
ITC/\DeltaCom and any of its Restricted Subsidiaries; and (vi) all extraordinary
gains and extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total amount of assets
of ITC/\DeltaCom and its Restricted Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (i) all
current liabilities of ITC/\DeltaCom and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recent quarterly or annual consolidated balance sheet of
ITC/\DeltaCom and its Restricted Subsidiaries, prepared in conformity with GAAP
and filed with the Commission or provided to the Trustee pursuant to the
"Commission Reports and Reports to Holders" covenant described below.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by ITC/\DeltaCom or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with
ITC/\DeltaCom or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of
ITC/\DeltaCom and its Restricted Subsidiaries on the date of such investment or
(ii) an acquisition by ITC/\DeltaCom or any of its Restricted Subsidiaries of
the property and assets of any Person other than ITC/\DeltaCom or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person; provided that the property and assets acquired are
related, ancillary or complementary to the businesses of ITC/\DeltaCom and its
Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by ITC/\DeltaCom or
any of its Restricted Subsidiaries (other than to ITC/\DeltaCom or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of ITC/\DeltaCom or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or a
series of related transactions by ITC/\DeltaCom or any of its Restricted
Subsidiaries to any Person other than ITC/\DeltaCom or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of ITC/\DeltaCom or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of ITC/\DeltaCom or any
of its Restricted Subsidiaries outside the ordinary course of business of
ITC/\DeltaCom or such Restricted Subsidiary and, in each case, that is not
governed by the provisions of the Indenture applicable to mergers,
consolidations and sales of all or substantially all of the assets of
ITC/\DeltaCom; provided that "Asset Sale" shall not include (a) sales, transfers
or other dispositions of inventory, receivables and other current assets, (b)
sales, transfers or other dispositions of assets with a fair market value (as
certified in an Officers' Certificate) not in excess of $500,000 in any
transaction or series of related transactions or (c) sales,
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transfers or other dispositions of assets for consideration at least equal to
the fair market value of the assets sold, transferred or otherwise disposed of
to the extent the consideration received would satisfy clause (B) of the
"Limitation on Assets Sales" covenant described below, provided that after
giving pro forma effect to such exchange, the Consolidated Leverage Ratio shall
be no greater than the Consolidated Leverage Ratio immediately prior to such
exchange.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) of which the discounted present value of the
rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the ultimate
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 35% of the total voting power of the Voting Stock of ITC/\DeltaCom on a
fully diluted basis and such ownership represents a greater percentage of the
total voting power of the Voting Stock of ITC/\DeltaCom, on a fully diluted
basis, than is held by the Existing Stockholders on such date; or (ii)
individuals who on the Closing Date constitute the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination by the Board of Directors for election by ITC/\DeltaCom's
stockholders was approved by a vote of at least two-thirds of the members of the
Board of Directors then in office who either were members of the Board of
Directors on the Closing Date or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally issued under
the Indenture.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's equity, other than Preferred Stock of
such Person, whether outstanding on the Closing Date or issued thereafter,
including, without limitation, all series and classes of such common stock.
"Consolidated EBITDA" means, for any period, the sum of the amounts for such
period of (i) Adjusted Consolidated Net Income, (ii) Consolidated Interest
Expense to the extent such amount was deducted in calculating Adjusted
Consolidated Net Income, (iii) income taxes, to the extent such amount was
deducted in calculating Adjusted Consolidated Net Income (other than income
taxes (either positive or negative) attributable to extraordinary and non-
recurring gains or losses or sales of assets), (iv) depreciation expense, to the
extent such amount was deducted in calculating Adjusted Consolidated Net Income,
(v) amortization expense, to the extent such amount was deducted in calculating
Adjusted Consolidated Net Income, and (vi) all other non-cash items reducing
Adjusted Consolidated Net Income (other than items that will require cash
payments and for which an accrual or reserve is, or is required by GAAP to be,
made), less all non-cash items increasing Adjusted Consolidated Net Income, all
as determined on a consolidated basis for ITC/\DeltaCom and its Restricted
Subsidiaries in conformity with GAAP; provided that, if any Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA
shall be reduced (to the extent not otherwise reduced in accordance with GAAP)
by an amount equal to (A) the amount of the Adjusted Consolidated Net Income
attributable to such Restricted Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding Common Stock of such Restricted Subsidiary
not owned on the last day of such period by the Company or any of its Restricted
Subsidiaries divided by (2) the total number of shares of outstanding
ITC/\DeltaCom of such Restricted Subsidiary on the last day of such period.
"Consolidated Interest Expense" means, for any period, the aggregate amount of
interest in respect of Indebtedness (including, without limitation, amortization
of original issue discount on any Indebtedness and the interest portion of any
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deferred payment obligation, calculated in accordance with the effective
interest method of accounting; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by ITC/\DeltaCom or any of its
Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by ITC/\DeltaCom and its Restricted Subsidiaries during such
period; excluding, however, (i) any amount of such interest of any Restricted
Subsidiary if the net income of such Restricted Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof) and (ii) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Notes and the Reorganization, all as determined on a
consolidated basis (without taking into account Unrestricted Subsidiaries) in
conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of (i)
the aggregate amount of Indebtedness of ITC/\DeltaCom and its Restricted
Subsidiaries on a consolidated basis outstanding on such Transaction Date to
(ii) the aggregate amount of Consolidated EBITDA for the Four Quarter Period;
provided that, in making the foregoing calculation, (A) pro forma effect shall
be given to any Indebtedness to be Incurred or repaid on the Transaction Date;
(B) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur during the Reference Period, as if they had occurred and
such proceeds had been applied on the first day of such Reference Period; (C)
pro forma effect shall be given to asset dispositions and asset acquisitions
(including giving pro forma effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into ITC/\DeltaCom or any Restricted
Subsidiary during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; provided that to the extent that clause (B)
or (C) of this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed of for which financial information is available; and (D) the aggregate
amount of Indebtedness outstanding as of the end of such Reference Period will
be deemed to include the total amount of funds outstanding and/or available on
the Transaction Date under any revolving credit or similar facilities of
ITC/\DeltaCom or its Restricted Subsidiaries.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of ITC/\DeltaCom and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of ITC/\DeltaCom or any of its Restricted Subsidiaries, each item
to be determined in conformity with GAAP (excluding the effects of foreign
currency exchange adjustments under Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 52).
"Consolidated Secured Indebtedness Leverage Ratio" means, on any Transaction
Date, the ratio of (i) the aggregate amount of Secured Indebtedness of
ITC/\DeltaCom and its Restricted Subsidiaries on a consolidated basis
outstanding on such Transaction Date to (ii) the aggregate amount of
Consolidated EBITDA for the Four Quarter Period; provided that, in making the
foregoing calculation, (A) pro forma effect shall be given to any Secured
Indebtedness to be Incurred or repaid on the Transaction Date; (B) pro forma
effect shall be given to Asset Dispositions and Asset Acquisitions (including
giving pro forma effect to the application of proceeds of any Asset Disposition)
that occur during the Reference Period, as if they had occurred and such
proceeds had been applied on the first day of such Reference Period; (C) pro
forma effect shall be given to asset dispositions and asset acquisitions
(including giving pro forma effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into ITC/\DeltaCom or any Restricted
Subsidiary during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; provided that to the extent that clause (B)
or (C) of this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed of for which financial information is available; and (D) the aggregate
amount of Secured Indebtedness outstanding as of the end of such Reference
Period will be deemed to include the total amount of
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funds outstanding and/or available on the Transaction Date under any revolving
credit or similar facilities of ITC/\DeltaCom or its Restricted Subsidiaries to
the extent that borrowings under such facilities would constitute Secured
Indebtedness.
"Credit Agreement" means the First Amended and Restated Credit Agreement among
Interstate FiberNet, Inc., NationsBank of Texas, N.A., as administrative lender,
and the lenders party thereto, as such agreement may be amended, supplemented or
modified from time to time.
"Credit Facilities" means revolving credit or working capital facilities or
similar facilities made available from time to time to ITC/\DeltaCom and its
Restricted Subsidiaries.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or both
would be, an Event of Default.
"Existing Stockholders" means Campbell B. Lanier, III and SCANA Corporation
and their Affiliates, and Campbell B. Lanier, III's spouse and any one or more
of his lineal descendants and their spouses; provided however, that any such
person other than Campbell B. Lanier, III shall only be deemed to be an
"Existing Stockholder" to the extent such person's Capital Stock of
ITC/\DeltaCom was received, directly or indirectly, from Campbell B. Lanier,
III.
"Fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution; provided that for purposes of clause (viii) of
the second paragraph of the "Limitation on Indebtedness" covenant, (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the capital contribution or sale
of Capital Stock and (y) in the event the aggregate fair market value of any
other property (other than cash or cash equivalents) received by ITC/\DeltaCom
exceeds $10 million, the fair market value of such property shall be determined
by a nationally recognized investment banking firm and set forth in their
written opinion which shall be delivered to the Trustee.
"Four Quarter Period" means, with respect to any Transaction Date, the then
most recent four fiscal quarter period for which financial statements of
ITC/\DeltaCom have been filed with the Commission or provided to the Trustee
pursuant to the "Commission Reports and Reports to Holders" covenant described
below.
"GAAP" means generally accepted accounting principles in the United States of
America as in effect from time to time, including, without limitation, those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that computations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes or the Reorganization and (ii) except
as otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length and are entered into in
the ordinary course of business), to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
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"Holder" means the registered holder of any Note.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an Incurrence of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of determination
(without duplication), (i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person in respect of
letters of credit or other similar instruments (including reimbursement
obligations with respect thereto), (iv) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, which purchase
price is due more than six months after the date of placing such property in
service or taking delivery and title thereto or the completion of such services,
except Trade Payables, (v) all Capitalized Lease Obligations of such Person,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; provided
that the amount of such Indebtedness shall be the lesser of (A) the fair market
value of such asset at such date of determination and (B) the amount of such
Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person and (viii) to the
extent not otherwise included in this definition, obligations under Currency
Agreements and Interest Rate Agreements. The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date (or, in the
case of a revolving credit or other similar facility, the total amount of funds
outstanding and/or available on the date of determination) of all unconditional
obligations as described above and, with respect to contingent obligations, the
maximum liability upon the occurrence of the contingency giving rise to the
obligation, provided (A) that the amount outstanding at any time of any
Indebtedness issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at the time of its issuance as determined in
conformity with GAAP, (B) that money borrowed and set aside at the time of the
Incurrence of any Indebtedness in order to prefund the payment of the interest
on such Indebtedness shall not be deemed to be "Indebtedness" and (C) that
Indebtedness shall not include any liability for federal, state, local or other
taxes.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or other
extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the balance sheet of ITC/\DeltaCom or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair
market value of the Capital Stock (or any other Investment), held by
ITC/\DeltaCom or any of its Restricted Subsidiaries, of (or in) any Person that
has ceased to be a Restricted Subsidiary, including, without limitation, by
reason of any transaction permitted by clause (iii) of the "Limitation on the
Issuance and Sale of Capital Stock of Restricted Subsidiaries" covenant
described below. For purposes of the definition of "Unrestricted Subsidiary" and
the "Limitation on Restricted Payments" covenant described below, (i)
"Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to ITC/\DeltaCom or any of its
Subsidiaries) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to ITC/\DeltaCom or
any of its Subsidiaries) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from any Person shall be valued at its fair market value at
the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds of
such Asset Sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent
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such obligations are financed or sold with recourse to ITC/\DeltaCom or any
Restricted Subsidiary) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of (i) brokerage
commissions and other fees and expenses (including fees and expenses of counsel
and investment bankers) related to such Asset Sale, (ii) provisions for all
taxes (whether or not such taxes will actually be paid or are payable) as a
result of such Asset Sale without regard to the consolidated results of
operations of ITC/\DeltaCom and its Restricted Subsidiaries, taken as a whole,
(iii) payments made to repay Indebtedness or any other obligation outstanding at
the time of such Asset Sale that either (A) is secured by a Lien on the property
or assets sold or (B) is required to be paid as a result of such sale and (iv)
appropriate amounts to be provided by ITC/\DeltaCom or any Restricted Subsidiary
as a reserve against any liabilities associated with such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as determined
in conformity with GAAP, and (b) with respect to any capital contribution or
issuance or sale of Capital Stock, options, warrants or other rights to acquire
Capital Stock or Indebtedness, the proceeds of such capital contribution or
issuance or sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to ITC/\DeltaCom or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes or
payable as a result thereof.
"Offer to Purchase" means an offer by ITC/\DeltaCom to purchase Notes from the
Holders commenced by mailing a notice to the Trustee and each Holder stating:
(i) the covenant pursuant to which the offer is being made and that all Notes
validly tendered will be accepted for payment on a pro rata basis; (ii) the
purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless ITC/\DeltaCom defaults in the
payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (vii) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. On the Payment Date, ITC/\DeltaCom shall (i) accept
for payment on a pro rata basis Notes or portions thereof tendered pursuant to
an Offer to Purchase; (ii) deposit with the Paying Agent money sufficient to pay
the purchase price of all Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee all Notes or portions thereof
so accepted together with an Officers' Certificate specifying the Notes or
portions thereof accepted for payment by ITC/\DeltaCom. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered; provided that each Note purchased and each new Note issued
shall be in a principal amount of $1,000 or integral multiples thereof.
ITC/\DeltaCom will publicly announce the results of an Offer to Purchase as soon
as practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. ITC/\DeltaCom will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that ITC/\DeltaCom
is required to repurchase Notes pursuant to an Offer to Purchase.
"Permitted Investment" means (i) an Investment in ITC/\DeltaCom or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, ITC/\DeltaCom
or a Restricted Subsidiary; provided that such Person's primary business is
related, ancillary or complementary to the businesses of ITC/\DeltaCom and its
Restricted Subsidiaries on the date of such Investment; (ii) a Temporary Cash
Investment; (iii) commission, payroll, travel and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses in accordance with GAAP; (iv) stock, obligations or securities
received in satisfaction of judgments; (v) Investments in prepaid expenses,
negotiable instruments held for collection, and lease, utility and workers'
compensation, performance
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and other similar deposits; and (vi) Interest Rate Agreements and Currency
Agreements to the extent permitted under clause (iv) of the "Limitation on
Indebtedness" covenant described below.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental charges
or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
similar Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other irregularities that do not materially interfere with the ordinary
course of business of ITC/\DeltaCom or any of its Restricted Subsidiaries; (vi)
Liens (including extensions and renewals thereof) upon real or personal property
(including, without limitation, tangible and intangible assets and Acquired
Assets) acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing Indebtedness Incurred, in accordance with the
"Limitation on Indebtedness" covenant described below, to finance the cost
(including, without limitation, the cost of design, development, construction,
acquisition, installation, improvement, transportation or integration) of the
real or personal property (including tangible and intangible assets) subject
thereto and such Lien is created prior to, at the time of or within six months
after the latest of the acquisition, the completion of construction or the
commencement of full operation of such real or personal property; provided that
in the case of Acquired Assets, the Lien secures the Indebtedness Incurred to
purchase the Capital Stock of the Person to make such Person a Restricted
Subsidiary, (b) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of such cost and (c) any such Lien shall not extend to or
cover any real or personal property other than such real or personal property
and any improvements on such real or personal property and any proceeds thereof;
(vii) leases or subleases granted to others that do not materially interfere
with the ordinary course of business of ITC/\DeltaCom and its Restricted
Subsidiaries, taken as a whole; (viii) Liens encumbering property or assets
under construction arising from progress or partial payments by a customer of
ITC/\DeltaCom or its Restricted Subsidiaries relating to such property or
assets; (ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease; (x) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xi) Liens on property
of, or on shares of Capital Stock or Indebtedness of, any Person existing at the
time such Person becomes, or becomes a part of, any Restricted Subsidiary;
provided that such Liens do not extend to or cover any property or assets of
ITC/\DeltaCom or any Restricted Subsidiary other than the property or assets
acquired and any proceeds thereof; (xii) Liens in favor of ITC/\DeltaCom or any
Restricted Subsidiary; (xiii) Liens arising from the rendering of a final
judgment or order against ITC/\DeltaCom or any Restricted Subsidiary that does
not give rise to an Event of Default; (xiv) Liens securing reimbursement
obligations with respect to letters of credit that encumber documents and other
property relating to such letters of credit and the products and proceeds
thereof; (xv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (xvi) Liens encumbering customary initial deposits and
margin deposits, and other Liens that are either within the general parameters
customary in the industry and incurred in the ordinary course of business, in
each case securing Indebtedness under Interest Rate Agreements and Currency
Agreements and forward contracts, options, future contracts, futures options or
similar agreements or arrangements designed solely to protect ITC/\DeltaCom or
any of its Restricted Subsidiaries from fluctuations in interest rates,
currencies or the price of commodities; (xvii) Liens arising out of conditional
sale, title retention, consignment or similar arrangements for the sale of goods
entered into by ITC/\DeltaCom or any of its Restricted Subsidiaries in the
ordinary course of business in accordance with the past practices of
ITC/\DeltaCom and its Restricted Subsidiaries prior to the Closing Date; (xviii)
Liens on or sales of receivables, including related intangible assets and
proceeds thereof; and (xix) Liens that secure Indebtedness with an aggregate
principal amount not to exceed $5 million at any time outstanding.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference equity, whether
outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of such preferred or preference stock.
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"Public Equity Offering" means an underwritten primary offering of Common
Stock of ITC/\DeltaCom pursuant to an effective registration statement under the
Securities Act.
"Redeemable Stock" means any class or series of Capital Stock of any Person
that by its terms or otherwise is (i) required to be redeemed prior to the
Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Redeemable Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Redeemable Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable in any material respect
to the holders of such Capital Stock than the provisions contained in
"Limitation on Asset Sales" and "Repurchase of Notes upon a Change of Control"
covenants described below are to the holders of the Notes and such Capital Stock
specifically provides that such Person will not repurchase or redeem any such
stock pursuant to such provision prior to ITC/\DeltaCom's repurchase of such
Notes as are required to be repurchased pursuant to the "Limitation on Asset
Sales" and "Repurchase of Notes upon a Change of Control" covenants described
below.
"Reference Period" means, with respect to any Transaction Date, the period
from the beginning of the Four Quarter Period with respect to such Transaction
Date through such Transaction Date.
"Reorganization" means the transactions in which ITC Holding Company, Inc., a
Delaware corporation, contributed to ITC/\DeltaCom its investments in the
Reorganization Subsidiaries (or their successors-in-interest).
"Reorganization Subsidiaries" means, collectively, (i) DeltaCom, Inc., an
Alabama corporation; (ii) Eastern Telecom, Inc., a Georgia corporation; (iii)
Gulf States Transmission Systems, Inc., a Delaware corporation; (iv) ITC
Transmission Systems, Inc., a Delaware corporation; (v) ITC Transmission Systems
II, Inc., a Delaware corporation; and (vi) Interstate FiberNet, a Georgia
general partnership.
"Restricted Subsidiary" means any Subsidiary of ITC/\DeltaCom other than an
Unrestricted Subsidiary.
"Secured Indebtedness" means Indebtedness of ITC/\DeltaCom or any of its
Restricted Subsidiaries that is secured by Liens on the property or assets of
ITC/\DeltaCom or any of its Restricted Subsidiaries.
"Significant Subsidiary" means, at any date of determination, any Restricted
Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal
year of ITC/\DeltaCom, accounted for more than 10% of the consolidated revenues
of ITC/\DeltaCom and its Restricted Subsidiaries or (ii) as of the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of
ITC/\DeltaCom and its Restricted Subsidiaries, all as set forth on the most
recently available consolidated financial statements of ITC/\DeltaCom for such
fiscal year.
"Stated Maturity" means (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Strategic Subordinated Indebtedness" means Indebtedness of ITC/\DeltaCom
Incurred to finance the acquisition of a Person engaged in the
Telecommunications Business that by its terms, or by the terms of any agreement
or instrument pursuant to which such Indebtedness is Incurred, (i) is expressly
made subordinate in right of payment to the Notes and (ii) provides that no
payment of principal, premium or interest on, or any other payment with respect
to, such Indebtedness may be made prior to the payment in full of all of
ITC/\DeltaCom's obligations under the Notes; provided that such Indebtedness may
provide for and be repaid at any time from the proceeds of the sale of Capital
Stock (other than Redeemable Stock) of ITC/\DeltaCom after the Incurrence of
such Indebtedness.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the voting power of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.
"Telecommunications Business" means the development, ownership or operation of
one or more telephone, telecommunications or information systems or the
provision of telephony, telecommunications or information services
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(including, without limitation, any voice, video transmission, data or Internet
services) and any related, ancillary or complementary business.
"Temporary Cash Investment" means any of the following: (i) direct obligations
of the United States of America or any agency thereof or obligations fully and
unconditionally guaranteed by the United States of America or any agency
thereof, (ii) time deposit accounts, certificates of deposit and money market
deposits maturing within one year of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate of ITC/\DeltaCom) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher) according to
Standard & Poor's Ratings Service, and (v) securities with maturities of six
months or less from the date of acquisition issued or fully and unconditionally
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by Standard & Poor's Ratings Service or Moody's Investors Service,
Inc.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any Indebtedness
by ITC/\DeltaCom or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (i) any Subsidiary of ITC/\DeltaCom that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of
ITC/\DeltaCom) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, ITC/\DeltaCom or
any Restricted Subsidiary; provided that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
"Limitation on Restricted Payments" covenant described below. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that (i) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to such designation and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately after such designation would, if Incurred at such time, have been
permitted to be Incurred for all purposes of the Indenture. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Voting Stock" means with respect to any Person, Capital Stock of any class or
kind ordinarily having the power to vote for the election of directors, managers
or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
COVENANTS
The Indenture will contain, among others, the following covenants:
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Limitation on Indebtedness
(a) ITC/\DeltaCom will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes and Indebtedness
existing on the Closing Date); provided that ITC/\DeltaCom may Incur
Indebtedness if, after giving effect to the Incurrence of such Indebtedness and
the receipt and application of the proceeds thereof, the Consolidated Leverage
Ratio would be less than or equal to 7 to 1, for Indebtedness Incurred on or
prior to June 30, 1998, or less than or equal to 5 to 1, for Indebtedness
Incurred thereafter.
Notwithstanding the foregoing, ITC/\DeltaCom, and (except as specified below)
any Restricted Subsidiary, may Incur each and all of the following: (i)
Indebtedness in an aggregate principal amount outstanding or available at any
time not to exceed the sum of (A) $150 million, plus (B) $100 million, if after
giving effect to the Incurrence of such Indebtedness and application of the
proceeds thereof the Consolidated Secured Indebtedness Leverage Ratio would be
less than or equal to 2.25 to 1, less (C) any amount of such Indebtedness
permanently repaid as provided under the "Limitation on Asset Sales" covenant
described below; (ii) Indebtedness owed (A) to ITC/\DeltaCom and evidenced by an
unsubordinated promissory note or (B) to any Restricted Subsidiaries; provided
that any event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness (other
than to ITC/\DeltaCom or another Restricted Subsidiary) shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness not permitted by this
clause (ii); (iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness (other than
Indebtedness Incurred under clause (i), (ii), (iv), (vi) or (ix) of this
paragraph) and any refinancings of such new Indebtedness in an amount not to
exceed the amount so refinanced or refunded (plus premiums, accrued interest,
fees and expenses); provided that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that is pari passu in right of
payment with, or subordinated in right of payment to, the Notes shall only be
permitted under this clause (iii) if (A) in case the Notes are refinanced in
part or the Indebtedness to be refinanced is pari passu in right of payment with
the Notes, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is outstanding, is
expressly made pari passu in right of payment with, or subordinate in right of
payment to, the remaining Notes, (B) in case the Indebtedness to be refinanced
is subordinated in right of payment to the Notes, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such new
Indebtedness is issued or remains outstanding, is expressly made subordinate in
right of payment to the Notes at least to the extent that the Indebtedness to be
refinanced is subordinated to the Notes and (C) such new Indebtedness,
determined as of the date of Incurrence of such new Indebtedness, does not
mature prior to the Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded; and
provided further that in no event may Indebtedness of ITC/\DeltaCom be
refinanced by means of any Indebtedness of any Restricted Subsidiary pursuant to
this clause (iii); (iv) Indebtedness (A) in respect of performance, surety or
appeal bonds provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; provided that such agreements (a) are
designed solely to protect ITC/\DeltaCom or its Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates and (b) do not
increase the Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest rates or
by reason of fees, indemnities and compensation payable thereunder or (C)
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations, or from Guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of ITC/\DeltaCom or any of
its Restricted Subsidiaries pursuant to such agreements, in each case Incurred
in connection with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted Subsidiary
for the purpose of financing such acquisition), in a principal amount not to
exceed the gross proceeds actually received by ITC/\DeltaCom or any Restricted
Subsidiary in connection with such disposition; (v) Indebtedness of
ITC/\DeltaCom, to the extent the net proceeds thereof are promptly (A) used to
purchase Notes tendered in an Offer to Purchase made as a result of a Change of
Control or (B) deposited to defease all of the Notes as described below under
"Defeasance"; (vi) Guarantees of the Notes and Guarantees of Indebtedness of
ITC/\DeltaCom by any Restricted Subsidiary, provided the Guarantee of such
Indebtedness is permitted by and made in accordance with the "Limitation on
Issuance of Guarantees by Restricted Subsidiaries" covenant described below;
(vii) Indebtedness (including Acquired Indebtedness) Incurred to finance the
cost (including the cost of design, development, acquisition, construction,
installation, improvement, transportation or integration) for ITC/\DeltaCom or a
Restricted Subsidiary to acquire equipment, inventory or other assets (tangible
or intangible) used or useful in a Telecommunications Business after the Closing
Date; (viii) Indebtedness of ITC/\DeltaCom not to exceed, at any one time
outstanding, two times (A) the Net Cash Proceeds received by ITC/\DeltaCom after
the Closing Date as a capital contribution or from the issuance and sale of its
Capital Stock (other than Redeemable Stock) to a Person that is not a Subsidiary
of ITC/\DeltaCom, to the extent such Net Cash Proceeds have not been used
pursuant to clause (C)(2) of the first paragraph or clause (iii), (iv) or (vi)
of the second paragraph of the "Limitation on Restricted Payments" covenant
described below to make a Restricted Payment and (B) 80% of the fair market
value of property (other than cash and cash equivalents) received by
ITC/\DeltaCom after the Closing Date from a contribution of capital or the sale
of its Capital Stock (other than
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Redeemable Stock) to a Person that is not a Subsidiary of ITC/\DeltaCom, to the
extent such capital contribution or sale of Capital Stock has not been used
pursuant to clause (iii), (iv) or (ix) of the second paragraph of the
"Limitation on Restricted Payments" covenant described below to make a
Restricted Payment; provided that such Indebtedness does not mature prior to the
Stated Maturity of the Notes and has an Average Life longer than the Notes; and
(ix) Strategic Subordinated Indebtedness.
(b) Notwithstanding any other provision of this "Limitation on Indebtedness"
covenant, the maximum amount of Indebtedness that ITC/\DeltaCom or a Restricted
Subsidiary may Incur pursuant to this "Limitation on Indebtedness" covenant
shall not be deemed to be exceeded due solely to the result of fluctuations in
the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (1) Guarantees, Liens or obligations
with respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included and (2) any
Liens granted pursuant to the equal and ratable provisions referred to in the
"Limitation on Liens" covenant described below shall not be treated as
Indebtedness. For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, ITC/\DeltaCom, in its sole discretion, shall classify such item of
Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.
Limitation on Restricted Payments
ITC/\DeltaCom will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on or with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to acquire shares of
such Capital Stock and (y) pro rata dividends or distributions on Common Stock
of Restricted Subsidiaries held by minority stockholders, provided that such
dividends do not in the aggregate exceed the minority stockholders' pro rata
share of such Restricted Subsidiaries' net income from the first day of the
fiscal quarter beginning immediately following the Closing Date) held by Persons
other than ITC/\DeltaCom or any of its Restricted Subsidiaries, (ii) purchase,
redeem, retire or otherwise acquire for value any shares of Capital Stock of (A)
ITC/\DeltaCom or an Unrestricted Subsidiary (including options, warrants or
other rights to acquire such shares of Capital Stock) held by any Person or (B)
a Restricted Subsidiary (including options, warrants or other rights to acquire
such shares of Capital Stock) held by any Affiliate of ITC/\DeltaCom (other than
a Wholly Owned Restricted Subsidiary) or any holder (or any Affiliate of such
holder) of 5% or more of the Capital Stock of ITC/\DeltaCom, (iii) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of ITC/\DeltaCom that is subordinated in right of payment to the
Notes (other than, in each case, the purchase, repurchase or acquisition of
Indebtedness in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in any case due within one year after the date of
such purchase, repurchase or acquisition) or (iv) make any Investment, other
than a Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and be
continuing, (B) ITC/\DeltaCom could not Incur at least $1.00 of Indebtedness
under the first paragraph of the "Limitation on Indebtedness" covenant or (C)
the aggregate amount of all Restricted Payments (the amount, if other than in
cash, to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution) made
after the Closing Date shall exceed the sum of (1) 50% of the aggregate amount
of the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated Net
Income is a loss, minus 100% of the amount of such loss) (excluding, for
purposes of such computation, income resulting from transfers of assets by
ITC/\DeltaCom or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued
on a cumulative basis during the period (taken as one accounting period)
beginning on the first day of the fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal quarter preceding the
Transaction Date for which reports have been filed with the Commission or
provided to the Trustee pursuant to the "Commission Reports and Reports to
Holders" covenant plus (2) the aggregate Net Cash Proceeds received by
ITC/\DeltaCom after the Closing Date from a capital contribution or the issuance
and sale permitted by the Indenture to a Person who is not a Subsidiary of
ITC/\DeltaCom of (a) its Capital Stock (other than Redeemable Stock), (b) any
options, warrants or other rights to acquire Capital Stock of ITC/\DeltaCom (in
each case, exclusive of any Redeemable Stock or any options, warrants or other
rights that are redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the Notes) and (c) Indebtedness of
ITC/\DeltaCom that has been exchanged for or converted into Capital Stock of
ITC/\DeltaCom (other than Redeemable Stock), in each case except to the extent
such Net Cash Proceeds are used to Incur Indebtedness pursuant to clause (viii)
of the second paragraph under the "Limitation on Indebtedness" covenant, plus
(3) an amount equal to the net reduction in Investments (other than reductions
in Permitted Investments
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and reductions in Investments made pursuant to clause (vi) of the second
paragraph of this "Limitation on Restricted Payments" covenant) in any Person
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to ITC/\DeltaCom
or any Restricted Subsidiary or from the Net Cash Proceeds from the sale of any
such Investment (except, in each case, to the extent any such payment or
proceeds is included in the calculation of Adjusted Consolidated Net Income), or
from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments"), not to
exceed, in each case, the amount of Investments previously made by ITC/\DeltaCom
or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (i) the payment of
any dividend within 60 days after the date of declaration thereof if, at such
date of declaration, such payment would comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition or retirement
for value of Indebtedness that is subordinated in right of payment to the Notes,
including premium, if any, and accrued and unpaid interest, with the proceeds
of, or in exchange for, Indebtedness Incurred under clause (iii) of the second
paragraph of part (a) of the "Limitation on Indebtedness" covenant; (iii) the
repurchase, redemption or other acquisition of Capital Stock of ITC/\DeltaCom
(or options, warrants or other rights to acquire such Capital Stock) in exchange
for, or out of the proceeds of a substantially concurrent offering of, shares of
Capital Stock (other than Redeemable Stock) of ITC/\DeltaCom (or options,
warrants or other rights to acquire such Capital Stock); (iv) the making of any
principal payment or the repurchase, redemption, retirement, defeasance or other
acquisition for value of Indebtedness of ITC/\DeltaCom which is subordinated in
right of payment to the Notes in exchange for, or out of the proceeds of, a
substantially concurrent offering of shares of the Capital Stock (other than
Redeemable Stock) of ITC/\DeltaCom (or options, warrants or other rights to
acquire such Capital Stock); (v) payments or distributions to dissenting
stockholders pursuant to applicable law in connection with a consolidation,
merger or transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially all
of the property and assets of ITC/\DeltaCom; (vi) Investments in any Person the
primary business of which is related, ancillary or complementary to the business
of ITC/\DeltaCom and its Restricted Subsidiaries on the date of such
Investments; provided that the aggregate amount of Investments made pursuant to
this clause (vi) does not exceed the sum of (x) $25 million plus (y) the amount
of Net Cash Proceeds received by ITC/\DeltaCom after the Closing Date as a
capital contribution or from the sale of its Capital Stock (other than
Redeemable Stock) to a Person who is not a Subsidiary of ITC/\DeltaCom, except
to the extent such Net Cash Proceeds are used to Incur Indebtedness pursuant to
clause (viii) under the "Limitation on Indebtedness" covenant or to make
Restricted Payments pursuant to clause (C)(2) of the first paragraph, or clauses
(iii) or (iv) of this paragraph, of this "Limitation on Restricted Payments"
covenant, plus (z) the net reduction in Investments made pursuant to this clause
(vi) resulting from distributions on or repayments of such Investments or from
the Net Cash Proceeds from the sale of any such Investment (except in each case
to the extent any such payment or proceeds is included in the calculation of
Adjusted Consolidated Net Income) or from such Person becoming a Restricted
Subsidiary (valued in each case as provided in the definition of "Investments"),
provided that the net reduction in any Investment shall not exceed the amount of
such Investment; (vii) the purchase, redemption, acquisition, cancellation or
other retirement for value of shares of Capital Stock of ITC/\DeltaCom to the
extent necessary, in the judgment of the Board of Directors, to prevent the loss
or secure the renewal or reinstatement of any license or franchise held by
ITC/\DeltaCom or any Restricted Subsidiary from any governmental agency; (viii)
the purchase, redemption, retirement or other acquisition for value of shares of
Capital Stock of ITC/\DeltaCom, or options to purchase such shares, held by
directors, employees, or former directors or employees of ITC/\DeltaCom or any
Restricted Subsidiary (or their estates or beneficiaries under their estates)
upon their death, disability, retirement, termination of employment or pursuant
to the terms of any agreement under which such shares of Capital Stock or
options were issued; provided that the aggregate consideration paid for such
purchase, redemption, retirement or other acquisition for value of such shares
of Capital Stock or options after the Closing Date does not exceed $2 million in
any calendar year, or $5 million in the aggregate; or (ix) Investments acquired
as a capital contribution to ITC/\DeltaCom or in exchange for Capital Stock
(other than Redeemable Stock) of ITC/\DeltaCom; provided that, except in the
case of clauses (i), (iii) and (iv), no Default or Event of Default shall have
occurred and be continuing, or occur as a consequence of the actions or payments
set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph (other
than the Restricted Payment referred to in clause (ii) thereof, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in clause (iii) or
(iv) thereof and an Investment referred to in clause (ix) thereof), and the Net
Cash Proceeds from any issuance of Capital Stock referred to in clauses (iii),
(iv) and (vi) thereof, shall be included in calculating whether the conditions
of clause (C) of the first paragraph of this "Limitation on Restricted Payments"
covenant have been met with respect to any subsequent Restricted Payments. In
the event the proceeds of an issuance of Capital Stock of ITC/\DeltaCom are used
for the redemption, repurchase or other acquisition of the Notes, or
Indebtedness that is pari passu in right of payment with the Notes, then the Net
Cash Proceeds of such issuance shall be included in clause (C) of the first
paragraph of this
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"Limitation on Restricted Payments" covenant only to the extent such proceeds
are not used for such redemption, repurchase or other acquisition of
Indebtedness.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
ITC/\DeltaCom will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by
ITC/\DeltaCom or any other Restricted Subsidiary, (ii) pay any Indebtedness owed
to ITC/\DeltaCom or any other Restricted Subsidiary, (iii) make loans or
advances to ITC/\DeltaCom or any other Restricted Subsidiary or (iv) transfer
any of its property or assets to ITC/\DeltaCom or any other Restricted
Subsidiary.
The foregoing provisions shall not restrict any encumbrances or restrictions:
(i) existing on the Closing Date in the Indenture or any other agreements in
effect on the Closing Date, and any extensions, refinancings, renewals or
replacements of such agreements; provided that the encumbrances and restrictions
in any such extensions, refinancings, renewals or replacements are no less
favorable in any material respect to the Holders than those encumbrances or
restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced; (ii) existing under or by reason of applicable law; (iii)
existing with respect to any Person or the property or assets of such Person
acquired by ITC/\DeltaCom or any Restricted Subsidiary and existing at the time
of such acquisition and not incurred in contemplation thereof, which
encumbrances or restrictions are not applicable to any Person or the property or
assets of any Person other than such Person or the property or assets of such
Person so acquired; (iv) in the case of clause (iv) of the first paragraph of
this "Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by virtue of
any transfer of, agreement to transfer, option or right with respect to, or Lien
on, any property or assets of ITC/\DeltaCom or any Restricted Subsidiary not
otherwise prohibited by the Indenture or (C) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of property or assets
of ITC/\DeltaCom or any Restricted Subsidiary in any manner material to
ITC/\DeltaCom or any Restricted Subsidiary; (v) with respect to a Restricted
Subsidiary and imposed pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary; or (vi) contained in the
terms of any Indebtedness or any agreement pursuant to which such Indebtedness
was issued if (A) the encumbrance or restriction applies only in the event of a
payment default or a default with respect to a financial covenant contained in
such Indebtedness or agreement; provided that in the case of the Credit
Agreement the encumbrance or restriction may apply if an event of default (other
than an event of default resulting solely from the breach of a representation or
warranty) occurs and is continuing under the Credit Agreement; provided that,
with respect to any event of default (other than a payment default, a bankruptcy
event with respect to ITC/\DeltaCom, Interstate FiberNet, Inc. or any
Significant Subsidiary or the loss of a material license or fiber network) under
the Credit Agreement, such encumbrance or restriction may not prohibit dividends
to ITC/\DeltaCom to pay scheduled interest on the Notes for more than 180 days
in any consecutive 360-day period, (B) the encumbrance or restriction is not
materially more disadvantageous to the Holders of the Notes than is customary in
comparable financings (as determined by ITC/\DeltaCom) and (C) ITC/\DeltaCom
determines that any such encumbrance or restriction will not materially affect
ITC/\DeltaCom's ability to make principal or interest payments on the Notes.
Nothing contained in this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant shall prevent
ITC/\DeltaCom or any Restricted Subsidiary from (1) creating, incurring,
assuming or suffering to exist any Liens otherwise permitted in the "Limitation
on Liens" covenant described below or (2) restricting the sale or other
disposition of property or assets of ITC/\DeltaCom or any of its Restricted
Subsidiaries that secure Indebtedness of ITC/\DeltaCom or any of its Restricted
Subsidiaries.
Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries
ITC/\DeltaCom will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except (i) to ITC/\DeltaCom or a Wholly Owned
Restricted Subsidiary, (ii) issuances of director's qualifying shares, or sales
to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law, (iii) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such issuance or sale would have been permitted
to be made under the "Limitation on Restricted Payments" covenant if
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made on the date of such issuance or sale or (iv) issuances or sales of Common
Stock of a Restricted Subsidiary, provided that ITC/\DeltaCom or such Restricted
Subsidiary applies the Net Cash Proceeds, if any, of any such sale in accordance
with clause (A) or (B) of the "Limitation on Asset Sales" covenant described
below.
Limitation on Issuances of Guarantees by Restricted Subsidiaries
ITC/\DeltaCom will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of ITC/\DeltaCom which is pari passu
in right of payment with, or subordinate in right of payment to, the Notes
("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for a Guarantee (a "Subsidiary Guarantee") of payment of the Notes by
such Restricted Subsidiary and (ii) such Restricted Subsidiary waives, and will
not in any manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other rights against
ITC/\DeltaCom or any other Restricted Subsidiary as a result of any payment by
such Restricted Subsidiary under its Subsidiary Guarantee; provided that this
paragraph shall not be applicable to (x) any Guarantee of any Restricted
Subsidiary that existed at the time such Person became a Restricted Subsidiary
and was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary or (y) any Guarantee of any Restricted
Subsidiary of Indebtedness Incurred (I) under Credit Facilities pursuant to
clause (i) of the second paragraph of the "Limitation on Indebtedness" covenant
or (II) pursuant to clause (vii) of the second paragraph of the "Limitation on
Indebtedness" covenant. If the Guaranteed Indebtedness is (A) pari passu in
right of payment with the Notes, then the Guarantee of such Guaranteed
Indebtedness shall be pari passu in right of payment with, or subordinated in
right of payment to, the Subsidiary Guarantee or (B) subordinated in right of
payment to the Notes, then the Guarantee of such Guaranteed Indebtedness shall
be subordinated in right of payment to the Subsidiary Guarantee at least to the
extent that the Guaranteed Indebtedness is subordinated in right of payment to
the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of ITC/\DeltaCom, of all of ITC/\DeltaCom's and
each Restricted Subsidiary's Capital Stock in, or all or substantially all the
assets of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by the Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
Limitation on Transactions with Stockholders and Affiliates
ITC/\DeltaCom will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of ITC/\DeltaCom or with any
Affiliate of ITC/\DeltaCom or any Restricted Subsidiary, except upon fair and
reasonable terms no less favorable in any material respect to ITC/\DeltaCom or
such Restricted Subsidiary than could be obtained, at the time of such
transaction or, if such transaction is pursuant to a written agreement, at the
time of the execution of the agreement providing therefor, in a comparable
arm's-length transaction with a Person that is not such a holder or an
Affiliate.
The foregoing limitation does not limit, and shall not apply to: (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which ITC/\DeltaCom or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to ITC/\DeltaCom or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between ITC/\DeltaCom and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment of
reasonable and customary regular fees to directors of ITC/\DeltaCom who are not
employees of ITC/\DeltaCom; (iv) any payments or other transactions pursuant to
any tax-sharing agreement between ITC/\DeltaCom and any other Person with which
ITC/\DeltaCom files a consolidated tax return or with which ITC/\DeltaCom is
part of a consolidated group for tax purposes; or (v) any Restricted Payments
not prohibited by the "Limitation on Restricted Payments" covenant.
Notwithstanding the foregoing, any transaction covered by the first paragraph of
this "Limitation on Transactions with Stockholders and Affiliates" covenant and
not covered by clauses (ii) through (v) of this paragraph, the aggregate amount
of which exceeds $5 million in value, must be approved or determined to be fair
in the manner provided for in clause (i)(A) or (B) above.
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Limitation on Liens
ITC/\DeltaCom will not, and will not permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Lien on any of its assets or
properties of any character, or any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, without making effective provision for all of the
Notes and all other amounts due under the Indenture to be directly secured
equally and ratably with (or, if the obligation or liability to be secured by
such Lien is subordinated in right of payment to the Notes, prior to) the
obligation or liability secured by such Lien.
The foregoing limitation does not apply to: (i) Liens existing on the Closing
Date; (ii) Liens granted after the Closing Date on any assets or Capital Stock
of ITC/\DeltaCom or its Restricted Subsidiaries created in favor of the Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary granted by
such Restricted Subsidiary to ITC/\DeltaCom or a Wholly Owned Restricted
Subsidiary to secure Indebtedness owing to ITC/\DeltaCom or such other
Restricted Subsidiary; (iv) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under clause
(iii) of the second paragraph of the "Limitation on Indebtedness" covenant;
provided that such Liens do not extend to or cover any property or assets of
ITC/\DeltaCom or any Restricted Subsidiary other than the property or assets
securing the Indebtedness being refinanced; (v) Liens securing obligations under
Credit Facilities Incurred under clause (i) of the second paragraph of the
"Limitation on Indebtedness" covenant; or (vi) Permitted Liens.
Limitation on Sale-Leaseback Transactions
ITC/\DeltaCom will not, and will not permit any Restricted Subsidiary to,
enter into any sale-leaseback transaction involving any of its assets or
properties whether now owned or hereafter acquired, whereby ITC/\DeltaCom or a
Restricted Subsidiary sells or transfers such assets or properties and then or
thereafter leases such assets or properties or any part thereof or any other
assets or properties which ITC/\DeltaCom or such Restricted Subsidiary, as the
case may be, intends to use for substantially the same purpose or purposes as
the assets or properties sold or transferred.
The foregoing restriction does not apply to any sale-leaseback transaction if
(i) the lease is for a period, including renewal rights, of not in excess of
three years; (ii) the lease secures or relates to industrial revenue or
pollution control bonds; (iii) the transaction is solely between ITC/\DeltaCom
and any Wholly Owned Restricted Subsidiary or solely between Wholly Owned
Restricted Subsidiaries; or (iv) ITC/\DeltaCom or such Restricted Subsidiary,
within 12 months after the sale or transfer of any assets or properties is
completed, applies an amount not less than the net proceeds received from such
sale in accordance with clause (A) or (B) of the first paragraph of the
"Limitation on Asset Sales" covenant described below.
Limitation on Asset Sales
ITC/\DeltaCom will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (i) the consideration received by
ITC/\DeltaCom or such Restricted Subsidiary is at least equal to the fair market
value of the assets sold or disposed of and (ii) at least 75% of the
consideration received consists of cash or Temporary Cash Investments. In the
event and to the extent that the Net Cash Proceeds received by ITC/\DeltaCom or
any of its Restricted Subsidiaries from one or more Asset Sales occurring on or
after the Closing Date in any period of 12 consecutive months exceed 10% of
Adjusted Consolidated Net Tangible Assets (determined as of the date closest to
the commencement of such 12-month period for which a consolidated balance sheet
of ITC/\DeltaCom and its Subsidiaries has been filed with the Commission or
provided to the Trustee pursuant to the "Commission Reports and Reports to
Holders" covenant), then ITC/\DeltaCom shall or shall cause the relevant
Restricted Subsidiary to (i) within 12 months after the date Net Cash Proceeds
so received exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an
amount equal to such excess Net Cash Proceeds to permanently repay
unsubordinated Indebtedness of ITC/\DeltaCom or any Restricted Subsidiary
providing a Subsidiary Guarantee pursuant to the "Limitation on Issuances of
Guarantees by Restricted Subsidiaries" covenant described above or Indebtedness
of any other Restricted Subsidiary, in each case owing to a Person other than
ITC/\DeltaCom or any of its Subsidiaries, or (B) invest an amount equal to such
excess Net Cash Proceeds, or the amount of such Net Cash Proceeds not so applied
pursuant to clause (A) (or enter into a definitive agreement committing to so
invest within 12 months after the date of such agreement), in capital assets of
a nature or type or that are used in a business (or in a Person having capital
assets of a nature or type, or engaged in a business) similar or related to the
nature or type of the property and assets of, or the business of, ITC/\DeltaCom
and its Restricted Subsidiaries existing on the date of such investment (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution) and (ii) apply (no later than
the end of the 12-month period referred to in clause (i)) such excess Net Cash
Proceeds (to the extent not applied pursuant to clause (i)) as provided in the
following paragraph of this "Limitation on Asset Sales" covenant. The amount of
such excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set forth in clause (i) of the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
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If, as of the first day of any calendar month, the aggregate amount of Excess
Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $5 million, ITC/\DeltaCom
must commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount of the Notes plus, in
each case, accrued interest to the Payment Date.
Commission Reports and Reports to Holders
ITC/\DeltaCom shall file with the Commission the annual, quarterly and other
reports and other information required by Section 13(a) or 15(d) of the Exchange
Act, regardless of whether such sections of the Exchange Act are applicable to
ITC/\DeltaCom (unless the Commission will not accept such a filing).
