<PAGE>
As filed with the Securities and Exchange Commission on April 7, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ITC/\DELTACOM, INC.
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C> <C>
Delaware 4813 58-2301135
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
</TABLE>
1791 O.G. Skinner Drive
West Point, Georgia 31833
(706) 385-8000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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Andrew M. Walker
Chief Executive Officer
ITC/\DeltaCom, Inc .
1791 O.G. Skinner Drive
West Point, Georgia 31833
(706) 385-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Richard J. Parrino, Esq.
John F. Gaul, Esq.
Hogan & Hartson L.L.P.
8300 Greensboro Drive, Suite 1100
McLean, Virginia 22102
(703) 610-6200
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Proposed Proposed
Title of each class of amount to be maximum price Maximum aggregate Amount of
securities to be registered(1) registered(2) per security offering price(2)(3) registration fee
______________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share.......... (4) (4) (4)
Preferred Stock, par
value $0.01 per share.... (4) (4) (4)
Depositary Shares,
representing Preferred
Stock.................... (4) (4) (4)
Warrants(5)............... (4) (4) (4)
Stock Purchase Contracts
and Stock Purchase
Units(6)................. (4) (4) (4)
Subscription Rights(7).... (4) (4) (4)
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Total.................... $126,787,500 (4) $126,787,500(8) $33,472(9)
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</TABLE>
(1) The securities covered by this registration statement may be sold or
otherwise distributed separately, together or as units with other securities
covered by this registration statement. This registration statement covers
offers, sales and other distributions of the securities listed in this table
from time to time at prices to be determined, as well as shares of preferred
stock distributable upon the termination of a deposit arrangement for depositary
shares so offered or sold, and shares of common stock issuable upon the exchange
or conversion of shares of preferred stock so offered or sold that are
exchangeable for or convertible into shares of common stock or upon the exercise
of common stock, preferred stock or depositary share warrants or rights so
offered, sold or distributed. This registration statement also covers shares of
preferred stock, depositary shares, shares of common stock, warrants and rights
that may be offered or sold under delayed delivery contracts pursuant to which
the counterparty
<PAGE>
may be required to purchase such securities, as well as such contracts
themselves. Such contracts would be issued with the shares of preferred stock,
depositary shares, shares of common stock, warrants and/or rights.
(2) In U.S. dollars or the equivalent thereof for any security denominated
in one or more, or units of two or more, foreign currencies or composite
currencies based on the exchange rate at the time of sale.
(3) Estimated solely for purposes of calculating the registration fee under
Rule 457.
(4) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
(5) The warrants covered by this registration statement may be preferred
stock warrants, depositary share warrants or common stock warrants.
(6) Stock Purchase Contracts and Stock Purchase Units with respect to
Common Stock or Preferred Stock.
(7) Subscription rights evidencing the right to purchase Common Stock,
Preferred Stock, Depositary Shares or Warrants.
(8) The aggregate maximum offering price of all securities issued under
this registration statement will not exceed $126,787,500. No separate
consideration will be received for shares of preferred stock or common stock
that are issued upon conversion or exchange of shares of preferred stock or
depositary shares registered hereunder or for shares of preferred stock
distributed upon termination of a deposit arrangement for depositary shares.
(9) Calculated under Rule 457(o) of the rules and regulations 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.
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<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated April 7, 2000
PROSPECTUS
$126,787,500
[ITC/\DeltaCom LOGO]
Common Stock, Preferred Stock, Depositary Shares,
Warrants, Subscription Rights, Stock Purchase Contracts to Purchase
Common Stock or Preferred Stock and Stock Purchase Units
By this prospectus, we may offer, from time to time, in one or more series or
classes the following securities:
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<CAPTION>
<S> <C>
. shares of our common stock . warrants exercisable for
our common stock, preferred
stock or depositary shares,
. shares of our preferred stock, . subscription rights
evidencing the right to
purchase any of the above
securities, and
. shares of our preferred . stock purchase contracts
stock represented by to purchase common stock or
depositary shares, preferred stock and stock
purchase units.
</TABLE>
The aggregate initial offering price of these "offered securities" that we may
issue will not exceed $126,787,500.
We may offer the offered securities in amounts, at prices and on terms
determined at the time of the offering. We will provide you with specific terms
of the applicable offered securities in supplements to this prospectus.
<PAGE>
Our common stock is listed for trading on The Nasdaq Stock Market's National
Market under the symbol "ITCD." On April 5, 2000, the last reported sale price
of our common stock on The Nasdaq National Market was $30 1/4.
You should read this prospectus and any supplement carefully before you decide
to invest. This prospectus may not be used to consummate sales of the offered
securities unless it is accompanied by a prospectus supplement describing the
method and terms of the offering of those offered securities.
Investing in the offered securities involves risks. See "Risk Factors"
beginning on page 1 of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these offered securities or determined
if this prospectus is truthful or complete. It is illegal for any person to tell
you otherwise.