ITC/\DeltaCom shall mail or cause to be mailed copies of such reports and
information to Holders and the Trustee within 15 days after the date it files
such reports and information with the Commission or after the date it would have
been required to file such reports and information with the Commission had it
been subject to such sections of the Exchange Act; provided, however, that the
copies of such reports and information mailed to Holders may omit exhibits,
which ITC/\DeltaCom will supply to any Holder at such Holder's request.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
ITC/\DeltaCom shall commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued
interest to the Payment Date.
There can be no assurance that ITC/\DeltaCom will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
may be contained in other securities of ITC/\DeltaCom which might be outstanding
at the time). The foregoing covenant requiring ITC/\DeltaCom to repurchase the
Notes will, unless consents are obtained, require ITC/\DeltaCom to repay all
indebtedness then outstanding which by its terms would prohibit such Note
repurchase, either prior to or concurrently with such Note repurchase.
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the Indenture:
(a) defaults in the payment of principal of (or premium, if any, on) any Note
when the same becomes due and payable at maturity, upon acceleration, redemption
or otherwise; (b) defaults in the payment of interest on any Note when the same
becomes due and payable, which defaults continue for a period of 30 days; (c)
defaults in the performance or breach of the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially all
of the assets of ITC/\DeltaCom, or the failure to make or consummate an Offer to
Purchase in accordance with the "Limitation on Asset Sales" or the "Repurchase
of Notes upon a Change of Control" covenant described above; (d) defaults in the
performance or breach of any covenant or agreement of ITC/\DeltaCom in the
Indenture or under the Notes (other than a default specified in clause (a), (b)
or (c) above), which default or breach continues for a period of 30 consecutive
days after written notice by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding; (e) there occurs with
respect to any issue or issues of Indebtedness of ITC/\DeltaCom or any
Significant Subsidiary having an outstanding principal amount of $5 million or
more in the aggregate for all such issues of all such Persons, whether such
Indebtedness now exists or shall hereafter be created, (I) an event of default
that has caused the holder thereof to declare such Indebtedness to be due and
payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled
within 30 days of such acceleration and/or (II) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such defaulted
payment shall not have been made, waived or extended within 30 days of such
payment default; (f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $5 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles, self-
insurance or retention as not so covered) shall be rendered against
ITC/\DeltaCom or any Significant Subsidiary and shall not be paid or discharged,
and there shall be any period of 30 consecutive days following entry of the
final judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all such
Persons to exceed $5 million during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; (g) a court having jurisdiction in the premises enters a decree or order
for (A) relief in respect of ITC/\DeltaCom or any Significant Subsidiary in an
involuntary case under any
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applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (B) appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of ITC/\DeltaCom or any Significant Subsidiary
or for all or substantially all of the property and assets of ITC/\DeltaCom or
any Significant Subsidiary or (C) the winding up or liquidation of the affairs
of ITC/\DeltaCom or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) ITC/\DeltaCom or any Significant Subsidiary (A) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of ITC/\DeltaCom or any Significant Subsidiary
or for all or substantially all of the property and assets of ITC/\DeltaCom or
any Significant Subsidiary or (C) effects any general assignment for the benefit
of creditors.
If an Event of Default (other than an Event of Default specified in clause (g)
or (h) above that occurs with respect to ITC/\DeltaCom) occurs and is continuing
under the Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding, by written notice to
ITC/\DeltaCom (and to the Trustee if such notice is given by the Holders), may,
and the Trustee at the request of such Holders shall, declare the principal of,
premium, if any, and accrued interest on the Notes to be immediately due and
payable. Upon a declaration of acceleration, such principal, premium, if any,
and accrued interest shall be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in clause (e)
above has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (e) shall be remedied or cured by
ITC/\DeltaCom or the relevant Significant Subsidiary or waived by the holders of
the relevant Indebtedness within 60 days after the declaration of acceleration
with respect thereto. If an Event of Default specified in clause (g) or (h)
above occurs with respect to ITC/\DeltaCom, the principal of, premium, if any,
and accrued interest on the Notes then outstanding shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder. The Holders of at least a majority in principal
amount of the outstanding Notes, by written notice to ITC/\DeltaCom and to the
Trustee, may waive all past defaults and rescind and annul a declaration of
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of the principal of, premium, if any, and interest on the
Notes that have become due solely by such declaration of acceleration, have been
cured or waived and (ii) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction. For information as to the waiver of
defaults, see "--Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of Notes not joining in the giving
of such direction and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes. A Holder
may not pursue any remedy with respect to the Indenture or the Notes unless: (i)
the Holder gives the Trustee written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of outstanding
Notes make a written request to the Trustee to pursue the remedy; (iii) such
Holder or Holders offer the Trustee indemnity satisfactory to the Trustee
against any costs, liability or expense; (iv) the Trustee does not comply with
the request within 60 days after receipt of the request and the offer of
indemnity; and (v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request. However, such limitations do
not apply to the right of any Holder of a Note to receive payment of the
principal of, premium, if any, or interest on, such Note or to bring suit for
the enforcement of any such payment, on or after the due date expressed in the
Notes, which right shall not be impaired or affected without the consent of the
Holder.
The Indenture will require certain officers of ITC/\DeltaCom to certify, on or
before a date not more than 90 days after the end of each fiscal year, that a
review has been conducted of the activities of ITC/\DeltaCom and its Restricted
Subsidiaries and the performance of ITC/\DeltaCom and its Restricted
Subsidiaries under the Indenture and that ITC/\DeltaCom has fulfilled all
obligations thereunder, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default and the nature and status
thereof. ITC/\DeltaCom will also be obligated to notify the Trustee of any
default or defaults in the performance of any covenants or agreements under the
Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
ITC/\DeltaCom shall not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into ITC/\DeltaCom unless: (i) ITC/\DeltaCom
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shall be the continuing Person, or the Person (if other than ITC/\DeltaCom)
formed by such consolidation or into which ITC/\DeltaCom is merged or that
acquired or leased such property and assets of ITC/\DeltaCom shall be a
corporation organized and validly existing under the laws of the United States
of America or any jurisdiction thereof, and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, all of the
obligations of ITC/\DeltaCom on all of the Notes and under the Indenture; (ii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, ITC/\DeltaCom or any Person
becoming the successor obligor of the Notes shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of ITC/\DeltaCom immediately
prior to such transaction; (iv) immediately after giving effect to such
transaction on a pro forma basis, ITC/\DeltaCom, or any Person becoming the
successor obligor of the Notes, as the case may be, could Incur at least $1.00
of Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant described above; provided, however, that this clause (iv) shall not
apply to a consolidation or merger with or into a Wholly Owned Restricted
Subsidiary with a positive net worth, provided that in connection with any such
merger or consolidation, no consideration (except Capital Stock (other than
Redeemable Stock) in the surviving Person or ITC/\DeltaCom (or a Person that
owns directly or indirectly all of the Capital Stock of the surviving Person or
ITC/\DeltaCom immediately following such transaction)) shall be issued or
distributed to the stockholders of ITC/\DeltaCom; and (v) ITC/\DeltaCom delivers
to the Trustee an Officers' Certificate (attaching the arithmetic computations
to demonstrate compliance with clauses (iii) and (iv) above) and an Opinion of
Counsel, in each case stating that such consolidation, merger or transfer and
such supplemental indenture comply with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with; provided, however, that clauses (iii) and (iv) above do not apply if, in
the good faith determination of the Board of Directors of ITC/\DeltaCom, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of ITC/\DeltaCom and
any such transaction shall not have as one of its purposes the evasion of the
foregoing limitations.
DEFEASANCE
Defeasance and Discharge. The Indenture will provide that ITC/\DeltaCom will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the deposit referred to below, and
the provisions of the Indenture will no longer be in effect with respect to the
Notes (except for, among other matters, certain obligations to register the
transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes,
to maintain paying agencies and to hold monies for payment in trust) if, among
other things, (A) ITC/\DeltaCom has deposited with the Trustee, in trust, money
and/or U.S. Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of, premium, if any, and accrued
interest on the Notes on the Stated Maturity of such payments in accordance with
the terms of the Indenture and the Notes, (B) ITC/\DeltaCom has delivered to the
Trustee (i) either (x) an Opinion of Counsel to the effect that Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
ITC/\DeltaCom's exercise of its option under this "Defeasance" provision and
will be subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred, which Opinion of Counsel must be based upon (and
accompanied by a copy of) a ruling of the Internal Revenue Service to the same
effect unless there has been a change in applicable federal income tax law after
the Closing Date such that a ruling is no longer required or (y) a ruling
directed to the Trustee received from the Internal Revenue Service to the same
effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit, the trust fund will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor
Law, (C) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day after
the date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which ITC/\DeltaCom or any of its Subsidiaries is a party or by which
ITC/\DeltaCom or any of its Subsidiaries is bound, and (D) if at such time the
Notes are listed on a national securities exchange, ITC/\DeltaCom has delivered
to the Trustee an Opinion of Counsel to the effect that the Notes will not be
delisted as a result of such deposit, defeasance and discharge.
Defeasance of Certain Covenants and Certain Events of Default. The Indenture
further will provide that the provisions of the Indenture will no longer be in
effect with respect to clauses (iii) and (iv) under "Consolidation, Merger and
Sale of Assets" and all the covenants described herein under "Covenants," clause
(d) under "Events of Default" with respect to such covenants and clauses (iii)
and (iv) under "Consolidation, Merger and Sale of Assets," and that clauses (e)
and (f) under "Events of Default" shall be deemed not to be Events of Default,
upon, among other things, the deposit with
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the Trustee, in trust, of money and/or U.S. Government Obligations that through
the payment of interest and principal in respect thereof in accordance with
their terms will provide money in an amount sufficient to pay the principal of,
premium, if any, and accrued interest on the Notes on the Stated Maturity of
such payments in accordance with the terms of the Indenture and the Notes, the
satisfaction of the provisions described in clauses (B)(ii), (C) and (D) of the
preceding paragraph and the delivery by ITC/\DeltaCom to the Trustee of an
Opinion of Counsel to the effect that, among other things, the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain covenants and Events of Default and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred.
Defeasance and Certain Other Events of Default. In the event ITC/\DeltaCom
exercises its option to omit compliance with certain covenants and provisions of
the Indenture with respect to the Notes as described in the immediately
preceding paragraph and the Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Notes at the time of their Stated Maturity
but may not be sufficient to pay amounts due on the Notes at the time of the
acceleration resulting from such Event of Default. However, ITC/\DeltaCom will
remain liable for such payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by ITC/\DeltaCom and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes; provided, however, that no
such modification or amendment may, without the consent of each Holder affected
thereby, (i) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, (ii) reduce the principal of, or premium, if any, or
interest on, any Note, (iii) change the place or currency of payment of
principal of, or premium, if any, or interest on, any Note, (iv) impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity (or, in the case of a redemption, on or after the Redemption
Date) of any Note, (v) reduce the above-stated percentage of outstanding Notes
the consent of whose Holders is necessary to modify or amend the Indenture, (vi)
waive a default in the payment of principal of, premium, if any, or interest on
the Notes or (vii) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Exchange Notes will initially be represented
by one or more permanent global Notes in definitive, fully registered form
without interest coupons (each a "Global Note") and will be deposited with the
Trustee as custodian for, and registered in the name of, a nominee of DTC.
Except in the limited circumstances described below under "Certified Notes,"
owners of beneficial interests in a Global Note will not be entitled to receive
physical delivery of Certificated Notes (as defined below).
Ownership of beneficial interests in a Global Note will be limited to persons
who have accounts with DTC ("participants") or persons who hold interests
through participants. Ownership of beneficial interests in a Global Note will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
or holder of the Exchange Notes represented by such Global Note for all purposes
under the Indenture and the Exchange Notes. No beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
Indenture.
Payments of the principal of, and interest on, a Global Note will be made to
DTC or its nominee, as the case may be, as the registered owner thereof. Neither
ITC/\DeltaCom, the Trustee nor any Paying Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
ITC/\DeltaCom expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
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interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. ITC/\DeltaCom also expects that payments by participants to
owners of beneficial interests in such Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way in
accordance with DTC rules and will be settled in same-day funds.
ITC/\DeltaCom expects that DTC will take any action permitted to be taken by a
holder of Exchange Notes (including the presentation of Exchange Notes for
exchange as described below) only at the direction of one or more participants
to whose account the DTC interests in a Global Note is credited and only in
respect of such portion of the aggregate principal amount of Exchange Notes as
to which such participant or participants has or have given such direction.
However, if there is an Event of Default under the Exchange Notes, DTC will
exchange the applicable Global Note for Certificated Exchange Notes, which it
will distribute to its participants.
ITC/\DeltaCom understands that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a clearing corporation within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates and certain other organizations. Indirect access to the DTC
system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly ("indirect participants").
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in a Global Note among participants of DTC, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither ITC/\DeltaCom nor the
Trustee will have any responsibility for the performance by DTC or its
respective participants or indirect participants of their respective obligation
under the rules and procedures governing their operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as depositary, and a
successor depositary is not appointed by ITC/\DeltaCom within 90 days or, if an
Event of Default under the Indenture has occurred and is continuing,
ITC/\DeltaCom will issue Certificated Notes in exchange for the Global Notes
representing such Notes. Holders of an interest in a Global Note may receive
Certificated Notes in accordance with the DTC's rules and procedures in addition
to those provided for under the Indenture.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS OR
EMPLOYEES
The Indenture provides that no recourse for the payment of the principal of,
premium, if any, or interest on any of the Notes or for any claim based thereon
or otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of ITC/\DeltaCom in the Indenture, or in any of the Notes
or because of the creation of any Indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer, director, employee or
controlling person of ITC/\DeltaCom or of any successor Person thereof. Each
Holder, by accepting the Notes, waives and releases all such liability.
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of a Default, the
Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indenture. If an Event of Default has occurred
and is continuing, the Trustee will use the same degree of care and skill in its
exercise of the rights and powers vested in it under the Indenture as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as amended,
incorporated by reference therein contain limitations on the rights of the
Trustee, should it become a creditor of ITC/\DeltaCom, to obtain payment of
claims
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in certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. The Trustee is permitted to engage in
other transactions; provided, however, that if it acquires any conflicting
interest, it must eliminate such conflict or resign.
The Trustee, United States Trust Company of New York, also serves as trustee
under the 1997 Senior Notes Indenture and the March 1998 Senior Notes Indenture.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Outstanding
Notes where such Outstanding Notes were acquired as a result of market-making
activities or other trading activities. We have agreed that, for a period not to
exceed 180 days after the Expiration Date, it will furnish additional copies of
this prospectus, as amended or supplemented, to any broker-dealer that
reasonably requests such documents for use in connection with any such resale.
We will not receive any proceeds from any sale of Exchange Notes by broker-
dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that
resells Exchange Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit of any such resale of Exchange Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Exchange Notes will constitute a new issue of securities with no
established trading market. We do not intend to list the Exchange Notes on any
national securities exchange or to seek approval for quotation through any
automated quotation system. We have been advised by the Placement Agents that
following completion of the Exchange Offer, the Placement Agents intend to make
a market in the Exchange Notes. However, the Placement Agents are not obligated
to do so and any market-making activities with respect to the Exchange Notes may
be discontinued at any time without notice. Accordingly, no assurance can be
given that an active public or other market will develop for the Exchange Notes
or as to the liquidity of or the trading market for the Exchange Notes. If a
trading market does not develop or is not maintained, holders of the Exchange
Notes may experience difficulty in reselling the Exchange Notes or may be unable
to sell them at all. If a market for the Exchange Notes develops, any such
market may cease at any time. If a public trading market develops for the
Exchange Notes, future trading prices of the Exchange Notes will depend on many
factors, including, among other things, prevailing interest rates, the market
for similar securities, our financial conditions and results of operations and
other factors beyond our control, including general economic conditions.
Notwithstanding the registration of the Exchange Notes in the Exchange Offer,
holders who are "affiliates" of ITC/\DeltaCom (within the meaning of Rule 405
under the Securities Act) may publicly offer for sale or resell the Exchange
Notes only in compliance with the provisions of Rule 144 under the Securities
Act or any other available exemptions under the Securities Act.
We have agreed to pay all expenses incident to the Exchange Offer other
than commissions or concessions of any brokers or dealers, and will indemnify
the holders of the Outstanding Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following summary describes certain United States federal income tax
consequences of the acquisition, ownership and disposition of the Notes, subject
to the limitations stated herein. The summary is based on the Internal Revenue
Code of 1986, as amended (the "Code"), and regulations, rulings and judicial
decisions as of the date hereof, all of which may be repealed, revoked or
modified so as to result in federal income tax consequences different from those
described below. Such changes could be applied retroactively in a manner that
could adversely affect holders of the Notes. It is therefore possible that the
consequences of the acquisition, ownership and disposition of the Notes may
differ from the treatment described below.
The tax treatment of a holder of the Notes may vary depending upon the
particular situation of the holder. This summary is limited to investors who
will hold the Notes as capital assets within the meaning of Section 1221 of the
Code and does not deal with holders that may be subject to special tax rules
(including, but not limited to, insurance companies, tax-exempt organizations,
financial institutions, dealers in securities or currencies, holders whose
functional currency is not the U.S. dollar or holders who will hold the Notes as
a hedge against currency risks or as part of a straddle, synthetic security,
conversion transaction or other integrated investment comprised of the Notes and
one or more other investments). The summary is applicable only to purchasers of
Notes in the Offering and does not address other purchasers.
This summary is for general information only and does not address all aspects
of federal income taxation that may be relevant to holders of the Notes in light
of their particular circumstances, and it does not address any tax consequences
arising under the laws of any state, local or foreign taxing jurisdiction.
Prospective holders are urged to consult their own tax advisors as to the
particular tax consequences to them of acquiring, holding or disposing of the
Notes.
STATED INTEREST ON NOTES
Except as set forth below, interest on a Note will generally be taxable to a
United States Holder as ordinary income from domestic sources at the time it is
paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes. As used herein, a "United States Holder" of a
Note means (i) an individual that is a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in or under
the laws of the United States or any political subdivision thereof, (iii) an
estate the income of which is subject to United States federal income taxation
regardless of its source, or (iv) a trust if (i) a U.S. court is able to
exercise primary supervision over the administration of the trust and (ii) one
or more U.S. persons have the authority to control all substantial decisions of
the trust. A "Non-United States Holder" is a holder that is not a United
States Holder.
If we fail to consummate the Exchange Offer or to file or cause to be declared
effective the Shelf Registration Statement as described in this prospectus under
the caption "Description of the Notes--Registration Rights" then additional
interest will accrue on the Notes in the manner described under that caption.
According to U.S. Treasury regulations, the possibility of a change in the
interest rate will not affect the amount of interest income recognized by a
United States Holder (or the timing of such recognition) if the likelihood of
the change, as of the date the Notes are issued, is remote. We believe that the
likelihood of a change in the interest rate on the Notes is remote. Therefore,
we do not intend to treat the possibility of a change in the interest rate as
affecting the yield to maturity of any Note. In the unlikely event that the
interest rate on the Notes is increased, then such increased interest may be
treated as original issue discount, includable by a United States Holder in
income as such interest accrues, in advance of receipt of any cash payment
thereof. If, as anticipated, the issue price of the Notes will equal their
stated principal amount, and based on our belief that the likelihood of a change
in the interest rate is remote, the Notes will not be issued with original issue
discount.
MARKET DISCOUNT
If a United States Holder purchases a Note for an amount that is less than its
principal amount, the amount of the difference will be treated as "market
discount" for U.S. federal income tax purposes, unless such difference is less
than a specified de minimis amount. Under the market discount rules, a United
States Holder will be required to treat any partial principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the market discount which has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. In addition, the United States Holder may
be required to defer, until
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the maturity of the Note or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue on a constant interest method. A United States
Holder may elect to include market discount in income currently as it accrues
(on either the ratable or constant interest method), in which case the rules
described above regarding (i) ordinary income recognition resulting from a
partial principal payment or a sale or other disposition and (ii) deferral of
interest deductions will not apply. This election to include market discount in
income currently, once made, applies to all market discount obligations acquired
on or after the first taxable year to which the election applies and may not be
revoked without the consent of the Internal Revenue Service (the "IRS").
AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a Note for an amount in excess of the
principal amount will be considered to have purchased the Note at a "premium."
A United States Holder generally may elect to amortize the premium over the
remaining term of the Note on a constant yield method. However, if the Note is
purchased at a time when the Note may be optionally redeemed for an amount that
is in excess of the principal amount, special rules would apply that could
result in a deferral of the amortization of bond premium until later in the term
of the Note. The amount amortized in any year will be treated as a reduction of
the United States Holder's interest income from the Note. Bond premium on a Note
held by a United States Holder that does not make such an election will decrease
the gain or increase the loss otherwise recognized on disposition of the Note.
The election to amortize premium on a constant yield method, once made, applies
to all debt obligations held or subsequently acquired by the electing United
States Holder on or after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
Upon the sale, exchange, redemption, retirement or other disposition of a
Note, a United States Holder generally will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange, redemption,
retirement or other disposition and such holder's adjusted tax basis of the
Note. A United States Holder's adjusted tax basis in a Note will, in general, be
the United States Holder's cost therefor, increased by market discount
previously included in income by the United States Holder and reduced by any
principal payments received by the United States Holder and any amortized
premium previously deducted from income by the United States Holder. Except as
described above with respect to market discount or except to the extent the gain
or loss is attributable to accrued but unpaid stated interest, such gain or loss
will be capital gain or loss. For certain noncorporate taxpayers (including
individuals), the rate of taxation of capital gains will depend upon (i) the
taxpayer's holding period in the capital asset (with a preferential rate
available for capital assets held more than 12 months) and (ii) the taxpayer's
marginal tax rate for ordinary income. The deductibility of capital losses is
subject to limitations.
The exchange of an Outstanding Note by a United States Holder for an Exchange
Note should not constitute a taxable exchange. A United States Holder will have
the same tax basis and holding period in the Exchange Note as it did in the
Outstanding Note.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject to
the discussion below concerning backup withholding:
(a) no United States federal withholding tax will be imposed with respect
to the payment by us or our paying agent of principal, premium, if any, or
interest on a Note owned by a Non-United States Holder (the "Portfolio
Interest Exception"), provided (i) that such Non-United States Holder does
not actually or constructively own 10% or more of the total combined voting
power of all classes of ITC/\DeltaCom stock entitled to vote within the
meaning of section 871(h)(3) of the Code and the regulations thereunder, (ii)
such Non-United States Holder is not a controlled foreign corporation that is
related, directly or indirectly, to the Company through stock ownership, (iii)
such Non-United States Holder is not a bank whose receipt of interest on a
Note is described in section 881(c)(3)(A) of the
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Code and (iv) such Non-United States Holder satisfies the statement
requirement (described generally below) set forth in section 871(h) and
section 881(c) of the Code and the regulations thereunder;
(b) no United States federal withholding tax will be imposed generally with
respect to any gain or income realized by a Non-United States Holder upon the
sale, exchange, redemption, retirement or other disposition of a Note; and
(c) a Note beneficially owned by an individual who at the time of death is
a Non-United States Holder will not be subject to United States federal estate
tax as a result of such individual's death, provided that such individual does
not actually or constructively own 10% or more of the total combined voting
power of all classes of ITC/\DeltaCom stock entitled to vote within the
meaning of section 871(h)(3) of the Code and provided that the interest
payments with respect to such Note would not have been, if received at the
time of such individual's death, effectively connected with the conduct of a
United States trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial owner
of such Note, or a financial institution holding the Note on behalf of such
owner, must provide, in accordance with specified procedures, a paying agent of
ITC/\DeltaCom with a statement to the effect that the beneficial owner is not a
United States Holder. Pursuant to current temporary U.S. Treasury regulations,
these requirements will be met if (1) the beneficial owner provides his name and
address, and certifies, under penalties of perjury, that he is not a United
States Holder (which certification may be made on an IRS Form W-8 (or substitute
form)) or (2) a financial institution holding the Note on behalf of the
beneficial owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof.
If a Non-United States Holder cannot satisfy the requirements of the Portfolio
Interest Exception described in (a) above, payments on a Note made to such Non-
United States Holder will be subject to a 30% withholding tax unless the
beneficial owner of the Note provides us or our paying agent, as the case may
be, with a properly executed (1) IRS Form 1001 (or substitute form) claiming an
exemption from or reduction of withholding under the benefit of a tax treaty or
(2) IRS Form 4224 (or substitute form) stating that interest paid on the Note is
not subject to withholding tax because it is effectively connected with the
beneficial owner's conduct of a trade or business in the United States.
Treasury regulations generally effective for payments made after December 31,
1999, modify certain of the certification requirements described above. It is
possible that we and other withholding agents may request new withholding
exemption forms from holders in order to qualify for continued exemption from
withholding under the Treasury regulations when they become effective.
If a Non-United States Holder is engaged in a trade or business in the United
States and payment on a Note is effectively connected with the conduct of such
trade or business, the Non-United States Holder, although exempt from United
States federal withholding tax as discussed above, will be subject to United
States federal income tax on such payment on a net income basis in the same
manner as if it were a United States Holder. In addition, if such Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, such payment on a Note will be included in such
foreign corporation's earnings and profits.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of a Note generally will not be subject to United States federal
income tax unless (i) such gain or income is effectively connected with a trade
or business in the United States of the Non-United States Holder or (ii) in the
case of a Non-United States Holder who is an individual, (y) such individual is
present in the United States for 183 days or more in the taxable year of such
sale, exchange, retirement or other disposition, and certain other conditions
are met or (z) such individual is a former citizen or former long-term resident
of the United States meeting certain qualifications.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments on a
Note and to the proceeds of the sale of a Note made to United States Holders
other than certain exempt recipients (such as corporations). A 31% backup
withholding tax will apply to such payments if the United States Holder fails to
provide a taxpayer identification number or certification of other exempt status
or fails to report in full dividend and interest income.
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<PAGE>
No information reporting or backup withholding will be required with respect
to payments made by ITC/\DeltaCom or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "--Non-United States
Holders" has been received and the payor does not have actual knowledge that
the beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments on a Note are paid or collected by a foreign office of a custodian,
nominee or other foreign agent on behalf of the beneficial owner of such Note,
or if a foreign office of a broker (as defined in applicable U.S. Treasury
regulations) pays the proceeds of the sale of a Note to the owner thereof. If,
however, such nominee, custodian, agent or broker is, for United States federal
income tax purposes, a United States person, a controlled foreign corporation, a
foreign person that derives 50% or more of its gross income for a specified
three-year period from the conduct of a trade or business in the United States
or (in the case of payments made after December 31, 1999) a foreign partnership
with certain connections to the United States, such payments will be subject to
information reporting (but not backup withholding), unless (1) such custodian,
nominee, agent or broker has documentary evidence in its records that the
beneficial owner is not a United States person and certain other conditions are
met or (2) the beneficial owner otherwise establishes an exemption.
Payments on a Note paid to the beneficial owner of a Note that is a Non-United
States Holder by a United States office of a custodian, nominee or agent, or the
payment to a Non-United States Holder by the United States office of a broker of
the proceeds of sale of a Note, will be subject to both backup withholding and
information reporting unless the beneficial owner provides the statement
referred to in (a)(iv) above under "--Non-United States Holders" and the payor
does not have actual knowledge that the beneficial owner is a United States
person or otherwise establishes an exemption.
Treasury regulations, generally effective for payments made after December 31,
1999, modify certain of the certification requirements for backup withholding.
It is possible that ITC/\DeltaCom and other withholding agents may request a new
withholding exemption form from holders in order to qualify for continued
exemption from backup withholding under Treasury regulations when they become
effective.
Any amounts withheld under the backup withholding rules will be credited
toward such Holder's United States federal income tax liability, if any. To the
extent that the amounts withheld exceed the Holder's tax liability, the excess
may be refunded to the Holder provided the required information is furnished to
the IRS. In addition to providing the necessary information, the Holder must
file a United States tax return in order to obtain a refund of the excess
withholding.
THE FEDERAL INCOME TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. PROSPECTIVE UNITED STATES HOLDERS AND NON-UNITED STATES HOLDERS OF
THE NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE ACQUISITION. OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE EFFECTS OF CHANGES IN SUCH LAWS.
69
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Exchange Notes offered hereby are
being passed upon for ITC/\DeltaCom by Hogan & Hartson L.L.P., Washington, D.C.,
special counsel for ITC/\DeltaCom. Hogan & Hartson L.L.P. also provides legal
services to affiliated companies and Campbell B. Lanier, III. Anthony S.
Harrington, a partner of the firm, beneficially owns 159,744 shares of Common
Stock of ITC/\DeltaCom.
EXPERTS
The consolidated balance sheets of ITC/\DeltaCom, Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997 and the related schedule incorporated by
reference in this Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
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NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION WHICH IS NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ONLY THE NOTES OFFERED
HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO
DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS
DATE.
$125,000,000
LOGO
9 3/4% Senior Notes Due 2008
PROSPECTUS
DATED ___, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law ("DGCL"), a
corporation may indemnify its directors, officers, employees and agents and its
former directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, such person must have had
no reasonable cause to believe his or her conduct was unlawful. In addition, the
DGCL does not permit indemnification in an action or suit by or in the right of
the corporation, where such person has been adjudged liable to the corporation,
unless, and only to the extent that, a court determines that such person fairly
and reasonably is entitled to indemnity for costs the court deems proper in
light of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.
The Certificate contains provisions that provide that no director of
ITC/\DeltaCom shall be liable for breach of fiduciary duty as a director except
for (1) any breach of the directors' duty of loyalty to ITC/\DeltaCom or its
stockholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (3) liability under
Section 174 of the DGCL; or (4) any transaction from which the director derived
an improper personal benefit. Under the Bylaws of ITC/\DeltaCom, ITC/\DeltaCom
is required to advance expenses incurred by an officer or director in defending
any such action if the director or officer undertakes to repay such amount if it
is determined that the director or officer is not entitled to indemnification.
In addition, ITC/\DeltaCom has entered into indemnity agreements with each of
its directors pursuant to which ITC/\DeltaCom has agreed to indemnify the
directors as permitted by the DGCL. ITC/\DeltaCom has obtained directors and
officers liability insurance against certain liabilities, including liabilities
under the Securities Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
1.1 Placement Agreement, dated October 29, 1998, among
ITC/\DeltaCom, Inc. and Morgan Stanley & Co. Incorporated and
First Union Capital Markets, a division of Wheat First
Securities, Inc.
3.1 Restated Certificate of Incorporation of ITC/\DeltaCom, Inc.
3.2 Amended and Restated Bylaws of ITC/\DeltaCom, Inc. (filed as
Exhibit 3.2 to Form S-1 and incorporated herein by
reference).
4.1 Form of Common Stock Certificate of ITC/\DeltaCom, Inc.
(filed as Exhibit 4.1 to Form S-1 and incorporated herein by
reference).
4.2 Indenture dated as of November 5, 1998 between ITC/\DeltaCom,
Inc. and United States Trust Company of New York, as Trustee,
relating to the 9 3/4% Senior Notes Due 2008 of
ITC/\DeltaCom, Inc.
4.3 Registration Rights Agreement, dated November 5, 1998, among
ITC/\DeltaCom, Inc. and Morgan Stanley & Co. Incorporated and
First Union Capital Markets, a division of Wheat First
Securities, Inc.
4.4 Form of Initial Global 9 3/4% Note Due 2008.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
4.5 Form of Exchange Note (contained in Indenture filed as
Exhibit 4.2).
5.1 Opinion of Hogan & Hartson L.L.P.
10.1 Capacity Agreement dated as of February 1, 1997 between
Interstate FiberNet and Entergy Technology Company (filed as
Exhibit 10.1 to Registration Statement on Form S-4, as
amended, File No. 333-31361 ("1997 Form S-4") and
incorporated herein by reference).
10.2 License Agreement dated February 1, 1997 between Interstate
FiberNet and Metropolitan Atlanta Rapid Transit Authority
(filed as Exhibit 10.2 to 1997 Form S-4 and incorporated
herein by reference).
10.3 Supply Agreement for Transmission Equipment dated March 26,
1993 between Interstate FiberNet and Northern Telecom, Inc.
(filed as Exhibit 10.3 to 1997 Form S-4 and incorporated
herein by reference).
10.3.1 Network Products Purchase Agreement, dated as of December 24,
1997, by and between Interstate FiberNet, Inc. and Northern
Telecom, Inc. (filed as Exhibit 10.3.1 to Annual Report on
Form 10-K, File No. 000-23253 ("1997 Form 10-K), filed with
the Commission on March 30, 1998 and incorporated herein by
reference).
10.4 First Amendment to Supply Agreement for Transmission
Equipment dated as of September 9, 1993 between Interstate
FiberNet and Northern Telecom, Inc. (filed as Exhibit 10.4 to
1997 Form S-4 and incorporated herein by reference).
10.5 Second Amendment to Supply Agreement for Transmission
Equipment dated as of January 19, 1994 between Interstate
FiberNet and Northern Telecom, Inc. (filed as Exhibit 10.5 to
1997 Form S-4 and incorporated herein by reference).
10.6 Sixth Amendment to Supply Agreement for Transmission
Equipment dated as of November 21, 1996 between Interstate
FiberNet and Northern Telecom, Inc. (which supersedes the
Third and the Fourth Amendment to this Agreement) (filed as
Exhibit 10.6 to 1997 Form S-4 and incorporated herein by
reference).
10.7 Seventh Amendment to Supply Agreement for Transmission
Equipment dated as of April 15, 1997 between Interstate
FiberNet and Northern Telecom, Inc. (which supersedes the
Fifth Amendment to this Agreement) (filed as Exhibit 10.7 to
1997 Form S-4 and incorporated herein by reference).
10.8 Master Capacity Lease dated July 22, 1996 between Interstate
FiberNet and InterCel PCS Services, Inc. (filed as Exhibit
10.8 to 1997 Form S-4 and incorporated herein by reference).
10.9 First Amendment to Master Capacity Lease dated as of August
22, 1996 between Interstate FiberNet and InterCel PCS
Services, Inc. (filed as Exhibit 10.9 to 1997 Form S-4 and
incorporated herein by reference).
10.10 Amended and Restated Loan Agreement dated as of March 27,
1997 by and among Gulf States Transmission Systems, Inc., the
Lenders parties thereto and NationsBank, N.A. (filed as
Exhibit 10.10 to 1997 Form S-4 and incorporated herein by
reference).
10.11 Promissory Note dated March 27, 1997 between Gulf States
Transmission Systems, Inc. and NationsBank, N.A. (filed as
Exhibit 10.11 to 1997 Form S-4 and incorporated herein by
reference).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.12 Amended and Restated Security Agreement dated as of March 27,
1997 between Gulf States FiberNet and Gulf States
Transmission Systems, Inc. and NationsBank, N.A. (filed as
Exhibit 10.12 to 1997 Form S-4 and incorporated herein by
reference).
10.13 Assignment and Assumption Agreement dated as of March 27,
1997 between Gulf States FiberNet and Gulf States
Transmission Systems, Inc. (filed as Exhibit 10.13 to 1997
Form S-4 and incorporated herein by reference).
10.14 Term Agreement dated as of August 11, 1994 between Gulf
States FiberNet and Illinois Central Railroad Company (filed
as Exhibit 10.14 to 1997 Form S-4 and incorporated herein by
reference).
10.15 Revised and Restated Fiber Optic Facilities and Services
Agreement dated as of June 9, 1995 among Southern Development
and Investment Group, Inc., on behalf of itself and as agent
for Alabama Power Company, Georgia Power Company, Gulf Power
Company, Mississippi Power Company, Savannah Electric and
Power Company, Southern Electric Generating Company and
Southern Company Services, Inc. and MPX Systems, Inc., which
was assigned in part by MPX Systems, Inc. to Gulf States
FiberNet pursuant to an Assignment dated as of July 25, 1995
(filed as Exhibit 10.15 to 1997 Form S-4 and incorporated
herein by reference).
10.15.1 Release, Waiver, and Assumption Agreement, dated as of
December 31, 1997, between Southern Development Investment
Group, Inc., on behalf of itself and as agent for Alabama
Power Company, Georgia Power Company, Gulf Power Company,
Mississippi Power Company, Savannah Electric and Power
Company, Southern Electric Generating Company and Southern
Company Services, Inc. and Interstate FiberNet, Inc. and Gulf
States Transmission Systems, Inc. (filed as Exhibit 10.15.1
to 1997 Form 10-K and incorporated herein by reference).
10.15.2 Amendment to the Revised and Restated Fiber Optic Facilities
and Services Agreement, dated as of January 1, 1998, by and
among Southern Company Energy Solutions, Inc. (f/k/a Southern
Development Group, Inc.), on behalf of itself and as agent
for Alabama Power Company, Georgia Power Company, Gulf Power
Company, Mississippi Power Company, Savannah Electric and
Power Company, Southern Electric Generating Company and
Southern Company Services, Inc. and Interstate FiberNet, Inc.
(filed as Exhibit 10.15.2 to Quarterly Report Form 10-Q
("Form 10-Q"), filed with the Commission of November 16,
1998, and incorporated herein by reference).
10.16 First Amendment to Revised and Restated Fiber Optic
Facilities and Services Agreement dated as of July 24, 1995
between Southern Development and Investment Group, Inc. on
behalf of itself and as agent for others and MPX Systems,
Inc. (filed as Exhibit 10.16 to 1997 Form S-4 and
incorporated herein by reference).
10.17 Partial Assignment and Assumption of Revised and Restated
Fiber Optic Facilities and Services Agreement dated July 25,
1995 between MPX Systems, Inc. and Gulf States FiberNet
(filed as Exhibit 10.17 to 1997 Form S-4 and incorporated
herein by reference).
+10.17.1 Amendment to Revised and Restated Fiber Optic Facilities and
Services Agreement, dated July 15, 1997, by and among
Southern Development and Investment Group, Inc., on behalf of
itself and its agent for Alabama Power Company, Georgia Power
Company, Gulf Power Company, Mississippi Power Company,
Savannah Electric and Power Company, Southern Electric
Generating Company and Southern Company Services, Inc.
(collectively "SES"), ITC Transmission Systems, Inc. (as
managing partner of Interstate Fibernet) and Gulf States
Transmission Systems, Inc. (filed as Exhibit 10.17.1 to 1997
Form S-4 and incorporated herein by reference).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.18 Consent for Assignment of Interest dated February 20, 1997
among SCANA Communications, Inc., Gulf States FiberNet, Gulf
States Transmission Systems, Inc. and Southern Development
and Investment Groups, Inc. (filed as Exhibit 10.18 to 1997
Form S-4 and incorporated herein by reference).
10.19 Second Partial Assignment and Assumption of Revised and
Restated Fiber Optic Facilities and Services Agreement dated
March 27, 1997 between SCANA Communications, Inc. and ITC
Holding Company, Inc. (filed as Exhibit 10.19 to 1997 Form S-
4 and incorporated herein by reference).
10.20 Fiber System Lease Agreement dated January 30, 1996 between
CSW Communications, Inc. and Gulf States FiberNet (filed as
Exhibit 10.20 to 1997 Form S-4 and incorporated herein by
reference).
10.21 Consent for Acquisition and Assignment dated January 13, 1997
between CSW Communications, Inc. and Gulf States FiberNet
(filed as Exhibit 10.21 to 1997 Form S-4 and incorporated
herein by reference).
10.22 Agreement for the Provision of Fiber Optic Services and
Facilities dated April 21, 1986 between SouthernNet, Inc. and
MPX Systems, Inc. (filed as Exhibit 10.22 to 1997 Form S-4
and incorporated herein by reference).
10.23 First Amendment to Agreement for the Provision of Fiber Optic
Services and Facilities dated May 8, 1992 between MPX
Systems, Inc. and MCI Telecommunications Corporation (filed
as Exhibit 10.23 to 1997 Form S-4 and incorporated herein by
reference).
10.24 Second Amendment to Agreement for the Provision of Fiber
Optic Services and Facilities dated January 30, 1996 between
MPX Systems, Inc. and MCI Telecommunications Corporation
(filed as Exhibit 10.24 to 1997 Form S-4 and incorporated
herein by reference).
10.25 Network Operating Agreement dated March 25, 1996 among Gulf
States FiberNet, TriNet, Inc., Hart Communications, Inc. and
SCANA Communications, Inc. (f/k/a MPX Systems, Inc.) (filed
as Exhibit 10.25 to 1997 Form S-4 and incorporated herein by
reference).
10.26 Agreement for the Provision of Fiber Optic Facilities and
Services dated March 29, 1990 between Alabama Power Company
and Southern Interexchange Facilities, Inc. (filed as Exhibit
10.26 to 1997 Form S-4 and incorporated herein by reference).
10.27 Amendment to the Agreement for Provision of Fiber Optic
Facilities and Services dated March 29, 1990 between Alabama
Power Company and Southern Interexchange Facilities, Inc.
(filed as Exhibit 10.27 to 1997 Form S-4 and incorporated
herein by reference).
10.28 First Amendment to the Agreement for the Provision of Fiber
Optic Facilities and Services dated March 22, 1991 between
Alabama Power Company and Southern Interexchange Facilities,
Inc. (filed as Exhibit 10.28 to 1997 Form S-4 and
incorporated herein by reference).
10.29 Second Amendment to the Agreement for the Provision of Fiber
Optic Facilities and Services dated December 1, 1991 between
Alabama Power Company and Southern Interexchange Facilities,
Inc. (filed as Exhibit 10.29 to 1997 Form S-4 and
incorporated herein by reference).
10.30 Third Amendment to the Agreement for the Provision of Fiber
Optic Facilities and Services dated September 23, 1992
between Alabama Power Company and Southern Interexchange
Facilities, Inc. (filed as Exhibit 10.30 to 1997 Form S-4 and
incorporated herein by reference).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.31 Fourth Amendment to the Agreement for the Provision of Fiber Optic Facilities and
Services dated January 1, 1994 between Alabama Power Company and Southern Interexchange
Facilities, Inc. (filed as Exhibit 10.31 to 1997 Form S-4 and incorporated herein by
reference).
10.32 Agreement dated March 6, 1990 between Tennessee Valley Authority and Consolidated
Communications Corporation (predecessor to DeltaCom, Inc.) (filed as Exhibit 10.32 to
1997 Form S-4 and incorporated herein by reference).
10.32.1 Supplement Agreement; Leased Fiber Pathways, dated as of September 26, 1997, by and
between Tennessee Valley Authority and DeltaCom, Inc. (filed as Exhibit 10.32.1 to 1997
Form 10-K and incorporated herein by reference).
10.33 Interconnection Agreement signed March 12, 1997 between DeltaCom, Inc. and BellSouth
Telecommunications, Inc. (filed as Exhibit 10.33 to 1997 Form S-4 and incorporated herein
by reference).
10.34 Amendment to Interconnection Agreement relating to BellSouth loops dated March 12, 1997
between DeltaCom, Inc. and BellSouth Telecommunications, Inc. (filed as Exhibit 10.34 to
1997 Form S-4 and incorporated herein by reference).
10.35 Amendment to Interconnection Agreement relating to resale of BellSouth services dated
March 12, 1997 between DeltaCom, Inc. and BellSouth Telecommunications, Inc. (filed as
Exhibit 10.35 to 1997 Form S-4 and incorporated herein by reference).
10.35.1 Third Amendment to Interconnection Agreement, dated March 12, 1997, by and between
DeltaCom, Inc. and BellSouth Telecommunications, Inc. (filed as Exhibit 10.35.1 to Form
S-4 and incorporated herein by reference).
10.35.2 Fourth Amendment to Interconnection Agreement, dated August 22, 1997, by and between
DeltaCom, Inc. and BellSouth Telecommunications, Inc. (filed as Exhibit 10.35.2 to Form
S-4 and incorporated herein by reference).
10.35.3 Amendment to Interconnection Agreement, dated October 3, 1997, by and between DeltaCom,
Inc. and BellSouth Telecommunications, Inc. (filed as Exhibit 10.35.3 to Form S-1 and
incorporated herein by reference).
10.35.4 Fifth Amendment to Interconnection Agreement, dated July 22, 1998, by and between
DeltaCom, Inc., and BelSouth Telecommunications, Inc. (filed as Exhibit 10.35.4 to Form
10-Q, filed with the Commission on November 16, 1998 and incorporated herein by
reference).
10.36 Master Equipment Lease Agreement dated October 30, 1995 between AT&T Systems Leasing Co.
and DeltaCom, Inc. (filed as Exhibit 10.36 to 1997 Form S-4 and incorporated herein by
reference).
10.37 Network Products Purchase Agreement dated January 24, 1996, as amended through March 4,
1997, between DeltaCom, Inc. and Northern Telecom, Inc. (filed as Exhibit 10.37 to 1997
Form S-4 and incorporated herein by reference).
10.38 First Amendment to Product Attachment Carrier Network Products, dated May 20, 1997 (filed
as Exhibit 10.38 to 1997 Form S-4 and incorporated herein by reference).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.39 Agreement for Use of Optical Fiber System, Microwave Radio Tower Site and Associated
Facilities dated January 2, 1996 between DeltaCom, Inc. and SCI Systems, Inc. (filed as
Exhibit 10.39 to 1997 Form S-4 and incorporated herein by reference).
10.40 Collocate Agreement dated January 7, 1991 between Williams Telecommunications Services,
Inc., and Southern Interexchange Facilities, Inc. (including consent for change of
control) (filed as Exhibit 10.40 to 1997 Form S-4 and incorporated herein by reference).
10.41 Agreement dated January 14, 1997 between DeltaCom, Inc. and SCANA Communications, Inc.,
for switch location in Columbia, South Carolina (filed as Exhibit 10.41 to 1997 Form S-4
and incorporated herein by reference).
10.42 Lease Agreement dated January 1, 1996 between Brindlee Mountain Telephone Company and
DeltaCom, Inc. for, among other purposes, switch location in Arab, Alabama (filed as
Exhibit 10.42 to 1997 Form S-4 and incorporated herein by reference).
10.43 Promissory Note dated March 27, 1997 between ITC Holding Company, Inc. and SCANA
Communications, Inc. (filed as Exhibit 10.43 to 1997 Form S-4 and incorporated herein by
reference).
+10.44 Agreement for the Provision of Telecommunications Services and Facilities, dated January
27, 1996, by and between Interstate FiberNet, Inc. and Carolinas FiberNet, LLC (filed as
Exhibit 10.44 to 1997 Form S-4 and incorporated herein by reference).
+10.44.1 First Amendment to the Agreement for the Provision of Telecommunications Services and
Facilities, dated as of September 1, 1997, by and between Interstate FiberNet, Inc. and
Carolinas FiberNet, LLC (filed as Exhibit 10.44.1 to 1997 Form 10-K and incorporated
herein by reference).
+10.45 Fiber Optic Facilities Agreement, dated November 15, 1996, by and between Interstate
FiberNet and Florida Power Corporation (filed as Exhibit 10.45 to 1997 Form S-4 and
incorporated herein by reference).
+10.46 Fiber Optic Capacity Marketing and Operating Agreement, dated March 21, 1996, by and
between Interstate FiberNet and Florida Power & Light Company (filed as Exhibit 10.46 to
1997 Form S-4 and incorporated herein by reference).
+10.47 Addendum to Fiber Optic Capacity Marketing and Operating Agreement, dated July 10, 1997,
by and between Interstate FiberNet and Florida Power & Light Company (filed as Exhibit
10.47 to 1997 Form S-4 and incorporated herein by reference).
+10.48 Master Service Agreement, dated May 6, 1996, by and between Interstate FiberNet and MCI
Telecommunications Corporation (filed as Exhibit 10.48 to 1997 Form S-4 and incorporated
herein by reference).
+10.49 Telecommunications System Maintenance Agreement, dated as of January 26, 1995, by and
between Interstate FiberNet and Sprint Communications Company L.P. (filed as Exhibit
10.49 to 1997 Form S-4 and incorporated herein by reference).
+10.50 Sprint Communications Company Facilities and Services Agreement, dated January 26, 1995,
by and between Interstate FiberNet and Sprint Communications Company L.P. (filed as
Exhibit 10.50 to 1997 Form S-4 and incorporated herein by reference).
+10.51 Fiber Optic Facility Lease Agreement, dated as of January 31, 1997, by and between
Interstate FiberNet and Southern Telecom 1, Inc. (filed as Exhibit 10.51 to 1997 Form S-4
and incorporated herein by reference).
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.52 First Assignment and Assumption of Fiber Optic Facility Lease Agreement, dated February
1, 1997, by and between Interstate FiberNet and Gulf States FiberNet (filed as Exhibit
10.52 to 1997 Form S-4 and incorporated herein by reference).
+10.53 Telecommunications System Agreement, dated January 26, 1995, by and between Interstate
FiberNet and Sprint Communications Company L.P. (filed as Exhibit 10.53 to 1997 Form S-4
and incorporated herein by reference).
10.54 Amendment to Telecommunications System Agreement, dated July 25, 1995, by and between
Gulf States FiberNet and Sprint Communications Company L.P. (filed as Exhibit 10.54 to
1997 Form S-4 and incorporated herein by reference).
+10.55 Amendment No. 2 to Telecommunications System Agreement, dated August 8, 1996, by and
between Gulf States FiberNet and Sprint Communications Company L.P. (filed as Exhibit
10.55 to 1997 Form S-4 and incorporated herein by reference).
+10.56 Assignment of the Telecommunications System Agreement, dated July 25, 1995, between
Interstate FiberNet, Gulf States FiberNet and Sprint Communications Company L.P. (filed
as Exhibit 10.56 to 1997 Form S-4 and incorporated herein by reference).
+10.57 Assignment of the Telecommunications System Agreement, dated February 27, 1997, between
Sprint Communications Company L.P., Gulf States FiberNet and Gulf States Transmission
Systems, Inc. (filed as Exhibit 10.57 to 1997 Form S-4 and incorporated herein by
reference).
10.58 Fixed Fee Agreement for Exchange of Use and Maintenance of Six (6) Fiber Optic Fibers
with an Option of Two (2) Additional Fiber Optic Fibers, dated July 25, 1997, by and
between Interstate FiberNet, Gulf States Transmission Systems, Inc. and ALLTEL Telephone
Services Corporation. (filed as Exhibit 10.58 to 1997 Form S-4 and incorporated herein by
reference).
+10.59 MCI Carrier Agreement, effective August 1, 1995, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit
10.59 to 1997 Form S-4 and incorporated herein by reference).
+10.60 First Amendment to MCI Carrier Agreement, dated as of March 20, 1996, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA)
(filed as Exhibit 10.60 to 1997 Form S-4 and incorporated herein by reference).
+10.61 Third Amendment to MCI Carrier Agreement, dated as of August 1, 1996, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA)
(filed as Exhibit 10.61 to 1997 Form S-4 and incorporated herein by reference).
10.62 Fourth Amendment to MCI Carrier Agreement dated as of May 1, 1996, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA)
(filed as Exhibit 10.62 to 1997 Form S-4 and incorporated herein by reference).
+10.63 Fifth Amendment to MCI Carrier Agreement, dated as of April 10, 1996, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA)
(filed as Exhibit 10.63 to 1997 Form S-4 and incorporated herein by reference).
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
+10.64 Sixth Amendment to MCI Carrier Agreement, dated as of September 11, 1996, by and between
MCI Telecommunications Corporation and Associated Communications Companies of America
(ACCA) (filed as Exhibit 10.64 to 1997 Form S-4 and incorporated herein by reference).
+10.65 Seventh Amendment to MCI Carrier Agreement, dated as of August 1, 1996, by and between
MCI Telecommunications Corporation and Associated Communications Companies of America
(ACCA) (filed as Exhibit 10.65 to 1997 Form S-4 and incorporated herein by reference).
+10.66 Eighth Amendment to MCI Carrier Agreement, effective March 1, 1997, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA)
(filed as Exhibit 10.66 to 1997 Form S-4 and incorporated herein by reference).
+10.67 Ninth Amendment to MCI Carrier Agreement, dated as of May 15, 1997, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA)
(filed as Exhibit 10.67 to 1997 Form S-4 and incorporated herein by reference).
10.68 Tenth Amendment to MCI Carrier Agreement, dated July 11, 1997, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA)
(filed as Exhibit 10.68 to 1997 Form S-4 and incorporated herein by reference).
+10.69 Switched Reseller Services Agreement, dated January 25, 1994, by and between DeltaCom,
Inc. and Allnet Communication Services, Inc. (filed as Exhibit 10.69 to 1997 Form S-4 and
incorporated herein by reference).
+10.70 WilTel, Inc. Carrier Digital Services Agreement, dated September 1, 1995, by and between
WorldCom Network Services, Inc. D/b/a WilTel, Associated Communications Companies of
America (ACCA) and the individual members of ACCA referenced therein (filed as Exhibit
10.70 to 1997 Form S-4 and incorporated herein by reference).
+10.71 Amendment to WilTel, Inc. Carrier Digital Services Agreement, dated April 1, 1996, by and
between WorldCom Network Services, Inc. d/b/a/ WilTel, Associated Communications
Companies of America (ACCA) and the individual members of ACCA referenced therein (filed
as Exhibit 10.71 to 1997 Form S-4 and incorporated herein by reference).
+10.72 Amendment No. 2 to WilTel, Inc. Carrier Digital Services Agreement, dated June 1, 1996,
by and between WorldCom Network Services, Inc. d/b/a/ WilTel, Associated Communications
Companies of America (ACCA) and the individual members of ACCA referenced therein (filed
as Exhibit 10.72 to 1997 Form S-4 and incorporated herein by reference).
+10.73 Amendment No. 3 to WilTel, Inc. Carrier Digital Services Agreement, dated May 1, 1997, by
and between WorldCom Network Services, Inc. d/b/a/ WilTel, Associated Communications
Companies of America (ACCA) and the individual members of ACCA referenced therein (filed
as Exhibit 10.73 to 1997 Form S-4 and incorporated herein by reference).
+10.74 Marketing and Operating Agreement, dated as of October 6, 1994, by and between Interstate
FiberNet and DukeNet Communications, Inc. (filed as Exhibit 10.74 to 1997 Form S-4 and
incorporated herein by reference).
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
+10.75 Reseller Agreement, dated June 25, 1997, by and between DeltaCom, Inc. and Total Network
Services, a division of Cable & Wireless, Inc. (filed as Exhibit 10.75 to 1997 Form S-4
and incorporated herein by reference).
10.76 Sublease Agreement, dated as of January 1, 1995, by and between ITC Holding Company, Inc.
and ITC Transmission Systems, Inc. (filed as Exhibit 10.76 to 1997 Form S-4 and
incorporated herein by reference).
10.77.1 $100,000,000 Credit Agreement, dated as of September 17, 1997, among Interstate FiberNet,
Inc., NationsBank of Texas, N.A. as Administrative Lender, and certain other Lenders
identified therein (the "IFN Credit Agreement") (filed as Exhibit 10.77 to 1997 Form S-4
and incorporated herein by reference).
10.77.2 First Amendment to Credit Agreement, dated as of October 20, 1997, among Interstate
FiberNet, Inc., NationsBank of Texas, N.A. as Administrative Lender, and certain other
Lenders identified therein (filed as Exhibit 10.77.2 to Form S 1 and incorporated herein
by reference).
10.77.3 First Amended and Restated Credit Agreement, dated as of February 24, 1998, among
Interstate FiberNet, Inc., NationsBank of Texas, N.A. as Administrative Lender, and
certain other Lenders identified therein (filed as Exhibit 10.77.3 to 1997 Form 10-K and
incorporated herein by reference).
10.78.1 $8,750,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of NationsBank of Texas, N.A. (filed as Exhibit
10.78.1 to 1997 Form S-4 and incorporated herein by reference).
10.78.2 $3,750,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Amsouth Bank (filed as Exhibit 10.78.2 to 1997
Form S-4 and incorporated herein by reference).
10.78.3 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Creditanstalt-Bankverein (filed as Exhibit 10.78.3
to 1997 Form S-4 and incorporated herein by reference).
10.78.4 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Meespierson Capital Corp. (filed as Exhibit
10.78.4 to 1997 Form S-4 and incorporated herein by reference).
10.78.5 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of State Street Bank and Trust Company (filed as
Exhibit 10.78.5 to 1997 Form S-4 and incorporated herein by reference).
10.78.6 $7,500,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Corestates Bank, N.A. (filed as Exhibit 10.78.6 to
1997 Form S-4 and incorporated herein by reference).
10.78.7 $2,500,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of First Union National Bank (filed as Exhibit
10.78.7 to 1997 Form S-4 and incorporated herein by reference).
10.78.8 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Regions Bank (filed as Exhibit 10.78.8 to 1997
Form S-4 and incorporated herein by reference).
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.78.9 $7,500,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Toronto Dominion (Texas), Inc. (filed as Exhibit
10.78.9 to 1997 Form S-4 and incorporated herein by reference).
10.79.1 $8,750,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of NationsBank of Texas, N.A. (filed as Exhibit
10.79.1 to 1997 Form S-4 and incorporated herein by reference).
10.79.2 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Creditanstalt-Bankverein (filed as Exhibit 10.79.2
to 1997 Form S-4 and incorporated herein by reference).
10.79.3 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Meespierson Capital Corp. (filed as Exhibit
10.79.3 to 1997 Form S-4 and incorporated herein by reference).
10.79.4 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of State Street Bank and Trust Company (filed as
Exhibit 10.79.4 to 1997 Form S-4 and incorporated herein by reference).
10.79.5 $7,500,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Corestates Bank, N.A. (filed as Exhibit 10.79.5 to
1997 Form S-4 and incorporated herein by reference).
10.79.6 $2,500,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of First Union National Bank (filed as Exhibit
10.79.6 to 1997 Form S-4 and incorporated herein by reference).
10.79.7 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Regions Bank (filed as Exhibit 10.79.7 to 1997
Form S-4 and incorporated herein by reference).
10.79.8 $7,500,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Toronto Dominion (Texas), Inc. (filed as Exhibit
10.79.8 to 1997 Form S-4 and incorporated herein by reference).
10.79.9 $3,750,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate
FiberNet, Inc. payable to the order of Amsouth Bank (filed as Exhibit 10.79.9 to 1997
Form S-4 and incorporated herein by reference).
10.80.1 Security Agreement, dated as of September 17, 1997, made by Interstate FiberNet, Inc. in
favor of NationsBank of Texas, N.A., as Administrative Lender, and each other lender
party to the IFN Credit Agreement (filed as Exhibit 10.80.1 to 1997 Form S-4 and
incorporated herein by reference).
10.80.2 Security Agreement, dated as of September 17, 1997, made by DeltaCom, Inc. in favor of
NationsBank of Texas, N.A., as Administrative Lender, and each other lender party to the
IFN Credit Agreement (filed as Exhibit 10.80.2 to 1997 Form S-4 and incorporated herein
by reference).
10.80.3 Security Agreement, dated as of September 17, 1997, made by Gulf States Transmission
Systems, Inc. in favor of NationsBank of Texas, N.A., as Administrative Lender, and each
other lender party to the IFN Credit Agreement (filed as Exhibit 10.80.3 to 1997 Form S-4
and incorporated herein by reference).
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.81.1 Indenture, dated as of June 3, 1997, between ITC/\DeltaCom, Inc. and United States Trust
Company of New York, as Trustee, relating to the 11% Senior Notes due 2007 of
ITC/\DeltaCom, Inc. (filed as Exhibit 4.1 to 1997 Form S-4 and incorporated herein by
reference).
10.81.2 Supplemental Indenture, dated as of October 17, 1997, between ITC/\DeltaCom, Inc. and
United States Trust Company of New York, as Trustee (filed as Exhibit 82.2 to Form S-1
and incorporated herein by reference).
10.82 Pledge and Security Agreement dated as of June 3, 1997 from ITC/\DeltaCom, Inc. as Pledgor
to United States Trust Company of New York as Trustee (filed as Exhibit 4.3 to 1997 Form
S-4 and incorporated herein by reference).
10.83 Form of Exchange Note (contained in Indenture filed as Exhibit 10.81).
10.84 Assignment and Contribution Agreement Pursuant to Pledge and Security Agreement dated as
of July 25, 1997, by and among ITC/\DeltaCom, Inc., Interstate FiberNet, Inc. and United
States Trust Company of New York, as Trustee filed herewith (filed as Exhibit 4.5 to 1997
Form S-4 and incorporated herein by reference).
+10.85 MCI Carrier Agreement, effective September 1, 1997, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit
10.87 to Form S-1 and incorporated herein by reference).
+10.85.1 First Amendment to the MCI Carrier Agreement, dated as of November 21, 1997, by and
between MCI Telecommunications Corporation and Associated Communication Companies of
America (ACCA) (filed as Exhibit 10.87.1 to 1997 Form 10-K and incorporated herein by
reference).
10.86 ITC/\DeltaCom, Inc. 1997 Stock Option Plan (filed as Exhibit 10.88 to Form S-1 and
incorporated herein by reference).
10.87 ITC/\DeltaCom, Inc. 1997 Director Stock Option Plan (filed as Exhibit 10.89 to Form S-1
and incorporated herein by reference).
10.88 ITC Holding Company, Inc. Amended and Restated Stock Option Plan (filed as Exhibit 10.90
to Form S-1 and incorporated herein by reference).
10.89 ITC Holding Company, Inc. Nonemployee Director Stock Option Plan (filed as Exhibit 10.91
to Form S-1 and incorporated herein by reference).
10.90 Description of ITC/\DeltaCom, Inc. Bonus Plan (filed as Exhibit 10.92 to Form S-1 and
incorporated herein by reference).
10.91 Form of Indemnity Agreement between ITC/\DeltaCom, Inc. and its Directors and Certain
Officers (filed as Exhibit 10.93 to Form S-1 and incorporated herein by reference).
10.92 Sale and Purchase Agreement, dated as of March 11, 1997, by and between SCANA Corporation
and ITC Holding Company, Inc. (filed as Exhibit 10.94 to Form S-1 and incorporated herein
by reference).
10.93 First Amendment to Sale and Purchase Agreement. Among SCANA Corporation, SCANA
Communications, Inc., and ITC Holding Company, Inc., dated as of October 16, 1997, among
SCANA Corporation, SCANA Communications, Inc., ITC Holding Company, Inc. and
ITC/\DeltaCom, Inc. (filed as Exhibit 10.95 to Form S-1 and incorporated herein by
reference).
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.94 Indenture dated March 3, 1998 between ITC/\DeltaCom, Inc. and United States Trust Company
of New York, as Trustee, relating to the 8-7/8% Senior Notes Due 2008 of ITC/\DeltaCom,
Inc. (filed as Exhibit 4.2 to 1997 Form 10-K and incorporated herein by reference).
10.95 Form of Exchange Note (contained in Indenture filed as Exhibit 10.94).
12.1 Statement regarding Computation of Ratios.
21.1 Subsidiaries of ITC/\DeltaCom, Inc. (filed as Exhibit 21.1 to 1997 Form 10-K and
incorporated herein by reference).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
24.1 Power of attorney (included on signature page).
25.1 Statement on Form T-1 of Eligibility of Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
__________
+ Confidential treatment has been granted for this exhibit. The copy filed
as an exhibit omits the information subject to the confidential
treatment request.
(b) Financial Statement Schedules.
The following financial statement schedule was filed with ITC/\DeltaCom's
Annual Report on Form 10-K (File No. 0-23253), filed with the Commission on
March 30, 1998, and is incorporated herein by reference:
Schedule II--Valuation and Qualifying Accounts
Schedules not listed above have been omitted because they are inapplicable
or the information required to be set forth therein is contained, or
incorporated by reference, in the Consolidated Financial Statements of the
Company or notes thereto.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such
II-12
<PAGE>
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
this Registration Statement when it became effective.
The undersigned registrant hereby undertakes that for purposes of determining
any liability under the Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective.
The undersigned registrant hereby undertakes that for the purpose of
determining any liability under the Securities Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective amendment to this
Registration Statement;
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-
effective amendment hereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
this Registration Statement when it becomes effective; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement.
The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Act, the Company has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of West Point, State of Georgia, on this
3rd day of February, 1999.
ITC/\DELTACOM, INC.
By: /s/ Andrew M. Walker
-------------------------
Andrew M. Walker
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Campbell B. Lanier, III, Andrew M. Walker and Douglas
A. Shumate, jointly and severally, each in his own capacity, his true and lawful
attorneys-in-fact, with full power of substitution, for him and his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents with full power and authority to do so and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons, in the capacities
indicated below, on this 3rd day of February, 1999.
SIGNATURE TITLE
--------- -----
/s/ Campbell B. Lanier, III
___________________________________ Chairman, Director
CAMPBELL B. LANIER, III
/s/ Andrew M. Walker
___________________________________ Vice Chairman, Chief Executive Officer
ANDREW M. WALKER and Director
(Principal executive officer)
/s/ Douglas A. Shumate
___________________________________ Senior Vice President and Chief
DOUGLAS A. SHUMATE Financial Officer
(Principal financial officer and
principal accounting officer)
/s/ Donald W. Burton
___________________________________ Director
DONALD W. BURTON
___________________________________ Director
MALCOLM C. DAVENPORT, V
/s/ Robert A. Dolson
___________________________________ Director
ROBERT A. DOLSON
II-14
<PAGE>
SIGNATURE TITLE
--------- -----
/s/ O. Gene Gabbard
___________________________________ Director
O. GENE GABBARD
___________________________________ Director
WILLIAM T. PARR
/s/ William H. Scott, III
___________________________________ Director
WILLIAM H. SCOTT, III
___________________________________ Director
WILLIAM B. TIMMERMAN
II-15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
1.1 Placement Agreement, dated October 29, 1998, among ITC/\DeltaCom, Inc. and Morgan Stanley & Co. Incorporated
and First Union Capital Markets, a division of Wheat First Securities, Inc.
3.1 Restated Certificate of Incorporation of ITC/\DeltaCom, Inc.
3.2 Amended and Restated Bylaws of ITC/\DeltaCom, Inc. (filed as Exhibit 3.2 to Form S-1 and incorporated herein
by reference).
4.1 Form of Common Stock Certificate of ITC/\DeltaCom, Inc. (filed as Exhibit 4.1 to Form S-1 and incorporated
herein by reference).
4.2 Indenture dated as of November 5, 1998 between ITC/\DeltaCom, Inc. and United States Trust Company of New
York, as Trustee, relating to the 9 3/4% Senior Notes Due 2008 of ITC/\DeltaCom, Inc.
4.3 Registration Rights Agreement, dated November 5, 1998, among ITC/\DeltaCom, Inc. and Morgan Stanley & Co.
Incorporated and First Union Capital Markets, a division of Wheat First Securities, Inc.
4.4 Form of Initial Global 9 3/4% Note Due 2008.
4.5 Form of Exchange Note (contained in Indenture filed as Exhibit 4.2).
5.1 Opinion of Hogan & Hartson L.L.P.
10.1 Capacity Agreement dated as of February 1, 1997 between Interstate FiberNet and Entergy Technology Company
(filed as Exhibit 10.1 to Registration Statement on Form S-4, as amended, File No. 333-31361 ("1997 Form S-4")
and incorporated herein by reference).
10.2 License Agreement dated February 1, 1997 between Interstate FiberNet and Metropolitan Atlanta Rapid Transit
Authority (filed as Exhibit 10.2 to 1997 Form S-4 and incorporated herein by reference).
10.3 Supply Agreement for Transmission Equipment dated March 26, 1993 between Interstate FiberNet and Northern
Telecom, Inc. (filed as Exhibit 10.3 to 1997 Form S-4 and incorporated herein by reference).
10.3.1 Network Products Purchase Agreement, dated as of December 24, 1997, by and between Interstate FiberNet, Inc.
and Northern Telecom, Inc. (filed as Exhibit 10.3.1 to Annual Report on Form 10-K, File No. 000-23253 ("1997
Form 10-K), filed with the Commission on March 30, 1998 and incorporated herein by reference).
10.4 First Amendment to Supply Agreement for Transmission Equipment dated as of September 9, 1993 between
Interstate FiberNet and Northern Telecom, Inc. (filed as Exhibit 10.4 to 1997 Form S-4 and incorporated herein
by reference).
10.5 Second Amendment to Supply Agreement for Transmission Equipment dated as of January 19, 1994 between
Interstate FiberNet and Northern Telecom, Inc. (filed as Exhibit 10.5 to 1997 Form S-4 and incorporated herein
by reference).
10.6 Sixth Amendment to Supply Agreement for Transmission Equipment dated as of November 21, 1996 between
Interstate FiberNet and Northern Telecom, Inc. (which supersedes the Third and the Fourth Amendment to this
Agreement) (filed as Exhibit 10.6 to 1997 Form S-4 and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.7 Seventh Amendment to Supply Agreement for Transmission Equipment dated as of April 15, 1997 between Interstate
FiberNet and Northern Telecom, Inc. (which supersedes the Fifth Amendment to this Agreement) (filed as Exhibit
10.7 to 1997 Form S-4 and incorporated herein by reference).
10.8 Master Capacity Lease dated July 22, 1996 between Interstate FiberNet and InterCel PCS Services, Inc. (filed
as Exhibit 10.8 to 1997 Form S-4 and incorporated herein by reference).
10.9 First Amendment to Master Capacity Lease dated as of August 22, 1996 between Interstate FiberNet and InterCel
PCS Services, Inc. (filed as Exhibit 10.9 to 1997 Form S-4 and incorporated herein by reference).
10.10 Amended and Restated Loan Agreement dated as of March 27, 1997 by and among Gulf States Transmission Systems,
Inc., the Lenders parties thereto and NationsBank, N.A. (filed as Exhibit 10.10 to 1997 Form S-4 and
incorporated herein by reference).
10.11 Promissory Note dated March 27, 1997 between Gulf States Transmission Systems, Inc. and NationsBank, N.A.
(filed as Exhibit 10.11 to 1997 Form S-4 and incorporated herein by reference).
10.12 Amended and Restated Security Agreement dated as of March 27, 1997 between Gulf States FiberNet and Gulf
States Transmission Systems, Inc. and NationsBank, N.A. (filed as Exhibit 10.12 to 1997 Form S-4 and
incorporated herein by reference).
10.13 Assignment and Assumption Agreement dated as of March 27, 1997 between Gulf States FiberNet and Gulf States
Transmission Systems, Inc. (filed as Exhibit 10.13 to 1997 Form S-4 and incorporated herein by reference).
10.14 Term Agreement dated as of August 11, 1994 between Gulf States FiberNet and Illinois Central Railroad Company
(filed as Exhibit 10.14 to 1997 Form S-4 and incorporated herein by reference).
10.15 Revised and Restated Fiber Optic Facilities and Services Agreement dated as of June 9, 1995 among Southern
Development and Investment Group, Inc., on behalf of itself and as agent for Alabama Power Company, Georgia
Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern
Electric Generating Company and Southern Company Services, Inc. and MPX Systems, Inc., which was assigned in
part by MPX Systems, Inc. to Gulf States FiberNet pursuant to an Assignment dated as of July 25, 1995 (filed
as Exhibit 10.15 to 1997 Form S-4 and incorporated herein by reference).
10.15.1 Release, Waiver, and Assumption Agreement, dated as of December 31, 1997, between Southern Development
Investment Group, Inc., on behalf of itself and as agent for Alabama Power Company, Georgia Power Company,
Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Electric
Generating Company and Southern Company Services, Inc. and Interstate FiberNet, Inc. and Gulf States
Transmission Systems, Inc. (filed as Exhibit 10.15.1 to 1997 Form 10-K and incorporated herein by reference).
10.15.2 Amendment to the Revised and Restated Fiber Optic Facilities and Services Agreement, dated as of January 1,
1998, by and among Southern Company Energy Solutions, Inc. (f/k/a Southern Development Group, Inc.), on behalf
of itself and as agent for Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power
Company, Savannah Electric and Power Company, Southern Electric Generating Company and Southern Company
Services, Inc. and Interstate FiberNet, Inc. (filed as Exhibit 10.15.2 to Quarterly Report Form 10-Q ("Form
10-Q"), filed with the Commission of November 16, 1998, and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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<S> <C>
10.16 First Amendment to Revised and Restated Fiber Optic Facilities and Services Agreement
dated as of July 24, 1995 between Southern Development and Investment Group, Inc. on
behalf of itself and as agent for others and MPX Systems, Inc. (filed as Exhibit 10.16 to
1997 Form S-4 and incorporated herein by reference).
10.17 Partial Assignment and Assumption of Revised and Restated Fiber Optic Facilities and Services Agreement dated
July 25, 1995 between MPX Systems, Inc. and Gulf States FiberNet (filed as Exhibit 10.17 to 1997 Form S-4 and
incorporated herein by reference).
+10.17.1 Amendment to Revised and Restated Fiber Optic Facilities and Services Agreement, dated July 15, 1997, by and
among Southern Development and Investment Group, Inc., on behalf of itself and its agent for Alabama Power
Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power
Company, Southern Electric Generating Company and Southern Company Services, Inc. (collectively "SES"), ITC
Transmission Systems, Inc. (as managing partner of Interstate Fibernet) and Gulf States Transmission Systems,
Inc. (filed as Exhibit 10.17.1 to 1997 Form S-4 and incorporated herein by reference).
10.18 Consent for Assignment of Interest dated February 20, 1997 among SCANA Communications, Inc., Gulf States
FiberNet, Gulf States Transmission Systems, Inc. and Southern Development and Investment Groups, Inc. (filed
as Exhibit 10.18 to 1997 Form S-4 and incorporated herein by reference).
10.19 Second Partial Assignment and Assumption of Revised and Restated Fiber Optic Facilities and Services Agreement
dated March 27, 1997 between SCANA Communications, Inc. and ITC Holding Company, Inc. (filed as Exhibit 10.19
to 1997 Form S-4 and incorporated herein by reference).
10.20 Fiber System Lease Agreement dated January 30, 1996 between CSW Communications, Inc. and Gulf States FiberNet
(filed as Exhibit 10.20 to 1997 Form S-4 and incorporated herein by reference).
10.21 Consent for Acquisition and Assignment dated January 13, 1997 between CSW Communications, Inc. and Gulf States
FiberNet (filed as Exhibit 10.21 to 1997 Form S-4 and incorporated herein by reference).
10.22 Agreement for the Provision of Fiber Optic Services and Facilities dated April 21, 1986 between SouthernNet,
Inc. and MPX Systems, Inc. (filed as Exhibit 10.22 to 1997 Form S-4 and incorporated herein by reference).
10.23 First Amendment to Agreement for the Provision of Fiber Optic Services and Facilities dated May 8, 1992
between MPX Systems, Inc. and MCI Telecommunications Corporation (filed as Exhibit 10.23 to 1997 Form S-4 and
incorporated herein by reference).
10.24 Second Amendment to Agreement for the Provision of Fiber Optic Services and Facilities dated January 30, 1996
between MPX Systems, Inc. and MCI Telecommunications Corporation (filed as Exhibit 10.24 to 1997 Form S-4 and
incorporated herein by reference).
10.25 Network Operating Agreement dated March 25, 1996 among Gulf States FiberNet, TriNet, Inc., Hart
Communications, Inc. and SCANA Communications, Inc. (f/k/a MPX Systems, Inc.) (filed as Exhibit 10.25 to 1997
Form S-4 and incorporated herein by reference).
10.26 Agreement for the Provision of Fiber Optic Facilities and Services dated March 29, 1990 between Alabama Power
Company and Southern Interexchange Facilities, Inc. (filed as Exhibit 10.26 to 1997 Form S-4 and incorporated
herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.27 Amendment to the Agreement for Provision of Fiber Optic Facilities and Services dated March 29, 1990 between
Alabama Power Company and Southern Interexchange Facilities, Inc. (filed as Exhibit 10.27 to 1997 Form S-4 and
incorporated herein by reference).
10.28 First Amendment to the Agreement for the Provision of Fiber Optic Facilities and Services dated March 22, 1991
between Alabama Power Company and Southern Interexchange Facilities, Inc. (filed as Exhibit 10.28 to 1997 Form
S-4 and incorporated herein by reference).
10.29 Second Amendment to the Agreement for the Provision of Fiber Optic Facilities and Services dated December 1,
1991 between Alabama Power Company and Southern Interexchange Facilities, Inc. (filed as Exhibit 10.29 to 1997
Form S-4 and incorporated herein by reference).
10.30 Third Amendment to the Agreement for the Provision of Fiber Optic Facilities and Services dated September 23,
1992 between Alabama Power Company and Southern Interexchange Facilities, Inc. (filed as Exhibit 10.30 to 1997
Form S-4 and incorporated herein by reference).
10.31 Fourth Amendment to the Agreement for the Provision of Fiber Optic Facilities and Services dated January 1,
1994 between Alabama Power Company and Southern Interexchange Facilities, Inc. (filed as Exhibit 10.31 to 1997
Form S-4 and incorporated herein by reference).
10.32 Agreement dated March 6, 1990 between Tennessee Valley Authority and Consolidated Communications Corporation
(predecessor to DeltaCom, Inc.) (filed as Exhibit 10.32 to 1997 Form S-4 and incorporated herein by
reference).
10.32.1 Supplement Agreement; Leased Fiber Pathways, dated as of September 26, 1997, by and between Tennessee Valley
Authority and DeltaCom, Inc. (filed as Exhibit 10.32.1 to 1997 Form 10-K and incorporated herein by
reference).
10.33 Interconnection Agreement signed March 12, 1997 between DeltaCom, Inc. and BellSouth Telecommunications, Inc.
(filed as Exhibit 10.33 to 1997 Form S-4 and incorporated herein by reference).
10.34 Amendment to Interconnection Agreement relating to BellSouth loops dated March 12, 1997 between DeltaCom, Inc.
and BellSouth Telecommunications, Inc. (filed as Exhibit 10.34 to 1997 Form S-4 and incorporated herein by
reference).
10.35 Amendment to Interconnection Agreement relating to resale of BellSouth services dated March 12, 1997 between
DeltaCom, Inc. and BellSouth Telecommunications, Inc. (filed as Exhibit 10.35 to 1997 Form S-4 and
incorporated herein by reference).
10.35.1 Third Amendment to Interconnection Agreement, dated March 12, 1997, by and between DeltaCom, Inc. and
BellSouth Telecommunications, Inc. (filed as Exhibit 10.35.1 to Form S-4 and incorporated herein by
reference).
10.35.2 Fourth Amendment to Interconnection Agreement, dated August 22, 1997, by and between DeltaCom, Inc. and
BellSouth Telecommunications, Inc. (filed as Exhibit 10.35.2 to Form S-4 and incorporated herein by
reference).
10.35.3 Amendment to Interconnection Agreement, dated October 3, 1997, by and between DeltaCom, Inc. and BellSouth
Telecommunications, Inc. (filed as Exhibit 10.35.3 to Form S-1 and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.35.4 Fifth Amendment to Interconnection Agreement, dated July 22, 1998, by and between DeltaCom, Inc., and BelSouth
Telecommunications, Inc. (filed as Exhibit 10.35.4 to Form 10-Q, filed with the Commission on November 16,
1998 and incorporated herein by reference).
10.36 Master Equipment Lease Agreement dated October 30, 1995 between AT&T Systems Leasing Co. and DeltaCom, Inc.
(filed as Exhibit 10.36 to 1997 Form S-4 and incorporated herein by reference).
10.37 Network Products Purchase Agreement dated January 24, 1996, as amended through March 4, 1997, between
DeltaCom, Inc. and Northern Telecom, Inc. (filed as Exhibit 10.37 to 1997 Form S-4 and incorporated herein by
reference).
10.38 First Amendment to Product Attachment Carrier Network Products, dated May 20, 1997 (filed as Exhibit 10.38 to
1997 Form S-4 and incorporated herein by reference).
10.39 Agreement for Use of Optical Fiber System, Microwave Radio Tower Site and Associated Facilities dated January
2, 1996 between DeltaCom, Inc. and SCI Systems, Inc. (filed as Exhibit 10.39 to 1997 Form S-4 and incorporated
herein by reference).
10.40 Collocate Agreement dated January 7, 1991 between Williams Telecommunications Services, Inc., and Southern
Interexchange Facilities, Inc. (including consent for change of control) (filed as Exhibit 10.40 to 1997 Form
S-4 and incorporated herein by reference).
10.41 Agreement dated January 14, 1997 between DeltaCom, Inc. and SCANA Communications, Inc., for switch location in
Columbia, South Carolina (filed as Exhibit 10.41 to 1997 Form S-4 and incorporated herein by reference).
10.42 Lease Agreement dated January 1, 1996 between Brindlee Mountain Telephone Company and DeltaCom, Inc. for, among
other purposes, switch location in Arab, Alabama (filed as Exhibit 10.42 to 1997 Form S-4 and incorporated
herein by reference).
10.43 Promissory Note dated March 27, 1997 between ITC Holding Company, Inc. and SCANA Communications, Inc. (filed as
Exhibit 10.43 to 1997 Form S-4 and incorporated herein by reference).
+10.44 Agreement for the Provision of Telecommunications Services and Facilities, dated January 27, 1996, by and
between Interstate FiberNet, Inc. and Carolinas FiberNet, LLC (filed as Exhibit 10.44 to 1997 Form S-4 and
incorporated herein by reference).
+10.44.1 First Amendment to the Agreement for the Provision of Telecommunications Services and Facilities, dated as of
September 1, 1997, by and between Interstate FiberNet, Inc. and Carolinas FiberNet, LLC (filed as Exhibit
10.44.1 to 1997 Form 10-K and incorporated herein by reference).
+10.45 Fiber Optic Facilities Agreement, dated November 15, 1996, by and between Interstate FiberNet and Florida Power
Corporation (filed as Exhibit 10.45 to 1997 Form S-4 and incorporated herein by reference).
+10.46 Fiber Optic Capacity Marketing and Operating Agreement, dated March 21, 1996, by and between Interstate
FiberNet and Florida Power & Light Company (filed as Exhibit 10.46 to 1997 Form S-4 and incorporated herein by
reference).
+10.47 Addendum to Fiber Optic Capacity Marketing and Operating Agreement, dated July 10, 1997, by and between
Interstate FiberNet and Florida Power & Light Company (filed as Exhibit 10.47 to 1997 Form S-4 and incorporated
herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
+10.48 Master Service Agreement, dated May 6, 1996, by and between Interstate FiberNet and MCI Telecommunications
Corporation (filed as Exhibit 10.48 to 1997 Form S-4 and incorporated herein by reference).
+10.49 Telecommunications System Maintenance Agreement, dated as of January 26, 1995, by and between Interstate
FiberNet and Sprint Communications Company L.P. (filed as Exhibit 10.49 to 1997 Form S-4 and incorporated
herein by reference).
+10.50 Sprint Communications Company Facilities and Services Agreement, dated January 26, 1995, by and between
Interstate FiberNet and Sprint Communications Company L.P. (filed as Exhibit 10.50 to 1997 Form S-4 and
incorporated herein by reference).
+10.51 Fiber Optic Facility Lease Agreement, dated as of January 31, 1997, by and between Interstate FiberNet and
Southern Telecom 1, Inc. (filed as Exhibit 10.51 to 1997 Form S-4 and incorporated herein by reference).
10.52 First Assignment and Assumption of Fiber Optic Facility Lease Agreement, dated February 1, 1997, by and
between Interstate FiberNet and Gulf States FiberNet (filed as Exhibit 10.52 to 1997 Form S-4 and incorporated
herein by reference).
+10.53 Telecommunications System Agreement, dated January 26, 1995, by and between Interstate FiberNet and Sprint
Communications Company L.P. (filed as Exhibit 10.53 to 1997 Form S-4 and incorporated herein by reference).
10.54 Amendment to Telecommunications System Agreement, dated July 25, 1995, by and between Gulf States FiberNet and
Sprint Communications Company L.P. (filed as Exhibit 10.54 to 1997 Form S-4 and incorporated herein by
reference).
+10.55 Amendment No. 2 to Telecommunications System Agreement, dated August 8, 1996, by and between Gulf States
FiberNet and Sprint Communications Company L.P. (filed as Exhibit 10.55 to 1997 Form S-4 and incorporated
herein by reference).
+10.56 Assignment of the Telecommunications System Agreement, dated July 25, 1995, between Interstate FiberNet, Gulf
States FiberNet and Sprint Communications Company L.P. (filed as Exhibit 10.56 to 1997 Form S-4 and
incorporated herein by reference).
+10.57 Assignment of the Telecommunications System Agreement, dated February 27, 1997, between Sprint Communications
Company L.P., Gulf States FiberNet and Gulf States Transmission Systems, Inc. (filed as Exhibit 10.57 to 1997
Form S-4 and incorporated herein by reference).
10.58 Fixed Fee Agreement for Exchange of Use and Maintenance of Six (6) Fiber Optic Fibers with an Option of Two
(2) Additional Fiber Optic Fibers, dated July 25, 1997, by and between Interstate FiberNet, Gulf States
Transmission Systems, Inc. and ALLTEL Telephone Services Corporation. (filed as Exhibit 10.58 to 1997 Form S-4
and incorporated herein by reference).
+10.59 MCI Carrier Agreement, effective August 1, 1995, by and between MCI Telecommunications Corporation and
Associated Communications Companies of America (ACCA) (filed as Exhibit 10.59 to 1997 Form S-4 and
incorporated herein by reference).
+10.60 First Amendment to MCI Carrier Agreement, dated as of March 20, 1996, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.60 to 1997 Form S-4
and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
+10.61 Third Amendment to MCI Carrier Agreement, dated as of August 1, 1996, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.61 to 1997 Form S-4
and incorporated herein by reference).
10.62 Fourth Amendment to MCI Carrier Agreement dated as of May 1, 1996, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.62 to 1997 Form S-4
and incorporated herein by reference).
+10.63 Fifth Amendment to MCI Carrier Agreement, dated as of April 10, 1996, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.63 to 1997 Form S-4
and incorporated herein by reference).
+10.64 Sixth Amendment to MCI Carrier Agreement, dated as of September 11, 1996, by and between MCI
Telecommunications Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit
10.64 to 1997 Form S-4 and incorporated herein by reference).
+10.65 Seventh Amendment to MCI Carrier Agreement, dated as of August 1, 1996, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.65 to 1997 Form S-4
and incorporated herein by reference).
+10.66 Eighth Amendment to MCI Carrier Agreement, effective March 1, 1997, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.66 to 1997 Form S-4
and incorporated herein by reference).
+10.67 Ninth Amendment to MCI Carrier Agreement, dated as of May 15, 1997, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.67 to 1997 Form S-4
and incorporated herein by reference).
10.68 Tenth Amendment to MCI Carrier Agreement, dated July 11, 1997, by and between MCI Telecommunications
Corporation and Associated Communications Companies of America (ACCA) (filed as Exhibit 10.68 to 1997 Form S-4
and incorporated herein by reference).
+10.69 Switched Reseller Services Agreement, dated January 25, 1994, by and between DeltaCom, Inc. and Allnet
Communication Services, Inc. (filed as Exhibit 10.69 to 1997 Form S-4 and incorporated herein by reference).
+10.70 WilTel, Inc. Carrier Digital Services Agreement, dated September 1, 1995, by and between WorldCom Network
Services, Inc. D/b/a WilTel, Associated Communications Companies of America (ACCA) and the individual members
of ACCA referenced therein (filed as Exhibit 10.70 to 1997 Form S-4 and incorporated herein by reference).
+10.71 Amendment to WilTel, Inc. Carrier Digital Services Agreement, dated April 1, 1996, by and between WorldCom
Network Services, Inc. d/b/a/ WilTel, Associated Communications Companies of America (ACCA) and the individual
members of ACCA referenced therein (filed as Exhibit 10.71 to 1997 Form S-4 and incorporated herein by
reference).
+10.72 Amendment No. 2 to WilTel, Inc. Carrier Digital Services Agreement, dated June 1, 1996, by and between
WorldCom Network Services, Inc. d/b/a/ WilTel, Associated Communications Companies of America (ACCA) and the
individual members of ACCA referenced therein (filed as Exhibit 10.72 to 1997 Form S-4 and incorporated herein
by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
+10.73 Amendment No. 3 to WilTel, Inc. Carrier Digital Services Agreement, dated May 1, 1997, by and between WorldCom
Network Services, Inc. d/b/a/ WilTel, Associated Communications Companies of America (ACCA) and the individual
members of ACCA referenced therein (filed as Exhibit 10.73 to 1997 Form S-4 and incorporated herein by
reference).
+10.74 Marketing and Operating Agreement, dated as of October 6, 1994, by and between Interstate FiberNet and DukeNet
Communications, Inc. (filed as Exhibit 10.74 to 1997 Form S-4 and incorporated herein by reference).
+10.75 Reseller Agreement, dated June 25, 1997, by and between DeltaCom, Inc. and Total Network Services, a division
of Cable & Wireless, Inc. (filed as Exhibit 10.75 to 1997 Form S-4 and incorporated herein by reference).
10.76 Sublease Agreement, dated as of January 1, 1995, by and between ITC Holding Company, Inc. and ITC Transmission
Systems, Inc. (filed as Exhibit 10.76 to 1997 Form S-4 and incorporated herein by reference).
10.77.1 $100,000,000 Credit Agreement, dated as of September 17, 1997, among Interstate FiberNet, Inc., NationsBank of
Texas, N.A. as Administrative Lender, and certain other Lenders identified therein (the "IFN Credit
Agreement") (filed as Exhibit 10.77 to 1997 Form S-4 and incorporated herein by reference).
10.77.2 First Amendment to Credit Agreement, dated as of October 20, 1997, among Interstate FiberNet, Inc.,
NationsBank of Texas, N.A. as Administrative Lender, and certain other Lenders identified therein (filed as
Exhibit 10.77.2 to Form S 1 and incorporated herein by reference).
10.77.3 First Amended and Restated Credit Agreement, dated as of February 24, 1998, among Interstate FiberNet, Inc.,
NationsBank of Texas, N.A. as Administrative Lender, and certain other Lenders identified therein (filed as
Exhibit 10.77.3 to 1997 Form 10-K and incorporated herein by reference).
10.78.1 $8,750,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of NationsBank of Texas, N.A. (filed as Exhibit 10.78.1 to 1997 Form S-4 and incorporated
herein by reference).
10.78.2 $3,750,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of Amsouth Bank (filed as Exhibit 10.78.2 to 1997 Form S-4 and incorporated herein by
reference).
10.78.3 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of Creditanstalt-Bankverein (filed as Exhibit 10.78.3 to 1997 Form S-4 and incorporated
herein by reference).
10.78.4 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of Meespierson Capital Corp. (filed as Exhibit 10.78.4 to 1997 Form S-4 and incorporated
herein by reference).
10.78.5 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of State Street Bank and Trust Company (filed as Exhibit 10.78.5 to 1997 Form S-4 and
incorporated herein by reference).
10.78.6 $7,500,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of Corestates Bank, N.A. (filed as Exhibit 10.78.6 to 1997 Form S-4 and incorporated
herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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<S> <C>
10.78.7 $2,500,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of First Union National Bank (filed as Exhibit 10.78.7 to 1997 Form S-4 and incorporated
herein by reference).
10.78.8 $5,000,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of Regions Bank (filed as Exhibit 10.78.8 to 1997 Form S-4 and incorporated herein by
reference).
10.78.9 $7,500,000 Revolving Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc.
payable to the order of Toronto Dominion (Texas), Inc. (filed as Exhibit 10.78.9 to 1997 Form S-4 and
incorporated herein by reference).
10.79.1 $8,750,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of NationsBank of Texas, N.A. (filed as Exhibit 10.79.1 to 1997 Form S-4 and incorporated herein by
reference).
10.79.2 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of Creditanstalt-Bankverein (filed as Exhibit 10.79.2 to 1997 Form S-4 and incorporated herein by
reference).
10.79.3 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of Meespierson Capital Corp. (filed as Exhibit 10.79.3 to 1997 Form S-4 and incorporated herein by
reference).
10.79.4 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of State Street Bank and Trust Company (filed as Exhibit 10.79.4 to 1997 Form S-4 and incorporated
herein by reference).
10.79.5 $7,500,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of Corestates Bank, N.A. (filed as Exhibit 10.79.5 to 1997 Form S-4 and incorporated herein by
reference).
10.79.6 $2,500,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of First Union National Bank (filed as Exhibit 10.79.6 to 1997 Form S-4 and incorporated herein by
reference).
10.79.7 $5,000,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of Regions Bank (filed as Exhibit 10.79.7 to 1997 Form S-4 and incorporated herein by reference).
10.79.8 $7,500,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of Toronto Dominion (Texas), Inc. (filed as Exhibit 10.79.8 to 1997 Form S-4 and incorporated herein
by reference).
10.79.9 $3,750,000 Term Promissory Note, dated as of September 17, 1997, made by Interstate FiberNet, Inc. payable to
the order of Amsouth Bank (filed as Exhibit 10.79.9 to 1997 Form S-4 and incorporated herein by reference).
10.80.1 Security Agreement, dated as of September 17, 1997, made by Interstate FiberNet, Inc. in favor of NationsBank
of Texas, N.A., as Administrative Lender, and each other lender party to the IFN Credit Agreement (filed as
Exhibit 10.80.1 to 1997 Form S-4 and incorporated herein by reference).
10.80.2 Security Agreement, dated as of September 17, 1997, made by DeltaCom, Inc. in favor of NationsBank of Texas,
N.A., as Administrative Lender, and each other lender party to the IFN Credit Agreement (filed as Exhibit
10.80.2 to 1997 Form S-4 and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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<S> <C>
10.80.3 Security Agreement, dated as of September 17, 1997, made by Gulf States Transmission Systems, Inc. in favor of
NationsBank of Texas, N.A., as Administrative Lender, and each other lender party to the IFN Credit Agreement
(filed as Exhibit 10.80.3 to 1997 Form S-4 and incorporated herein by reference).
10.81.1 Indenture, dated as of June 3, 1997, between ITC/\DeltaCom, Inc. and United States Trust Company of New York,
as Trustee, relating to the 11% Senior Notes due 2007 of ITC/\DeltaCom, Inc. (filed as Exhibit 4.1 to 1997
Form S-4 and incorporated herein by reference).
10.81.2 Supplemental Indenture, dated as of October 17, 1997, between ITC/\DeltaCom, Inc. and United States Trust
Company of New York, as Trustee (filed as Exhibit 82.2 to Form S-1 and incorporated herein by reference).
10.82 Pledge and Security Agreement dated as of June 3, 1997 from ITC/\DeltaCom, Inc. as Pledgor to United States
Trust Company of New York as Trustee (filed as Exhibit 4.3 to 1997 Form S-4 and incorporated herein by
reference).
10.83 Form of Exchange Note (contained in Indenture filed as Exhibit 10.81).
10.84 Assignment and Contribution Agreement Pursuant to Pledge and Security Agreement dated as of July 25, 1997, by
and among ITC/\DeltaCom, Inc., Interstate FiberNet, Inc. and United States Trust Company of New York, as
Trustee filed herewith (filed as Exhibit 4.5 to 1997 Form S-4 and incorporated herein by reference).
+10.85 MCI Carrier Agreement, effective September 1, 1997, by and between MCI Telecommunications Corporation and
Associated Communications Companies of America (ACCA) (filed as Exhibit 10.87 to Form S-1 and incorporated
herein by reference).
+10.86.1 First Amendment to the MCI Carrier Agreement, dated as of November 21, 1997, by and between MCI
Telecommunications Corporation and Associated Communication Companies of America (ACCA) (filed as Exhibit
10.87.1 to 1997 Form 10-K and incorporated herein by reference).
10.87 ITC/\DeltaCom, Inc. 1997 Stock Option Plan (filed as Exhibit 10.88 to Form S-1 and incorporated herein by
reference).
10.88 ITC/\DeltaCom, Inc. 1997 Director Stock Option Plan (filed as Exhibit 10.89 to Form S-1 and incorporated
herein by reference).
10.89 ITC Holding Company, Inc. Amended and Restated Stock Option Plan (filed as Exhibit 10.90 to Form S-1 and
incorporated herein by reference).
10.90 ITC Holding Company, Inc. Nonemployee Director Stock Option Plan (filed as Exhibit 10.91 to Form S-1 and
incorporated herein by reference).
10.91 Description of ITC/\DeltaCom, Inc. Bonus Plan (filed as Exhibit 10.92 to Form S-1 and incorporated herein by
reference).
10.92 Form of Indemnity Agreement between ITC/\DeltaCom, Inc. and its Directors and Certain Officers (filed as
Exhibit 10.93 to Form S-1 and incorporated herein by reference).
10.93 Sale and Purchase Agreement, dated as of March 11, 1997, by and between SCANA Corporation and ITC Holding
Company, Inc. (filed as Exhibit 10.94 to Form S-1 and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.94 First Amendment to Sale and Purchase Agreement. Among SCANA Corporation, SCANA Communications, Inc., and ITC
Holding Company, Inc., dated as of October 16, 1997, among SCANA Corporation, SCANA Communications, Inc., ITC
Holding Company, Inc. and ITC/\DeltaCom, Inc. (filed as Exhibit 10.95 to Form S-1 and incorporated herein by
reference).
10.95 Indenture dated March 3, 1998 between ITC/\DeltaCom, Inc. and United States Trust Company of New York, as
Trustee, relating to the 8-7/8% Senior Notes Due 2008 of ITC/\DeltaCom, Inc. (filed as Exhibit 4.2 to 1997
Form
10-K and incorporated herein by reference).
10.96 Form of Exchange Note (contained in Indenture filed as Exhibit 10.95).
12.1 Statement regarding Computation of Ratios.
21.1 Subsidiaries of ITC/\DeltaCom, Inc. (filed as Exhibit 21.1 to 1997 Form 10-K and incorporated herein by
reference).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
24.1 Power of attorney (included on signature page).
25.1 Statement on Form T-1 of Eligibility of Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
__________
+ Confidential treatment has been granted for this exhibit. The copy filed as
an exhibit omits the information subject to the confidential treatment
request.
<PAGE>
EXHIBIT 1.1
ITC/\DELTACOM, INC.
PLACEMENT AGREEMENT
October 29, 1998
Morgan Stanley & Co. Incorporated,
for itself and the other
several Placement Agents
named below
1585 Broadway
New York, New York 10036-8293
Ladies and Gentlemen:
ITC/\DeltaCom, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to you (the "Manager") and the other several purchasers named
in Schedule I hereto (collectively with the Manager, the "Placement Agents")
$125,000,000 aggregate principal amount of its 9 3/4% Senior Notes due 2008 (the
"Notes") to be issued pursuant to the provisions of an Indenture to be dated as
of November 5, 1998 (the "Indenture") between the Company and United States
Trust Company of New York, Trustee (the "Trustee").
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act and in offshore transactions in reliance
on Regulation S under the Securities Act ("Regulation S").
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement, to be dated the
Closing Date (as defined) and to be substantially in the form attached hereto as
Exhibit A (the "Registration Rights Agreement").
In connection with the sale of the Notes, the Company will prepare a
private placement memorandum (the "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering and a
description of the Company and its business.
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1. Representations and Warranties. The Company represents and
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warrants to, and agrees with, you that as of the date hereof:
(a) The Memorandum, in the form used by the Placement Agents to
confirm sales and on the Closing Date, will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 1(a) do not apply to statements or omissions in the Memorandum
based upon information relating to any Placement Agent furnished to the Company
in writing by such Placement Agent through you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole;
Schedule 1 to the form of opinion of Hogan & Hartson L.L.P. attached hereto as
Exhibit B sets forth each jurisdiction in which the conduct of the Company's
business or its ownership or leasing of property requires the Company to be
qualified as a foreign corporation, other than jurisdictions in which the
failure to be qualified in all such jurisdictions would not, in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(c) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Memorandum and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; Schedule 2 to the form of
opinion of Hogan & Hartson L.L.P. attached hereto as Exhibit B sets forth each
jurisdiction in which the conduct of the business of Interstate FiberNet, Inc.
("Interstate FiberNet") or its ownership or leasing of property requires
Interstate FiberNet to be qualified as a foreign corporation, other than
jurisdictions in which the failure to be qualified in all such jurisdictions
would not, in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole. Schedule 1 to the form of opinion of J.
Thomas Mullis, attached hereto as Exhibit E, sets forth each jurisdiction in
which the conduct of the business of ITC/\DeltaCom Communications, Inc.
("DeltaCom") or its ownership or leasing of property requires DeltaCom to be
qualified as a foreign corporation, other than jurisdictions in which the
failure
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3
to be qualified in all such jurisdictions would not, in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
Interstate FiberNet and DeltaCom are the only active subsidiaries, direct or
indirect, of the Company.
(d) This Agreement has been duly authorized, executed and delivered by
the Company.
(e) The Notes have been duly authorized by the Company and, when
executed and authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the Placement Agents in accordance with the terms
of this Agreement, will (x) be valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as (A)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (B) rights of acceleration, if
applicable, and the availability of equitable remedies may be limited by
equitable principles of general applicability and (y) be entitled to the
benefits of the Indenture.
(f) The Indenture has been duly authorized by the Company and, when
executed and delivered by the Company, will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms except
as (x) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (y) rights of
acceleration, if applicable, and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(g) The Registration Rights Agreement has been duly authorized and,
when executed and delivered by the Company, will be a valid and binding
agreement of, the Company, enforceable against the Company in accordance with
its terms except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally, (y) the
availability of equitable remedies may be limited by equitable principles of
general applicability and (z) the rights to indemnification and contribution
thereunder may be limited by state or federal securities laws or the policies
underlying such laws.
(h) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture, the
Registration Rights Agreement and the Notes (collectively, the "Transaction
Documents") and the issuance, sale and delivery of the Notes will not contravene
any provision of applicable law or the certificate of incorporation or by-laws
of the Company or any material agreement or other material instrument binding
upon the Company or any of its subsidiaries or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the Company or
any of its subsidiaries, and no permit, license, consent, approval,
authorization or order of, or filing, declaration or qualification with, any
governmental body or agency is required for the
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4
performance by the Company of its obligations under the Transaction Documents,
except (i) such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Notes and (ii) such
as are required to be obtained after the date hereof and specifically set forth
in the Transaction Documents. Schedule 2 to the form of opinion of Hogan &
Hartson L.L.P. attached hereto as Exhibit B sets forth all material agreements
and instruments to which the Company or Interstate FiberNet is a party. Schedule
2 to the form of opinion of J. Thomas Mullis attached hereto as Exhibit E sets
forth all material agreements and instruments to which DeltaCom is a party.
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Memorandum. Furthermore, except in each case as described in the Memorandum,
(i) the Company and its subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (ii) neither the Company nor any of its
subsidiaries has purchased any of the Company's outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on the
Company's capital stock; and (iii) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
subsidiaries, taken as a whole.
(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
other than proceedings accurately described in all material respects in the
Memorandum and proceedings that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or ability of
the Company to perform its obligations under the Transaction Documents or to
consummate the transactions contemplated by the Memorandum.
(k) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "Affiliate") of the Company has
directly, or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Notes in a
manner that would require the registration under the Securities Act of the Notes
or (ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) in connection
with the offering of the Notes or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act.
(l) The Company is not and, after giving effect to the offering and
sale of the Notes and the application of the proceeds thereof as described in
the Memorandum, will
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5
not be an "investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(m) It is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agents in the manner contemplated by this
Agreement to register the Notes under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
(n) The Company and each of its subsidiaries (i) have all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and have made all declarations and filings with, all federal, state, local
and other governmental, administrative or regulatory authorities, all self-
regulatory organizations and all courts and other tribunals, to own, lease,
license and use their respective properties and assets and to conduct their
respective businesses in the manner described in the Memorandum, except to the
extent that the failure to obtain such consents, authorizations, approvals,
orders, certificates and permits or make such declarations and filings would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole, and (ii) have not received any notice of proceedings relating to
revocation or modification of any such consent, authorization, approval, order,
certificate or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole, except as described in or
contemplated by the Memorandum.
(o) The Company and each of its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants, including all such laws and regulations concerning electromagnetic
radio frequency emissions ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(p) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
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(q) None of the Company, its Affiliates or any person acting on its or
their behalf (other than the Placement Agents) has engaged in any directed
selling efforts (as that term is defined in Regulation S) with respect to the
Notes and the Company and its Affiliates and any person acting on its or their
behalf (other than the Placement Agents) have complied with the offering
restrictions requirement of Regulation S.
(r) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(s) The Company and each of its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to their respective
businesses, in each case free and clear of all liens, encumbrances and defects,
except such as are described in the Memorandum, such as do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by them; and any real property and buildings held
under lease by them are held under valid, subsisting and enforceable leases with
such exceptions as are not material and do not materially interfere with the use
made and proposed to be made of such property and buildings by them, in each
case except as described in or contemplated by the Memorandum.
(t) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with their businesses as now operated, and neither it nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(u) No material labor dispute exists with the employees of the Company
or any of its subsidiaries, except as described in or contemplated by the
Memorandum, or, to its knowledge, is imminent; and it is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors
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7
that could result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
(v) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, except as described in or contemplated
by the Memorandum.
(w) The historical financial statements included in the Memorandum
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the related published rules and
regulations.
2. Offering. You have advised the Company that the Placement Agents
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will make an offering of the Notes purchased by the Placement Agents hereunder
on the terms set forth in the Memorandum as soon as practicable after this
Agreement is entered into as in your judgment is advisable.
3. Purchase and Delivery. The Company hereby agrees to sell to the
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several Placement Agents, and the Placement Agents, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agree, severally and not jointly, to purchase from the
Company the respective principal amount of Notes set forth in Schedule I hereto
opposite their names at a purchase price of 97.50% of the principal amount
thereof plus accrued interest, if any, from November 5, 1998 to the date of
payment and delivery.
Payment for the Notes shall be made against delivery of the Notes at a
closing (the "Closing") to be held at the office of Shearman & Sterling, 599
Lexington Avenue, New York, New York, at 9:00 A.M., local time, November 5,
1998, or at such other time on the same or such other date, not later than
November 19, 1998, as shall be designated in writing by you. The time and date
of such payment are herein referred to as the Closing Date. Payment for the
Notes shall be made to the Company in federal funds or other funds immediately
available in New York City.
Certificates for the Notes shall be in definitive form and registered
in such names and in such denominations as you shall request in writing not less
than one full business
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8
day prior to the Closing Date. The certificates evidencing the Notes shall be
delivered to you on the Closing Date for the respective accounts of the several
Placement Agents, with any transfer taxes payable in connection with the
transfer of the Notes to the Placement Agents duly paid, against payment of the
purchase price therefor.
4. Conditions to Closing. The several obligations of the Placement
---------------------
Agents under this Agreement to purchase the Notes will be subject to the
following conditions:
(a) Subsequent to the date of this Agreement and prior to the Closing
Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and its
subsidiaries, taken as a whole, from that set forth in the Memorandum that,
in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Notes on the terms and in the manner
contemplated in the Memorandum.
(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct in all material respects as of the Closing Date and that the
Company has complied in all material respects with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied on or
before the Closing Date.
The officer signing and delivering any such certificate may rely upon
the best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of Hogan &
Hartson L.L.P., counsel for the Company, dated the Closing Date, in the form set
forth in Exhibit B.
The opinion of Hogan & Hartson L.L.P. shall be rendered to you at the
request of the Company and shall so state therein.
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9
(d) You shall have received on the Closing Date an opinion of Brantley
& Wilkerson, P.C., Alabama communications counsel for the Company, dated the
Closing Date, in the form set forth in Exhibit C.
The opinion of Brantley & Wilkerson, P.C. shall be rendered to you at
the request of the Company and shall so state therein.
(e) You shall have received on the Closing Date an opinion of Stowers,
Hayes, Clark & Roane, Georgia communications counsel for the Company, dated the
Closing Date, in the form set forth in Exhibit D.
The opinion of Stowers, Hayes, Clark & Roane shall be rendered to you
at the request of the Company and shall so state therein.
(f) You shall have received on the Closing Date an opinion of J.
Thomas Mullis, General Counsel of the Company, dated the Closing Date, in the
form set forth in Exhibit E.
The opinion of J. Thomas Mullis shall be rendered to you at the
request of the Company and shall so state therein.
(g) You shall have received on the Closing Date an opinion of Shearman
& Sterling, counsel for the Placement Agents, dated the Closing Date, in form
and substance satisfactory to you.
(h) You shall have received on each of the date hereof and the Closing
Date a letter, dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from Arthur Andersen LLP, the Company's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Memorandum.
(i) Interstate FiberNet, Inc., NationsBank, N.A. and the other lenders
party thereto shall have entered into an amendment to the First Amended and
Restated Credit Agreement dated as of February 24, 1998, substantially in the
form set forth in Exhibit F.
(j) You shall have received such other certificates and documents as
you or your counsel may request.
5. Covenants of the Company. In further consideration of the
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agreements of the Placement Agents contained in this Agreement, the Company
covenants as follows:
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(a) To furnish to you, without charge, during the period mentioned in
paragraph (c) below, as many copies of the Memorandum and any supplements and
amendments thereto as you may reasonably request and to use its best efforts to
deliver such copies to you by 10:00 a.m. (New York City time) on the business
day next following the execution of this Agreement.
(b) Before amending or supplementing the Memorandum, to furnish to you
a copy of each such proposed amendment or supplement and not to use any such
proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the date
on which all of the Notes shall have been sold by the Placement Agents, any
event shall occur or condition exist as a result of which it is necessary in
your judgment to amend or supplement the Memorandum in order to make the
statements therein, in the light of the circumstances when the Memorandum is
delivered to a purchaser, not misleading, or if, in the opinion of counsel to
the Placement Agents, it is necessary to amend or supplement the Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to the
Memorandum so that the statements in the Memorandum as so amended or
supplemented will not, in the light of the circumstances when the Memorandum is
delivered to a purchaser, be misleading or so that the Memorandum, as so amended
or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) Whether or not any sale of such Notes is consummated, to pay all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the preparation of the Memorandum and all amendments and
supplements thereto, (ii) the preparation, issuance and delivery of the Notes,
(iii) the fees and disbursements of the Company's counsel and accountants and
the Trustee and its counsel, (iv) the qualification of such Notes under
securities or Blue Sky laws in accordance with the provisions of Section 5(d),
including filing fees and the fees and disbursements of counsel for the
Placement Agents in connection therewith and in connection with the preparation
of any Blue Sky or legal investment memoranda, (v) the printing and delivery to
the Placement Agents in quantities as hereinabove stated of copies of the
Memorandum and any amendments or supplements thereto, (vi) any fees charged by
rating agencies for the rating of such Notes, (vii) all document production
charges and expenses of counsel to the Placement Agents (but not including their
fees for professional services) in connection with the preparation of this
Agreement, (viii) the fees and expenses, if any, incurred in connection with the
admission of such Notes for trading in PORTAL or any other appropriate market
system, (ix) the costs and expenses of the
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Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the Notes, including, without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging expense
of the representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and (x) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section.
(f) Neither the Company nor any Affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could be integrated with the sale of the
Notes in a manner which would require the registration under the Securities Act
of such Notes.
(g) Not to solicit any offer to buy or offer or sell the Notes by
means of any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(h) While any of the Notes remain outstanding, the Company will make
available, upon request, to any seller of such Notes the information specified
in Rule 144A(d)(4) under the Securities Act, unless the Company is then subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(i) None of the Company, its Affiliates or any person acting on its or
their behalf (other than the Placement Agents) will engage in any directed
selling efforts (as that term is defined in Regulation S) with respect to the
Notes, and the Company and its Affiliates and each person acting on its or their
behalf (other than the Placement Agents) will comply with the offering
restrictions of Regulation S.
(j) To use its best efforts to permit the Notes to be designated
PORTAL securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in the
PORTAL Market.
(k) To use the net proceeds received by it from the sale of the Notes
pursuant to this Agreement in the manner specified in the Memorandum under the
caption "Use of Proceeds."
(l) The Company will, and will cause the Trustee to, refuse to
register any transfer of any Notes sold pursuant to Regulation S if such
transfer is not made in accordance with the provisions of Regulation S.
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12
6. Offering of Notes; Restrictions on Transfer. (a) Each Placement
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Agent, severally and not jointly, represents and warrants to the Company that
such Placement Agent is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB"). Each Placement Agent, severally and not
jointly, agrees with the Company that (i) it will not solicit offers for, or
offer or sell, such Notes by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Notes only from,
and will offer such Notes only to, persons that it reasonably believes to be (A)
in the case of offers inside the United States, QIBs and (B) in the case of
offers outside the United States, persons other than U.S. persons ("foreign
purchasers," which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)) that, in each case, in purchasing such
Notes are deemed to have represented and agreed as provided in the Memorandum
under the caption "Transfer Restrictions."
(b) Each Placement Agent, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:
(i) it understands that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of the
Notes, or possession or distribution of the Memorandum or any other
offering or publicity material relating to the Notes, in any country or
jurisdiction where action for that purpose is required;
(ii) such Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Notes or has in its possession or distributes the Memorandum or
any such other material, in all cases at its own expense;
(iii) the Notes have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance
with Regulation S under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Notes and will offer and
sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the Closing Date, only in accordance with
Rule 903 of Regulation S or another exemption from the registration
requirements of the Securities Act. Accordingly, neither such Placement
Agent, its Affiliates nor any persons acting on its or their behalf have
engaged or will engage in any directed selling efforts (within the meaning
of
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13
Regulation S) with respect to the Notes, and any such Placement Agent,
its Affiliates and any such persons have complied and will comply with the
offering restrictions requirements of Regulation S;
(v) such Placement Agent has (A) not offered or sold and, during
the period of six months from the date hereof, will not offer or sell any
Notes to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 (the "Regulations"); (B)
complied and, during the period of six months from the date hereof, will
comply with all applicable provisions of the Financial Services Act 1986
and the Regulations with respect to anything done by it in relation to the
Notes in, from or otherwise involving the United Kingdom; and (C) only
issued or passed on and, during the period of six months from the date
hereof, will only issue or pass on to any person in the United Kingdom any
document received by it in connection with the issue of the Notes if that
person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person
to whom such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Notes have not been
and will not be registered under the Securities and Exchange Law of Japan,
and represents that it has not offered or sold, and agrees that it will not
offer or sell, any Notes, directly or indirectly in Japan or to any
resident of Japan except (A) pursuant to an exemption from the registration
requirements of the Securities and Exchange Law of Japan and (B) in
compliance with any other applicable requirements of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to confirmation
of sales of the Notes, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that
purchases Notes from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the closing date, except in either case
in accordance with Regulation S (or Rule 144A, if available) under the
Securities Act. Terms used above have the meaning given to them by
Regulation S."
<PAGE>
14
Terms used in this Section 6 have the meanings given to them by Regulation S.
7. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Placement Agent, and each person, if any, who
controls such Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, such Placement Agent, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Placement Agent or any such
controlling or affiliated person in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Memorandum (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to the Memorandum shall not inure
to the benefit of any Placement Agent (or any other person indemnified pursuant
to this paragraph (a)) to the extent that any such losses, claims, damages or
liabilities result from the fact that such Placement Agent sold securities to a
person to whom there was not sent or given by or on behalf of such Placement
Agent a copy of an amended or supplemented Memorandum at or prior to the written
confirmation of the sale of the Notes to such person (if the Company shall have
furnished such amendment or supplement to the Memorandum to such Placement Agent
prior to the written confirmation of such sale), and if the losses, claims,
damages or liabilities result from an untrue statement or alleged untrue
statement or an omission or alleged omission contained in the Memorandum that
was corrected in such amendment or supplement to the Memorandum.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use in the
Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) of this Section 7 above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying
<PAGE>
15
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated in the case of parties indemnified
pursuant to paragraph (a) of this Section 7 above and by the Company in the case
of parties indemnified pursuant to paragraph (b) of this Section 7 above. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 7 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Placement Agents, on the other hand, from the
offering of such Notes or
<PAGE>
16
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Placement Agents on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Placement Agents on the other hand in connection with the offering of
such Notes shall be deemed to be in the same respective proportions as the net
proceeds from the offering of such Notes (before deducting expenses) received by
the Company and the total discounts and commissions received by the Placement
Agents in respect thereof bear to the aggregate offering price of such Notes.
The relative fault of the Company on the one hand and of the Placement Agents on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Placement Agents and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Placement Agents' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the respective principal amount of
Notes they have purchased hereunder, and not joint.
(e) The Company and the Placement Agents agree that it would not be
just or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Placement Agents were treated as one entity for
- --- ----
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes resold by it in
the initial placement of such Notes were offered to investors exceeds the amount
of any damages that such Placement Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution provisions contained in this Section 7
and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents or any person controlling the Placement Agents or by or
on behalf of the Company, any of its officers or directors or any
<PAGE>
17
person controlling the Company and (iii) acceptance of and payment for any of
the Notes. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
8. Termination. This Agreement shall be subject to termination by
-----------
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Notes on the terms and in the manner contemplated in the Memorandum.
9. Miscellaneous. If, on the Closing Date, any one or more of the
-------------
Placement Agents shall fail or refuse to purchase Notes that it or they have
agreed to purchase hereunder on such date, and the aggregate principal amount of
Notes which such defaulting Placement Agent or Placement Agents agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of Notes to be purchased on such date, the other Placement
Agents shall be obligated severally in the proportions that the principal amount
of Notes set forth opposite their respective names in Schedule I bears to the
aggregate principal amount of Notes set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Notes which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
--------
that in no event shall the principal amount of Notes that any Placement Agent
has agreed to purchase pursuant to Section 3 be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such principal amount of Notes
without the written consent of such Placement Agent. If, on the Closing Date,
any Placement Agent or Placement Agents shall fail or refuse to purchase Notes
which it or they have agreed to purchase hereunder on such date and the
aggregate principal amount of Notes with respect to which such default occurs is
more than one-tenth of the aggregate principal amount of Notes to be purchased
on such date and arrangements satisfactory to you and the Company for the
purchase of such Notes are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Placement Agent or of the Company. In any such case either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Memorandum
or in any other
<PAGE>
18
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Placement Agent from liability in respect of
any default of such Placement Agent under this Agreement.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
If this Agreement shall be terminated by the Placement Agents, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Placement Agents or such Placement
Agents as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Placement Agents in connection
with this Agreement or the offering contemplated hereunder.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
<PAGE>
19
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
ITC/\DeltaCom, Inc.
By /s/ Douglas A. Shumate
-------------------------------
Name: Douglas A. Shumate
Title: Senior Vice President
and Chief Financial Officer
Agreed as of the date first above written
Morgan Stanley & Co. Incorporated
First Union Capital Markets, a division of
Wheat First Securities, Inc.
By Morgan Stanley & Co. Incorporated
By /s/ Katina Dorton
------------------------
Name: Katina Dorton
Title: Principal
<PAGE>
SCHEDULE I
Principal Amount at
Maturity of Notes
Placement Agent To Be Purchased
--------------- ----------------
Morgan Stanley & Co. Incorporated.......... $100,000,000
First Union Capital Markets, a division
of Wheat First Securities, Inc............ 25,000,000
Total........................ $125,000,000
============
<PAGE>
EXHIBIT A
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT B
---------
OPINION OF HOGAN & HARTSON L.L.P.
<PAGE>
EXHIBIT C
---------
OPINION OF BRANTLEY & WILKERSON, P.C.
<PAGE>
EXHIBIT D
---------
OPINION OF STOWERS, HAYES, CLARK & ROANE
<PAGE>
EXHIBIT E
---------
OPINION OF J. THOMAS MULLIS
<PAGE>
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
ITC/\DELTACOM, INC.
ITC/\DELTACOM, INC., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
1. ITC/\DELTACOM, INC. (the "Corporation") was originally incorporated on
March 24, 1997, and its original Certificate of Incorporation filed with
the Secretary of State of the State of Delaware on the same date and
amended on October 20, 1997, October 22, 1997 and January 7, 1998 (as
amended, the "Certificate of Incorporation").
2. Pursuant to Section 245 of the Delaware General Corporation Law, this
Restated Certificate of Incorporation restates and integrates the
provisions previously filed with the Secretary of State of the State of
Delaware on March 24, 1997, October 20, 1997, October 22, 1997 and
January 7, 1998.
3. The Board of Directors of the Corporation, at a meeting held on April 28,
1998, in accordance with the Bylaws of the Corporation and Section 141 of
the Delaware General Corporation Law, duly adopted resolutions proposing
and declaring advisable the restatement of the Certificate of Incorporation
of the Corporation pursuant to Section 245 of the Delaware General
Corporation Law.
4. This Restated Certificate of Incorporation shall be effective upon filing.
5. The text of the Certificate of Incorporation of ITC/\DELTACOM, INC. hereby
is restated to read in its entirety as follows:
1. NAME.
The name of the corporation is ITC/\DeltaCom, Inc. (the "Corporation").
2. REGISTERED OFFICE AND AGENT.
The registered office of the Corporation shall be located at 1013 Centre
Road, Wilmington, Delaware 19805 in the County of New Castle. The registered
agent of the Corporation at such address shall be Corporation Service Company.
<PAGE>
3. PURPOSE AND POWERS.
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware as from time to time amended (the "Delaware General
Corporation Law"). The Corporation shall have all power necessary or helpful to
engage in such acts and activities.
4. CAPITAL STOCK.
4.1. Authorized Shares; Increase in Authorized Shares.
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 95,000,000 shares, of which
90,000,000 shares shall be classified as shares of Common Stock, with a par
value of $0.01 per share ("Common Stock"), and 5,000,000 shares shall be
classified as shares of Preferred Stock, with a par value of $0.01 per share
("Preferred Stock"). The Board of Directors expressly is authorized to provide
for the issuance of shares of Preferred Stock in one or more series without the
approval of the stockholders of the Corporation. The number of authorized
shares of any class of stock of the Corporation may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the capital stock of the Corporation
entitled to vote (irrespective of the right to vote thereupon as a class that
the holders of the shares of any such class would otherwise be entitled to under
Section 242(b)(2) of the Delaware General Corporation Law).
4.2. Common Stock.
4.2.1. Relative Rights.
The Common Stock shall be subject to all of the rights, privileges,
preferences and priorities of the Preferred Stock as set forth in the
certificates of designations filed to establish the respective series of
Preferred Stock. Each share of Common Stock shall have the same relative rights
as, and be identical in all respects to, all the other shares of Common Stock.
4.2.2. Voting Rights.
Each holder of record of shares of Common Stock shall be entitled to
attend all special and annual meetings of the stockholders of the Corporation
and, share for share and without regard to class, together with the holders of
all other classes of stock entitled to attend such meetings and to vote (except
any class or series of stock having special voting rights), to cast one vote in
person or by proxy for each outstanding share of Common Stock so held upon any
matter or thing
-2-
<PAGE>
(including, without limitation, the election of one or more directors) properly
considered and acted upon by the stockholders.
4.2.3. Dividends.
Subject to the rights, if any, of the holders of shares of Preferred
Stock, the holders of record of the Common Stock, and any class or series of
stock entitled to participate therewith as to dividends, shall be entitled to
receive dividends, when, as and if declared by the Board of Directors, out of
any assets legally available for the payment of dividends thereon.
4.2.4. Dissolution, Liquidation, Winding Up.
In the event of any dissolution, liquidation or winding up of the
Corporation (whether voluntary or involuntary), the holders of record of the
Common Stock then outstanding, and all holders of any class or series of stock
entitled to participate (in whole or in part) therewith as to distribution of
assets, shall become entitled to participate equally on a per-share basis in the
distribution of any assets of the Corporation remaining after the Corporation
shall have paid or provided for payment of all debts and liabilities of the
Corporation, and shall have paid (or set aside for payment) to the holders of
any class or series of stock having preference over the Common Stock in the
event of dissolution, liquidation or winding up, the full preferential amounts
(if any) to which they are entitled.
4.3. Preferred Stock.
4.3.1. Issuance, Designations, Powers, Etc.
The Board of Directors expressly is authorized, subject to limitations
prescribed by the Delaware General Corporation Law and the provisions of this
Certificate of Incorporation, to provide (by resolution and by filing a
certificate of designations pursuant to the Delaware General Corporation Law)
for the issuance from time to time of the shares of Preferred Stock in one or
more series, to establish from time to time the number of shares to be included
in each such series, and to fix the designation, powers, preferences and other
rights of the shares of each such series and to fix the qualifications,
limitations and restrictions thereon, including, but without limiting the
generality of the foregoing, the following:
(i) the number of shares constituting that series and the distinctive
designation of that series;
(ii) the dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that series;
-3-
<PAGE>
(iii) whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
(iv) whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(v) whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the dates upon or
after which they shall be redeemable, and the amount per share payable in case
of redemption, which amount may vary under different conditions and at different
redemption dates;
(vi) whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(vii) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(viii) any other relative powers, preferences, and rights of that
series, and qualifications, limitations or restrictions on that series.
Pursuant to authority granted to the Board of Directors of the
Corporation in the Corporation's original Certificate of Incorporation, on
October 16, 1997, the Board of Directors of the Corporation duly adopted
resolutions creating the Series A Convertible Preferred Stock, par value $.01
per share, of the Corporation, the rights, powers and preferences for which are
set forth in Attachment 1 hereto and incorporated by reference herein and made
------------
an integral part hereof.
4.3.2. Dissolution, Liquidation, Winding Up.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Preferred Stock of
each series shall be entitled to receive only such amount or amounts as shall
have been fixed by the certificate of designations or by the resolution or
resolutions of the Board of Directors providing for the issuance of such series.
4.4. Redemption.
Notwithstanding any other provision of this Certificate of
Incorporation to the contrary, outstanding shares of stock of the Corporation
shall always be subject to redemption by the Corporation, by action of the Board
of Directors, if in the judgment of the Board of Directors such action should be
taken,
-4-
<PAGE>
pursuant to Section 151(b) of the Delaware General Corporation Law or any other
applicable provision of law, to the extent necessary to prevent the loss or
secure the reinstatement of any license or franchise from any governmental
agency held by the Corporation or any of its subsidiaries to conduct any portion
of the business of the Corporation or any of its subsidiaries, which license or
franchise is conditioned upon some or all of the holders of the Corporation's
stock possessing prescribed qualifications. The terms and conditions of such
redemption shall be as follows:
(a) The redemption price of the shares to be redeemed pursuant to this
Section 4.4 shall be determined by the Board of Directors and shall be equal to
the Fair Market Value (as defined herein) of such shares or, if such shares were
purchased by one or more Disqualified Holders (as defined herein) within one
year of the Redemption Date (as defined herein), the lesser of (i) the Fair
Market Value of such shares and (ii) the purchase price paid by such
Disqualified Holder for such shares.
(b) At the election of the Corporation, the redemption price of such
shares may be paid in cash, Redemption Securities (as defined herein) or any
combination thereof.
(c) If fewer than all shares held by Disqualified Holders are to be
redeemed, the shares to be redeemed shall be selected in such manner as shall be
determined by the Board of Directors, which may include selection first of the
most recently purchased shares thereof, selection by lot or selection in any
other manner determined by the Board of Directors.
(d) At least 30 days' prior written notice of the Redemption Date
shall be given to any Disqualified Holder of shares selected to be redeemed
(unless waived in writing by any such holder), provided that the Redemption Date
may be the date on which written notice shall be given to such holder if the
cash or Redemption Securities necessary to effect the redemption shall have been
deposited in trust for the benefit of such holder and subject to immediate
withdrawal by it upon surrender of the stock certificates formerly representing
the shares redeemed.
(e) From and after the Redemption Date, any and all rights of whatever
nature that any Disqualified Holder may have with respect to any shares selected
for redemption (including, without limitation, any rights to vote or participate
in dividends declared on stock of the same class or series as such shares) shall
cease and terminate, and such Disqualified Holder shall thenceforth be entitled
only to receive, with respect to such shares, the cash or Redemption Securities
payable upon redemption.
(f) The Board of Directors may also impose additional terms and
conditions.
(g) For purposes of this Section 4.4:
-5-
<PAGE>
(i) "Disqualified Holder" shall mean any holder of shares of stock
of the Corporation whose holding of such stock, either
individually or when taken together with the holding of shares
of stock of the Corporation by any other holders, may result,
in the judgment of the Board of Directors, in the loss of, or
the failure to secure the reinstatement of, any license or
franchise from any governmental agency held by the Corporation
or any of its subsidiaries to conduct any portion of the
business of the Corporation or any of its subsidiaries.
(ii) "Fair Market Value" of a share of the Corporation's stock of
any class or series shall mean the average Closing Price (as
defined herein) for such a share for each of the 45 most
recent days on which shares of stock of such class or series
shall have been traded preceding the day on which notice of
redemption shall be given pursuant to paragraph (d) of this
Section 4.4; provided, however, that if shares of stock of
-------- -------
such class or series are not traded on any securities exchange
or in the over-the-counter market, "Fair Market Value" shall
be determined by the Board of Directors in good faith.
"Closing Price" on any day means the reported closing sales
price or, in case no such sale takes place, the average of the
reported closing bid and asked prices on the principal United
States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest
closing sales price or bid quotation for such stock on the
Nasdaq National Market of The Nasdaq Stock Market, Inc. or any
system then in use, or if no such prices or quotations are
available, the fair market value on the day in question as
determined by the Board of Directors in good faith.
(iii) "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the
Corporation pursuant to this Section 4.4.
(iv) "Redemption Securities" shall mean any debt or equity
securities of the Corporation, any of its subsidiaries or any
other corporations, or any combination thereof, having such
terms and conditions as shall be approved by the Board of
Directors and which, together with any cash to be paid as part
of the redemption price, in the opinion of any investment
banking firm selected by the Board of Directors (which may be
a firm which provides other investment banking, brokerage or
other services to the Corporation), has
-6-
<PAGE>
a value, at the time notice of redemption is given pursuant to
paragraph (d) of this Section 4.4, at least equal to the price
required to be paid pursuant to paragraph (a) of this Section
4.4 (assuming for purposes of such valuation, in the case of
Redemption Securities to be publicly traded, such Redemption
Securities were fully distributed and trading under normal
conditions).
5. BOARD OF DIRECTORS.
5.1. Classification.
Except as otherwise provided in this Certificate of Incorporation or a
certificate of designations relating to the rights of the holders of any series
of Preferred Stock, voting separately by series, to elect additional directors
under specified circumstances, the number of directors of the Corporation shall
be as fixed from time to time by the Board of Directors of the Corporation. The
directors, other than those who may be elected by the holders of any series of
Preferred Stock voting separately by series, shall be classified, with respect
to the time for which they severally hold office, into three classes, Class I,
Class II and Class III, which shall be as nearly equal in number as possible,
and shall be adjusted from time to time by the Board of Directors to maintain
such proportionality. Each initial director in Class I shall hold office for a
term expiring at the 2000 annual meeting of stockholders, each initial director
in Class II shall hold office for a term expiring at the 1999 annual meeting of
stockholders, and each initial director in Class III shall hold office for a
term expiring at the 1998 annual meeting of stockholders. Elections of
directors need not be by written ballot.
Notwithstanding the foregoing provisions of this Section 5.1, each
director shall serve until such director's successor is duly elected and
qualified or until such director's earlier death, resignation or removal. At
each annual meeting of stockholders, the successors to the class of directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election and until their successors have been duly elected and
qualified or until any such director's earlier death, resignation or removal.
Except as set forth below with respect to vacancies and newly created
directorships, directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors.
5.2. Removal.
Except as otherwise provided pursuant to the provisions of this
Certificate of Incorporation or a certificate of designations relating to the
rights of
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<PAGE>
the holders of any series of Preferred Stock, voting separately by series, to
elect directors under specified circumstances, any director or directors may be
removed from office at any time, but only for cause and only by the affirmative
vote of not less than 66-2/3% of the total number of votes of the then
outstanding shares of stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, and only if notice of
such proposal was contained in the notice of such meeting. At least 30 days
prior to any meeting of stockholders where the removal of directors prior to
expiration of their term in office will be considered, written notice shall be
sent to the director or directors whose removal will be considered at such
meeting. Any vacancy in the Board of Directors resulting from any such removal
or otherwise shall be filled in accordance with Section 5.3 hereof.
5.3. Vacancies and Change of Authorized Number.
Vacancies and newly created directorships resulting from any increase
in the authorized number of directors elected by all of the stockholders having
the right to vote as a single class may only be filled by a majority of the
directors then in office, although fewer than a quorum, or by a sole remaining
director. In the event that one or more directors resign from the board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective. Notwithstanding the foregoing, whenever
the holders of any class or classes of stock or series thereof are entitled to
elect one or more directors by the provisions of this Certificate of
Incorporation, vacancies and newly created directorships of such class or
classes or series may only be filled by a majority of the directors elected by
such class or classes or series thereof in office, or by a sole remaining
director so elected. Each director chosen in accordance with this Section 5.3
shall hold office until the next election of the class for which such director
shall have been chosen, and until such director's successor is elected and
qualified, or until the director's earlier death, resignation or removal.
5.4. Directors Elected by Holders of Preferred Stock.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies, removal and other features of such directorships shall be governed by
the terms of the certificate of designations applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this Section
5 unless expressly provided by the certificate of designations.
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<PAGE>
5.5. Limitation of Liability.
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty as a
director; provided, however, that this provision shall not eliminate or limit
-----------------
the liability of a director: (a) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (b) for acts or omissions that
are not in good faith or that involve intentional misconduct or a knowing
violation of law; (c) for liability under Section 174 of the Delaware General
Corporation Law; or (d) for any transaction from which the director received any
improper personal benefit. Any repeal or modification of this Section 5.5 shall
be prospective only, and shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification
with respect to acts or omissions occurring prior to such repeal or
modification.
6. ACTIONS BY STOCKHOLDERS.
6.1. Action at Meetings or By Unanimous Consent.
Except as otherwise provided in this Certificate of Incorporation or a
certificate of designations relating to the rights of the holders of any series
of Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders, and may not be effected by any consent in
writing by such stockholders, unless such consent is unanimous.
6.2. Special Meetings of Stockholders.
Special meetings of the stockholders may be called at any time but
only by (a) the chairman of the board of the Corporation or (b) a majority of
the directors in office, although less than a quorum.
7. AMENDMENT OF CERTIFICATE OF INCORPORATION.
Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation), the affirmative vote of 66-2/3%
of the total number of votes of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend or repeal, or to adopt
any provision inconsistent with the purpose or intent of, Section 5 or Section 6
hereof, and this Section 7. Notice of any such proposed amendment, repeal or
adoption shall be contained in the notice of the meeting at which it is to be
considered. Subject to the provisions set forth herein,
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<PAGE>
the Corporation reserves the right to amend, alter, repeal or rescind any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by law.
8. AMENDMENT OF BYLAWS.
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors is expressly authorized
and empowered to adopt, amend and repeal the Bylaws of the Corporation.
Notwithstanding any other provisions of this Certificate of Incorporation or the
Bylaws of the Corporation (and notwithstanding the fact that a lesser percentage
may be specified by law, this Certificate of Incorporation or the Bylaws of the
Corporation), in order for the stockholders of the Corporation to amend or
repeal the Bylaws of the Corporation, the affirmative vote of 66-2/3% of the
total number of votes of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be executed by its duly authorized officer, as
of this 23rd day of July, 1998
/s/ J. Thomas Mullis
------------------------------
J. Thomas Mullis
Senior Vice President-General
Counsel, Secretary
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<PAGE>
Attachment 1
------------
RESTATEDCERTIFICATE OF DESIGNATIONS OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING OR OTHER RIGHTS,
AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF,
OF
SERIES A CONVERTIBLE PREFERRED STOCK
($0.01 Par Value)
OF
ITC/\DELTACOM, INC.
_________________
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
_________________
ITC/\DELTACOM, INC., a Delaware corporation (the "Corporation"), does
hereby certify that the following resolutions were duly adopted by the Board of
Directors of the Corporation pursuant to authority conferred upon the Board of
Directors by Section 4 of the Restated Certificate of Incorporation of the
Corporation, which authorizes the issuance of up to 5,000,000 shares of
preferred stock, at a meeting of the Board of Directors:
RESOLVED, that the issue of a series of preferred stock, $0.01 par
value, of the Corporation is hereby authorized and the designation, powers,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, in addition to those set
forth in the Restated Certificate of Incorporation of the Corporation, are
hereby fixed as follows:
1. NUMBER OF SHARES AND DESIGNATION
1,750,000 shares of the preferred stock, $0.01 par value, of the
Corporation are hereby constituted as a series of the preferred stock
designated as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"). Without the consent of the then current holders of shares of
Series A Preferred Stock as provided for herein, the number of authorized
shares of Series A Preferred Stock may not be increased or decreased below
the number of then currently outstanding shares of Series A Preferred
Stock.
<PAGE>
2. DEFINITIONS
For purposes of the Series A Preferred Stock, the following terms
shall have the meanings indicated:
"Acceptance Notice" shall have the meaning set forth in Section
9.3.
"Board of Directors" shall mean the board of directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series A
Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Georgia are
authorized or obligated by law or executive order to close.
"Common Stock" shall mean the Common Stock of the Corporation,
par value $0.01 per share.
"Conversion Date" shall mean March 14, 2002.
"Conversion Price" shall mean the conversion price per share of
Common Stock into which the Series A Preferred Stock is convertible,
as such Conversion Price may be adjusted pursuant to Section 6. The
"Initial Conversion Price" shall be obtained by multiplying $13.2378
by the Relative Fair Market Valuation of the Corporation (equivalent
to the rate of one share of Common Stock for each share of Series A
Preferred Stock).
"Current Market Price" shall mean, as of a particular date, the
average of the high bid and low asked prices per share of Common Stock
in the over-the-counter market, as reported by The Nasdaq Stock Market
or such other system then in use, or such other exchange or inter-
dealer quotation system on which the Common Stock is principally
traded or authorized to be quoted; or, if the Common Stock is not so
traded or authorized to be quoted on any such exchange or inter-dealer
quotation system, then the price per share of Common Stock most
recently designated by the Board of Directors as the "fair market
value" thereof for purposes of granting incentive stock options.
"Issue Date" shall mean the first date on which shares of Series
A Preferred Stock are issued.
"Notice" shall have the meaning set forth in Section 9.2.
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<PAGE>
"Person" shall mean any individual, firm, partnership,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Relative Fair Market Valuation of the Corporation" shall mean
the fair market value of the Corporation expressed as a percentage of
the ITC Holding Fair Market Value, determined as of the date the
initial public offering price per share of the common stock of the
Corporation (the "IPO Price") is established. The "ITC Holding Fair
Market Value" shall be determined by the Board of Directors (or a
committee thereof) of ITC West Point, Inc., by reference to the
business and operations of ITC Holding Company, Inc. immediately prior
to the transfer of assets and liabilities to ITC West Point, Inc. to
be undertaken in connection with a corporate reorganization by ITC
Holding Company, Inc. The fair market value of the Corporation will
be determined by the Board of Directors of the Corporation (or a
committee thereof), by reference to the IPO Price.
"Securities" shall have the meaning set forth in Section 6.4.2.
"Series A Preferred Liquidation Distribution" shall have the
meaning set forth in Section 4.
"Series A Preferred Stock" shall mean the series of preferred
stock, $0.01 par value, of the Corporation designated as Series A
Convertible Preferred Stock.
"Shares" shall have the meaning set forth in Section 9.1.
"Stockholder" shall have the meaning set forth in Section 9.1.
"Subsidiaries" shall mean any and all corporations, partnerships,
limited liability companies, joint ventures, associations and other
entities controlled by the Corporation directly or indirectly through
one or more intermediaries.
"The Nasdaq Stock Market" shall mean the National Market System
of The Nasdaq Stock Market, Inc.
"Trading Day" means a day on which any exchange or inter-dealer
quotation system on which the Common Stock is principally traded or
authorized to be quoted is open for the transaction of business.
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<PAGE>
"Transaction" shall have the meaning set forth in Section 6.5.
"Transfer" shall have the meaning set forth in Section 9.1.
"Transfer Agent" means such agent or agents, if any, of the
Corporation as may be designated by the Board of Directors of the
Corporation as the transfer agent for the Series A Preferred Stock.
"Transferring Stockholder" shall have the meaning set forth in
Section 9.2.
3. DIVIDENDS
3.1. Right to Receive Dividends
The holders of shares of the Series A Preferred Stock shall be
entitled to receive, when and if declared by the Board of Directors out of
funds legally available therefor, dividends in an amount per share of
Series A Preferred Stock equal to the dividends payable on the number of
shares of Common Stock into which one share of Series A Preferred Stock is
then convertible (assuming that the Conversion Date has already occurred),
determined as of the date fixed for determining holders of shares of Common
Stock entitled to receive such dividends. Each such dividend shall be
payable in arrears to the holders of record of shares of the Series A
Preferred Stock, as they appear on the stock records of the Corporation at
the close of business on such record dates, not more than 60 days preceding
the payment dates thereof, as shall be fixed by the Board of Directors.
3.2. Dividends on Other Stock
So long as any shares of the Series A Preferred Stock are outstanding,
no dividends shall be declared or paid or set apart for payment on any
class or series of stock of the Corporation ranking, as to dividends, on a
parity with the Series A Preferred Stock, for any period, nor shall any
shares ranking on a parity with the Series A Preferred Stock be redeemed or
purchased by the Corporation or any Subsidiary, unless dividends have been
or contemporaneously are declared and paid (or are declared and a sum
sufficient for the payment thereof set apart for such payment) on the
Series A Preferred Stock in an amount per share of Series A Preferred Stock
equal to dividends declared and paid or payable on the number of shares of
Common Stock into which one share of Series A Preferred Stock is then
convertible (assuming that the Conversion Date has already occurred), in
accordance with Section 3.1.
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<PAGE>
4. LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of Common Stock or any other
series or class or classes of stock of the Corporation ranking junior to
the Series A Preferred Stock, upon liquidation, dissolution or winding up,
the holders of the shares of Series A Preferred Stock shall be entitled to
receive the Initial Conversion Price per share plus an amount equal to all
dividends declared and unpaid thereon to the date of final distribution to
such holders (the "Series A Preferred Liquidation Distribution"). After
the Series A Preferred Liquidation Distribution has been made and after the
holders of shares of any other class or series of stock having preference
over the Common Stock in the event of liquidation, dissolution or winding
up have received the full preferential amounts to which they are entitled,
the holders of shares of Common Stock and any other class or series of
stock entitled to participate with the Common Stock in the event of
liquidation, dissolution or winding up shall be entitled to receive out of
the assets of the Corporation legally available for distribution to
stockholders (whether capital or surplus) cash in amount per share equal to
the amount of the Series A Preferred Liquidation Distribution. Thereafter,
the holders of the Series A Preferred Stock shall be entitled to share
ratably with the holders of the shares of Common Stock and any other class
or series of stock entitled to participate with the Common Stock in the
event of liquidation, dissolution or winding up, in any and all assets
remaining to be paid or distributed, such that distributions shall be made
in respect of each share of Series A Preferred Stock in an amount equal to
the distributions made in respect of the number of shares of Common Stock
into which such share of Series A Preferred Stock is then convertible. If,
upon any liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable among the
holders of the shares of Series A Preferred Stock and any other shares of
stock ranking, as to liquidation, dissolution or winding up, on a parity
with the Series A Preferred Stock, shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments in respect thereof,
then such assets, or the proceeds thereof, shall be distributed among the
holders of shares of Series A Preferred Stock and any such other stock
ratably in accordance with the respective amounts which would be payable on
such shares of Series A Preferred Stock and any such other stock if all
amounts payable thereon were paid in full. For the purposes of this
Section 4, (i) a consolidation or merger of the Corporation with one or
more corporations, (ii) a sale or transfer of all or substantially all of
the Corporation's assets, (iii) a statutory share exchange or (iv) a spin-
off of assets of the Corporation to its stockholders shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary.
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<PAGE>
5. SHARES TO BE RETIRED
All shares of Series A Preferred Stock purchased by the Corporation or
converted shall be retired and canceled and shall be restored to the status
of authorized but unissued shares of preferred stock, without designation
as to series.
6. CONVERSION
Holders of shares of Series A Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as
follows:
6.1. Right of Conversion
Subject to and upon compliance with the provisions of this Section 6,
a holder of shares of Series A Preferred Stock shall have the right, at
his, her or its option, at any time after March 14, 2002, to convert any or
all of such shares into the number of fully paid and nonassessable shares
of Common Stock (calculated as to each conversion to the nearest 1/100th of
a share) obtained by dividing the aggregate liquidation preference of such
shares by the Conversion Price and by surrender of such shares so to be
converted by the holder thereof, such surrender to be made in the manner
provided in Section 6.2. No shares of Series A Preferred Stock may be
converted into fractional shares of Common Stock. Any fractional interest
in respect of a share of Common Stock arising upon such conversion shall be
settled as provided in Section 6.3.
6.2. Exercise of Conversion Right
In order to exercise the conversion right, the holder of each share of
Series A Preferred Stock to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent or, if no Transfer Agent has
been appointed by the Corporation, at the principal office of the
Corporation, accompanied by written notice to the Corporation that the
holder thereof elects to convert its shares of Series A Preferred Stock or
a specified portion thereof. Unless the shares issuable on conversion are
to be issued in the same name as the name in which such share of Series A
Preferred Stock is registered, each share surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
vi
<PAGE>
Holders of shares of Series A Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding dividend payment date
notwithstanding the conversion thereof following such dividend payment
record date and prior to such dividend payment date.
As promptly as practicable after the surrender of certificates for
shares of Series A Preferred Stock as aforesaid, the Corporation shall
issue and shall deliver at such office to such holder, or on his, her or
its written order, (i) a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such shares in
accordance with the provisions of this Section 6, (ii) if less than the
full number of shares of Series A Preferred Stock evidenced by the
surrendered certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificates less the number of shares being converted, and
(iii) any fractional interest in respect of a share of Common Stock arising
upon such conversion shall be settled as provided in Section 6.3.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
shares of Series A Preferred Stock shall have been surrendered and such
notice received by the Corporation as aforesaid, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares represented thereby at such
time on such date and such conversion shall be at the Conversion Price in
effect at such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at
the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion
Price in effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation. All shares of
Common Stock delivered upon conversion of the Series A Preferred Stock
shall upon delivery be duly and validly issued and fully paid and
nonassessable.
6.3. No Fractional Shares Upon Conversion
No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series A Preferred
Stock. Instead of any fractional interest in a share of Common Stock which
would otherwise be deliverable upon the conversion of a share of Series A
Preferred Stock, the Corporation shall pay to the holder of such share an
vii
<PAGE>
amount in cash (computed to the nearest cent) equal to such fraction of a
share multiplied by the Current Market Price of one share of Common Stock
as of the date of conversion. If more than one share shall be surrendered
for conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series A Preferred Stock so
surrendered.
6.4. Adjustment of Conversion Price
The Conversion Price shall be adjusted from time to time as follows:
6.4.1. Stock Dividends, Reorganizations, Reclassifications
In case the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution on its Common Stock in shares of its Common Stock,
(B) subdivide its outstanding Common Stock into a greater number of shares,
(C) combine its outstanding Common Stock into a smaller number of shares or
(D) issue any shares of capital stock by reclassification of its Common
Stock, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of any share of Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock of the Corporation which such holder would
have owned or have been entitled to receive after the happening of any of
the events described above had such share of Series A Preferred Stock been
converted immediately prior to the happening of such event or the record
date therefor, whichever is earlier. An adjustment made pursuant to this
Section 6.4.1 shall become effective immediately after the close of
business on the record date in the case of a dividend or distribution
(except as provided in Section 6.8 below) and shall become effective
immediately after the close of business on the record date in the case of a
subdivision, combination or reclassification.
6.4.2. Certain Other Distributions to Holders of Common Stock
In case the Corporation shall distribute to all holders of its Common
Stock any shares of capital stock of the Corporation (other than Common
Stock) or evidences of its indebtedness or assets (other than a regular
cash dividend that the Board of Directors determines, in good faith, can be
maintained by the Corporation for at least four consecutive periods
covering not less than one year and that the Board of Directors intends to
maintain for at least four consecutive periods covering not less than one
year, out of profits or surplus) or rights or warrants to subscribe for or
purchase any of its securities (any of the foregoing being hereinafter in
this Section 6.4.2 called the "Securities"), then in each such case, unless
the Corporation elects to reserve shares or other units of such Securities
for distribution to the holders of the Series A Preferred Stock upon the
conversion of the shares of Series A
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<PAGE>
Preferred Stock so that any such holder converting shares of Series A
Preferred Stock will receive upon such conversion, in addition to the
shares of the Common Stock to which such holder is entitled, the amount and
kind of such Securities which such holder would have received if such
holder had, immediately prior to the record date for the distribution of
the Securities, converted his or her shares of Series A Preferred Stock
into Common Stock (such election to be based upon a determination by the
Board of Directors that such reservation will not materially adversely
affect the interests of any holder of Series A Preferred Stock in any such
reserved Securities), the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying (I) the Conversion
Price in effect immediately prior to the date of such distribution by (II)
a fraction, the numerator of which shall be the Current Market Price per
share of the Common Stock on the record date mentioned below less the fair
market value (as determined by the Board of Directors, whose determination
shall, if made in good faith, be conclusive) of the portion of the capital
stock or assets or evidences of indebtedness so distributed or of such
rights or warrants applicable to one share of Common Stock, and the
denominator of which shall be the Current Market Price per share of the
Common Stock. Such adjustment shall become effective immediately, except as
provided in Section 6.8 below, after the record date for the determination
of stockholders entitled to receive such distribution.
6.4.3. No De Minimis Adjustments
No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this
-----------------
Section 6.4.3 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment; and provided further that
any adjustment shall be required and made in accordance with the provisions
of this Section 6 (other than this Section 6.4.3) not later than such time
as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. All calculations
under this Section 6 shall be made to the nearest cent (with $.005 being
rounded upward) or to the nearest 1/100 of a share (with .005 of a share
being rounded upward), as the case may be. Anything in this Section 6.4.3
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion Price,
in addition to those required by Section 6.4.3, as it in its discretion
shall determine to be advisable in order that any stock dividends,
subdivision of shares, distribution of rights or warrants to purchase stock
or securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its stockholders shall not
be taxable.
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6.4.4. No Adjustment Where Similar Dividend, Distribution, or Issuance
With Respect to Preferred Stock
No adjustment in the Conversion Price shall be required in the event
of any dividend, distribution or issuance to holders of shares of Common
Stock pursuant to Sections 6.4.1 or 6.4.2 above if holders of shares of
Series A Preferred Stock have received the same dividend, distribution or
issuance in accordance with Section 3.
6.5. Certain Transactions
In case the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, sale of all or substantially
all of the Corporation's assets or recapitalization of the Common Stock and
excluding any transaction as to which Section 6.4.1 applies) (each of the
foregoing being referred to as a "Transaction"), in each case as a result
of which shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or any
combination thereof), each share of Series A Preferred Stock which is not
converted into the right to receive stock, securities or other property in
connection with such Transaction shall thereafter be convertible into the
kind and amount of shares of stock and other securities and property
receivable (including cash) upon the consummation of such Transaction by a
holder of that number of shares or fraction thereof of Common Stock into
which one share of Series A Preferred Stock was convertible immediately
prior to such Transaction. The Corporation shall not be a party to any
Transaction unless the terms of such Transaction are consistent with the
provisions of this Section 6.5, and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the Series A Preferred Stock which will
contain provisions enabling the holders of the Series A Preferred Stock
which remains outstanding after such Transaction to convert into the
consideration received by holders of Common Stock at the Conversion Price
immediately after such Transaction. The provisions of this Section 6.5
shall similarly apply to successive Transactions.
6.6. Notice of Certain Events
If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than a regular cash dividend that
the Board of Directors determines can be maintained by the Corporation for
at least four consecutive periods covering at least one year and that the
Board of Directors intends to maintain for at least four consecutive
periods covering at least one year out of profits or surplus); or
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(ii) the Corporation shall authorize the granting to the holders of
the Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Stock (other
than an event to which Section 6.4.1 applies) or any consolidation or
merger to which the Corporation is a party and for which approval of any
stockholders of the Corporation is required, or the sale or transfer of all
or substantially all of the assets of the Corporation;
then in each such case the Corporation shall cause to be filed with
the Transfer Agent, if any, and shall cause to be mailed to the holders of
shares of the Series A Preferred Stock at their addresses as shown on the
stock records of the Corporation, as promptly as possible, but at least 15
days prior to the applicable date specified in clauses (A) and (B) below, a
notice stating (A) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or rights or
warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, sale or transfer is expected, that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale or transfer. Failure to
give such notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section 6.
6.7. Notice of Adjustment in Conversion Price
Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the date on which
such adjustment becomes effective and shall promptly mail such notice of
such adjustment of the Conversion Price to the holder of each share of
Series A Preferred Stock at his, her or its last address as shown on the
stock records of the Corporation.
6.8. Adjustment in Conversion Price and Record Dates
In any case in which Section 6.4 provides that an adjustment shall
become effective immediately after a record date for an event, the
Corporation may defer until the occurrence of such event (A) issuing to the
holder of any share of Series A Preferred Stock converted after such record
date and before the occurrence of such event the additional shares of
Common Stock issuable upon such
xi
<PAGE>
conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect
to such adjustment and (B) paying to such holder any amount in cash in lieu
of any fraction pursuant to Section 6.3.
6.9. Determination of Number of Outstanding Shares of Common Stock
For purposes of this Section 6, the number of shares of Common Stock
at any time outstanding shall not include any shares of Common Stock then
owned or held by or for the account of the Corporation.
6.10. Adjustments Required by Multiple Sections
If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one paragraph of this Section 6,
only one adjustment shall be made and such adjustment shall be the amount
of adjustment which has the highest absolute value.
6.11. Other Actions Affecting Conversion Rights
In case the Corporation shall take any action affecting the Common
Stock, other than action described in this Section 6, that in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of the shares of Series A Preferred Stock, the
Conversion Price for the Series A Preferred Stock may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors may determine to be equitable in the circumstances.
6.12. Reservation of Common Stock for Issuance Upon Conversion
The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of
Common Stock held in its treasury, or both, for the purpose of effecting
conversion of the Series A Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares of
Series A Preferred Stock not theretofore converted. For purposes of this
Section 6.12, the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Series A
Preferred Stock shall be computed as if at the time of computation all such
outstanding shares were held by a single holder.
6.13. Fully Paid and Nonassessable Shares Upon Conversion
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Common Stock
deliverable upon conversion of the Series A Preferred Stock, the
Corporation shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Corporation may validly and
legally issue fully
xii
<PAGE>
paid and nonassessable shares of Common Stock at such adjusted Conversion
Price.
6.14. Listing of Shares Issuable Upon Conversion
The Corporation shall use all reasonable efforts to list the shares of
Common Stock required to be delivered upon conversion of the Series A
Preferred Stock, prior to such delivery, on any exchange or inter-dealer
quotation system on which the Common Stock is principally traded or
authorized to be quoted at such time.
6.15. Compliance with Laws and Regulatory Requirements
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Series A Preferred Stock, the
Corporation shall use all reasonable efforts to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by,
any governmental authority, and any such conversion or delivery shall be
subject to any applicable requirements of law or regulation.
6.16. Payment of Issue or Transfer Taxes
The Corporation shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock on conversion of the Series A Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be
------------------
required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock in a name other
than that of the holder of the Series A Preferred Stock to be converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Corporation the amount of
any such tax or has established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
7. RANKING
Any class or classes of stock of the Corporation shall be deemed to
rank:
(a) prior to the Series A Preferred Stock, as to dividends or as to
distribution of assets upon liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Series A Preferred
Stock;
xiii
<PAGE>
(b) on a parity with the Series A Preferred Stock, (A) as to
dividends, if such stock shall be Common Stock or if the holders of such
class of stock and the Series A Preferred Stock shall be entitled to the
receipt of dividends in proportion to their respective amounts of declared
and unpaid dividends per share, without preference or priority one over the
other, or (B) as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the liquidation price per share thereof be
different from that of the Series A Preferred Stock, if the holders of such
class of stock and the Series A Preferred Stock shall be entitled to the
receipt of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of liquidation prices, without
preference or priority one over the other: and
(c) junior to the Series A Preferred Stock, (A) as to dividends, if
the holders of Series A Preferred Stock shall be entitled to the receipt of
dividends in preference or priority to the holders of shares of such stock,
or (B) as to distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be Common Stock or if the holders of Series
A Preferred Stock shall be entitled to receipt of amounts distributable
upon liquidation, dissolution or winding up in preference or priority to
the holders of shares of such stock.
8. VOTING
(a) Except as herein provided or as otherwise from time to time
required by law, holders of Series A Preferred Stock shall have no voting
rights.
(b) So long as any shares of the Series A Preferred Stock remain
outstanding, the consent of the holders of at least two-thirds of the
shares of Series A Preferred Stock outstanding at the time given in person
or by proxy, either in writing or at any special or annual meeting, shall
be necessary to permit, effect or validate any one or more of the
following:
(i) The authorization, creation or issuance, or any increase in
the authorized or issued amount, of any class or series of stock
ranking prior to Series A Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up;
(ii) The increase in the authorized or issued amount of Series A
Preferred Stock: or
(iii) The amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Restated
Certificate of Incorporation of the Corporation (including any of the
xiv
<PAGE>
provisions hereof) that would affect any right, preference or voting
power of Series A Preferred Stock or of the holders thereof; provided,
---------
however, that any increase in the amount of authorized preferred stock
--------
or the creation and issuance of other series of preferred stock, or
any increase in the amount of authorized shares of such series or of
any other series of preferred stock, in each case ranking on a parity
with or junior to the Series A Preferred Stock with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to affect such rights,
preferences or voting powers.
9. RESTRICTIONS ON TRANSFER; RIGHTS OF FIRST REFUSAL
9.1. Restrictions on Transfers
Except as hereinafter provided, no holder of Series A Preferred Stock
(a "Stockholder") shall sell, assign, transfer, give (whether by inter
vivos transfer or, upon the death of any Stockholder, by testamentary
disposition or pursuant to the laws of intestate succession), pledge,
encumber or otherwise dispose of ("Transfer") all or any part of such
Stockholder's shares of Series A Preferred Stock of the Corporation (the
"Shares") to any person, trust, association, partnership, firm, corporation
or other legal entity without the prior written consent of the Corporation.
9.2. Notice of Proposed Transfer
Except for Transfers pursuant to Section 9.1 or 9.6, any Stockholder
desiring to Transfer any of the Shares (the "Transferring Stockholder")
prior to making a Transfer must give written notice to the Corporation of
the portion of the Transferring Stockholder's Shares which the Transferring
Stockholder desires to Transfer and all the proposed material terms and
conditions of such Transfer (such notice is hereinafter referred to as the
"Notice"). Such Notice shall constitute an offer by the Transferring
Stockholder to sell to the Corporation, all, but not less than all, of the
Shares which the Transferring Stockholder proposes to dispose of, upon the
terms set forth in the Notice.
9.3. Acceptance of Offer by the Corporation or the Stockholders
The Corporation may accept the offer of the Transferring Stockholder
as set forth in the Notice, in whole or in part, by giving written notice
of such acceptance (the "Acceptance Notice") at any time within 45 days
following the date the Notice was delivered to the Corporation by the
Transferring Stockholder.
xv
<PAGE>
9.4. Closing
If the Offer of the Transferring Stockholder is accepted by the
Corporation pursuant to Section 9.3 hereof, the closing of the purchase by
the Corporation of the Shares being sold by the Transferring Stockholder
shall be held at the main office of the Corporation within 30 days after
the acceptance of the offer by the Corporation, on the date and at the time
specified by the Corporation. At each such closing, (a) the Transferring
Stockholder shall deliver (i) certificates representing the shares of stock
to be transferred, endorsed in blank or accompanied by duly executed blank
stock powers and (ii) appropriate representations that the Transferring
Stockholder has good, valid and unencumbered title to the Shares being
transferred and has transferred free and clear title thereto to the
Corporation, and (b) the Corporation shall deliver the full amount of the
purchase price set forth in the Notice by check or wire transfer of
immediately available federal funds to an account designated by the
Transferring Stockholder.
9.5. Sale of Series A Preferred Stock if Offered is Rejected
If the Corporation does not accept the offer of the Transferring
Stockholder in the manner herein provided, then the Transferring
Stockholder shall be permitted to Transfer all of the Shares proposed to be
Transferred; provided; however, that (i) such Transfer must be made to the
transferee in strict accordance with the terms as described in the Notice;
and (ii) such transfer must be consummated within 90 days following the
delivery of the Notice to the Corporation on a date and at a time and place
of which the Transferring Stockholder shall give the Corporation at least
ten days' notice. The Corporation may designate an individual whom the
Transferring Stockholder shall permit to attend the closing of such
Transfer and to examine the documents implementing such Transfer. In the
event the Transferring Stockholder fails to consummate such proposed
Transfer prior to the expiration of such 90-day period, then prior to any
subsequent Transfer of all or any portion of the Transferring Stockholder's
Shares, the Transferring Stockholder shall be required to give the notice
contemplated by Section 9.2, and the restrictions on Transfer and rights of
first refusal contained herein shall again be applicable with respect
thereto.
9.6. Permitted Transfers
Notwithstanding the foregoing provisions of this Section 9, a
Stockholder may at any time Transfer the Shares owned by it, to (i) any
spouse or lineal descendant of such Stockholder, (ii) a parent,
grandparent, brother or sister of such Stockholder, (iii) any trust
established for the benefit of such Stockholder or any spouse or lineal
descendent thereof, or (iv) any corporation in which such Stockholder owns
all of the issued and outstanding
xvi
<PAGE>
capital stock. Any transfer specified in this Section 9.6 shall not be
subject to any of the restrictions on transfer or rights of first refusal
set forth in this Section 9.
9.7. Applicability of Restrictions on Transfer
(a) The restrictions on Transfer and the right of first refusal with
respect to the Shares shall terminate upon the date the Corporation becomes
subject to the reporting requirements of Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended.
(b) The rights of first refusal set forth in this Section 9 shall not
apply to any proposed exchange to be effected pursuant to a merger or
consolidation approved by the Stockholders or any proposed pledge by any
Stockholder of any of the Shares to any financial institution as security
for indebtedness of such Stockholder to such financial institution.
However, any financial institution which accepts the pledge of Shares shall
be subject to these restrictions on Transfer and the right of first refusal
in the event of foreclosure on such Shares.
10. RECORD HOLDERS
The Corporation and any Transfer Agent may deem and treat the record
holder of any shares of Series A Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the Corporation nor any
Transfer Agent shall be affected by any notice to the contrary.
* * * * *
xvii
<PAGE>
EXHIBIT 4.2
================================================================================
ITC/\DELTACOM, INC.,
Issuer
and
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
________________________
INDENTURE
Dated as of November 5, 1998
________________________
9 3/4% Senior Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
---------------------
<TABLE>
<CAPTION>
TIA Sections Indenture Sections
- ------------ ------------------
<S> <C>
(S) 310(a)(1)............................................ 7.10
(a)(2)............................................... 7.10
(b).................................................. 7.08
(S) 313(c)............................................... 7.06; 10.02
(S) 314(a)............................................... 4.17; 10.02
(a)(4)............................................... 4.16; 10.02
(c)(1)............................................... 10.03
(c)(2)............................................... 10.03
(e).................................................. 10.04
(S) 315(b)............................................... 7.05; 10.02
(S) 316(a)(1)(A)......................................... 6.05
(a)(1)(B)............................................ 6.04
(b).................................................. 6.07
(S) 317(a)(1)............................................ 6.08
(a)(2)............................................... 6.09
(S) 318(a)............................................... 10.01
(c).................................................. 10.01
</TABLE>
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions......................................... 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act... 21
SECTION 1.03. Rules of Construction............................... 22
ARTICLE TWO THE NOTES
SECTION 2.01. Form and Dating..................................... 22
SECTION 2.02. Restrictive Legends................................. 23
SECTION 2.03. Execution, Authentication and Denominations......... 25
SECTION 2.04. Registrar and Paying Agent.......................... 26
SECTION 2.05. Paying Agent to Hold Money in Trust................. 27
SECTION 2.06. Transfer and Exchange............................... 27
SECTION 2.07. Book-Entry Provisions for Global Notes.............. 28
SECTION 2.08. Special Transfer Provisions......................... 30
SECTION 2.09. Replacement Notes................................... 33
SECTION 2.10. Outstanding Notes................................... 33
SECTION 2.11. Temporary Notes..................................... 34
SECTION 2.12. Cancellation........................................ 34
SECTION 2.13. CUSIP Numbers....................................... 35
SECTION 2.14. Defaulted Interest.................................. 35
SECTION 2.15. Issuance of Additional Notes........................ 35
ARTICLE THREE REDEMPTION
SECTION 3.01. Right of Redemption; Mandatory Redemption........... 35
SECTION 3.02. Notices to Trustee.................................. 36
SECTION 3.03. Selection of Notes to Be Redeemed................... 36
SECTION 3.04. Notice of Redemption................................ 37
SECTION 3.05. Effect of Notice of Redemption...................... 38
SECTION 3.06. Deposit of Redemption Price......................... 38
SECTION 3.07. Payment of Notes Called for Redemption.............. 38
SECTION 3.08. Notes Redeemed in Part.............................. 38
ARTICLE FOUR COVENANTS
SECTION 4.01. Payment of Notes.................................... 39
SECTION 4.02. Maintenance of Office or Agency..................... 39
- ------------------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 4.03. Limitation on Indebtedness.................................................. 39
SECTION 4.04. Limitation on Restricted Payments........................................... 42
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries........................................... 44
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries................................................................ 46
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted Subsidiaries..............46
SECTION 4.08. Limitation on Transactions with Stockholders and Affiliates...................47
SECTION 4.09. Limitation on Liens...........................................................48
SECTION 4.10. Limitation on Asset Sales.....................................................48
SECTION 4.11. Repurchase of Notes upon a Change of Control..................................49
SECTION 4.12. Existence.....................................................................49
SECTION 4.13. Payment of Taxes and Other Claims.............................................49
SECTION 4.14. Maintenance of Properties and Insurance.......................................50
SECTION 4.15. Notice of Defaults............................................................50
SECTION 4.16. Compliance Certificates.......................................................50
SECTION 4.17. Commission Reports and Reports to Holders.....................................51
SECTION 4.18. Waiver of Stay, Extension or Usury Laws.......................................51
SECTION 4.19. Limitation on Sale-Leaseback Transactions.....................................52
ARTICLE FIVE SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc................................................. 52
SECTION 5.02. Successor Substituted....................................................... 53
ARTICLE SIX DEFAULT AND REMEDIES
SECTION 6.01. Events of Default........................................................... 53
SECTION 6.02. Acceleration................................................................ 55
SECTION 6.03. Other Remedies.............................................................. 55
SECTION 6.04. Waiver of Past Defaults..................................................... 55
SECTION 6.05. Control by Majority......................................................... 56
SECTION 6.06. Limitation on Suits......................................................... 56
SECTION 6.07. Rights of Holders to Receive Payment........................................ 57
SECTION 6.08. Collection Suit by Trustee.................................................. 57
SECTION 6.09. Trustee May File Proofs of Claim............................................ 57
SECTION 6.10. Priorities.................................................................. 58
SECTION 6.11. Undertaking for Costs....................................................... 58
SECTION 6.12. Restoration of Rights and Remedies.......................................... 58
SECTION 6.13. Rights and Remedies Cumulative.............................................. 58
SECTION 6.14. Delay or Omission Not Waiver................................................ 59
ARTICLE SEVEN TRUSTEE
SECTION 7.01. General..................................................................... 59
SECTION 7.02. Certain Rights of Trustee................................................... 59
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 7.03. Individual Rights of Trustee................................................. 60
SECTION 7.04. Trustee's Disclaimer......................................................... 60
SECTION 7.05. Notice of Default............................................................ 60
SECTION 7.06. Reports by Trustee to Holders................................................ 61
SECTION 7.07. Compensation and Indemnity................................................... 61
SECTION 7.08. Replacement of Trustee....................................................... 62
SECTION 7.09. Successor Trustee by Merger, Etc............................................. 63
SECTION 7.10. Eligibility.................................................................. 63
SECTION 7.11. Money Held in Trust.......................................................... 63
SECTION 7.12. Withholding Taxes............................................................ 63
ARTICLE EIGHT DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations......................................... 64
SECTION 8.02. Defeasance and Discharge of Indenture........................................ 64
SECTION 8.03. Defeasance of Certain Obligations............................................ 67
SECTION 8.04. Application of Trust Money................................................... 68
SECTION 8.05. Repayment to Company......................................................... 69
SECTION 8.06. Reinstatement................................................................ 69
ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders................................................... 69
SECTION 9.02. With Consent of Holders...................................................... 70
SECTION 9.03. Revocation and Effect of Consent............................................. 71
SECTION 9.04. Notation on or Exchange of Notes............................................. 71
SECTION 9.05. Trustee to Sign Amendments, Etc.............................................. 72
SECTION 9.06. Conformity with Trust Indenture Act.......................................... 72
ARTICLE TEN MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939................................................. 72
SECTION 10.02. Notices..................................................................... 72
SECTION 10.03. Certificate and Opinion as to Conditions Precedent.......................... 73
SECTION 10.04. Statements Required in Certificate or Opinion............................... 74
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar................................. 74
SECTION 10.06. Payment Date Other Than a Business Day...................................... 74
SECTION 10.07. Governing Law............................................................... 74
SECTION 10.08. No Adverse Interpretation of Other Agreements............................... 75
SECTION 10.09. No Recourse Against Others.................................................. 75
SECTION 10.10. Successors.................................................................. 75
SECTION 10.11. Duplicate Originals......................................................... 75
SECTION 10.12. Separability................................................................ 75
SECTION 10.13. Table of Contents, Headings, Etc............................................ 75
EXHIBIT A Form of Note....................................................................... A-1
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
EXHIBIT B Form of Certificate............................................................... B-1
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Non-QIB Accredited Investors........................... C-1
EXHIBIT D Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S........................................... D-1
</TABLE>
<PAGE>
INDENTURE, dated as of November 5, 1998, between ITC/\DELTACOM, INC., a
Delaware corporation (the "Company"), and United States Trust Company of New
-------
York, a bank and trust company organized under the New York banking law (the
"Trustee").
- --------
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance initially of up to $125,000,000 aggregate
principal amount of the Company's 9 3/4% Senior Notes due 2008 (the "Notes")
-----
issuable as provided in this Indenture. All things necessary to make this
Indenture a valid agreement of the Company, in accordance with its terms, have
been done, and the Company has done all things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee hereunder
and duly issued by the Company, the valid obligations of the Company as
hereinafter provided.
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act of 1939 that are required to be a part of and to govern
indentures qualified under the Trust Indenture Act of 1939.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, the Company and the Trustee, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Acquired Assets" means (i) the Capital Stock of any Person that becomes a
Restricted Subsidiary after the Closing Date and (ii) the real or personal
property (including tangible and intangible assets) of any Person that becomes a
Restricted Subsidiary after the Closing Date.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by a Restricted Subsidiary; provided that Indebtedness of such
Person which is redeemed, defeased, retired or otherwise repaid at the time of
or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
<PAGE>
2
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined in conformity with GAAP; provided that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income (or loss) of any Person (other than a Restricted Subsidiary)
in which any Person (other than the Company or any of its Restricted
Subsidiaries) has a joint interest and the net income (or loss) of any
Unrestricted Subsidiary, except (x) with respect to net income, to the extent of
the amount of dividends or other distributions actually paid to the Company or
any of its Restricted Subsidiaries by such other Person or such Unrestricted
Subsidiary during such period and (y) with respect to net losses, to the extent
of the amount of cash contributed by the Company or any Restricted Subsidiary to
such Person during such period; (ii) solely for the purposes of calculating the
amount of Restricted Payments that may be made pursuant to clause (C) of the
first paragraph of Section 4.04 (and in such case, except to the extent
includable pursuant to clause (i) above), the net income (or loss) of any Person
accrued prior to the date it becomes a Restricted Subsidiary or is merged into
or consolidated with the Company or any of its Restricted Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by the
Company or any of its Restricted Subsidiaries; (iii) the net income of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary of such net income is not
at the time permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary; (iv) any gains or losses
(on an after-tax basis) attributable to Asset Sales; (v) except for purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 4.04, any amount paid or accrued as
dividends on Preferred Stock (other than accrued dividends which, pursuant to
the terms of the Preferred Stock, will not be payable prior to the first
anniversary after the Stated Maturity of the Notes) of the Company or any
Restricted Subsidiary owned by Persons other than the Company and any of its
Restricted Subsidiaries; and (vi) all extraordinary gains and extraordinary
losses.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee pursuant to Section 4.17.
<PAGE>
3
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Co-Registrar, Paying Agent or authenticating
agent.
"Agent Members" has the meaning provided in Section 2.07(a).
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such investment or (ii)
an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person; provided that the property and assets acquired are
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets (other than the Capital Stock or other
Investment in an Unrestricted Subsidiary) of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business of the Company
or such Restricted Subsidiary and, in each case, that is not governed by Article
Five; provided that "Asset Sale" shall not include (a) sales, transfers or other
dispositions of inventory, receivables and other current assets, (b) sales,
transfers or other dispositions of assets with a fair market value (as certified
in an Officers' Certificate) not in excess of
<PAGE>
4
$500,000 in any transaction or series of related transactions or (c) sales,
transfers or other dispositions of assets for consideration at least equal to
the fair market value of the assets sold, transferred or otherwise disposed of
to the extent the consideration received would satisfy clause (B) of the first
paragraph of Section 4.10, provided that after giving pro forma effect to such
exchange, the Consolidated Leverage Ratio shall be no greater than the
Consolidated Leverage Ratio immediately prior to such exchange.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company or any
committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 35% of the total voting power of the Voting Stock of the Company on a
fully diluted basis and such ownership represents a
<PAGE>
5
greater percentage of the total voting power of the Voting Stock of the Company,
on a fully diluted basis, than is held by the Existing Stockholders on such
date; or (ii) individuals who on the Closing Date constitute the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination by the Board of Directors for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
members of the Board of Directors then in office who either were members of the
Board of Directors on the Closing Date or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally issued
under this Indenture.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's equity, other than Preferred Stock of
such Person, whether outstanding on the Closing Date or issued thereafter,
including, without limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name of the
Company (i) by its Chairman, a Vice Chairman, its President or a Vice President
and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee; provided, however, that such written
request or order may be signed by any two of the officers or directors listed in
clause (i) above in lieu of being signed by one of such officers or directors
listed in such clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, the sum of the amounts for
such period of (i) Adjusted Consolidated Net Income, (ii) Consolidated Interest
Expense, to the extent such amount was deducted in calculating Adjusted
Consolidated Net Income, (iii) income taxes, to the extent such amount was
deducted in calculating Adjusted Consolidated Net Income (other than income
taxes (either positive or negative) attributable to extraordinary and non-
recurring gains or losses or sales of assets), (iv) depreciation expense, to the
extent
<PAGE>
6
such amount was deducted in calculating Adjusted Consolidated Net Income,
(v) amortization expense, to the extent such amount was deducted in calculating
Adjusted Consolidated Net Income, and (vi) all other non-cash items reducing
Adjusted Consolidated Net Income (other than items that will require cash
payments and for which an accrual or reserve is, or is required by GAAP to be,
made), less all non-cash items increasing Adjusted Consolidated Net Income, all
as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP; provided that, if any Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA
shall be reduced (to the extent not otherwise reduced in accordance with GAAP)
by an amount equal to (A) the amount of the Adjusted Consolidated Net Income
attributable to such Restricted Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding Common Stock of such Restricted Subsidiary
not owned on the last day of such period by the Company or any of its Restricted
Subsidiaries divided by (2) the total number of shares of outstanding Common
Stock of such Restricted Subsidiary on the last day of such period.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by the Company or any of its
Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company and its Restricted Subsidiaries during such
period; excluding, however, (i) any amount of such interest of any Restricted
Subsidiary if the net income of such Restricted Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof) and (ii) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Notes and the Reorganization, all as determined on a
consolidated basis (without taking into account Unrestricted Subsidiaries) in
conformity with GAAP.
"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Indebtedness of the Company and its Restricted
Subsidiaries on a consolidated basis outstanding on such Transaction Date to
(ii) the aggregate amount of Consolidated EBITDA for the Four Quarter Period;
provided that, in making the foregoing calculation, (A) pro forma effect shall
be given to any Indebtedness to be Incurred or repaid on the Transaction Date;
(B) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur during the Reference Period, as if they had occurred and
such proceeds
<PAGE>
7
had been applied on the first day of such Reference Period; (C) pro forma effect
shall be given to asset dispositions and asset acquisitions (including giving
pro forma effect to the application of proceeds of any asset disposition) that
have been made by any Person that has become a Restricted Subsidiary or has been
merged with or into the Company or any Restricted Subsidiary during such
Reference Period and that would have constituted Asset Dispositions or Asset
Acquisitions had such transactions occurred when such Person was a Restricted
Subsidiary as if such asset dispositions or asset acquisitions were Asset
Dispositions or Asset Acquisitions that occurred on the first day of such
Reference Period; provided that to the extent that clause (B) or (C) of this
sentence requires that pro forma effect be given to an Asset Acquisition or
Asset Disposition, such pro forma calculation shall be based upon the four full
fiscal quarters immediately preceding the Transaction Date of the Person, or
division or line of business of the Person, that is acquired or disposed of for
which financial information is available; and (D) the aggregate amount of
Indebtedness outstanding as of the end of such Reference Period will be deemed
to include the total amount of funds outstanding and/or available on the
Transaction Date under any revolving credit or similar facilities of the Company
or its Restricted Subsidiaries.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the Company or any of its Restricted Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Consolidated Secured Indebtedness Leverage Ratio" means, on any
Transaction Date, the ratio of (i) the aggregate amount of Secured Indebtedness
of the Company and its Restricted Subsidiaries on a consolidated basis
outstanding on such Transaction Date to (ii) the aggregate amount of
Consolidated EBITDA for the Four Quarter Period; provided that, in making the
foregoing calculation, (A) pro forma effect shall be given to any Secured
Indebtedness to be Incurred or repaid on the Transaction Date; (B) pro forma
effect shall be given to Asset Dispositions and Asset Acquisitions (including
giving pro forma effect to the application of proceeds of any Asset Disposition)
that occur during the Reference Period, as if they had occurred and such
proceeds had been applied on the first day of such Reference Period; (C) pro
forma effect shall be given to asset dispositions and asset acquisitions
(including giving pro forma effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into the Company or any Restricted
Subsidiary during such Reference Period and that would have constituted
<PAGE>
8
Asset Dispositions or Asset Acquisitions had such transactions occurred when
such Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; provided that to the extent that clause (B)
or (C) of this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed of for which financial information is available; and (D) the aggregate
amount of Secured Indebtedness outstanding as of the end of such Reference
Period will be deemed to include the total amount of funds outstanding and/or
available on the Transaction Date under any revolving credit or similar
facilities of the Company or its Restricted Subsidiaries to the extent that
borrowings under such facilities would constitute Secured Indebtedness.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 114 West 47th Street, New York, NY 10036, Attention: Corporate Trust
Department.
"Credit Agreement" means the First Amended and Restated Credit Agreement
among Interstate FiberNet Inc., NationsBank of Texas, N.A., as administrative
lender, and the lenders party thereto, as such agreement may be amended,
supplemented or modified from time to time.
"Credit Facilities" means revolving credit or working capital facilities or
similar facilities made available from time to time to the Company and its
Restricted Subsidiaries.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees, and their
respective successors.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.10.
"Exchange Act" means the Securities Exchange Act of 1934.
<PAGE>
9
"Exchange Notes" means any securities of the Company containing terms
identical to the Notes (except that such Exchange Notes shall be registered
under the Securities Act) that are issued and exchanged for the Notes pursuant
to the Registration Rights Agreement and this Indenture.
"Existing Stockholders" means Campbell B. Lanier, III and SCANA Corporation
and their Affiliates, and Campbell B. Lanier, III's spouse and any one or more
of his lineal descendants and their spouses; provided, however, that any such
person other than Campbell B. Lanier, III shall only be deemed to be an
"Existing Stockholder" to the extent such person's Capital Stock of the Company
was received, directly or indirectly, from Campbell B. Lanier, III.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution; provided that for purposes of clause (viii) of
the second paragraph of Section 4.03(a), (x) the fair market value of any
security registered under the Exchange Act shall be the average of the closing
prices, regular way, of such security for the 20 consecutive trading days
immediately preceding the capital contribution or sale of Capital Stock and (y)
in the event the aggregate fair market value of any other property (other than
cash or cash equivalents) received by the Company exceeds $10 million, the fair
market value of such property shall be determined by a nationally recognized
investment banking firm and set forth in their written opinion which shall be
delivered to the Trustee.
"Four Quarter Period" means, with respect to any Transaction Date, the then
most recent four fiscal quarter period for which financial statements of the
Company have been filed with the Commission or provided to the Trustee pursuant
to Section 4.17.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, including, without limitation, those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
this Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that computations made for purposes of determining compliance with
the terms of the covenants and with other provisions of this Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes or the Reorganization and (ii) except
as otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
<PAGE>
10
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length and are entered into in
the ordinary course of business), to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guaranteed Indebtedness" has the meaning provided in Section 4.07.
"Holder" means the registered holder of any Note.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an Incurrence of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables, (v) all Capitalized Lease Obligations of
such Person, (vi) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed
by such Person to the extent such Indebtedness is Guaranteed by such Person and
(viii) to the extent not otherwise included in this definition,
<PAGE>
11
obligations under Currency Agreements and Interest Rate Agreements. The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date (or, in the case of a revolving credit or other similar facility, the
total amount of funds outstanding and/or available on the date of determination)
of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (A) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at the time of its issuance
as determined in conformity with GAAP, (B) that money borrowed and set aside at
the time of the Incurrence of any Indebtedness in order to prefund the payment
of the interest on such Indebtedness shall not be deemed to be "Indebtedness"
and (C) that Indebtedness shall not include any liability for federal, state,
local or other taxes.
"Indenture" means this Indenture as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
to this Indenture entered into pursuant to the applicable provisions of this
Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date on May
15 and November 15 of each year, commencing May 15, 1999.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair
market value of the Capital Stock (or any other Investment), held by the Company
or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to
be a Restricted Subsidiary, including, without limitation, by reason of any
transaction permitted by clause (iii) of Section 4.06. For purposes of the
definition of "Unrestricted Subsidiary" and Section 4.04, (i) "Investment" shall
include the fair market value of the assets (net of liabilities (other than
liabilities to the Company or any of its
<PAGE>
12
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Subsidiaries)) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from any Person shall be valued at its fair market value at
the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP, and (b) with respect
to any capital contribution or issuance or sale of Capital Stock, options,
warrants or other rights to acquire Capital Stock or Indebtedness, the proceeds
of such capital contribution or issuance or sale in the form of cash or cash
equivalents, including payments in respect of deferred payment obligations (to
the extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary) and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of attorney's fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such issuance
or sale and net of taxes or payable as a result thereof.
<PAGE>
13
"Non-U.S. Person" means a person who is not a "U.S. person" (as defined in
Regulation S).
"Notes" means any of the securities, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Indenture.
For all purposes of this Indenture, the term "Notes" shall include the Notes
initially issued on the Closing Date, any Exchange Notes to be issued and
exchanged for any Notes pursuant to the Registration Rights Agreement and this
Indenture and any other Notes issued after the Closing Date under this
Indenture. For purposes of this Indenture, all Notes shall vote together as one
series of Notes under this Indenture.
"Offer to Purchase" means an offer by the Company to purchase Notes from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that
all Notes validly tendered will be accepted for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which shall be a Business Day
no earlier than 30 days nor later than 60 days from the date such notice is
mailed) (the "Payment Date"); (iii) that any Note not tendered will continue to
accrue interest pursuant to its terms; (iv) that, unless the Company defaults in
the payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (vii) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. On the Payment Date, the Company shall (i) accept
for payment on a pro rata basis Notes or portions thereof tendered pursuant to
an Offer to Purchase; (ii) deposit with the Paying Agent money sufficient to pay
the purchase price of all Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee all Notes or portions thereof
so accepted together with an Officers' Certificate specifying the Notes or
portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered; provided that each Note purchased and each new Note issued
shall be in a principal amount of $1,000 or
<PAGE>
14
integral multiples thereof. The Company will publicly announce the results of
an Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable,
in the event that the Company is required to repurchase Notes pursuant to an
Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President or the
Chief Financial Officer, and (ii) the Treasurer or any Assistant Treasurer, or
the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer listed in
clause (i) of the definition thereof and one Officer listed in clause (ii) of
the definition thereof or two officers listed in clause (i) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion signed by legal counsel, who
may be an employee of or counsel to the Company, that meets the requirements of
Section 10.04 hereof. Each such Opinion of Counsel shall include the statements
provided for in TIA Section 314(e).
"Paying Agent" has the meaning provided in Section 2.04, except that, for
the purposes of Article Eight, the Paying Agent shall not be the Company or a
Subsidiary of the Company or an Affiliate of any of them. The term "Paying
Agent" includes any additional Paying Agent.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to the Company or
a Restricted Subsidiary; provided that such Person's primary business is
related, ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such Investment; (ii) a Temporary Cash
Investment; (iii) commission, payroll, travel and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses in accordance with GAAP; (iv) stock, obligations or securities
received in satisfaction of judgments; (v) Investments in prepaid expenses,
negotiable instruments held for collection, and lease, utility and workers'
compensation, performance and other similar deposits; and (vi) Interest Rate
Agreements and
<PAGE>
15
Currency Agreements to the extent permitted under clause (iv) of the second
paragraph of Section 4.03(a).
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
similar Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other irregularities that do not materially interfere with the ordinary
course of business of the Company or any of its Restricted Subsidiaries; (vi)
Liens (including extensions and renewals thereof) upon real or personal property
(including, without limitation, tangible and intangible assets and Acquired
Assets) acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing Indebtedness Incurred, in accordance with
Section 4.03, to finance the cost (including, without limitation, the cost of
design, development, construction, acquisition, installation, improvement,
transportation or integration) of the real or personal property (including
tangible and intangible assets) subject thereto and such Lien is created prior
to, at the time of or within six months after the latest of the acquisition, the
completion of construction or the commencement of full operation of such real or
personal property; provided that in the case of Acquired Assets, the Lien
secures the Indebtedness Incurred to purchase the Capital Stock of the Person to
make such Person a Restricted Subsidiary, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost and (c) any
such Lien shall not extend to or cover any real or personal property other than
such real or personal property and any improvements on such real or personal
property and any proceeds thereof; (vii) leases or subleases granted to others
that do not materially interfere with the ordinary course of business of the
Company and its Restricted Subsidiaries, taken as a whole; (viii) Liens
encumbering property or assets under construction arising from progress or
partial payments by a customer of the Company or its Restricted Subsidiaries
relating to such property or assets; (ix) any interest or title of a lessor in
the property subject to any Capitalized Lease or operating lease; (x) Liens
arising from filing Uniform Commercial Code financing statements regarding
leases; (xi) Liens on property
<PAGE>
16
of, or on shares of Capital Stock or Indebtedness of, any Person existing at the
time such Person becomes, or becomes a part of, any Restricted Subsidiary;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Restricted Subsidiary other than the property or assets acquired
and any proceeds thereof; (xii) Liens in favor of the Company or any Restricted
Subsidiary; (xiii) Liens arising from the rendering of a final judgment or order
against the Company or any Restricted Subsidiary that does not give rise to an
Event of Default; (xiv) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating to such
letters of credit and the products and proceeds thereof; (xv) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods; (xvi) Liens
encumbering customary initial deposits and margin deposits, and other Liens that
are either within the general parameters customary in the industry and incurred
in the ordinary course of business, in each case securing Indebtedness under
Interest Rate Agreements and Currency Agreements and forward contracts, options,
future contracts, futures options or similar agreements or arrangements designed
solely to protect the Company or any of its Restricted Subsidiaries from
fluctuations in interest rates, currencies or the price of commodities; (xvii)
Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business in accordance with
the past practices of the Company and its Restricted Subsidiaries prior to the
Closing Date; (xviii) Liens on or sales of receivables, including related
intangible assets and proceeds thereof; and (xix) Liens that secure Indebtedness
with an aggregate principal amount not to exceed $5 million at any time
outstanding.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference equity, whether
outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of such preferred or preference stock.
"principal" of a debt security, including the Notes, means the principal
amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.02.
<PAGE>
17
"Public Equity Offering" means an underwritten primary offering of Common
Stock of the Company pursuant to an effective registration statement under the
Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redeemable Stock" means any class or series of Capital Stock of any Person
that by its terms or otherwise is (i) required to be redeemed prior to the
Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Redeemable Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Redeemable Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable in any material respect
to the holders of such Capital Stock than the provisions contained in Sections
4.10 and 4.11 are to the holders of the Notes and such Capital Stock
specifically provides that such Person will not repurchase or redeem any such
stock pursuant to such provision prior to the Company's repurchase of such Notes
as are required to be repurchased pursuant to Sections 4.10 and 4.11.
"Redemption Date" means, when used with respect to any Note to be redeemed,
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price at which such Note is to be redeemed pursuant to this
Indenture.
"Reference Period" means, with respect to any Transaction Date, the period
from the beginning of the Four Quarter Period with respect to such Transaction
Date through such Transaction Date.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Closing Date, between the Company and Morgan Stanley & Co.
Incorporated and First Union Capital Markets, a division of Wheat First
Securities, Inc., and certain permitted assigns specified therein.
"Registration Statement" means the Registration Statement as defined and
described in the Registration Rights Agreement.
<PAGE>
18
"Regular Record Date" for the interest payable on any Interest Payment Date
means the May 1 or November 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Reorganization" means the transactions in which ITC Holding Company, Inc.,
a Delaware corporation, contributed to the Company its investments in the
Reorganization Subsidiaries (or their successors in interest).
"Reorganization Subsidiaries" means, collectively, (i) DeltaCom, Inc., an
Alabama corporation; (ii) Eastern Telecom, Inc., a Georgia corporation; (iii)
Gulf States Transmission Systems, Inc., a Delaware corporation, (iv) ITC
Transmission Systems, Inc., a Delaware corporation; (v) ITC Transmission Systems
II, Inc., a Delaware corporation; and (vi) Interstate FiberNet, a Georgia
general partnership.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee in its Corporate Trust Department customarily performing
functions similar to those performed by any of the above-designated officers and
in each case having direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Secured Indebtedness" means Indebtedness of the Company or any of its
Restricted Subsidiaries that is secured by Liens on the property or assets of
the Company or any of its Restricted Subsidiaries.
"Securities Act" means the Securities Act of 1933.
<PAGE>
19
"Security Register" has the meaning provided in Section 2.04.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Stated Maturity" means (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Strategic Subordinated Indebtedness" means Indebtedness of the Company
Incurred to finance the acquisition of a Person engaged in the
Telecommunications Business that by its terms, or by the terms of any agreement
or instrument pursuant to which such Indebtedness is Incurred, (i) is expressly
made subordinate in right of payment to the Notes and (ii) provides that no
payment of principal, premium or interest on, or any other payment with respect
to, such Indebtedness may be made prior to the payment in full of all of the
Company's obligations under the Notes; provided that such Indebtedness may
provide for and be repaid at any time from the proceeds of the sale of Capital
Stock (other than Redeemable Stock) of the Company after the Incurrence of such
Indebtedness.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Subsidiary Guarantee" has the meaning provided in Section 4.07.
"Telecommunications Business" means the development, ownership or operation
of one or more telephone, telecommunications or information systems or the
provision of telephony, telecommunications or information services (including,
without limitation, any voice, video transmission, data or Internet services)
and any related, ancillary or complementary business.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts,
<PAGE>
20
certificates of deposit and money market deposits maturing within one year of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50 million (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) commercial paper, maturing
not more than one year after the date of acquisition, issued by a corporation
(other than an Affiliate of the Company) organized and in existence under the
laws of the United States of America, any state thereof or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard & Poor's
Ratings Service, and (v) securities with maturities of six months or less from
the date of acquisition issued or fully and unconditionally guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Service or Moody's Investors Service, Inc.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S. Code (S)(S) 77aaa-77bbbb), as in effect on the date this Indenture was
executed, except as provided in Section 9.06.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article Seven of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended and as codified in Title 11 of the United States Code, as amended from
time to time hereafter, or any successor federal bankruptcy law.
<PAGE>
21
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under Section
4.04. The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that (i) no Default or Event of Default shall
have occurred and be continuing at the time of or after giving effect to such
designation and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation would, if Incurred at such time,
have been permitted to be Incurred for all purposes of this Indenture. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Voting Stock" means, with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
<PAGE>
22
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
-------------------------------------------------
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
---------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
<PAGE>
23
(vi) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(vii) all ratios and computations based on GAAP contained in this
Indenture shall be computed in accordance with the definition of GAAP set
forth in Section 1.01; and
(viii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the Trustee's certificate of
---------------
authentication shall be substantially in the form annexed hereto as Exhibit A
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange agreements to which the
Company is subject or usage. The Company shall approve the form of the Notes and
any notation, legend or endorsement on the Notes. Each Note shall be dated the
date of its authentication.
The terms and provisions contained in the form of the Notes annexed hereto
as Exhibit A shall constitute, and are hereby expressly made, a part of this
Indenture. To the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "U.S. Global Notes"),
-----------------
registered in the name of the nominee of the Depositary, deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Notes may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary or its nominee, in accordance with the instructions given by the
Holder thereof, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on Regulation S
shall be issued initially in the form of one or more permanent global Notes in
registered form, substantially in the form set forth in Exhibit A (the "Offshore
--------
Global Notes"), registered in the name of the nominee of the Depositary,
- ------------
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Offshore Global Notes may from time to time
<PAGE>
24
be increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Notes issued pursuant to Section 2.07 to Institutional Accredited Investors
and Notes issued to OIBs in exchange for an interest in the U.S. Global Note
shall be issued in the form of permanent certificated Notes in registered form
in substantially the form set forth in Exhibit A (the "U.S. Physical Notes").
-------------------
Notes issued pursuant to Section 2.07 in exchange for interests in the Offshore
Global Notes shall be in the form of permanent certificated Notes in registered
form substantially in the form set forth in Exhibit A (the "Offshore Physical
-----------------
Notes").
- -----
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." The U.S. Global Notes
--------------
and the Offshore Global Notes are sometimes referred to herein as the "Global
------
Notes."
- -----
The definitive Notes shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Notes may
be listed, all as determined by the Officers executing such Notes, as evidenced
by their execution of such Notes.
SECTION 2.02. Restrictive Legends. Unless and until a Note is exchanged
-------------------
for an Exchange Note in connection with an effective Registration Statement
pursuant to the Registration Rights Agreement, (i) each U.S. Global Note and
each U.S. Physical Note shall bear the legend set forth below on the face
thereof and (ii) each Offshore Physical Note and each Offshore Global Note shall
bear the legend set forth below on the face thereof until at least the 41st day
after the Closing Date and receipt by the Company and the Trustee of a
certificate substantially in the form of Exhibit B hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO UNDER RULE 144(k) UNDER THE SECURITIES ACT
<PAGE>
25
AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN
THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also bear the
following legend on the face thereof:
<PAGE>
26
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
SECTION 2.03. Execution, Authentication and Denominations. Subject to
-------------------------------------------
Article Four, the aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is unlimited. The Notes shall be executed by
two Officers of the Company. The signature of these Officers on the Notes may
be by facsimile or manual signature in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that office at
the time the Trustee or authenticating agent authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this Indenture,
the Trustee or an authenticating agent shall upon receipt of a Company Order
authenticate for original issue Notes in the aggregate principal amount
specified in such Company Order; provided that the Trustee shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel of the Company in
connection with such authentication of Notes. Such Company Order shall specify
<PAGE>
27
the amount of Notes to be authenticated and the date on which the original issue
of Notes is to be authenticated and in case of an issuance of Notes pursuant to
Section 2.15, shall certify that such issuance is in compliance with Article
Four.
The Trustee may appoint an authenticating agent to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
The Trustee shall not be liable for the misconduct or negligence of any
authenticating agent appointed with due care.
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 in principal amount and any integral multiple of
$1,000 in excess thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain an
--------------------------
office or agency where Notes may be presented for registration of transfer or
for exchange (the "Registrar"), an office or agency where Notes may be presented
---------
for payment (the "Paying Agent") and an office or agency where notices and
------------
demands to or upon the Company in respect of the Notes and this Indenture may be
served, which shall be in the Borough of Manhattan, The City of New York. The
Company shall cause the Registrar to keep a register of the Notes and of their
transfer and exchange (the "Security Register"). The Company may have one or
-----------------
more co-Registrars and one or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall give prompt written
notice to the Trustee of the name and address of any such Agent and any change
in the address of such Agent. If the Company fails to maintain a Registrar,
Paying Agent and/or agent for service of notices and demands, the Trustee shall
act as such Registrar, Paying Agent and/or agent for service of notices and
demands. The Company may remove any Agent upon written notice to such Agent and
the Trustee; provided that no such removal shall become effective until (i) the
acceptance of an appointment by a successor Agent to such Agent as evidenced by
an appropriate agency agreement entered into by the Company and such successor
Agent and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands.
The Company initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands. The Trustee
shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses
<PAGE>
28
of Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee as of each Regular
Record Date and at such other times as the Trustee may request in writing a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Holders, including the aggregate principal amount of
Notes held by each Holder.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than 11:00
-----------------------------------
a.m. (New York City time) each due date of the principal, premium, if any, and
interest on any Notes, the Company shall deposit with the Paying Agent money in
immediately available funds sufficient to pay such principal, premium, if any,
and interest so becoming due. The Company shall require each Paying Agent other
than the Trustee to agree in writing that such Paying Agent shall hold in trust
for the benefit of the Holders or the Trustee all money held by the Paying Agent
for the payment of principal of, premium, if any, and interest on the Notes
(whether such money has been paid to it by the Company or any other obligor on
the Notes), and such Paying Agent shall promptly notify the Trustee of any
default by the Company (or any other obligor on the Notes) in making any such
payment. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and account for any funds disbursed, and the Trustee
may at any time during the continuance of any payment default, upon written
request to a Paying Agent, require such Paying Agent to pay all money held by it
to the Trustee and to account for any funds disbursed. Upon doing so, the Paying
Agent shall have no further liability for the money so paid over to the Trustee.
If the Company or any Subsidiary of the Company or any Affiliate of any of them
acts as Paying Agent, it will, on or before each due date of any principal of,
premium, if any, or interest on the Notes, segregate and hold in a separate
trust fund for the benefit of the Holders a sum of money sufficient to pay such
principal, premium, if any, or interest so becoming due until such sum of money
shall be paid to such Holders or otherwise disposed of as provided in this
Indenture, and will promptly notify the Trustee of its action or failure to act.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only in
---------------------
registered form. A Holder may transfer a Note only by written application to
the Registrar stating the name of the proposed transferee and otherwise
complying with the terms of this Indenture. No such transfer shall be effected
until, and such transferee shall succeed to the rights of a Holder only upon,
final acceptance and registration of the transfer by the Registrar in the
Security Register. Prior to the registration of any transfer by a Holder as
provided herein, the Company, the Trustee, and any agent of the Company shall
treat the person in whose name the Note is registered as the owner thereof for
all purposes whether or not the Note shall be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a
<PAGE>
29
book entry. When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal principal
amount of Notes of other authorized denominations (including an exchange of
Notes for Exchange Notes), the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met
(including that such Notes are duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Trustee and Registrar duly
executed by the Holder thereof or by an attorney who is authorized in writing to
act on behalf of the Holder); provided that no exchanges of Notes for Exchange
Notes shall occur until a Registration Statement shall have been declared
effective by the Commission and that any Notes that are exchanged for Exchange
Notes shall be cancelled by the Trustee. To permit registrations of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Notes at the Registrar's request. No service charge shall be made for any
registration of transfer or exchange or redemption of the Notes, but the Company
may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or other similar governmental charge payable upon exchanges
pursuant to Section 2.11, 3.08 or 9.04).
The Registrar shall not be required (i) to issue, register the transfer of
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes selected
for redemption under Section 3.03 and ending at the close of business on the day
of such mailing, or (ii) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) The U.S.
--------------------------------------
Global Notes and Offshore Global Notes initially shall (i) be registered in the
name of the Depositary for such Global Notes or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear
legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("Agent Members") shall have
-------------
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depositary, or the Trustee as its custodian, or under the Global
Note, and the Depositary may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee,
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Note. Neither the Company nor the Trustee shall be
liable for any delay by the Depositary in identifying the beneficial owners of
the Notes and the Company and the Trustee may conclusively rely on, and shall be
protected in relying on, instructions from the Depositary for all purposes
(including
<PAGE>
30
with respect to the registration and delivery, and the respective principal
amounts, of any Notes to be issued).
(b) Transfers of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part, to the Depositary, its successors or their
respective nominees. Interests of beneficial owners in a Global Note may be
transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore Global
Notes, respectively, if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the U.S. Global Notes or the
Offshore Global Notes, as the case may be, and a successor depositary is not
appointed by the Company within 90 days of such notice, (ii) an Event of Default
has occurred and is continuing and the Registrar has received a request from the
Depositary or (iii) in accordance with the rules and procedures of the
Depositary and the provisions of Section 2.08.
(c) Any beneficial interest in one of the Global Notes that is transferred
to a person who takes delivery in the form of an interest in the other Global
Note will, upon transfer, cease to be an interest in such Global Note and become
an interest in the other Global Note and, accordingly, will thereafter be
subject to all transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such an
interest.
(d) In connection with any transfer of a portion of the beneficial
interests in a Global Note to beneficial owners pursuant to paragraph (b) of
this Section 2.07, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the Global Note in an amount equal to
the principal amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Notes of like tenor and amount.
(e) In connection with the transfer of the entire U.S. Global Note or
Offshore Global Note to beneficial owners pursuant to paragraph (b) of this
Section 2.07, the U.S. Global Note or Offshore Global Note, as the case may be,
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the U.S. Global Note or Offshore Global Note, as the case may be, an
equal aggregate principal amount of U.S. Physical Notes or Offshore Physical
Notes, as the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest in the
U.S. Global Note pursuant to paragraph (b) or (d) of this Section 2.07 shall,
except as otherwise provided
<PAGE>
31
by paragraph (f) of Section 2.08, bear the legend regarding transfer
restrictions applicable to the U.S. Physical Note set forth in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an interest in the
Offshore Global Note pursuant to paragraph (b) or (d) of this Section 2.07
shall, except as otherwise provided by paragraph (f) of Section 2.08, bear the
legend regarding transfer restrictions applicable to the Offshore Physical Note
set forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.08. Special Transfer Provisions. Unless and until a Note is
---------------------------
exchanged for an Exchange Note in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The following
-------------------------------------------------------
provisions shall apply with respect to the registration of any proposed transfer
of a Note to any Institutional Accredited Investor which is not a QIB (excluding
Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether or
not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act or (y) the proposed transferee has delivered to the
Registrar (A) a certificate substantially in the form of Exhibit C hereto
and (B) if the aggregate principal amount of the Notes being transferred is
less than $100,000, an opinion of counsel acceptable to the Company that
such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Note in an amount
equal to the principal amount of the beneficial interest in the U.S. Global
Note to be transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more U.S. Physical Notes of like
tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with respect
-----------------
to the registration of any proposed transfer of a U.S. Physical Note or an
interest in the U.S. Global Note to a QIB (excluding Non-U.S. Persons):
<PAGE>
32
(i) If the Note to be transferred consists of (x) U.S. Physical Notes,
the Registrar shall register the transfer if such transfer is being made by
a proposed transferor who has checked the box provided for on the form of
Note stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification provided for on
the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Note for its own account or
an account with respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the meaning of Rule 144A,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A or (y) an interest in the U.S. Global
Note, the transfer of such interest may be effected only through the book
entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of U.S. Physical Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions given
in accordance with the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the U.S. Global Note in an amount equal to the
principal amount of the U.S. Physical Notes to be transferred, and the
Trustee shall cancel the U.S. Physical Note so transferred .
(c) Transfers of Interests in the Offshore Global Note or Offshore Physical
-----------------------------------------------------------------------
Notes to U.S. Persons. The following provisions shall apply with respect to any
- ---------------------
transfer of interests in the Offshore Global Note or Offshore Physical Notes:
(i) prior to the removal of the Private Placement Legend from an
Offshore Global Note or Offshore Physical Note pursuant to Section 2.02,
the Registrar shall refuse to register such transfer unless such transfer
complies with Section 2.08(b) or Section 2.08(d), as the case may be; and
(ii) after such removal, the Registrar shall register the transfer of
any such Note without requiring any additional certification.
(d) Transfers to Non-U.S. Persons at Any Time. The following provisions
-----------------------------------------
shall apply with respect to any transfer of a Note to a Non-U.S. Person:
<PAGE>
33
(i) The Registrar shall register any proposed transfer to any Non-
U.S. Person if the Note to be transferred is a U.S. Physical Note or an
interest in the U.S. Global Note, upon receipt of a certificate
substantially in the form of Exhibit D hereto from the proposed transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Note, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Note in an amount
equal to the principal amount of the beneficial interest in the U.S. Global
Note to be transferred, and (b) if the proposed transferee is an Agent
Member, upon receipt by the Registrar of instructions given in accordance
with the Depositary's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the principal
amount of the Offshore Global Note in an amount equal to the principal
amount of the U.S. Physical Notes or the U.S. Global Note, as the case may
be, to be transferred, and the Trustee shall cancel the Physical Note, if
any, so transferred or decrease the amount of the U.S. Global Note.
(e) Private Placement Legend. Upon the transfer, exchange or replacement
------------------------
of Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement Legend, the Registrar
shall deliver only Notes that bear the Private Placement Legend unless either
(i) the circumstances contemplated by the fourth paragraph of Section 2.01 or
paragraph (a)(i)(x) or (d)(ii) of this Section 2.08 exist or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(f) General. By its acceptance of any Note bearing the Private Placement
-------
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture. The
Registrar shall not register a transfer of any Note unless such transfer
complies with the restrictions on transfer of such Note set forth in this
Indenture. In connection with any transfer of Notes, each Holder agrees by its
acceptance of the Notes to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
<PAGE>
34
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.07 or this Section 2.08. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered to
-----------------
the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of the second
paragraph of Section 2.10 are met. If required by the Trustee or the Company,
an indemnity bond must be furnished that is sufficient in the judgment of both
the Trustee and the Company to protect the Company, the Trustee or any Agent
from any loss that any of them may suffer if a Note is replaced. The Company
may charge such Holder for its expenses and the expenses of the Trustee in
replacing a Note. In case any such mutilated, lost, destroyed or wrongfully
taken Note has become or is about to become due and payable, the Company in its
discretion may pay such Note instead of issuing a new Note in replacement
thereof.
Every replacement Note is an additional obligation of the Company and shall
be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are all
-----------------
Notes that have been authenticated by the Trustee except for those cancelled by
it, those delivered to it for cancellation and those described in this Section
2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be outstanding
unless and until the Trustee and the Company receive proof satisfactory to them
that the replaced Note is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the Company)
holds on the maturity date money sufficient to pay Notes payable on that date,
then on and after that date such Notes cease to be outstanding and interest on
them shall cease to accrue.
A Note does not cease to be outstanding because the Company or one of its
Affiliates holds such Note, provided, however, that in determining whether the
Holders of the requisite principal amount of the outstanding Notes have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice,
<PAGE>
35
consent or waiver, only Notes which a Responsible Officer of the Trustee knows
to be so owned shall be so disregarded. Notes so owned which have been pledged
in good faith may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
---------------
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officers executing the temporary Notes, as
evidenced by their execution of such temporary Notes. If temporary Notes are
issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver to the
------------
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. The Registrar and the
Paying Agent shall forward to the Trustee any Notes surrendered to them for
transfer, exchange or payment. The Trustee shall cancel all Notes surrendered
for transfer, exchange, payment or cancellation and shall destroy them in
accordance with its normal procedure. Except as expressly permitted by this
Indenture, the Company may not issue new Notes to replace Notes it has paid in
full or delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may use
-------------
"CUSIP", "CINS" or "ISIN" numbers (if then generally in use), and the Trustee
shall use CUSIP, CINS or ISIN numbers, as the case may be, in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice shall state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of
redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Notes. The Company will promptly notify
the Trustee of any change in "CUSIP", "CINS" or "ISIN" numbers for the Notes.
<PAGE>
36
SECTION 2.14. Defaulted Interest. If the Company defaults in a payment of
------------------
interest on the Notes, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date. A special
record date, as used in this Section 2.14 with respect to the payment of any
defaulted interest, shall mean the 15th day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.
SECTION 2.15. Issuance of Additional Notes. The Company may, subject to
----------------------------
Article Four of this Indenture, issue additional Notes under this Indenture.
The Notes issued on the Closing Date and any additional Notes subsequently
issued shall be treated as a single class for all purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption; Mandatory Redemption. (a) The Notes
-----------------------------------------
will be redeemable, at the Company's option, in whole or in part, at any time or
from time to time, on or after November 15, 2003 and prior to maturity, upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's last address, as it appears in the Security Register, at the
following Redemption Prices (expressed in percentages of principal amount), plus
accrued and unpaid interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing November 15 of the years set
forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2003..................... 104.875%
2004..................... 103.250
2005..................... 101.625
2006 and thereafter...... 100.000
</TABLE>
(b) At any time prior to November 15, 2001, the Company may redeem up to
35% of the principal amount of the Notes with the proceeds of one or more Public
Equity Offerings,
<PAGE>
37
at any time or from time to time in part, at a Redemption Price (expressed as a
percentage of principal amount) of 109.750%, plus accrued and unpaid interest to
the Redemption Date (subject to the rights of Holders of record on the relevant
Regular Record Date that is prior to the Redemption Date to receive interest due
on an Interest Payment Date); provided that at least $81.25 million aggregate
principal amount of Notes remains outstanding after each such redemption.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem Notes
------------------
pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.02 in an
Officers' Certificate at least 45 days before the Redemption Date (unless a
shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of the
---------------------------------
Notes are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed in compliance with the requirements, as certified to it by the Company,
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed on a national securities exchange, on a
pro rata basis, by lot or by such other method as the Trustee in its sole
discretion shall deem fair and appropriate; provided that no Notes of $1,000 in
principal amount or less shall be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption. Notes in denominations of $1,000 in principal
amount may only be redeemed in whole. The Trustee may select for redemption
portions (equal to $1,000 in principal amount or any integral multiple thereof)
of Notes that have denominations larger than $1,000 in principal amount.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption. The Trustee shall notify the
Company and the Registrar promptly in writing of the Notes or portions of Notes
to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption of
--------------------
Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
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38
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the Holders is to
receive payment of the Redemption Price plus accrued interest to the
Redemption Date upon surrender of the Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be reissued;
and
(vii) that, if any Note contains a CUSIP, CINS or ISIN number as
provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may be
placed only on the other identification numbers printed on the Notes.
At the Company's request (which request may be revoked by the Company at
any time prior to the time at which the Trustee shall have given such notice to
the Holders), made in writing to the Trustee at least 45 days (or such shorter
period as shall be satisfactory to the Trustee) before a Redemption Date, the
Trustee shall give the notice of redemption pursuant to Section 3.01(a) or (b)
in the name and at the expense of the Company. If, however, the Company gives
such notice to the Holders, the Company shall concurrently deliver to the
Trustee an Officers' Certificate stating that such notice has been given.
SECTION 3.05. Effect of Notice of Redemption. Once notice of redemption
------------------------------
is mailed, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon surrender of any Notes to the Paying
Agent, such Notes shall be paid at the Redemption Price, plus accrued interest,
if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed, whether or
not the Holder receives the notice. In any event, failure to give such notice,
or any defect therein, shall not affect the validity of the proceedings for the
redemption of Notes held by Holders to whom such notice was properly given.
<PAGE>
39
SECTION 3.06. Deposit of Redemption Price. On or prior to any Redemption
---------------------------
Date, the Company shall deposit with the Paying Agent (or, if the Company is
acting as its own Paying Agent, shall segregate and hold in trust as provided in
Section 2.05) money sufficient to pay the Redemption Price of and accrued
interest on all Notes to be redeemed on that date other than Notes or portions
thereof called for redemption on that date that have been delivered by the
Company to the Trustee for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
--------------------------------------
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest. Upon surrender of any Note
for redemption in accordance with a notice of redemption, such Note shall be
paid and redeemed by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Regular
Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note that is
----------------------
redeemed in part, the Company shall execute and the Trustee shall authenticate
and deliver to the Holder a new Note equal in principal amount to the unredeemed
portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the principal of,
----------------
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment. If the Company or any Subsidiary of the Company or any
Affiliate of any of them acts as Paying Agent, an installment of principal,
premium, if any, or interest shall be considered paid on the due date if the
entity acting as Paying Agent complies with the last sentence of Section 2.05.
As provided in Section 6.09,
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40
upon any bankruptcy or reorganization procedure relative to the Company, the
Trustee shall serve as the Paying Agent, if any, for the Notes.
The Company shall pay interest on overdue principal, premium, if any, and
interest on overdue installments of interest, to the extent lawful, at the rate
per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will maintain
-------------------------------
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 10.02.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of the
Trustee as such office of the Company in accordance with Section 2.04.
SECTION 4.03. Limitation on Indebtedness. (a) The Company will not, and
--------------------------
will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness
(other than the Notes and Indebtedness existing on the Closing Date); provided
that the Company may Incur Indebtedness if, after giving effect to the
Incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Consolidated Leverage Ratio would be less than or equal to 5 to 1.
Notwithstanding the foregoing, the Company, and (except as specified below)
any Restricted Subsidiary, may Incur each and all of the following: (i)
Indebtedness in an aggregate principal amount outstanding or available at any
time not to exceed the sum of (A) $150 million, plus (B) $100 million, if after
giving effect to the Incurrence of such Indebtedness and application of the
proceeds thereof the Consolidated Secured Indebtedness Leverage Ratio would be
less than or equal to 2.25 to 1, less (C) any amount of such Indebtedness
permanently repaid as provided under Section 4.10; (ii) Indebtedness owed (A) to
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41
the Company and evidenced by an unsubordinated promissory note or (B) to any
Restricted Subsidiaries; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness not permitted by this clause (ii); (iii) Indebtedness issued in
exchange for, or the net proceeds of which are used to refinance or refund, then
outstanding Indebtedness (other than Indebtedness Incurred under clause (i),
(ii), (iv), (vi) or (ix) of this paragraph) and any refinancings of such new
Indebtedness in an amount not to exceed the amount so refinanced or refunded
(plus premiums, accrued interest, fees and expenses); provided that Indebtedness
the proceeds of which are used to refinance or refund the Notes or Indebtedness
that is pari passu in right of payment with, or subordinated in right of payment
to, the Notes shall only be permitted under this clause (iii) if (A) in case the
Notes are refinanced in part or the Indebtedness to be refinanced is pari passu
in right of payment with the Notes, such new Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such new Indebtedness
is outstanding, is expressly made pari passu in right of payment with, or
subordinate in right of payment to, the remaining Notes, (B) in case the
Indebtedness to be refinanced is subordinated in right of payment to the Notes,
such new Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced is subordinated to
the Notes and (C) such new Indebtedness, determined as of the date of Incurrence
of such new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; and provided further that in no event may
Indebtedness of the Company be refinanced by means of any Indebtedness of any
Restricted Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in
respect of performance, surety or appeal bonds provided in the ordinary course
of business, (B) under Currency Agreements and Interest Rate Agreements;
provided that such agreements (a) are designed solely to protect the Company or
its Subsidiaries against fluctuations in foreign currency exchange rates or
interest rates and (b) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder or (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in each case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition), in a
principal amount not to exceed the gross proceeds actually received by the
Company or any Restricted Subsidiary in connection with such disposition; (v)
Indebtedness of the Company, to
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42
the extent the net proceeds thereof are promptly (A) used to purchase Notes
tendered in an Offer to Purchase made as a result of a Change of Control or (B)
deposited to defease all of the Notes in accordance with Article Eight; (vi)
Guarantees of the Notes and Guarantees of Indebtedness of the Company by any
Restricted Subsidiary, provided the Guarantee of such Indebtedness is permitted
by and made in accordance with Section 4.07; (vii) Indebtedness (including
Acquired Indebtedness) Incurred to finance the cost (including the cost of
design, development, acquisition, construction, installation, improvement,
transportation or integration) for the Company or a Restricted Subsidiary to
acquire equipment, inventory or other assets (tangible or intangible) used or
useful in a Telecommunications Business after the Closing Date; (viii)
Indebtedness of the Company not to exceed, at any one time outstanding, two
times (A) the Net Cash Proceeds received by the Company after the Closing Date
as a capital contribution or from the issuance and sale of its Capital Stock
(other than Redeemable Stock) to a Person that is not a Subsidiary of the
Company, to the extent such Net Cash Proceeds have not been used pursuant to
clause (C)(2) of the first paragraph or clause (iii), (iv) or (vi) of the second
paragraph of Section 4.04 to make a Restricted Payment and (B) 80% of the fair
market value of property (other than cash and cash equivalents) received by the
Company after the Closing Date from a contribution of capital or the sale of its
Capital Stock (other than Redeemable Stock) to a Person that is not a Subsidiary
of the Company, to the extent such capital contribution or sale of Capital Stock
has not been used pursuant to clause (iii), (iv) or (ix) of the second paragraph
of Section 4.04 to make a Restricted Payment; provided that such Indebtedness
does not mature prior to the Stated Maturity of the Notes and has an Average
Life longer than the Notes; and (ix) Strategic Subordinated Indebtedness.
(b) Notwithstanding any other provision of this Section 4.03, the maximum
amount of Indebtedness that the Company or a Restricted Subsidiary may Incur
pursuant to this Section 4.03 shall not be deemed to be exceeded due solely to
the result of fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness
under this Section 4.03, (1) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (2) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 4.03, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, the Company, in its sole discretion, shall classify such item of
Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.
SECTION 4.04. Limitation on Restricted Payments. The Company will not,
---------------------------------
and will not permit any Restricted Subsidiary to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on or with respect to its
Capital Stock (other than (x) dividends or
<PAGE>
43
distributions payable solely in shares of its Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to acquire shares of
such Capital Stock and (y) pro rata dividends or distributions on Common Stock
of Restricted Subsidiaries held by minority stockholders, provided that such
dividends do not in the aggregate exceed the minority stockholders' pro rata
share of such Restricted Subsidiaries' net income from the first day of the
fiscal quarter beginning immediately following the Closing Date) held by Persons
other than the Company or any of its Restricted Subsidiaries, (ii) purchase,
redeem, retire or otherwise acquire for value any shares of Capital Stock of (A)
the Company or an Unrestricted Subsidiary (including options, warrants or other
rights to acquire such shares of Capital Stock) held by any Person or (B) a
Restricted Subsidiary (including options, warrants or other rights to acquire
such shares of Capital Stock) held by any Affiliate of the Company (other than a
Wholly Owned Restricted Subsidiary) or any holder (or any Affiliate of such
holder) of 5% or more of the Capital Stock of the Company, (iii) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of the Company that is subordinated in right of payment to the
Notes (other than, in each case, the purchase, repurchase or acquisition of
Indebtedness in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in any case due within one year after the date of
such purchase, repurchase or acquisition) or (iv) make any Investment, other
than a Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and be
continuing, (B) the Company could not Incur at least $1.00 of Indebtedness under
the first paragraph of Section 4.03(a) or (C) the aggregate amount of all
Restricted Payments (the amount, if other than in cash, to be determined in good
faith by the Board of Directors, whose determination shall be conclusive and
evidenced by a Board Resolution) made after the Closing Date shall exceed the
sum of (1) 50% of the aggregate amount of the Adjusted Consolidated Net Income
(or, if the Adjusted Consolidated Net Income is a loss, minus 100% of the amount
of such loss) (excluding, for purposes of such computation, income resulting
from transfers of assets by the Company or a Restricted Subsidiary to an
Unrestricted Subsidiary) accrued on a cumulative basis during the period (taken
as one accounting period) beginning on the first day of the fiscal quarter
immediately following the Closing Date and ending on the last day of the last
fiscal quarter preceding the Transaction Date for which reports have been filed
with the Commission or provided to the Trustee pursuant to Section 4.17 plus (2)
the aggregate Net Cash Proceeds received by the Company after the Closing Date
from a capital contribution or the issuance and sale permitted by this Indenture
to a Person who is not a Subsidiary of the Company of (a) its Capital Stock
(other than Redeemable Stock), (b) any options, warrants or other rights to
acquire Capital Stock of the Company (in each case, exclusive of any Redeemable
Stock or any options, warrants or other rights that are redeemable at the option
of the holder, or are required to be redeemed, prior to the Stated Maturity of
the Notes) and (c) Indebtedness of the Company that has been exchanged for or
converted into Capital Stock of the Company (other
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44
than Redeemable Stock), in each case except to the extent such Net Cash Proceeds
are used to Incur Indebtedness pursuant to clause (viii) of the second paragraph
of Section 4.03(a), plus (3) an amount equal to the net reduction in Investments
(other than reductions in Permitted Investments and reductions in Investments
made pursuant to clause (vi) of the second paragraph of this Section 4.04) in
any Person resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets, in each case to
the Company or any Restricted Subsidiary or from the Net Cash Proceeds from the
sale of any such Investment (except, in each case, to the extent any such
payment or proceeds is included in the calculation of Adjusted Consolidated Net
Income), or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in each case, the amount of Investments
previously made by the Company or any Restricted Subsidiary in such Person or
Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof if,
at such date of declaration, such payment would comply with the foregoing
paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of payment to
the Notes, including premium, if any, and accrued and unpaid interest, with the
proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of the
second paragraph of Section 4.03(a); (iii) the repurchase, redemption or other
acquisition of Capital Stock of the Company (or options, warrants or other
rights to acquire such Capital Stock) in exchange for, or out of the proceeds of
a substantially concurrent offering of, shares of Capital Stock (other than
Redeemable Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock); (iv) the making of any principal payment or the
repurchase, redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment to the
Notes in exchange for, or out of the proceeds of, a substantially concurrent
offering of shares of the Capital Stock (other than Redeemable Stock) of the
Company (or options, warrants or other rights to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant to applicable
law in connection with a consolidation, merger or transfer of assets that
complies with the provisions of Article Five; (vi) Investments in any Person the
primary business of which is related, ancillary or complementary to the business
of the Company and its Restricted Subsidiaries on the date of such Investments;
provided that the aggregate amount of Investments made pursuant to this clause
(vi) does not exceed the sum of (x) $25 million plus (y) the amount of Net Cash
Proceeds received by the Company after the Closing Date as a capital
contribution or from the sale of its Capital Stock (other than Redeemable Stock)
to a Person who is not a Subsidiary of the Company, except to the extent such
Net Cash Proceeds are used to Incur Indebtedness pursuant to clause (viii) of
the second paragraph of Section 4.03(a) or to make Restricted Payments pursuant
to clause (C)(2) of the first paragraph, or clause (iii) or (iv) of this
paragraph, of this Section 4.04, plus (z) the net reduction in Investments made
pursuant to this clause (vi) resulting from distributions on or
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45
repayments of such Investments or from the Net Cash Proceeds from the sale of
any such Investment (except in each case to the extent any such payment or
proceeds is included in the calculation of Adjusted Consolidated Net Income) or
from such Person becoming a Restricted Subsidiary (valued in each case as
provided in the definition of "Investments"), provided that the net reduction in
any Investment shall not exceed the amount of such Investment; (vii) the
purchase, redemption, acquisition, cancellation or other retirement for value of
shares of Capital Stock of the Company to the extent necessary, in the judgment
of the Board of Directors, to prevent the loss or secure the renewal or
reinstatement of any license or franchise held by the Company or any Restricted
Subsidiary from any governmental agency; (viii) the purchase, redemption,
retirement or other acquisition for value of shares of Capital Stock of the
Company, or options to purchase such shares, held by directors, employees, or
former directors or employees of the Company or any Restricted Subsidiary (or
their estates or beneficiaries under their estates) upon their death,
disability, retirement, termination of employment or pursuant to the terms of
any agreement under which such shares of Capital Stock or options were issued;
provided that the aggregate consideration paid for such purchase, redemption,
retirement or other acquisition for value of such shares of Capital Stock or
options after the Closing Date does not exceed $2 million in any calendar year,
or $5 million in the aggregate; or (ix) Investments acquired as a capital
contribution to the Company or in exchange for Capital Stock (other than
Redeemable Stock) of the Company; provided that, except in the case of clauses
(i), (iii) and (iv), no Default or Event of Default shall have occurred and be
continuing, or occur as a consequence of the actions or payments set forth
therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof, an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (ix)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred
to in clauses (iii), (iv) and (vi) thereof, shall be included in calculating
whether the conditions of clause (C) of the first paragraph of this Section 4.04
have been met with respect to any subsequent Restricted Payments. In the event
the proceeds of an issuance of Capital Stock of the Company are used for the
redemption, repurchase or other acquisition of the Notes, or Indebtedness that
is pari passu in right of payment with the Notes, then the Net Cash Proceeds of
such issuance shall be included in clause (C) of the first paragraph of this
Section 4.04 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Restricted Subsidiaries. The Company will not, and will not permit
- ---------------------------------
any Restricted Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (i) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of
<PAGE>
46
such Restricted Subsidiary owned by the Company or any other Restricted
Subsidiary, (ii) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary, (iii) make loans or advances to the Company or any other
Restricted Subsidiary or (iv) transfer any of its property or assets to the
Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in this Indenture or any other
agreements in effect on the Closing Date, and any extensions, refinancings,
renewals or replacements of such agreements; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no less favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced; (ii) existing under or by reason of applicable law; (iii)
existing with respect to any Person or the property or assets of such Person
acquired by the Company or any Restricted Subsidiary and existing at the time of
such acquisition and not incurred in contemplation thereof, which encumbrances
or restrictions are not applicable to any Person or the property or assets of
any Person other than such Person or the property or assets of such Person so
acquired; (iv) in the case of clause (iv) of the first paragraph of this Section
4.05, (A) that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) existing by virtue of any transfer
of, agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Company or any Restricted Subsidiary not otherwise
prohibited by this Indenture or (C) arising or agreed to in the ordinary course
of business, not relating to any Indebtedness, and that do not, individually or
in the aggregate, detract from the value of property or assets of the Company or
any Restricted Subsidiary in any manner material to the Company or any
Restricted Subsidiary; (v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock of, or property and assets of,
such Restricted Subsidiary; or (vi) contained in the terms of any Indebtedness
or any agreement pursuant to which such Indebtedness was issued if (A) the
encumbrance or restriction applies only in the event of a payment default or a
default with respect to a financial covenant contained in such Indebtedness or
agreement; provided that in the case of the Credit Agreement the encumbrance or
restriction may apply if an event of default (other than an event of default
resulting solely from the breach of a representation or warranty) occurs and is
continuing under the Credit Agreement; provided that, with respect to any event
of default (other than a payment default, a bankruptcy event with respect to the
Company, Interstate FiberNet, Inc. or any Significant Subsidiary or the loss of
a material license or fiber network) under the Credit Agreement, such
encumbrance or restriction may not prohibit dividends to the Company to pay
scheduled interest on the Notes for more than 180 days in any consecutive 360-
day period, (B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in comparable
financings (as determined by the Company) and (C) the
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47
Company determines that any such encumbrance or restriction will not materially
affect the Company's ability to make principal or interest payments on the
Notes.
Nothing contained in this Section 4.05 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 or (2) restricting the sale
or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock of
-------------------------------------------------------
Restricted Subsidiaries. The Company will not sell, and will not permit any
- -----------------------
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except (i) to the Company or a
Wholly Owned Restricted Subsidiary, (ii) issuances of director's qualifying
shares, or sales to foreign nationals of shares of Capital Stock of foreign
Restricted Subsidiaries, to the extent required by applicable law, (iii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect to such issuance or sale would have
been permitted to be made under Section 4.04 if made on the date of such
issuance or sale or (iv) issuances or sales of Common Stock of a Restricted
Subsidiary, provided that the Company or such Restricted Subsidiary applies the
Net Cash Proceeds, if any, of any such sale in accordance with clause (A) or (B)
of the first paragraph of Section 4.10.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
---------------------------------------------------
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly
- ------------
or indirectly, to Guarantee any Indebtedness of the Company which is pari passu
in right of payment with, or subordinate in right of payment to, the Notes
("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary
- -------------------------
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee (a "Subsidiary Guarantee") of payment of the Notes by
--------------------
such Restricted Subsidiary and (ii) such Restricted Subsidiary waives, and will
not in any manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other rights against
the Company or any other Restricted Subsidiary as a result of any payment by
such Restricted Subsidiary under its Subsidiary Guarantee; provided that this
paragraph shall not be applicable to (x) any Guarantee of any Restricted
Subsidiary that existed at the time such Person became a Restricted Subsidiary
and was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary or (y) any Guarantee of any Restricted
Subsidiary of Indebtedness Incurred (I) under Credit Facilities pursuant to
clause (i) of the second paragraph of Section 4.03(a) or (II) pursuant to clause
(vii) of the second paragraph of Section 4.03(a). If the Guaranteed Indebtedness
is (A) pari passu in right of payment with the Notes, then the Guarantee of such
Guaranteed Indebtedness shall
<PAGE>
48
be pari passu in right of payment with, or subordinated in right of payment to,
the Subsidiary Guarantee or (B) subordinated in right of payment to the Notes,
then the Guarantee of such Guaranteed Indebtedness shall be subordinated in
right of payment to the Subsidiary Guarantee at least to the extent that the
Guaranteed Indebtedness is subordinated in right of payment to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
SECTION 4.08. Limitation on Transactions with Stockholders and Affiliates.
-----------------------------------------------------------
The Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of the Company or with any Affiliate of
the Company or any Restricted Subsidiary, except upon fair and reasonable terms
no less favorable in any material respect to the Company or such Restricted
Subsidiary than could be obtained, at the time of such transaction or, if such
transaction is pursuant to a written agreement, at the time of the execution of
the agreement providing therefor, in a comparable arm's-length transaction with
a Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to: (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Company or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment of
reasonable and customary regular fees to directors of the Company who are not
employees of the Company; (iv) any payments or other transactions pursuant to
any tax-sharing agreement between the Company and any other Person with which
the Company files a consolidated tax return or with which the Company is part of
a consolidated group for tax purposes; or (v) any Restricted Payments not
prohibited by Section 4.04. Notwithstanding the foregoing, any transaction
covered by the first paragraph of this Section 4.08 and not covered by clauses
(ii) through (v) of this
<PAGE>
49
paragraph, the aggregate amount of which exceeds $5 million in value, must be
approved or determined to be fair in the manner provided for in clause (i)(A) or
(B) above.
SECTION 4.09. Limitation on Liens. The Company will not, and will not
-------------------
permit any Restricted Subsidiary to, create, incur, assume or suffer to exist
any Lien on any of its assets or properties of any character, or any shares of
Capital Stock or Indebtedness of any Restricted Subsidiary, without making
effective provision for all of the Notes and all other amounts due under this
Indenture to be directly secured equally and ratably with (or, if the obligation
or liability to be secured by such Lien is subordinated in right of payment to
the Notes, prior to) the obligation or liability secured by such Lien.
The foregoing limitation does not apply to: (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of the
Holders; (iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such other
Restricted Subsidiary; (iv) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under clause
(iii) of the second paragraph of Section 4.03(a); provided that such Liens do
not extend to or cover any property or assets of the Company or any Restricted
Subsidiary other than the property or assets securing the Indebtedness being
refinanced; (v) Liens securing obligations under Credit Facilities Incurred
under clause (i) of the second paragraph of Section 4.03(a); or (vi) Permitted
Liens.
SECTION 4.10. Limitation on Asset Sales. The Company will not, and will
-------------------------
not permit any Restricted Subsidiary to, consummate any Asset Sale, unless (i)
the consideration received by the Company or such Restricted Subsidiary is at
least equal to the fair market value of the assets sold or disposed of and (ii)
at least 75% of the consideration received consists of cash or Temporary Cash
Investments. In the event and to the extent that the Net Cash Proceeds received
by the Company or any of its Restricted Subsidiaries from one or more Asset
Sales occurring on or after the Closing Date in any period of 12 consecutive
months exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of
the date closest to the commencement of such 12-month period for which a
consolidated balance sheet of the Company and its Subsidiaries has been filed
with the Commission or provided to the Trustee pursuant to Section 4.17), then
the Company shall or shall cause the relevant Restricted Subsidiary to (i)
within 12 months after the date Net Cash Proceeds so received exceed 10% of
Adjusted Consolidated Net Tangible Assets (A) apply an amount equal to such
excess Net Cash Proceeds to permanently repay unsubordinated Indebtedness of the
Company or any Restricted Subsidiary providing a Subsidiary Guarantee pursuant
to Section 4.07 or Indebtedness of any other Restricted Subsidiary, in each case
owing to a Person other than the Company or any of its Subsidiaries, or (B)
invest an amount equal to such excess Net Cash Proceeds, or the amount of such
Net Cash Proceeds not so applied pursuant to clause (A) (or enter into a
<PAGE>
50
definitive agreement committing to so invest within 12 months after the date of
such agreement), in capital assets of a nature or type or that are used in a
business (or in a Person having capital assets of a nature or type, or engaged
in a business) similar or related to the nature or type of the property and
assets of, or the business of, the Company and its Restricted Subsidiaries
existing on the date of such investment (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) and (ii) apply (no later than the end of the 12-month period
referred to in clause (i)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (i)) as provided in the following paragraph of this
Section 4.10. The amount of such excess Net Cash Proceeds required to be applied
(or to be committed to be applied) during such 12-month period as set forth in
clause (i) of the preceding sentence and not applied as so required by the end
of such period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.10 totals at least $5 million, the Company shall commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
100% of the principal amount of the Notes plus, in each case, accrued interest
to the Payment Date.
SECTION 4.11. Repurchase of Notes upon a Change of Control. The Company
--------------------------------------------
shall commence, within 30 days after the occurrence of a Change of Control, and
consummate an Offer to Purchase for all Notes then outstanding, at a purchase
price equal to 101% of the principal amount thereof, plus accrued interest to
the Payment Date.
SECTION 4.12. Existence. Subject to Articles Four and Five of this
---------
Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each such Subsidiary and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.13. Payment of Taxes and Other Claims. The Company will pay or
---------------------------------
discharge and shall cause each of its Subsidiaries to pay or discharge, or cause
to be paid or discharged, before the same shall become delinquent (i) all
material taxes, assessments and governmental charges levied or imposed upon (a)
the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the
<PAGE>
51
Company or any such Subsidiary and (ii) all material lawful claims for labor,
materials and supplies that, if unpaid, might by law become a lien upon the
property of the Company or any such Subsidiary; provided that the Company shall
not be required to pay or discharge, or cause to be paid or discharged, any such
tax, assessment, charge or claim the amount, applicability or validity of which
is being contested in good faith by appropriate proceedings and for which
adequate reserves have been established.
SECTION 4.14. Maintenance of Properties and Insurance. The Company will
---------------------------------------
cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided that nothing in
this Section 4.14 shall prevent the Company or any such Subsidiary from
discontinuing the use, operation or maintenance of any of such properties or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Company, desirable in the conduct of the business of the Company or such
Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or an agency or
instrumentality thereof, in such amounts, with such deductibles and by such
methods as shall be customary for corporations similarly situated in the
industry in which the Company or any such Restricted Subsidiary, as the case may
be, is then conducting business.
SECTION 4.15. Notice of Defaults. In the event that the Company becomes
------------------
aware of any Default or Event of Default, the Company, promptly after it becomes
aware thereof, will give written notice thereof to the Trustee.
SECTION 4.16. Compliance Certificates. (a) The Company shall deliver to
-----------------------
the Trustee, within 45 days after the end of each fiscal quarter (90 days after
the end of the last fiscal quarter of each year), an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
occurred during such fiscal quarter. In the case of the Officers' Certificate
delivered within 90 days after the end of the Company's fiscal year, such
certificate shall contain a certification from the principal executive officer,
principal financial officer or principal accounting officer of the Company that
a review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's and its Restricted Subsidiaries' performance
under this Indenture and that the Company has complied with all
<PAGE>
52
conditions and covenants under this Indenture. For purposes of this Section
4.16, such compliance shall be determined without regard to any period of grace
or requirement of notice provided under this Indenture. If the officers of the
Company signing such certificate do know of such a Default or Event of Default,
the certificate shall describe any such Default or Event of Default and its
status. The first certificate to be delivered pursuant to this Section 4.16(a)
shall be for the first fiscal quarter beginning after the execution of this
Indenture.
(b) The Company shall deliver to the Trustee, within 90 days after the end
of the Company's fiscal year, beginning with the fiscal year in which this
Indenture was executed, a certificate signed by the Company's independent
certified public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Notes as they relate to
accounting matters, (ii) that they have read the most recent Officers'
Certificate delivered to the Trustee pursuant to paragraph (a) of this Section
4.16 and (iii) whether, in connection with their audit examination, anything
came to their attention that caused them to believe that the Company was not in
compliance with any of the terms, covenants, provisions or conditions of Article
Four and Section 5.01 of this Indenture as they pertain to accounting matters
and, if any Default or Event of Default has come to their attention, specifying
the nature and period of existence thereof; provided that such independent
certified public accountants shall not be liable in respect of such statement by
reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing standards in effect at
the date of such examination.
SECTION 4.17. Commission Reports and Reports to Holders. The Company
-----------------------------------------
shall file with the Commission the annual, quarterly and other reports and other
information required by Section 13(a) or 15(d) of the Exchange Act, regardless
of whether such sections of the Exchange Act are applicable to the Company
(unless the Commission will not accept such a filing). The Company shall mail or
cause to be mailed copies of such reports and information to Holders and the
Trustee within 15 days after the date it files such reports and information with
the Commission or after the date it would have been required to file such
reports and information with the Commission had it been subject to such sections
of the Exchange Act; provided, however, that the copies of such reports and
information mailed to Holders may omit exhibits, which the Company will supply
to any Holder at such Holder's request.
SECTION 4.18. Waiver of Stay, Extension or Usury Laws. The Company
---------------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company
<PAGE>
53
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 4.19. Limitation on Sale-Leaseback Transactions. The Company will
-----------------------------------------
not, and will not permit any Restricted Subsidiary to, enter into any sale-
leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby the Company or a Restricted Subsidiary
sells or transfers such assets or properties and then or thereafter leases such
assets or properties or any part thereof or any other assets or properties which
the Company or such Restricted Subsidiary, as the case may be, intends to use
for substantially the same purpose or purposes as the assets or properties sold
or transferred.
The foregoing restriction does not apply to any sale-leaseback transaction
if (i) the lease is for a period, including renewal rights, of not in excess of
three years; (ii) the lease secures or relates to industrial revenue or
pollution control bonds; (iii) the transaction is solely between the Company and
any Wholly Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; or (iv) the Company or such Restricted Subsidiary, within 12
months after the sale or transfer of any assets or properties is completed,
applies an amount not less than the net proceeds received from such sale in
accordance with clause (A) or (B) of the first paragraph of Section 4.10.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. The Company shall not
---------------------------
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless: (i) the Company shall be the continuing Person, or the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of the
Company shall be a corporation organized and validly existing under the laws of
the United States of America or any jurisdiction thereof, and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, all
of the obligations of the Company on all of the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Company or any Person
becoming the successor obligor of the Notes shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction; (iv) immediately after giving effect to such
transaction on a pro forma basis, the Company, or any Person becoming the
<PAGE>
54
successor obligor of the Notes, as the case may be, could Incur at least $1.00
of Indebtedness under the first paragraph of Section 4.03(a); provided, however,
that this clause (iv) shall not apply to a consolidation or merger with or into
a Wholly Owned Restricted Subsidiary with a positive net worth, provided that in
connection with any such merger or consolidation, no consideration (except
Capital Stock (other than Redeemable Stock) in the surviving Person or the
Company (or a Person that owns directly or indirectly all of the Capital Stock
of the surviving Person or the Company immediately following such transaction))
shall be issued or distributed to the stockholders of the Company; and (v) the
Company delivers to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clauses (iii) and (iv)
above) and an Opinion of Counsel, in each case stating that such consolidation,
merger or transfer and such supplemental indenture comply with this provision
and that all conditions precedent provided for herein relating to such
transaction have been complied with; provided, however, that clauses (iii) and
(iv) above do not apply if, in the good faith determination of the Board of
Directors of the Company, whose determination shall be evidenced by a Board
Resolution, the principal purpose of such transaction is to change the state of
incorporation of the Company and any such transaction shall not have as one of
its purposes the evasion of the foregoing limitations.
SECTION 5.02. Successor Substituted. Upon any consolidation or merger, or
---------------------
any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer, lease or other disposition is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein; provided that the Company shall not be released from its
obligation to pay the principal of, premium, if any, or interest on the Notes in
the case of a lease of all or substantially all of its property and assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall occur with
----------------- ----------------
respect to the Notes if:
(a) the Company defaults in the payment of the principal of (or
premium, if any, on) any Note when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise;
<PAGE>
55
(b) the Company defaults in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period
of 30 days;
(c) the Company defaults in the performance of, or breaches the
provisions of, Article Five or fails to make or consummate an Offer to
Purchase in accordance with Section 4.10 or 4.11;
(d) the Company defaults in the performance of or breaches any
covenant or agreement of the Company in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) above), and such
default or breach continues for a period of 30 consecutive days after
written notice by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $5 million or more in the aggregate for all such issues
of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the
final (but not any interim) fixed maturity and such defaulted payment shall
not have been made, waived or extended within 30 days of such payment
default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $5 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 30 consecutive days
following entry of the final judgment or order that causes the aggregate
amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $5 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant
Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B) appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs
of the Company or any
<PAGE>
56
Significant Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(h) the Company or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any
general assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event
------------
of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding, by written notice to the Company (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal of, premium, if any, and accrued
interest on the Notes to be immediately due and payable. Upon a declaration of
acceleration, such principal, premium, if any, and accrued interest shall be
immediately due and payable. In the event of a declaration of acceleration
because an Event of Default set forth in clause (e) of Section 6.01 has occurred
and is continuing, such declaration of acceleration shall be automatically
rescinded and annulled if the event of default triggering such Event of Default
pursuant to clause (e) shall be remedied or cured by the Company or the relevant
Significant Subsidiary or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If an
Event of Default specified in clause (g) or (h) of Section 6.01 occurs with
respect to the Company, the principal of, premium, if any, and accrued interest
on the Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
The Holders of at least a majority in principal amount of the outstanding
Notes, by written notice to the Company and to the Trustee, may waive all past
defaults and rescind and annul a declaration of acceleration and its
consequences if (i) all existing Events of Default, other than the nonpayment of
the principal of, premium, if any, and interest on the Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
(ii) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Trustee may, and at the direction of the Holders of at least a
majority in principal amount of the outstanding Notes shall, pursue any
available remedy by proceeding at law or in equity to
<PAGE>
57
collect the payment of principal of, premium, if any, or interest on the Notes
or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.02, 6.07 and
-----------------------
9.02, the Holders of at least a majority in principal amount of the outstanding
Notes, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences, except a Default in the payment of principal of,
premium, if any, or interest on any Note as specified in clause (a) or (b) of
Section 6.01 or in respect of a covenant or provision of this Indenture which
cannot be modified or amended without the consent of the Holder of each
outstanding Note affected. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a majority in
-------------------
aggregate principal amount of the outstanding Notes may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture,
that may involve the Trustee in personal liability, or that the Trustee
determines in good faith may be unduly prejudicial to the rights of Holders of
Notes not joining in the giving of such direction and may take any other action
it deems proper that is not inconsistent with any such direction received from
Holders of Notes.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any remedy
-------------------
with respect to this Indenture or the Notes unless:
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer (and if requested provide) the
Trustee indemnity satisfactory to the Trustee against any costs, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
<PAGE>
58
(v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section 6.06, the
Trustee shall comply with TIA Section 316(a) in making any determination of
whether the Holders of the required aggregate principal amount of outstanding
Notes have concurred in any request or direction of the Trustee to pursue any
remedy available to the Trustee or the Holders with respect to this Indenture or
the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
The limitations set forth in this Section 6.06 shall not apply to the right
of any Holder of a Note to receive payment of the principal of, premium, if any,
or interest on, such Note or to bring suit for the enforcement of any such
payment, on or after the due date expressed in the Notes, which right shall not
be impaired or affected without the consent of the Holder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
------------------------------------
other provision of this Indenture, the right of any Holder of a Note to receive
payment of the principal of, premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Notes, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
--------------------------
payment of principal, premium or interest specified in clause (a), (b) or (c) of
Section 6.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or any other
obligor of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in the Notes, and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such
--------------------------------
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.07) and the Holders allowed in any judicial proceedings relative to the
Company (or any other obligor of the Notes), its creditors or its property and
shall be entitled and empowered to collect and receive any monies, securities or
other property payable
<PAGE>
59
or deliverable upon conversion or exchange of the Notes or upon any such claims
and to distribute the same, and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07. Nothing herein contained shall be deemed to empower the Trustee to
authorize or consent to, or accept or adopt on behalf of any Holder, any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
----------
this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Notes for principal, premium, if any, and interest, respectively; and
Third: to the Company or any other obligors of the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of
---------------------
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07, or a suit by Holders of more than 10% in principal amount of the
outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any
----------------------------------
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined
<PAGE>
60
adversely to the Trustee or to such Holder, then, and in every such case,
subject to any determination in such proceeding, the Company, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Company,
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
------------------------------
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the
----------------------------
Trustee or of any Holder to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article Six or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the Trustee
-------
shall be as provided by the TIA and as set forth herein. Notwithstanding the
foregoing, no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections 315(a)
-------------------------
through (d):
(i) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice,
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61
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in any such document;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 10.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate or opinion;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or
agent appointed with due care;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction;
(v) the Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the written direction of the Holders of a majority in principal amount
of the outstanding Notes relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate; and
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company
personally or by agent or attorney.
<PAGE>
62
SECTION 7.03. Individual Rights of Trustee. The Trustee, in its
----------------------------
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
--------------------
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of Default
-----------------
occurs and is continuing and if such Default or Event of Default is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Holder in
the manner and to the extent provided in TIA Section 313(c) notice of the
Default or Event of Default within 45 days after it occurs, unless such Default
or Event of Default has been cured; provided, however, that, except in the case
of a default in the payment of the principal of, premium, if any, or interest on
any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each
-----------------------------
May 15, beginning with May 15, 1998, the Trustee shall mail to each Holder as
provided in TIA Section 313(c) a brief report dated as of such May 15, if
required by TIA Section 313(a).
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
--------------------------
Trustee such compensation as shall be agreed upon in writing for its services.
The compensation of the Trustee shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses and advances incurred or made
by the Trustee. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities, obligations, damages, penalties, judgments, actions, suits,
proceedings, reasonable costs and expenses (including reasonable fees and
disbursements of counsel) of any kind whatsoever which may be incurred by the
Trustee in connection with any investigative, administrative or judicial
proceeding (whether or not such indemnified party is designated a party to such
proceeding) arising out of or in connection with the acceptance or
administration of its duties under this Indenture; provided, however, that the
Company need not reimburse any expense or
<PAGE>
63
indemnify against any loss, obligation, damage, penalty, judgment, action, suit,
proceeding, reasonable cost or expense (including reasonable fees and
disbursements of counsel) of any kind whatsoever which may be incurred by the
Trustee in connection with any investigative, administrative or judicial
proceeding (whether or not such indemnified party is designated a party to such
proceeding) in which it is determined that the Trustee acted with negligence,
bad faith or willful misconduct. The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations hereunder,
unless the Company is materially prejudiced thereby. The Company shall defend
the claim and the Trustee shall cooperate in the defense. Unless otherwise set
forth herein, the Trustee may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, in its capacity as Trustee, except money or property
held in trust to pay principal of, premium, if any, and interest on particular
Notes.
If the Trustee incurs expenses or renders services after the occurrence of
an Event of Default specified in clause (g) or (h) of Section 6.01, the expenses
and the compensation for the services will be intended to constitute expenses of
administration under Title 11 of the United States Bankruptcy Code or any
applicable federal or state law for the relief of debtors.
SECTION 7.08. Replacement of Trustee. A resignation or removal of the
----------------------
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.
The Trustee may resign at any time by so notifying the Company in writing
at least 30 days prior to the date of the proposed resignation. The Holders of
a majority in principal amount of the outstanding Notes may remove the Trustee
by so notifying the Trustee in writing and may appoint a successor Trustee with
the consent of the Company. The Company may remove the Trustee if: (i) the
Trustee is no longer eligible under Section 7.10; (ii) the Trustee is adjudged a
bankrupt or an insolvent; (iii) a receiver or other public officer takes charge
of the Trustee or its property; or (iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee
<PAGE>
64
resigns or is removed, the retiring Trustee, the Company or the Holders of a
majority in principal amount of the outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after the delivery of
such written acceptance, subject to the lien provided in Section 7.07, (i) the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, (ii) the resignation or removal of the retiring Trustee shall
become effective and (iii) the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee
shall mail notice of its succession to each Holder.
If the Trustee is no longer eligible under Section 7.10, any Holder who
satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligation under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
--------------------------------
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a Trustee who
-----------
satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $25 million as set forth in its most
recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable for
-------------------
interest on any money received by it except as the Trustee may agree with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law and except for money held in trust
under Article Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for the Company,
------------------
shall exclude and withhold from each payment of principal and interest and other
amounts due
<PAGE>
65
hereunder or under the Notes any and all withholding taxes applicable thereto as
required by law. The Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or similar charges
are required to be withheld with respect to any amounts payable in respect of
the Notes, to withhold such amounts and timely pay the same to the appropriate
authority in the name of and on behalf of the Holders of the Notes, that it will
file any necessary withholding tax returns or statements when due, and that, as
promptly as possible after the payment thereof, it will deliver to each Holder
of a Note appropriate documentation showing the payment thereof, together with
such additional documentary evidence as such Holders may reasonably request from
time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations. Except as otherwise
------------------------------------
provided in this Section 8.01, the Company may terminate its obligations under
the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 8.05) have been delivered to the Trustee
for cancellation and the Company has paid all sums payable by it hereunder;
or
(ii) (A) the Notes mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption, (B) the Company
irrevocably deposits in trust with the Trustee during such one-year period,
under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds solely for the benefit of the
Holders for that purpose, money or U.S. Government Obligations sufficient
(in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee), without consideration of any reinvestment of any interest
thereon, to pay principal, premium, if, any, and interest on the Notes to
maturity or redemption, as the case may be, and to pay all other sums
payable by it hereunder, (C) no Default or Event of Default with respect to
the Notes shall have occurred and be continuing on the date of such
deposit, (D) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound and (E)
the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for
<PAGE>
66
herein relating to the satisfaction and discharge of this Indenture have
been complied with.
With respect to the foregoing clause (i), the Company's obligations under
Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable deposit,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under the Notes and this Indenture except for those
surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company will be
-------------------------------------
deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the date of the deposit referred to
in clause (A) of this Section 8.02, and the provisions of this Indenture will no
longer be in effect with respect to the Notes, and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same, except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
apparently mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of
Holders to receive payments of principal thereof and interest thereon, (iv) the
Company's obligations under Section 4.02, (v) the rights, obligations and
immunities of the Trustee hereunder and (vi) the rights of the Holders as
beneficiaries of this Indenture with respect to the property so deposited with
the Trustee payable to all or any of them; provided that the following
conditions shall have been satisfied:
(A) with reference to this Section 8.02, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 7.10) and conveyed
all right, title and interest for the benefit of the Holders, under the
terms of an irrevocable trust agreement in form and substance satisfactory
to the Trustee as trust funds in trust, specifically pledged to the Trustee
for the benefit of the Holders as security for payment of the principal of,
premium, if any, and interest, if any, on the Notes, and dedicated solely
to, the benefit of the Holders, in and to (1) money in an amount, (2) U.S.
Government Obligations that, through the payment of interest, premium, if
any, and principal in respect thereof in accordance with their terms, will
provide, not later than one day before the due date of any payment referred
to in this clause (A), money in an amount or (3) a combination thereof in
an amount sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, without consideration of
the reinvestment of such interest and after payment of all federal, state
and local taxes or other charges and assessments in respect thereof payable
by the Trustee, the principal of, premium, if
<PAGE>
67
any, and accrued interest on the outstanding Notes at the Stated Maturity
of such principal or interest; provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of such principal, premium, if any,
and interest with respect to the Notes;
(B) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;
(C) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day
after such date of deposit;
(D) the Company shall have delivered to the Trustee (1) either (x) a
ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the Company's exercise of its
option under this Section 8.02 and will be subject to federal income tax on
the same amount and in the same manner and at the same times as would have
been the case if such option had not been exercised or (y) an Opinion of
Counsel to the same effect as the ruling described in clause (x) above
accompanied by a ruling to that effect published by the Internal Revenue
Service, unless there has been a change in the applicable federal income
tax law since the date of this Indenture such that a ruling from the
Internal Revenue Service is no longer required and (2) an Opinion of
Counsel to the effect that (x) the creation of the defeasance trust does
not violate the Investment Company Act of 1940 and (y) after the passage of
123 days following the deposit (except, with respect to any trust funds for
the account of any Holder who may be deemed to be an "insider" for purposes
of the United States Bankruptcy Code, after one year following the
deposit), the trust funds will not be subject to the effect of Section 547
of the United States Bankruptcy Code or Section 15 of the New York Debtor
and Creditor Law in a case commenced by or against the Company under either
such statute, and either (I) the trust funds will no longer remain the
property of the Company (and therefore will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (II) if a court were to rule
under any such law in any case or proceeding that the trust funds remained
property of the Company, (a) assuming such trust funds remained in the
possession of the Trustee prior to such court ruling to the extent not paid
to the Holders, the Trustee will hold, for the benefit of the Holders, a
valid and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise except for the effect of Section
552(b) of the United States Bankruptcy Code on interest on the trust funds
accruing after the commencement of a case under such statute and (b) the
Holders will be entitled to receive adequate
<PAGE>
68
protection of their interests in such trust funds if such trust funds are
used in such case or proceeding;
(E) if the Notes are then listed on a national securities exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit, defeasance and discharge will not cause the
Notes to be delisted; and
(F) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (D)(2)(y) of this Section 8.02, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section 8.02,
the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.05 and 8.06 shall survive until the Notes
are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. If and when a ruling from the
Internal Revenue Service or an Opinion of Counsel referred to in clause (D)(1)
of this Section 8.02 is able to be provided specifically without regard to, and
not in reliance upon, the continuance of the Company's obligations under Section
4.01, then the Company's obligations under such Section 4.01 shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel and compliance with
the other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may omit to
---------------------------------
comply with any term, provision or condition set forth in clauses (iii) and (iv)
of Section 5.01 and Sections 4.03 through 4.17, Section 4.19 and clause (d) of
Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01 and Sections
4.03 through 4.17, Section 4.19 and clauses (e) and (f) of Section 6.01 shall be
deemed not to be Events of Default, in each case with respect to the outstanding
Notes if:
(i) with reference to this Section 8.03, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 7.10) and conveyed
all right, title and interest to the Trustee for the benefit of the
Holders, under the terms of an irrevocable trust
<PAGE>
69
agreement in form and substance satisfactory to the Trustee as trust funds
in trust, specifically pledged to the Trustee for the benefit of the
Holders as security for payment of the principal of, premium, if any, and
interest, if any, on the Notes, and dedicated solely to, the benefit of the
Holders, in and to (A) money in an amount, (B) U.S. Government Obligations
that, through the payment of interest and principal in respect thereof in
accordance with their terms, will provide, not later than one day before
the due date of any payment referred to in this clause (i), money in an
amount or (C) a combination thereof in an amount sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest and
after payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal of,
premium, if any, and interest on the outstanding Notes on the Stated
Maturity of such principal or interest; provided that the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of such principal, premium,
if any, and interest with respect to the Notes;
(ii) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;
(iii) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day
after such date of deposit;
(iv) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that (A) the creation of the defeasance trust does not
violate the Investment Company Act of 1940, (B) the Trustee, for the
benefit of the Holders, has a valid first-priority security interest in the
trust funds, (C) the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred and (D) after the
passage of 123 days following the deposit (except, with respect to any
trust funds for the account of any Holder who may be deemed to be an
"insider" for purposes of the United States Bankruptcy Code, after one year
following the deposit), the trust funds will not be subject to the effect
of Section 547 of the United States Bankruptcy Code or Section 15 of the
New York Debtor and Creditor Law in a case commenced by or against the
Company under either such statute, and either (1) the trust funds will no
longer remain the property of the Company (and therefore will not be
subject to the effect of any applicable bankruptcy,
<PAGE>
70
insolvency, reorganization or similar laws affecting creditors' rights
generally) or (2) if a court were to rule under any such law in any case or
proceeding that the trust funds remained property of the Company, (x)
assuming such trust funds remained in the possession of the Trustee prior
to such court ruling to the extent not paid to the Holders, the Trustee
will hold, for the benefit of the Holders, a valid and perfected security
interest in such trust funds that is not avoidable in bankruptcy or
otherwise (except for the effect of Section 552(b) of the United States
Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute) and (y) the Holders will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used in such case or proceeding;
(v) if the Notes are then listed on a national securities exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that such deposit defeasance and discharge will not cause the
Notes to be delisted; and
(vi) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 8.03 have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section 8.06, the
--------------------------
Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the case may be,
and shall apply the deposited money and the money from U.S. Government
Obligations in accordance with the Notes and this Indenture to the payment of
principal of, premium, if any, and interest on the Notes; but such money need
not be segregated from other funds except to the extent required by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01, 8.02
--------------------
and 8.03, the Trustee and the Paying Agent shall promptly pay to the Company
upon request set forth in an Officers' Certificate any excess money held by them
at any time and thereupon shall be relieved from all liability with respect to
such money. The Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal, premium, if any, or
interest that remains unclaimed for two years. After payment to the Company,
Holders entitled to such money must look to the Company for payment as general
creditors unless an applicable law designates another Person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to
-------------
apply any money or U.S. Government Obligations in accordance with Section 8.01,
8.02 or 8.03, as the case may be, by reason of any legal proceeding or by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such
<PAGE>
71
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.01, 8.02 or 8.03, as the case may be, until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.01, 8.02 or 8.03, as the case may be; provided that,
if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when authorized by
--------------------------
a resolution of its Board of Directors (as evidenced by a Board Resolution
delivered to the Trustee), and the Trustee may amend or supplement this
Indenture or the Notes without notice to or the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency in this Indenture;
provided that such amendments or supplements shall not, in the good faith
opinion of the Board of Directors as evidenced by a Board Resolution,
adversely affect the interests of the Holders in any material respect;
(2) to comply with Article Five;
(3) to comply with any requirements of the Commission in connection
with the qualification of this Indenture under the TIA;
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(5) to make any change that, in the good faith opinion of the Board
of Directors as evidenced by a Board Resolution, does not materially and
adversely affect the rights of any Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and 6.07
-----------------------
and without prior notice to the Holders, the Company, when authorized by its
Board of Directors (as evidenced by a Board Resolution delivered to the
Trustee), and the Trustee may amend this Indenture and the Notes with the
written consent of the Holders of a majority in principal amount of the Notes
then outstanding, and the Holders of a majority in principal amount of the
<PAGE>
72
Notes then outstanding by written notice to the Trustee may waive future
compliance by the Company with any provision of this Indenture and the Notes.
Notwithstanding the provisions of this Section 9.02, without the consent of
each Holder affected, an amendment or waiver, including a waiver pursuant to
Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or adversely affect any right of repayment at the
option of any Holder of any Note, or change any place of payment where, or
the currency in which, any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(ii) reduce the percentage in principal amount of outstanding Notes
the consent of whose Holders is required for any such supplemental
indenture, for any waiver of compliance with certain provisions of this
Indenture or certain Defaults and their consequences provided for in this
Indenture;
(iii) waive a default in the payment of principal of, premium, if
any, or interest on, any Note; or
(iv) modify any of the provisions of this Section 9.02, except to
increase any such percentage or to provide that certain other provisions of
this Indenture cannot be
modified or waived without the consent of the Holder of each outstanding
Note affected thereby.
It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. The Company will mail
supplemental indentures to Holders upon request. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment or
--------------------------------
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of
<PAGE>
73
the consenting Holder, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to its
Note or portion of its Note. Such revocation shall be effective only if the
Trustee receives the notice of revocation before the time the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver shall
become effective on receipt by the Trustee of written consents from the Holders
of the requisite percentage in principal amount of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Holder unless it is of the type described in any of clauses (i) through
(v) of the second paragraph of Section 9.02. In case of an amendment or waiver
of the type described in clauses (i) through (v) of the second paragraph of
Section 9.02, the amendment or waiver shall bind each Holder who has consented
to it and every subsequent Holder of a Note that evidences the same indebtedness
as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
--------------------------------
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. At the Company's expense, the Trustee may
place an appropriate notation on the Note about the changed terms and return it
to the Holder and the Trustee may place an appropriate notation on any Note
thereafter authenticated. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation, or issue a new Note, shall not affect the validity and
effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
-------------------------------
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and that it will be valid and binding upon the Company. Subject to
the preceding sentence, the Trustee shall sign such amendment, supplement or
waiver if the same does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Trustee may, but shall not be obligated to,
execute any such
<PAGE>
74
amendment, supplement or waiver that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every supplemental
-----------------------------------
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939. Prior to the effectiveness of
---------------------------
the Registration Statement, this Indenture shall incorporate and be governed by
the provisions of the TIA that are required to be part of and to govern
indentures qualified under the TIA. After the effectiveness of the Registration
Statement, this Indenture shall be subject to the provisions of the TIA that are
required to be a part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 10.02. Notices. Any notice or communication shall be sufficiently
-------
given if in writing and delivered in person, mailed by first-class mail or sent
by telecopier transmission addressed as follows:
if to the Company:
-----------------
ITC/\DeltaCom, Inc.
1241 O.G. Skinner Drive
West Point, GA 31833
Telecopier No.: (706) 645-8989
Attention: Chief Financial Officer
if to the Trustee:
-----------------
United States Trust Company of New York
114 West 47th Street
New York, NY 10036-1532
Telecopier No.: (212) 852-1626
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
<PAGE>
75
Any notice or communication mailed to a Holder shall be mailed to it at its
address as it appears on the Security Register by first-class mail and shall be
sufficiently given to him if so mailed within the time prescribed. Copies of
any such communication or notice to a Holder shall also be mailed to the Trustee
and each Agent at the same time.
Failure to transmit a notice or communication to a Holder as provided
herein or any defect in any such notice shall not affect its sufficiency with
respect to other Holders. Except for a notice to the Trustee, which is deemed
given only when received, and except as otherwise provided in this Indenture, if
a notice or communication is mailed in the manner provided in this Section
10.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 10.03. Certificate and Opinion as to Conditions Precedent. Upon
--------------------------------------------------
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
Counsel, all such conditions precedent have been complied with.
SECTION 10.04. Statements Required in Certificate or Opinion. Each
---------------------------------------------
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(i) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
<PAGE>
76
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(iv) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that, with respect to matters of fact, an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar. The Trustee
-------------------------------------------
may make reasonable rules for action by or at a meeting of Holders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 10.06. Payment Date Other Than a Business Day. If an Interest
--------------------------------------
Payment Date, Redemption Date, Payment Date, Stated Maturity or date of maturity
of any Note shall not be a Business Day, then payment of principal of, premium,
if any, or interest on such Note, as the case may be, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Payment Date or Redemption
Date, or at the Stated Maturity or date of maturity of such Note; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Payment Date, Redemption Date, Stated Maturity or date of maturity, as the
case may be.
SECTION 10.07. Governing Law. The laws of the State of New York shall
-------------
govern this Indenture and the Notes. The Trustee, the Company and the Holders
agree to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Indenture or the
Notes.
SECTION 10.08. No Adverse Interpretation of Other Agreements. This
---------------------------------------------
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 10.09. No Recourse Against Others. No recourse for the payment of
--------------------------
the principal of, premium, if any, or interest on any of the Notes, or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company contained in this
Indenture, or in any of the Notes, or because of
<PAGE>
77
the creation of any Indebtedness represented thereby, shall be had against any
incorporator or against any past, present or future partner, shareholder, other
equityholder, officer, director, employee or controlling person, as such, of the
Company or of any successor Person, either directly or through the Company or
any successor Person, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Notes.
SECTION 10.10. Successors. All agreements of the Company in this
----------
Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 10.11. Duplicate Originals. The parties may sign any number of
-------------------
copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 10.12. Separability. In case any provision in this Indenture or
------------
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 10.13. Table of Contents, Headings, Etc. The Table of Contents,
--------------------------------
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
and provisions hereof.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
ITC/\DELTACOM, INC.
By: /s/ Andrew M. Walker
-----------------------------------
Name: Andrew M. Walker
Title: Chief Executive Officer
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Louis P. Young
-----------------------------------
Name: Louis P. Young
Title: Vice President
<PAGE>
EXHIBIT A
---------
[FACE OF NOTE]
ITC/\DELTACOM, INC.
9 3/4% Senior Note due 2008
[CUSIP] [CINS][__________]
No. $_________
ITCDELTACOM, INC., a Delaware corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to _____________, or its registered assigns, the
principal sum of ____________ ($____) on November 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing May 15, 1999.
Regular Record Dates: May 1 and November 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
A-2
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: ITC/\DELTACOM, INC.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 9 3/4% Senior Notes due 2008 described in the within-
mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK
as Trustee
By:____________________________________
Authorized Signatory
<PAGE>
A-3
[REVERSE SIDE OF NOTE]
ITC/\DELTACOM, INC.
9 3/4% Senior Note due 2008
1. Principal and Interest.
----------------------
The Company will pay the principal of this Note on November 15, 2008.
The Company promises to pay interest on the principal amount of this Note
on each Interest Payment Date, as set forth below, at the rate per annum shown
above.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the May 1 or November 1 immediately preceding
the Interest Payment Date) on each Interest Payment Date, commencing May 15,
1999.
If an exchange offer (the "Exchange Offer") registered under the Securities
Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before May 5, 1999 in
accordance with the terms of the Registration Rights Agreement dated as of
November 5, 1998 between the Company and Morgan Stanley & Co. Incorporated and
First Union Capital Markets, a division of Wheat First Securities, Inc., the
annual interest rate borne by the Notes shall be increased by 0.5% from the rate
shown above accruing from May 5, 1999, payable in cash semiannually, in arrears,
on each Interest Payment Date, commencing May 15, 1999 until the Exchange Offer
is consummated or the Shelf Registration Statement is declared effective. The
Holder of this Note is entitled to the benefits of such Registration Rights
Agreement.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from November 5, 1998;
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at a
rate per annum that is 2% in excess of the rate otherwise payable.
<PAGE>
A-4
2. Method of Payment.
-----------------
The Company will pay interest (except defaulted interest) on the principal
amount of the Notes as provided above on each May 15 and November 15 commencing
May 15, 1999 to the persons who are Holders (as reflected in the Security
Register at the close of business on the May 1 or November 1 immediately
preceding the Interest Payment Date), in each case, even if the Note is
cancelled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to a Paying
Agent on or after November 15, 2008.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by its check payable in such money. It
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as authenticating agent, Paying Agent and
Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any
of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
----------------------
The Company issued the Notes under an Indenture dated as of November 5,
1998 (the "Indenture"), between the Company and United States Trust Company of
New York, trustee (the "Trustee"). Capitalized terms herein are used as defined
in the Indenture unless otherwise indicated. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
The Notes are general obligations of the Company.
5. Optional Redemption.
-------------------
<PAGE>
A-5
The Notes will be redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after November 15, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing November 15 of
the years set forth below:
Year Redemption Price
---- ----------------
2003......................... 104.875%
2004......................... 103.250
2005......................... 101.625
2006 and thereafter.......... 100.000
At any time prior to November 15, 2001, the Company may redeem up to 35% of
the principal amount of the Notes with the proceeds of one or more Public Equity
Offerings, at any time or from time to time in part, at a Redemption Price
(expressed as a percentage of principal amount) of 109.750% plus accrued and
unpaid interest to the Redemption Date (subject to the rights of Holders of
record on the relevant Regular Record Date that is prior to the Redemption Date
to receive interest due on an Interest Payment Date); provided that at least
$81.25 million aggregate principal amount of Notes remains outstanding after
each such redemption.
Notes in original denominations larger than $1,000 may be redeemed in part.
On and after the Redemption Date, interest ceases to accrue on Notes or portions
of Notes called for redemption, unless the Company defaults in the payment of
the Redemption Price.
6. Repurchase upon Change of Control.
---------------------------------
Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Payment Date").
A notice of such Change of Control will be mailed within 30 days after any
Change of Control occurs to each Holder at its last address as it appears in the
Security Register. Notes
<PAGE>
A-6
in original denominations larger than $1,000 may be sold to the Company in part.
On and after the Payment Date, interest ceases to accrue on Notes or portions of
Notes surrendered for purchase by the Company, unless the Company defaults in
the payment of the purchase price.
7. Denominations; Transfer; Exchange.
---------------------------------
The Notes are in registered form without coupons in denominations of $1,000
of principal amount and multiples of $1,000 in excess thereof. A Holder may
register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register
the transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.
8. Persons Deemed Owners.
---------------------
A Holder shall be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal, premium, if any, or interest remains
unclaimed for two years, the Trustee and the Paying Agent will pay the money
back to the Company at its request. After that, Holders entitled to the money
must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
-----------------------------------------
If the Company deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest on the Notes (a) to redemption or maturity, the
Company will be discharged from the Indenture and the Notes, except in certain
circumstances for certain sections thereof, and (b) to the Stated Maturity, the
Company will be discharged from certain covenants set forth in the Indenture.
11. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding, and any existing default or compliance
with any provision may be waived with the consent of the Holders of at least a
majority in principal amount of the Notes
<PAGE>
A-7
then outstanding. Without notice to or the consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency and make any change that
does not materially and adversely affect the rights of any Holder.
12. Restrictive Covenants.
---------------------
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or merge, consolidate or transfer
substantially all of its assets. Within 45 days after the end of each fiscal
quarter (90 days after the end of the last fiscal quarter of each year), the
Company must report to the Trustee on compliance with such limitations.
13. Successor Persons.
-----------------
When a successor person or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor person will
be released from those obligations.
14. Defaults and Remedies.
---------------------
The following events constitute "Events of Default" under the Indenture:
(a) default in the payment of principal of (or premium, if any, on) any Note
when the same becomes due and payable at maturity, upon acceleration, redemption
or otherwise; (b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30 days; (c)
default in the performance or breach of Article Five of the Indenture or the
failure to make or consummate an Offer to Purchase in accordance with Section
4.10 or 4.11 of the Indenture; (d) default in the performance of or breach of
any covenant or agreement of the Company in the Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) above), and such
default or breach continues for a period of 30 consecutive days after written
notice by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding; (e) there occurs with respect to any issue
or issues of Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $5 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment
<PAGE>
A-8
default; (f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $5 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles, self-
insurance or retention as not so covered) shall be rendered against the Company
or any Significant Subsidiary and shall not be paid or discharged, and there
shall be any period of 30 consecutive days following entry of the final judgment
or order that causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed $5
million during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; (g) a court
having jurisdiction in the premises enters a decree or order for (A) relief in
respect of the Company or any Significant Subsidiary in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or (h) the Company or any Significant Subsidiary (A)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of at least a majority in principal amount of the Notes then outstanding
may direct the Trustee in its exercise of any trust or power.
15. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from and perform services for the Company or
its Affiliates and may otherwise deal with the Company or its Affiliates as if
it were not the Trustee.
16. No Recourse Against Others.
--------------------------
<PAGE>
A-9
No incorporator or any past, present or future partner, stockholder, other
equity holder, officer, director, employee or controlling person as such, of the
Company or of any successor Person shall have any liability for any obligations
of the Company under the Notes or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
17. Authentication.
--------------
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
18. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
The Company will furnish a copy of the Indenture to any Holder upon written
request and without charge. Requests may be made to ITC/\DeltaCom, Inc., 1241
O.G. Skinner Drive, West Point, GA 31833; Attention: Chief Financial Officer.
<PAGE>
A-10
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
_____________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_____________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________________________________________________________
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED OFFSHORE GLOBAL NOTES AND
UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
---------
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule 144A
thereunder.
or
--
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
<PAGE>
A-11
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:____________ _______________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the within-mentioned instrument in every particular,
without alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933 and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:__________________________
NOTICE: To be executed by an executive officer
<PAGE>
A-12
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Section
4.10 or 4.11 of the Indenture, check the Box: [_]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.10 or 4.11 of the Indenture, state the amount:
$___________________.
Date: _________________
Your Signature:
______________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT B
---------
Form of Certificate
-------------------
_______________,
United States Trust Company
of New York
114 W. 47th Street
New York, NY 10036-1532
Attention: Corporate Trust Department
Re: ITC/\DeltaCom, Inc. (the "Company")
93/4% Senior Notes due 2008 (the "Notes")
------------------------------------------
Dear Sirs:
This letter relates to U.S. $_______________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.01 of
the Indenture dated as of November 5, 1998 (the "Indenture") relating to the
Notes, we hereby certify that we are (or we will hold such securities on behalf
of) a person outside the United States to whom the Notes could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By: _____________________________________________
Authorized Signature
<PAGE>
EXHIBIT C
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
____________, ____
United States Trust Company
of New York
114 W. 47th Street
New York, NY 10036-1532
Attention: Corporate Trust Department
Re: ITC/\DeltaCom, Inc. (the "Company")
9 3/4% Senior Notes due 2008 (the "Notes")
------------------------------------------
Dear Sirs:
In connection with our proposed purchase of $__________________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of
November 5, 1998 (the "Indenture"), relating to the Notes, and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the Securities
Act of 1933 (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell any Notes, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter, (D) outside
the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (E) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the
<PAGE>
Notes from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certifications, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:_______________________________________
Authorized Signature
<PAGE>
EXHIBIT D
---------
Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to Regulation S
---------------------------------------------------
____________, ____
United States Trust Company
of New York
114 W. 47th Street
New York, NY 10036-1532
Attention: Corporate Trust Department
Re: ITC/\DeltaCom, Inc. (the "Company")
9 3/4% Senior Notes due 2008 (the "Notes")
------------------------------------------
Dear Sirs:
In connection with our proposed sale of U.S.$__________________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of 1933
and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United States;
(2) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed
that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation
S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:__________________________
Authorized Signature
<PAGE>
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
Dated November 5, 1998
between
ITC/\DELTACOM, INC.
and
MORGAN STANLEY & CO. INCORPORATED
FIRST UNION CAPITAL MARKETS CORP, a division of Wheat First Securities, Inc.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into November 5, 1998, between ITC/\DELTACOM, INC., a Delaware
corporation (the "Company"), and MORGAN STANLEY & CO. INCORPORATED and FIRST
UNION CAPITAL MARKETS, a division of Wheat First Securities, Inc. (the
"Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated
October 29, 1998 between the Company and the Placement Agents (the "Placement
Agreement"), which provides for the sale by the Company to the Placement Agents
of an aggregate of $125,000,000 principal amount of the Company's 9 3/4% Senior
Notes due 2008 (the "Securities"). In order to induce the Placement Agents to
enter into the Placement Agreement, the Company has agreed to provide to the
Placement Agents and their direct and indirect transferees the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
-----------
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
--------
from time to time.
"Closing Date" shall mean the Closing Date as defined in the Placement
------------
Agreement.
"Company" shall have the meaning set forth in the preamble to this
-------
Agreement and shall also include the Company's successors.
"Counsel for the Holders" shall mean, with respect to any Registration
-----------------------
Statement, one counsel selected by the Holders of a majority in principal
amount of Registrable Securities covered by such Registration Statement.
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
<PAGE>
2
"Exchange Offer Registration" shall mean a registration under the 1933
---------------------------
Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Exchange Securities" shall mean securities issued by the Company
-------------------
under the Indenture containing terms identical to the Securities (except
that the Exchange Securities will not contain restrictions on transfer) and
to be offered to Holders of Securities in exchange for Securities pursuant
to the Exchange Offer.
"Holder" shall mean the Placement Agents, for so long as they own any
------
Registrable Securities, and each of their successors, assigns and direct
and indirect transferees who become registered owners of Registrable
Securities under the Indenture; provided that for purposes of Sections 4
--------
and 5 hereof, the term "Holder" shall include Participating Broker-Dealers
(as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities dated
---------
as of the Closing Date between the Company and United States Trust Company
of New York, trustee, and as the same may be amended from time to time in
accordance with the terms thereof.
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Registrable Securities; provided
--------
that whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by the Company or any of its affiliates (as such term is defined in
Rule 405 under the 1933 Act) (other than the Placement Agents or subsequent
holders of Registrable Securities if such subsequent holders are deemed to
be such affiliates solely by reason of their holding of such Registrable
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage or amount.
"Person" shall mean an individual, partnership, corporation, trust or
------
unincorporated organization or other entity, or a government or agency or
political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the preamble to
----------------
this Agreement.
"Placement Agreement" shall have the meaning set forth in the preamble
-------------------
to this Agreement.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with
<PAGE>
3
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case including
all material incorporated by reference therein.
"Registrable Securities" shall mean the Securities; provided, however,
---------------------- -------- -------
that the Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Securities shall have been
declared effective under the 1933 Act and such Securities shall have been
disposed of pursuant to such Registration Statement, (ii) when such
Securities have been sold to the public pursuant to Rule 144 (or any
provision similar to Rule 144 then in force, but not Rule 144A) under the
1933 Act or (iii) when such Securities shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel for
any underwriters or Holders in connection with blue sky qualification of
any of the Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating agency
fees, (v) all fees and disbursements relating to the qualification of the
Indenture under applicable securities laws, (vi) the fees and disbursements
of the Trustee and its counsel, (vii) the fees and disbursements of counsel
for the Company and, in the case of a Shelf Registration Statement, the
fees and disbursements of one counsel for the Holders (which counsel shall
be selected by the Majority Holders and which counsel may also be counsel
for the Placement Agents) and (viii) the fees and disbursements of the
independent public accountants of the Company, including the expenses of
any special audits or "cold comfort" letters required by or incident to
such performance and compliance, but excluding fees and expenses of counsel
to the underwriters (other than fees and expenses set forth in clause (ii)
above) or the Holders and underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company that covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement and all amendments
and supplements to any such Registration Statement, including post-
effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
---
<PAGE>
4
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Securities (but no other
securities unless approved by the Holders whose Registrable Securities are
covered by such Shelf Registration Statement) on an appropriate form under
Rule 415 under the 1933 Act, or any similar rule that may be adopted by the
SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Trustee" shall mean the trustee with respect to the Securities under
-------
the Indenture.
"Underwritten Offering" shall mean a registration in which Registrable
---------------------
Securities are sold to an Underwriter (as hereinafter defined) for
reoffering to the public.
2. Registration Under the 1933 Act.
-------------------------------
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company shall use its best efforts
to cause to be filed, no later than 60 days after the Closing Date, an Exchange
Offer Registration Statement covering the offer by the Company to the Holders to
exchange all of the Registrable Securities for Exchange Securities and to have
such Registration Statement remain effective until the closing of the Exchange
Offer. The Company shall commence the Exchange Offer promptly after the
Exchange Offer Registration Statement has been declared effective by the SEC and
use its best efforts to have the Exchange Offer consummated not later than 60
days after such effective date. The Company shall commence the Exchange Offer
by mailing the Prospectus related to the Exchange Offer and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities validly
tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period of
at least 20 business days from the date such notice is mailed) (the
"Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest in accordance with its terms,
but will not retain any rights under this Registration Rights Agreement;
<PAGE>
5
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Security, together with the enclosed letters of transmittal, to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice prior to the close of
business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last Exchange Date, by sending to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Securities delivered for exchange and a statement
that such Holder is withdrawing his election to have such Securities
exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
(i) accept for exchange Registrable Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted for
exchange by the Company and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange Security equal in
principal amount to the principal amount of the Registrable Securities
surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform the
Placement Agents of the names and addresses of the Holders to whom the Exchange
Offer is made, and the Placement Agents shall have the right, subject to
applicable law, to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company determines that the Exchange
Offer Registration provided for in Section 2(a) above is not available or may
not be consummated as soon as practicable after the last Exchange Date because
it would violate applicable law or the applicable interpretations of the Staff
of the SEC, (ii) the Exchange Offer is not for any other reason consummated by
May 5, 1999 or (iii) the Exchange Offer has been completed and in the opinion of
counsel for the Placement Agents a Registration Statement must be filed and a
Prospectus must be delivered by the Placement Agents in connection with any
offering or sale by them of Registrable Securities which they acquired from the
Company, the Company shall use its best efforts to cause to be filed as soon as
practicable after such determination, date or notice of such opinion of counsel
is given to the Company, as the case may be, a Shelf
<PAGE>
6
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities and to have such Shelf Registration Statement declared
effective by the SEC. In the event the Company is required to file a Shelf
Registration Statement solely as a result of the matters referred to in clause
(iii) of the preceding sentence, the Company shall file and use its best efforts
have declared effective by the SEC both an Exchange Offer Registration Statement
pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf
Registration Statement (which may be a combined Registration Statement with the
Exchange Offer Registration Statement) with respect to offers and sales of
Registrable Securities held by the Placement Agents after completion of the
Exchange Offer. The Company agrees to use its best efforts to keep the Shelf
Registration Statement continuously effective until expiration of the period
referred to in Rule 144(k) under the 1933 Act with respect to all Registrable
Securities covered by the Shelf Registration Statement or such shorter period
that will terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company further agrees to supplement or amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use its best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company agrees
to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2(a) or Section 2(b). Each Holder shall
pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
-------- -------
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. As provided for in the Indenture, in
the event that the Exchange Offer is not consummated and, if a Shelf
Registration Statement is required hereby, the Shelf Registration Statement is
not declared effective on or prior to May 5, 1999, the interest rate on the
Securities (and the Exchange Securities) will increase by .5% per annum until
the date the Exchange Offer is consummated or a Shelf Registration Statement is
declared effective.
(e) Without limiting the remedies available to the Placement Agents
and the Holders, the Company acknowledges that any failure by the Company to
comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury
<PAGE>
7
to the Placement Agents or the Holders for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Placement Agents or any Holder
may obtain such relief as may be required to specifically enforce the Company's
obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
-----------------------
In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the selling Holders
thereof and (z) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and use its best efforts to
cause such Registration Statement to become effective and remain effective
in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; and
keep each Prospectus current during the period described under Section 4(3)
and Rule 174 under the 1933 Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Securities or Exchange
Securities;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Placement Agents, to counsel for
the Holders and to each Underwriter of an Underwritten Offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or Underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (subject to the penultimate
paragraph of this Section 3) the Company consents to the use of such
Prospectus and any amendment or supplement thereto in accordance with
applicable law by each of the selling Holders of Registrable Securities and
any such Underwriters in connection with the offering and sale of the
Registrable Securities covered by and in the manner described in such
Prospectus or any amendment or supplement thereto in accordance with
applicable law;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of
<PAGE>
8
Registrable Securities covered by a Registration Statement shall reasonably
request in writing by the time the applicable Registration Statement is
declared effective by the SEC, to cooperate with such Holder in connection
with any filings required to be made with the National Association of
Securities Dealers, Inc. and do any and all other acts and things which may
be reasonably necessary or advisable to enable such Holder to consummate
the disposition in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Company shall not be
-------- -------
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (ii) file any general consent to service
of process or (iii) subject itself to taxation in any such jurisdiction if
it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or counsel,
confirm such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendment thereto has been filed and
becomes effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement and
Prospectus or for additional information after the Registration Statement
has become effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material
respects or if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose, (v)
of the happening of any event during the period a Shelf Registration
Statement is effective which makes any statement made in such Registration
Statement or the related Prospectus untrue in any material respect or which
requires the making of any changes in such Registration Statement or
Prospectus in order to make the statements therein not misleading in any
material respect and (vi) of any determination by the Company that a post-
effective amendment to a Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide prompt notice to each Holder of the withdrawal
of any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
<PAGE>
9
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends and enable such Registrable Securities
to be in such denominations (consistent with the provisions of the
Indenture) and registered in such names as the selling Holders may
reasonably request at least one business day prior to the closing of any
sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Company agrees to notify the Holders to suspend
use of the Prospectus as promptly as practicable after the occurrence of
such an event, and the Holders hereby agree to suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to the Placement Agents and their counsel (and, in the case of a
Shelf Registration Statement, the Counsel for the Holders) and make such of
the representatives of the Company as shall be reasonably requested by the
Placement Agents or their counsel (and, in the case of a Shelf Registration
Statement, Counsel for the Holders) available for discussion of such
document, and shall not at any time file or make any amendment to the
Registration Statement, any Prospectus or any amendment of or supplement to
a Registration Statement or a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus, of
which the Placement Agents and their counsel (and, in the case of a Shelf
Registration Statement, Counsel for the Holders) shall not have previously
been advised and furnished a copy or to which the Placement Agents or their
counsel (and, in the case of a Shelf Registration Statement, Counsel for
the Holders) shall reasonably object;
(k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;
(l) cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be,
cooperate with the Trustee and
<PAGE>
10
the Holders to effect such changes to the Indenture as may be required for
the Indenture to be so qualified in accordance with the terms of the TIA
and execute, and use its best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be
so qualified in a timely manner;
(m) in the case of a Shelf Registration, upon the execution of
customary confidentiality agreements reasonably satisfactory to the
Company, make available for inspection by a representative of the Holders
of the Registrable Securities, any Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and attorneys
and accountants designated by the Holders, at reasonable times and in a
reasonable manner, all financial and other records, pertinent documents and
properties of the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by
and customarily given by an issuer to any such representative, Underwriter,
attorney or accountant in connection with a Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best efforts to cause
all Registrable Securities to be listed on any securities exchange or any
automated quotation system on which similar securities issued by the
Company are then listed if requested by the Majority Holders, to the extent
such Registrable Securities satisfy applicable listing requirements;
(o) use its best efforts to cause the Exchange Securities or
Registrable Securities, as the case may be, to be rated by two nationally
recognized statistical rating organizations (as such term is defined in
Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable Securities
covered by a Shelf Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with
respect to such Holder as such Holder reasonably requests to be included
therein and (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as the Company has received
notification of the matters to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority in principal amount
of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities, including but
not limited to an Underwritten Offering, and in such connection, (i) to the
extent possible, make such representations and warranties to the Holders
and any Underwriters of such Registrable Securities with respect to the
business of the Company and its subsidiaries, the Registration Statement,
Prospectus and documents incorporated by reference therein or deemed
incorporated by reference therein, if any, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii)
<PAGE>
11
use its best efforts to obtain opinions of counsel to the Company (which
counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the Holders of a majority in principal amount of the
Registrable Securities being sold and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Securities, covering the matters customarily covered in
opinions requested in underwritten offerings, (iii) use its best efforts to
obtain "cold comfort" letters from the independent certified public
accountants of the Company (and, if necessary, any other certified public
accountant of any subsidiary of the Company, or of any business acquired by
the Company for which financial statements and financial data are or are
required to be included in the Registration Statement) addressed to each
selling Holder and Underwriter of Registrable Securities, such letters to
be in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings, and
(iv) deliver such documents and certificates as may be reasonably requested
by the Holders of a majority in principal amount of the Registrable
Securities being sold or the Underwriters, and which are customarily
delivered in underwritten offerings, to evidence the continued validity of
the representations and warranties of the Company made pursuant to clause
(i) above and to evidence compliance with any customary conditions
contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may require
each Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing. No Holder of Registrable Securities may include its Registrable
Securities in such Shelf Registration Statement unless and until such Holder
furnishes such information to the Company. Each Holder including Registrable
Securities in a Shelf Registration shall agree promptly to furnish to the
Company any information regarding such Holder and the proposed distribution by
such Holder of such Registrable Securities required to make the information
previously furnished to the Company by such Holder not materially misleading.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at the Company's expense)
all copies in such Holder's possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. If the Company shall give any
such notice to suspend the disposition of Registrable Securities pursuant to a
Registration Statement, the Company shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such disposition. The Company
<PAGE>
12
may give any such notice so long as there are no more than 90 days in any 365
day period in which such suspensions are in effect.
The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering; provided that such investment
--------
banker or investment bankers and manager or managers shall be reasonably
acceptable to the Company.
4. Participation of Broker-Dealers in Exchange Offer.
--------------------------------------------------
(a) The Company understands that the Staff of the SEC has taken the
position that any broker-dealer that receives Exchange Securities for its own
account in the Exchange Offer in exchange for Securities that were acquired by
such broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Securities, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Securities for their own accounts, so
long as the Prospectus otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Placement Agents or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
--------
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(i), for a period exceeding 180 days
after the last Exchange Date (as such period may be extended pursuant to
the penultimate paragraph of Section 3 of this Agreement) and Participating
Broker-Dealers shall not be
<PAGE>
13
authorized by the Company to deliver and shall not deliver such Prospectus
after such period in connection with the resales contemplated by this
Section 4; and
(ii) the application of the Shelf Registration procedures set forth in
Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the 1933
Act and the rules and regulations thereunder, will be in conformity with
the reasonable request to the Company by the Placement Agents or with the
reasonable request in writing to the Company by one or more broker-dealers
who certify to the Placement Agents and the Company in writing that they
anticipate that they will be Participating Broker-Dealers; and provided
--------
further that, in connection with such application of the Shelf Registration
-------
procedures set forth in Section 3 to an Exchange Offer Registration, the
Company shall be obligated (x) to deal only with one entity representing
the Participating Broker-Dealers, which shall be Morgan Stanley & Co.
Incorporated unless it elects not to act as such representative, (y) to pay
the fees and expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents unless such
counsel elects not to so act, and (z) to cause to be delivered only one, if
any, "cold comfort" letter with respect to the Prospectus in the form
existing on the last Exchange Date and with respect to each subsequent
amendment or supplement, if any, effected during the period specified in
clause (i) above.
(c) The Placement Agents shall have no liability to the Company or any
Holder with respect to any request that it may make pursuant to Section 4(b)
above.
5. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless the Placement
Agents, each Holder and each Person, if any, who controls any Placement Agent or
any Holder within the meaning of either Section 15 of the 1933 Act or Section 20
of the 1934 Act, or is under common control with, or is controlled by, any
Placement Agent or any Holder, from and against all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Placement Agent, any Holder or any such controlling
or affiliated Person in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment thereto)
pursuant to which Exchange Securities or Registrable Securities were registered
under the 1933 Act, including all documents incorporated therein by reference,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or caused by any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in the light of the circumstances under which
they were made not misleading, except (i) insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to the
Placement Agents
<PAGE>
14
or any Holder furnished to the Company in writing by the Placement Agents or any
selling Holder expressly for use therein and (ii) in the case of a Shelf
Registration, that the Company shall not be liable to any indemnified party
under the provisions of this Section 5 with respect to any preliminary
Prospectus to the extent that any such loss, claim, damage or liability results
from the fact that such indemnified party sold securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a final Prospectus (if the Company had previously furnished copies thereof
to the indemnified party), if the loss, claim, damage or liability of such
indemnified party results from an untrue statement or alleged untrue statement
or an omission or alleged omission contained in the preliminary Prospectus that
was corrected in the final Prospectus. In connection with any Underwritten
Offering permitted by Section 3, the Company will also indemnify the
Underwriters, if any, selling brokers, dealers and similar securities industry
professionals participating in the distribution, their officers and directors
and each Person who controls such Persons (within the meaning of either Section
15 of the 1933 Act or Section 20 of the 1934 Act) to the same extent as provided
above with respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.
(b) Each Holder (including a Placement Agent that is a Holder) agrees,
severally and not jointly, to indemnify and hold harmless the Company, the
Placement Agents and the other selling Holders, and each of their respective
directors, each officer of the Company who signed the Registration Statement and
each Person, if any, who controls the Company, any of the Placement Agents and
any other selling Holder within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from
the Company to the Placement Agents and the Holders, but only with reference to
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement
<PAGE>
15
Agents and all Persons, if any, who control any Placement Agent within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its directors, its officers who signed the
Registration Statement and each Person, if any, who controls the Company within
the meaning of either such Section and (c) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Holders and all
Persons, if any, who control any Holders within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In such case involving the Placement Agents and Persons who control
any Placement Agent, such firm shall be designated in writing by Morgan Stanley
& Co. Incorporated. In such case involving the Holders and such Persons who
control Holders, such firm shall be designated in writing by the Majority
Holders. In all other cases, such firm shall be designated by the Company. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party for such
fees and expenses of counsel in accordance with such request prior to the date
of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which such indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section 5(d) are several
in proportion to the respective number of Registrable Securities of such Holder
that were registered pursuant to a Registration Statement.
<PAGE>
16
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
--- ----
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Securities
were sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Placement Agents, any Holder or any Person controlling any Placement Agent
or any Holder, or by or on behalf of the Company, its officers or directors or
any Person controlling the Company, (iii) acceptance of any of the Exchange
Securities and (iv) any sale of Registrable Securities pursuant to a Shelf
Registration Statement.
6. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not entered into, and
--------------------------
on or after the date of this Agreement will not enter into, any agreement which
is inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; provided, however, that no amendment, modification,
-------- -------
supplement, waiver or consent to any departure from the provisions of Section 5
hereof shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder.
<PAGE>
17
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Placement Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
--------
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Placement Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
person shall be entitled to receive the benefits hereof. The Placement Agents
(in their capacity as Placement Agents) shall have no liability or obligation to
the Company with respect to any failure by a Holder to comply with, or any
breach by any Holder of, any of the obligations of such Holder under this
Agreement.
(e) Purchases and Sales of Securities. The Company shall not, and
---------------------------------
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the 1933 Act) not to, purchase and then resell or otherwise transfer any
Securities.
(f) Third Party Beneficiary. Each Holder shall be a third party
-----------------------
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Placement Agents, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
<PAGE>
18
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ITC/\DELTACOM, INC.
By: /s/ Andrew M. Walker
------------------------
Name: Andrew M. Walker
Title: Chief Executive Officer
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
FIRST UNION CAPITAL MARKETS,
a division of Wheat First Securities, Inc.
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Katina Dorton
-----------------------------
Name: Katina Dorton
Title: Principal
<PAGE>
EXHIBIT 4.4
1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO UNDER RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE
DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED
TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
<PAGE>
2
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
<PAGE>
3
ITC/\DELTACOM, INC.
9 3/4% Senior Note due 2008
CUSIP 45031TAG9
No. A-1 $125,000,000
ITC/\DELTACOM, INC., a Delaware corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to CEDE & CO., or its registered assigns, the
principal sum of ONE HUNDRED TWENTY FIVE MILLION DOLLARS ($125,000,000) on
November 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing May 15, 1999.
Regular Record Dates: May 1 and November 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: November 5, 1998 ITC DELTACOM, INC.
By: /s/ Andrew M. Walker
---------------------------
Name: Andrew M. Walker
Title: Chief Executive Officer
By: /s/ Foster D. McDonald
---------------------------
Name: Foster O. McDonald
Title: President
(Trustee's Certificate of Authentication)
This is one of the 9 3/4% Senior Notes due 2008 described in the within-
mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK
as Trustee
By: /s/ Louis P. Young
---------------------------
Authorized Signatory
<PAGE>
5
[REVERSE SIDE OF NOTE]
ITC/\DELTACOM, INC.
9 3/4% Senior Note due 2008
1. Principal and Interest.
----------------------
The Company will pay the principal of this Note on November 15, 2008.
The Company promises to pay interest on the principal amount of this Note
on each Interest Payment Date, as set forth below, at the rate per annum shown
above.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the May 1 or November 1 immediately preceding
the Interest Payment Date) on each Interest Payment Date, commencing May 15,
1999.
If an exchange offer (the "Exchange Offer") registered under the Securities
Act is not consummated and a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission, on or before May 5, 1999 in
accordance with the terms of the Registration Rights Agreement dated as of
November 5, 1998 between the Company and Morgan Stanley & Co. Incorporated and
First Union Capital Markets, a division of Wheat First Securities, Inc., the
annual interest rate borne by the Notes shall be increased by 0.5% from the rate
shown above accruing from May 5, 1999, payable in cash semiannually, in arrears,
on each Interest Payment Date, commencing May 15, 1999 until the Exchange Offer
is consummated or the Shelf Registration Statement is declared effective. The
Holder of this Note is entitled to the benefits of such Registration Rights
Agreement.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from November 5, 1998;
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at a
rate per annum that is 2% in excess of the rate otherwise payable.
<PAGE>
6
2. Method of Payment.
-----------------
The Company will pay interest (except defaulted interest) on the principal
amount of the Notes as provided above on each May 15 and November 15 commencing
May 15, 1999 to the persons who are Holders (as reflected in the Security
Register at the close of business on the May 1 or November 1 immediately
preceding the Interest Payment Date), in each case, even if the Note is
cancelled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to a Paying
Agent on or after November 15, 2008.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by its check payable in such money. It
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as authenticating agent, Paying Agent and
Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Limitations.
----------------------
The Company issued the Notes under an Indenture dated as of November 5,
1998 (the "Indenture"), between the Company and United States Trust Company of
New York, trustee (the "Trustee"). Capitalized terms herein are used as defined
in the Indenture unless otherwise indicated. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
The Notes are general obligations of the Company.
5. Optional Redemption.
-------------------
<PAGE>
7
The Notes will be redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after November 15, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing November 15 of
the years set forth below:
Year Redemption Price
---- ----------------
2003........................ 104.875%
2004........................ 103.250
2005........................ 101.625
2006 and thereafter......... 100.000
At any time prior to November 15, 2001, the Company may redeem up to 35% of
the principal amount of the Notes with the proceeds of one or more Public Equity
Offerings, at any time or from time to time in part, at a Redemption Price
(expressed as a percentage of principal amount) of 109.750% plus accrued and
unpaid interest to the Redemption Date (subject to the rights of Holders of
record on the relevant Regular Record Date that is prior to the Redemption Date
to receive interest due on an Interest Payment Date); provided that at least
$81.25 million aggregate principal amount of Notes remains outstanding after
each such redemption.
Notes in original denominations larger than $1,000 may be redeemed in part.
On and after the Redemption Date, interest ceases to accrue on Notes or portions
of Notes called for redemption, unless the Company defaults in the payment of
the Redemption Price.
6. Repurchase upon Change of Control.
---------------------------------
Upon the occurrence of any Change of Control, each Holder shall have the
right to require the repurchase of its Notes by the Company in cash pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Payment Date").
A notice of such Change of Control will be mailed within 30 days after any
Change of Control occurs to each Holder at its last address as it appears in the
Security Register. Notes in original denominations larger than $1,000 may be
sold to the Company in part. On and
<PAGE>
8
after the Payment Date, interest ceases to accrue on Notes or portions of Notes
surrendered for purchase by the Company, unless the Company defaults in the
payment of the purchase price.
7. Denominations; Transfer; Exchange.
---------------------------------
The Notes are in registered form without coupons in denominations of $1,000
of principal amount and multiples of $1,000 in excess thereof. A Holder may
register the transfer or exchange of Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.
8. Persons Deemed Owners.
---------------------
A Holder shall be treated as the owner of a Note for all purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal, premium, if any, or interest remains
unclaimed for two years, the Trustee and the Paying Agent will pay the money
back to the Company at its request. After that, Holders entitled to the money
must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
-----------------------------------------
If the Company deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium, if
any, and accrued interest on the Notes (a) to redemption or maturity, the
Company will be discharged from the Indenture and the Notes, except in certain
circumstances for certain sections thereof, and (b) to the Stated Maturity, the
Company will be discharged from certain covenants set forth in the Indenture.
11. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding, and any existing default or compliance
with any provision may be waived with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding. Without notice to or
the consent of any Holder, the parties thereto may
<PAGE>
9
amend or supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
12. Restrictive Covenants.
---------------------
The Indenture imposes certain limitations on the ability of the Company and
its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or merge, consolidate or transfer
substantially all of its assets. Within 45 days after the end of each fiscal
quarter (90 days after the end of the last fiscal quarter of each year), the
Company must report to the Trustee on compliance with such limitations.
13. Successor Persons.
-----------------
When a successor person or other entity assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor person will be
released from those obligations.
14. Defaults and Remedies.
---------------------
The following events constitute "Events of Default" under the Indenture:
(a) default in the payment of principal of (or premium, if any, on) any Note
when the same becomes due and payable at maturity, upon acceleration, redemption
or otherwise; (b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30 days; (c)
default in the performance or breach of Article Five of the Indenture or the
failure to make or consummate an Offer to Purchase in accordance with Section
4.10 or 4.11 of the Indenture; (d) default in the performance of or breach of
any covenant or agreement of the Company in the Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) above), and such
default or breach continues for a period of 30 consecutive days after written
notice by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding; (e) there occurs with respect to any issue
or issues of Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $5 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in
<PAGE>
10
excess of $5 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
30 consecutive days following entry of the final judgment or order that causes
the aggregate amount for all such final judgments or orders outstanding and not
paid or discharged against all such Persons to exceed $5 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (A) commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company occurs and is continuing, the Notes automatically become
due and payable. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of at least a majority in principal amount of the Notes then outstanding
may direct the Trustee in its exercise of any trust or power.
15. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from and perform services for the Company or
its Affiliates and may otherwise deal with the Company or its Affiliates as if
it were not the Trustee.
16. No Recourse Against Others.
--------------------------
<PAGE>
11
No incorporator or any past, present or future partner, stockholder, other
equity holder, officer, director, employee or controlling person as such, of the
Company or of any successor Person shall have any liability for any obligations
of the Company under the Notes or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
17. Authentication.
--------------
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
18. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
The Company will furnish a copy of the Indenture to any Holder upon written
request and without charge. Requests may be made to ITC/\DeltaCom, Inc., 1241
O.G. Skinner Drive, West Point, GA 31833; Attention: Chief Financial Officer.
<PAGE>
12
TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
_____________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_____________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________________________________________________________
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
---------
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule 144A
thereunder.
or
--
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
<PAGE>
13
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date:___________ _______________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the within-mentioned instrument in every particular,
without alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933 and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:________________________________
NOTICE: To be executed by an executive officer
<PAGE>
14
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Section
4.10 or 4.11 of the Indenture, check the Box: [_]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.10 or 4.11 of the Indenture, state the amount:
$___________________.
Date: _________________
Your Signature: _______________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: ______________________________
<PAGE>
Exhibit 5.1
February 3, 1999
ITC/\DeltaCom, Inc.
1241 O.G. Skinner Drive
West Point, GA 31833
Ladies and Gentlemen:
This firm has acted as counsel to ITC/\DeltaCom, Inc., a Delaware
corporation (the "Company"), in connection with its Registration Statement on
Form S-4 (the "Registration Statement"), as same may be amended, filed on the
date hereof with the Securities and Exchange Commission relating to the proposed
offering of up to $125,000,000 in aggregate principal amount of 9 3/4% Senior
Notes Due November 15, 2008 (the "Exchange Notes") in exchange for up to
$125,000,000 in aggregate principal amount of the Company's outstanding 9 3/4%
Senior Notes Due November 15, 2008 (the "Senior Notes"). This opinion letter is
furnished to you at your request to enable you to fulfill the requirements of
Item 601(b)(5) of Regulation S-K, 17 C.F.R. (S)229.601(b)(5), in connection with
the Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. An executed copy of the Indenture dated November 5, 1998 (the
"Indenture"), by and between the Company and United States Trust
Company of New York, including the form of Exchange Note to be
issued pursuant thereto, as filed as Exhibit 4.2 to the
Registration Statement.
3. The Restated Certificate of Incorporation of the Company, and all
amendments thereto (if any), as certified by the Secretary of
State of the State of Delaware on November 2, 1998 and as
certified by the Secretary of the Company on the date hereof as
being complete, accurate and in effect.
<PAGE>
February 3, 1999
Page 2
4. The Amended and Restated Bylaws of the Company, as certified by
the Secretary of the Company on the date hereof as being
complete, accurate and in effect.
5. Resolutions of the Board of Directors of the Company adopted on
October 29, 1998, as certified by the Secretary of the Company on
the date hereof as being complete, accurate and in effect,
relating to the issuance and sale of the Exchange Notes and
arrangements in connection therewith.
In our examination of the aforementioned documents, we have assumed
the genuineness of all signatures, the legal capacity of all natural persons,
the accuracy and completeness of all documents submitted to us, the authenticity
of all original documents, and the conformity to authentic original documents of
all documents submitted to us as copies (including telecopies). This opinion
letter is given, and all statements herein are made, in the context of the
foregoing.
This opinion letter is based as to matters of law solely on applicable
provisions of the General Corporation Law of the State of Delaware, as amended,
and the contract law of the State of New York (but not including any statutes,
ordinances, administrative decisions, rules or regulations of any political
subdivision of the State of New York). We express no opinion herein as to any
other laws, statutes, ordinances, rules or regulations not specifically referred
to above.
Based upon, subject to and limited by the foregoing, we are of the
opinion that the Exchange Notes have been duly authorized on behalf of the
Company and that, (i) following the effectiveness of the Registration Statement
and receipt by the Company of the Senior Notes in exchange for the Exchange
Notes as specified in the resolutions of the Board of Directors referred to
above, and (ii) assuming due execution, authentication, issuance and delivery of
the Exchange Notes as provided in the Indenture, the Exchange Notes will
constitute valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with their terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights (including, without limitation, the effect of
statutory and other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers) and as may be limited by the exercise of judicial
discretion and the application of principles of equity including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether the Exchange Notes are considered in a
proceeding in equity or at law).
<PAGE>
February 3, 1999
Page 3
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this opinion letter and should not be quoted in whole
or in part or otherwise referred to, nor filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE>
Exhibit 12.1
ITC/\DeltaCom, Inc.
Statement Re: Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
--------------------------------------------------- -------------------------------------
Historical Historical Historical Pro Forma Historical Historical Pro Forma
1995 1996 1997 1997 1997 1998 1998
---------- ---------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense on debt 297,228 6,172,421 21,367,351 42,104,795 14,917,907 23,322,107 33,039,579
Capitalized interest - - - 2,218,750 - - -
Interest element of
rent expense 24,845 424,130 2,053,526 2,053,526 1,399,752 2,428,807 2,428,807
Fixed charges of
unconsolidated subsidiary 782,054 1,564,200 - - - - -
---------- ---------- ----------- ----------- ---------- ------------ -----------
1,104,127 8,160,751 23,420,877 46,377,071 16,317,659 25,750,914 35,468,386
Earnings:
Consolidated net income (loss) (504,373) (3,909,749) (10,772,874) (32,323,032) (7,636,469) (24,734,880) (29,557,338)
Extraordinary item - - 507,515 8,943,685 507,515 8,436,170 8,436,170
Preacquisition earnings / losses - - (74,132) - (74,132) - -
Provision (benefit) for
income taxes (302,567) (1,233,318) (3,324,466) (11,362,072) (2,191,974) (5,611,225) (8,095,522)
Fixed charges 1,104,127 8,160,751 23,420,877 46,377,071 16,317,659 25,750,914 35,468,386
---------- ---------- ----------- ----------- ----------- ----------- -----------
297,187 3,017,684 9,756,920 11,635,652 6,922,599 3,840,979 6,251,696
(Deficiency) (806,940) (5,143,067) (13,663,957) (34,741,419) (9,395,060) (21,909,935) (29,216,690)
---------- ---------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 23, 1998
included in ITC/\DeltaCom, Inc.'s Form 10-K for the year ended December 31, 1997
and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
January 29, 1999
<PAGE>
EXHIBIT 25.1
FORM T-1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _________
___________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
________________
ITC /\ DELTA COM, INC.
(Exact name of obligor as specified in its charter)
Delaware
(State or other jurisdiction of 58-2301135
incorporation or organization) (I.R.S employer
identification No.)
1241 O.G. Skinner Drive 31833
West Point, Georgia (Zip Code)
(Address of principal executive offices)
________________
9 3/4% Senior Notes due November 15, 2008
(Title of the indenture securities)
================================================================================
<PAGE>
-2-
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New
York (Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3,4,5,6,7,8,9,10,11,12,13,14 and 15:
ITC /\ DeltaCom, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3,4,5,6,7,8,9,10,11,12,13,14 and
15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of New
York Banking Department to transact business as a Trust Company,
is incorporated by reference to Exhibit T-1.1 to Form T-1 filed
on September 15, 1995 with the Commission pursuant to the Trust
Indenture Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No.33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
-3-
16. LIST OF EXHIBITS
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15,
1995 with the Commission pursuant to the Trust
Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
----
As of January 27, 1999, the trustee had 2,999,020 shares of Common
Stock outstanding, all of which are owned by its parent company, U.S.
Trust Corporation. The term "trustee" in Item 2, refers to each of
United States Trust Company of New York and its parent company, U.S.
Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and
will rely on information to be furnished by the obligor and the
trustee disclaims responsibility for the accuracy or completeness of
such information.
------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 28th day of January, 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Louis P. Young
----------------------
Louis P. Young
Vice President
<PAGE>
EXHIBIT T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
Unites States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ Gerard F. Ganey
-------------------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1998
------------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 104,220
Short-Term Investments 207,292
Securities, Available for Sale 578,874
Loans 2,061,582
Less: Allowance for Credit Losses 17,199
----------
Net Loans 2,044,383
Premises and Equipment 58,263
Other Assets 124,079
----------
TOTAL ASSETS $3,117,111
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 709,221
Interest Bearing 1,908,861
----------
Total Deposits 2,618,082
Short-Term Credit Facilities 170,644
Accounts Payable and Accrued Liabilities 146,324
----------
TOTAL LIABILITIES $2,935,050
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 111,402
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,623
----------
TOTAL STOCKHOLDER'S EQUITY 182,061
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,117,111
==========
</TABLE>
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
February 1, 1999
<PAGE>
EXHIBIT 99.1
ITC/\DeltaCom, Inc.
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE ITS 9 3/4% SENIOR NOTES DUE NOVEMBER 15, 2008
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9 3/4% SENIOR NOTES DUE NOVEMBER 15, 2008
PURSUANT TO THE PROSPECTUS DATED FEBRUARY , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON APRIL , 1999, UNLESS EXTENDED (THE "EXPIRATION DATE").
The Exchange Agent
for the Exchange Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
By Facsimile: By Mail:
(212) 780-0592 United States Trust Company of New York
Attention: Customer Service P.O. Box 843 Cooper Station
Confirm by Telephone New York, New York 10276
to: (800) 548-6565 Attention: Corporate Trust Services
By Hand before 4:30 p.m.: By Overnight Courier and by
Hand after 4:30 p.m.:
United States Trust Company of New York United States Trust Company of New
111 Broadway York 770 Broadway, 13th Floor New
New York, New York 10006 York, New York 10003
Attention:Lower Level Corporate
Trust Window
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE
TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Outstanding
Notes (as defined below) either if Outstanding Notes are to be forwarded
herewith or if tenders of Outstanding Notes are to be made by book-entry
transfer to an account maintained by United States Trust Company of New York
(the "Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes" in the Prospectus.
Holders of Outstanding Notes whose certificates (the "Certificates") for
such Outstanding Notes are not immediately available or who cannot deliver
their Certificates, this Letter of Transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or who
cannot complete the procedures for book-entry transfer on a timely basis, may
tender their Outstanding Notes according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes"
in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
List below the Outstanding Notes of which you are a holder. If the space
provided below is inadequate, list the certificate numbers and principal
amount on a separate signed schedule and attach that schedule to this Letter
of Transmittal. See Instruction 3.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
DESCRIPTION OF OUTSTANDING NOTES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Certificate
Name(s) and Number(s)*
Address(es) of (Attach additional Principal Amount Principal Amount
Registered Holder(s) list (Attach additional Tendered (if less
(Fill in, if blank) if necessary) list if necessary) than all)**
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Total Amount Tendered:
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all Outstanding Notes
held. Outstanding Notes may be tendered in whole or in part in integral
multiples of $1,000 principal amount at maturity. All Outstanding Notes
held shall be deemed tendered unless a lesser number is specified in this
column. See Instruction 4.
(Boxes Below To Be Checked By Eligible Institutions Only. See Instruction 1)
[_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution: ____________________________________________
DTC Account Number: _______________________________________________________
Transaction Code Number: __________________________________________________
[_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): __________________________________________
Window Ticket Number (if any): ____________________________________________
Date of Notice of Guaranteed Delivery: ____________________________________
Institution Which Guaranteed Delivery: ____________________________________
If Guaranteed Delivery is to be made by book-entry transfer:
Name of Tendering Institution: ____________________________________________
DTC Account Number: _______________________________________________________
Transaction Code Number: __________________________________________________
2
<PAGE>
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR
YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name: _______________________________________________________________________
Address: ____________________________________________________________________
Telephone Number and Contact Person: ________________________________________
Ladies and Gentlemen:
The undersigned hereby tenders to ITC/\DeltaCom, Inc.., a Delaware
corporation (the "Company"), the above described principal amount of the
Company's 9 3/4% Senior Notes due November 15, 2008 (the "Outstanding Notes")
in exchange for a like principal amount of the Company's 9 3/4% Senior Notes
due November 15, 2008 (the "Exchange Notes") which have been registered under
the Securities Act of 1933 (the "Securities Act"), upon the terms and subject
to the conditions set forth in the Prospectus dated February , 1999, (as the
same may be amended or supplemented from time to time, the "Prospectus"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, together with the Prospectus, constitute the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of the Outstanding
Notes tendered herewith, the undersigned hereby sells, assigns and transfers
to or upon the order of the Company all right, title and interest in and to
such Outstanding Notes as are being tendered herewith. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent as its agent and
attorney-in-fact (with full knowledge that the Exchange Agent is also acting
as agent of the Company in connection with the Exchange Offer and as Trustee
under the Indenture for the Outstanding Notes and the Exchange Notes) with
respect to the tendered Outstanding Notes, with full power of substitution
(such power of attorney being an irrevocable power coupled with an interest),
subject only to the right of withdrawal described in the Prospectus, to: (i)
deliver such Outstanding Notes to the Company together with all accompanying
evidences of transfer and authenticity to, or upon the order of, the Company
upon receipt by the Exchange Agent, as the undersigned's agent, of the
Exchange Notes to be issued in exchange for such Outstanding Notes; (ii)
present Certificates for such Outstanding Notes for transfer, and to transfer
such Outstanding Notes on the account books maintained by DTC; and (iii)
receive for the account of the Company all benefits and otherwise exercise all
rights of beneficial ownership of such Outstanding Notes, all in accordance
with the terms and conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE
CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE
NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER
OF THE OUTSTANDING NOTES TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES
TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Outstanding
Notes. The Certificate number(s) and the Outstanding Notes that the
undersigned wishes to tender should be indicated in the appropriate boxes
above.
If any tendered Outstanding Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Outstanding Notes will be returned (or, in the
case of Outstanding Notes tendered by book-entry transfer, such Outstanding
Notes will be credited to an account maintained at DTC), without expense to
the tendering holder promptly following the expiration or termination of the
Exchange Offer.
3
<PAGE>
The undersigned understands that tenders of Outstanding Notes pursuant to
any one of the procedures described in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the Prospectus and in the instructions herein
will, upon the Company's acceptance for exchange of such tendered Outstanding
Notes, constitute a binding agreement between the undersigned and the Company
upon the terms and subject to the conditions of the Exchange Offer. The
undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Outstanding Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
Certificates representing Outstanding Notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please deliver Exchange Notes to the undersigned at
the address shown below the undersigned's signature.
BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT: (i) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY (WITHIN THE MEANING OF RULE 405 UNDER THE
SECURITIES ACT), OR IF THE UNDERSIGNED IS AN AFFILIATE, THE UNDERSIGNED WILL
COMPLY WITH THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE
SECURITIES ACT TO THE EXTENT APPLICABLE; (ii) ANY EXCHANGE NOTES TO BE
RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS
BUSINESS; AND (iii) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH
ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE
SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IF THE
UNDERSIGNED IS NOT A BROKER-DEALER, BY TENDERING OUTSTANDING NOTES AND
EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND AGREES
THAT IT IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION OF
EXCHANGE NOTES. IF THE UNDERSIGNED IS A BROKER-DEALER, BY TENDERING
OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED
REPRESENTS AND AGREES THAT SUCH OUTSTANDING NOTES WERE ACQUIRED BY SUCH
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
OTHER TRADING ACTIVITIES AND IT WILL DELIVER A PROSPECTUS MEETING THE
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF EXCHANGE
NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN
THE MEANING OF THE SECURITIES ACT). THE COMPANY HAS AGREED THAT STARTING ON
THE EXPIRATION DATE AND ENDING ON THE CLOSE OF BUSINESS ON THE FIRST
ANNIVERSARY OF THE EXPIRATION DATE, IT WILL MAKE THE PROSPECTUS AVAILABLE TO
ANY PARTICIPATING BROKER-DEALER IN CONNECTION WITH ANY SUCH RESALE.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus and in the Instructions contained in this Letter of
Transmittal, this tender is irrevocable.
4
<PAGE>
PLEASE SIGN HERE PLEASE SIGN HERE
__________________________________ __________________________________
(Authorized Signature) (Authorized Signature)
Name: ____________________________ Name: ____________________________
Title: ___________________________ Title: ___________________________
Address: _________________________ Address: _________________________
__________________________________ __________________________________
Telephone Number: ________________ Telephone Number: ________________
Dated: ___________________________ Dated: ___________________________
__________________________________ __________________________________
(Taxpayer Identification or (Taxpayer Identification or
Social Security Number) Social Security Number)
(NOTE: Signature(s) must be guaranteed if required by Instructions 2 and 5.
This Letter of Transmittal must be signed by the registered holder(s) exactly
as the name(s) appear(s) on Certificate(s) for the Outstanding Notes hereby
tendered or on a security position listing, or by any person(s) authorized to
become the registered holder(s) by endorsements and documents transmitted
herewith, including such opinions of counsel, certifications and other
information as may be required by the Company or the Trustee for the
Outstanding Notes to comply with the restrictions on transfer applicable to
the Outstanding Notes. If signature is by an attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting
in a fiduciary capacity or representative capacity, please set forth the
signer's full title. See Instructions 2 and 5. Please complete substitute Form
W-9 below.)
5
<PAGE>
Guarantee of Signature(s)
(If required--see Instructions 2 and 5)
Signature(s) Guaranteed by an
Eligible Institution: ___________________________________ Date: ___________
(Authorized Signature)
Name of Eligible Institution
Guaranteeing Signature: ____________________________________________________
Address: ___________________________________________________________________
Capacity (full title): _____________________________________________________
Telephone Number: __________________________________________________________
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 2, 5 and 6) (See Instructions 2, 5 and 6)
To be completed ONLY if the To be completed ONLY if the
Exchange Notes or any Outstanding Exchange Notes or any Outstanding
Notes that are not tendered are Notes that are not tendered are
to be issued in the name of to be sent to someone other than
someone other than the registered the registered holder(s) of the
holder(s) of the Outstanding Outstanding Notes whose name(s)
Notes whose name(s) appear(s) appear(s) above, or to such
above. holder at an address other than
that shown above.
Issue:
Mail:
[_] Outstanding Notes not
tendered, to: [_] Outstanding Notes not tendered,
to:
[_] Exchange Notes, to:
[_] Exchange Notes, to:
Name(s) __________________________
Name(s) __________________________
Address __________________________
Address __________________________
__________________________________
__________________________________
Telephone Number _________________
Telephone Number _________________
__________________________________
(Tax Identification or Social __________________________________
Security No.) (Tax Identification or Social
Security No.)
6
<PAGE>
INSTRUCTIONS
(FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER)
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in "The
Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus.
Certificates, or timely confirmation of a book-entry transfer of such
Outstanding Notes into the Exchange Agent's account at DTC, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date. The term
"book-entry confirmation" means a timely confirmation of book-entry transfer
of Outstanding Notes into the Exchange Agent's account at DTC. Outstanding
Notes may be tendered in whole or in part in integral multiples of $1,000
principal amount at maturity.
Holders who wish to tender their Outstanding Notes and: (i) whose
Certificates for such Outstanding Notes are not immediately available; (ii)
who cannot deliver their Certificates, this Letter of Transmittal and all
other required documents to the Exchange Agent prior to the Expiration Date;
or (iii) who cannot complete the procedures for delivery by book-entry
transfer on a timely basis, may tender their Outstanding Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in "The Exchange Offer--Procedures
for Tendering Outstanding Notes" in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying this Letter of
Transmittal, must be received by the Exchange Agent prior to the Expiration
Date; and (iii) the Certificates (or a book-entry confirmation) representing
all tendered Outstanding Notes, in proper form for transfer, together with a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution
of such Notice of Guaranteed Delivery, all as provided in "The Exchange
Offer--Procedures for Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery. For Outstanding Notes to be properly tendered pursuant to the
guaranteed delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery prior to the Expiration Date. As used herein and in the
Prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker
or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE
OBTAINED. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE
COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH
HOLDERS.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance
of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if: (i) this Letter of Transmittal is signed by the
registered holder (which shall include any participant in DTC whose name
appears on a security position listing as the owner of the Outstanding Notes)
of Outstanding Notes tendered herewith, unless such holder has
7
<PAGE>
completed either the box entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" above; or (ii) such Outstanding Notes
are tendered for the account of a firm that is an Eligible Institution. In all
other cases, an Eligible Institution must guarantee the signature(s) on this
Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned "Description
of Outstanding Notes Tendered" is inadequate, the Certificate number(s) and/or
the principal amount of Outstanding Notes and any other required information
should be listed on a separate signed schedule and attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Outstanding Notes will
be accepted only in integral multiples of $1,000 principal amount at maturity.
If less than all the Outstanding Notes evidenced by any Certificate submitted
are to be tendered, fill in the principal amount of Outstanding Notes which
are to be tendered in the box entitled "Principal Amount Tendered (if less
than all)." In such case, new Certificate(s) for the remainder of the
Outstanding Notes that were evidenced by the old Certificate(s) will be sent
to the tendering holder, unless the appropriate boxes on this Letter of
Transmittal are completed, promptly after the Expiration Date. All Outstanding
Notes represented by Certificates delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to the Expiration Date. In order for a withdrawal
to be effective, a written, telegraphic or facsimile transmission of such
notice of withdrawal must be timely received by the Exchange Agent at its
address set forth above prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Outstanding
Notes to be withdrawn, the aggregate principal amount of Outstanding Notes to
be withdrawn, and (if Certificates for such Outstanding Notes have been
tendered) the name of the registered holder of the Outstanding Notes as set
forth on the Certificate(s), if different from that of the person who tendered
such Outstanding Notes. If Certificates for Outstanding Notes have been
delivered or otherwise identified to the Exchange Agent, the notice of
withdrawal must specify the serial numbers on the particular Certificates for
the Outstanding Notes to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case
of Outstanding Notes tendered for the account of an Eligible Institution. If
Outstanding Notes have been tendered pursuant to the procedures for book-entry
transfer set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Outstanding Notes
and must otherwise comply with the procedures of DTC. Withdrawals of tenders
of Outstanding Notes may not be rescinded. Outstanding Notes properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time prior to the Expiration
Date by following any of the procedures described in the Prospectus under "The
Exchange Offer--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all
parties. Neither the Company, any affiliates of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Outstanding Notes
which have been tendered but which are withdrawn will be returned to the
holder thereof promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the
Outstanding Notes tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) or on a security
position listing, without alteration, enlargement or any change whatsoever.
If any of the Outstanding Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different names on
several Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
names in which Certificates are registered.
8
<PAGE>
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing and must submit proper evidence
satisfactory to the Company, in its sole discretion, of such persons'
authority to so act.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Outstanding Notes listed and transmitted hereby,
the Certificate(s) must be endorsed or accompanied by appropriate bond
power(s), signed exactly as the name(s) of the registered owner appear(s) on
the Certificate(s), and also must be accompanied by such opinions of counsel,
certifications and other information as the Company or the Trustee for the
Outstanding Notes may require in accordance with the restrictions on transfer
applicable to the Outstanding Notes. Signature(s) on such Certificate(s) or
bond power(s) must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes or
Certificates for Outstanding Notes not exchanged are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or are to be
sent to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. In the case of issuance in a different name,
the taxpayer identification number of the person named must also be indicated.
Holders tendering Outstanding Notes by book-entry transfer may request that
Outstanding Notes not exchanged be credited to such account maintained at DTC
as such holder may designate. If no such instructions are given, Outstanding
Notes not exchanged will be returned by mail or, if tendered by book-entry
transfer, by crediting the account indicated above maintained at DTC.
7. IRREGULARITIES. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of Outstanding Notes,
which determination shall be final and binding on all parties. The Company
reserves the absolute right, in its sole and absolute discretion, to reject
any and all tenders determined by it not to be in proper form or the
acceptance for exchange of which may, in the view of counsel to the Company,
be unlawful. The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer set forth
in the Prospectus under "The Exchange Offer--Conditions to the Exchange Offer"
or any defect or irregularity in any tender of Outstanding Notes of any
particular holder whether or not similar defects or irregularities are waived
in the case of other holders. The Company's interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) will be final and binding. No tender of Outstanding Notes
will be deemed to have been validly made until all defects or irregularities
with respect to such tender have been cured or waived. Neither the Company,
any affiliates of the Company, the Exchange Agent, or any other person shall
be under any duty to give any notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth above. Additional copies of the Prospectus, the
Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained
from the Exchange Agent or from your broker, dealer, commercial bank, trust
company or other nominee.
9. BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax
law, a holder whose tendered Outstanding Notes are accepted for exchange is
required to provide the Exchange Agent with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the holder or other payee to a $50 penalty. In addition,
payments to such holders or other payees with respect to Outstanding Notes
exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN
is provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period
9
<PAGE>
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent with its TIN within 60 days after the date of the Substitute
Form W-9, the amounts retained during the 60 day period will be remitted to
the holder and no further amounts shall be retained or withheld from payments
made to the holder thereafter. If, however, the holder has not provided the
Exchange Agent with its TIN within such 60 day period, amounts withheld will
be remitted to the IRS as backup withholding. In addition, 31% of all payments
made thereafter will be withheld and remitted to the IRS until a correct TIN
is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes
are registered in more than one name or are not in the name of the actual
owner, consult the Instructions to Form W-9 (Request for Identification Number
and Certification) for additional guidance on which number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the
face thereof, to avoid possible erroneous backup withholding. A foreign person
may qualify as an exempt recipient by submitting a properly completed IRS Form
W-8, signed under penalties of perjury, attesting to that holder's exempt
status. Please consult the Instructions to Form W-9 (Request for
Identification Number and Certification) for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. federal income tax. Rather, the
U.S. federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. MUTILATED, LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate
representing Outstanding Notes has been mutilated, lost, destroyed or stolen,
the holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing mutilated, lost, destroyed or
stolen Certificates have been followed.
11. SECURITY TRANSFER TAXES. Holders who tender their Outstanding Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith, except that if Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
Outstanding Notes tendered, or if a transfer tax is imposed for any reason
other than the exchange of Outstanding Notes in connection with the Exchange
Offer, then the amount of any such transfer tax (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such transfer tax or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer tax will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING TENDERED OUTSTANDING NOTES OR A BOOK ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
10
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS:
(See Instruction 9)
PAYER'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
PART 1--PLEASE PROVIDE YOUR
SUBSTITUTE TIN ON THE LINE AT RIGHT Social security number or
Form W-9 AND CERTIFY BY SIGNING AND Employer identification
DATING BELOW number
-------------------------
--------------------------------------------------------
PART 2--CERTIFICATION--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
taxpayer identification number (or I am waiting
for a number to be issued to me);
Department of (2) I am not subject to backup withholding either
the Treasury because: (a) I am exempt from backup withholding;
Internal (b) I have not been notified by the Internal
Revenue Revenue Service ("IRS") that I am subject to
Service backup withholding as a result of a failure to
report all interest or dividends; or (c) the IRS
has notified me that I am no longer subject to
backup withholding; and
(3) Any other information provided on this form is
true and correct.
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return and you have not been notified by the IRS that
you are no longer subject to backup withholding.
Payer's Request
for Taxpayer --------------------------------------------------------
Identification Part 3
Number (TIN) Signature: ____________ Date: ______ Awaiting TIN [_]
--------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN
CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF
31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
--------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION
NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and
either (1) I have mailed or delivered an application to
receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social
Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I
understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of all
payments made to me on account of the Exchange Notes
shall be retained until I provide a taxpayer
identification number to the Exchange Agent and that, if
I do not provide my taxpayer identification number
within 60 days, such retained amounts shall be remited
to the Internal Revenue Service as backup withholding
and 31% of all reportable payments made to me thereafter
will be withheld and remitted to the Internal Revenue
Service until I provide a taxpayer identification
number.
Signature: __________________________ Date: ________
11
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
9 3/4% SENIOR NOTES DUE NOVEMBER 15, 2008
(THE "OUTSTANDING NOTES")
OF
ITC/\DeltaCom, Inc.
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to tender Outstanding Notes pursuant to the Exchange Offer
described in the Prospectus dated February , 1999 (as the same may be amended
or supplemented from time to time, the "Prospectus") of ITC/\DeltaCom, Inc., a
Delaware corporation (the "Company"), if certificates for the Outstanding
Notes are not immediately available, or time will not permit the Outstanding
Notes, the Letter of Transmittal and all other required documents to be
delivered to United States Trust Company of New York (the "Exchange Agent")
prior to 5:00 p.m., New York City time, on April , 1999 or such later date
and time to which the Exchange Offer may be extended (the "Expiration Date"),
or the procedures for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery, or one substantially
equivalent to this form, must be delivered by hand or sent by facsimile
transmission or mail to the Exchange Agent, and must be received by the
Exchange Agent prior to the Expiration Date. See "The Exchange Offer--
Procedures for Tendering Outstanding Notes" in the Prospectus. Capitalized
terms used but not defined herein shall have the same meaning given them in
the Prospectus.
The Exchange Agent for the Exchange Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Facsimile: By Mail: By Hand before 4:30 p.m.:
<S> <C> <C>
(212) 780-0592 United States Trust Company United States Trust Company
Attention: Customer of New York of New York
Service Confirm by P.O. Box 843 Cooper Station 111 Broadway
Telephone to: New York, New York New York, New York 10006
(800) 548-6565 Attention: Corporate Trust Services Attention:Lower Level Corporate
Trust Window
</TABLE>
By Overnight Courier and By Hand after 4:30 p.m.:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, the Outstanding Notes indicated below pursuant to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering Outstanding Notes."
Name(s) of Registered Holder(s): _______________________________________________
(Please Print or Type)
Signature(s): __________________________________________________________________
Address(es): ___________________________________________________________________
Area Code(s) and Telephone Number(s): __________________________________________
Account Number: ________________________________________________________________
Date: __________________________________________________________________________
Principal Amount of
Certificate No(s). (if available) Outstanding Notes Tendered*
______________________________________ ______________________________________
______________________________________ ______________________________________
______________________________________ ______________________________________
______________________________________ ______________________________________
______________________________________ ______________________________________
*Must be in integral multiples of $1,000 principal amount at maturity.
<PAGE>
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank
or trust company having an office or a correspondent in the United States or
an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, hereby guarantees that the
undersigned will deliver to the Exchange Agent the certificates representing
the Outstanding Notes being tendered hereby in proper form for transfer (or a
confirmation of book-entry transfer of such Outstanding Notes, into the
Exchange Agent's account at the book-entry transfer facility of The Depository
Trust Company ("DTC")) with delivery of a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, all within three New York Stock
Exchange trading days after the date of execution of the Notice of Guaranteed
Delivery.
Name of Firm __________________________________________________________________
Authorized Signature __________________________________________________________
Address _______________________________________________________________________
Name __________________________________________________________________________
Please Print or Type
Title _________________________________________________________________________
Zip Code ______________________________________________________________________
Telephone No. _________________________________________________________________
Dated: ________________________________________________________________________
The institution that completes this form must communicate the guarantee to
the Exchange Agent and must deliver the certificates representing any
Outstanding Notes (or a confirmation of book-entry transfer of such
Outstanding Notes into the Exchange Agent's account at DTC) and the Letter of
Transmittal to the Exchange Agent within the time period shown herein. Failure
to do so could result in a financial loss to such institution.