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The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Prospectus Page
<S> <C>
Risk Factors......................................................... 1
Cautionary Note Regarding Forward-Looking Statements................. 15
About This Prospectus................................................ 16
Where You Can Find More Information.................................. 16
About ITC/\DeltaCom.................................................. 18
Use of Proceeds...................................................... 20
ERISA Matters........................................................ 20
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends......................................................... 21
Description of Common Stock.......................................... 22
Description of Preferred Stock....................................... 25
Description of Depositary Shares..................................... 30
Description of Warrants.............................................. 34
Description of Stock Purchase Contracts to Purchase Common Stock or
Preferred Stock and Stock Purchase Units.......................... 36
Description of Subscription Rights................................... 37
Plan of Distribution................................................. 39
Legal Matters........................................................ 42
Experts.............................................................. 42
</TABLE>
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If it is against the law in any state to make an offer to sell the
securities, or to solicit an offer from someone to buy the securities, then this
prospectus does not apply to any person in that state, and no offer or
solicitation is made by this prospectus to any such person.
You should rely only on the information contained or incorporated by
reference in this prospectus or any supplement. We have not authorized anyone to
provide you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. You should assume that the
information appearing in this prospectus or any supplement is accurate only as
of any date on the front cover of these documents.
<PAGE>
RISK FACTORS
ITC/\DeltaCom is a full-service provider of integrated voice and data
telecommunications services on a retail basis to mid-sized and major regional
businesses in the southern United States. We refer to this business segment as
our Retail Services segment. We are also a leading regional provider of
wholesale long-haul services to other telecommunications companies. We call this
business segment our Carriers' Carrier Services segment. In February 2000, we
announced the creation of a new business to be operated as e/\DeltaCom. We
expect that e/\DeltaCom will enable us to extend and enhance our current data
and Internet access products by offering customers collocation and Web server
hosting services integral to operating business-critical applications over the
Internet. In connection with these businesses, we own, operate and manage an
extensive fiber optic network in the southern United States. A more detailed
description of our business may be found under the caption "About ITC/\DeltaCom"
and in our Annual Report on Form 10-K for the year ended December 31, 1999,
filed with the Securities and Exchange Commission on March 30, 2000. See "Where
You Can Find More Information" to obtain a copy of this Annual Report.
In addition to the other information contained and incorporated by
reference in this prospectus, you should carefully consider the following risk
factors relating to ITC/\DeltaCom and our common stock before purchasing the
offered securities.
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.
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.
In addition, we cannot assure you that we will achieve or sustain profitability
or positive net cash flow at any time after that period. 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.
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 currently planned.
We need significant capital to expand our network, operations and services
according to our business plans. Our current business plans require us to
continue to make significant capital expenditures in connection with the
accelerated expansion of our fiber optic network and Retail Services segment.
During 1999, we made capital expenditures of approximately $166 million. We
currently estimate that our capital expenditures for our existing lines of
business will total approximately $235 million to $245 million in 2000 and our
capital expenditures for our new line of business, e/\DeltaCom, will be
approximately $65 million in 2000. In addition, we expect to make substantial
capital expenditures after 2000, which may be even more significant than those
in previous periods. If we do not have access to the capital that we require or
if our estimates are inaccurate, we will need to change our business plans. This
could have a material adverse effect on our business, financial condition and
results of operations.
Our planned capital expenditures primarily will be for:
. continued development and construction of our fiber optic network,
including transmission equipment;
1
<PAGE>
. 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, or
ISPs;
. market expansion; and
. infrastructure enhancements, principally for information systems.
If our estimates of the capital resources available to us are not accurate
for any reason, we cannot assure you that we will be able to obtain any
additional funds on favorable terms, or at all. Our inability to obtain such
funds, if necessary, could have a material adverse effect on our business,
financial condition and results of operations.
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.
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 historical
results on a consolidated basis, adjusted to reflect our issuance of (a) $160
million principal amount of senior notes in March 1998, (b) $125 million
principal amount of senior notes in November 1998 and (c) $100 million of
convertible subordinated notes in May 1999, as if each issuance had occurred on
January 1, 1998.
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<CAPTION>
Year ended Year ended
At December 31, 1999 December 31, 1999 December 31, 1998
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<S> <C> <C>
Indebtedness of $516.9 million Earnings insufficient to cover Earnings insufficient to cover
fixed charges by $56.6 million fixed charges by $49.4 million
Stockholders' equity of $218.2 EBITDA, as adjusted, less capital EBITDA, as adjusted, less capital
million expenditures and interest expense expenditures and interest expense
of negative $183.3 million of negative $172.8 million
</TABLE>
EBITDA, as adjusted, represents earnings before extraordinary item,
preacquisition earnings (loss), other income (expense), net interest, income
taxes, depreciation and amortization. EBITDA, as adjusted, is not a measure 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 flows
2
<PAGE>
as a measure of liquidity. EBITDA, as adjusted, is
provided because it is a measure commonly used in the industry.
To be able to meet our debt service requirements 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.
Our current indebtedness contains restrictive covenants that place limits on our
business activities.
We are subject to restrictions under the indentures pursuant to which our
publicly traded notes were issued and under our $160.0 million senior secured
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. Our senior note indentures restrict our ability to incur
indebtedness, other than indebtedness to finance the acquisition of equipment,
inventory or network assets and other specified indebtedness, by requiring
compliance with specified leverage ratios. In addition, if and when we borrow
funds under our $160.0 million senior secured credit facility, we will be
required to maintain specified financial ratios. We cannot assure you that we
will be able to maintain the required ratios following such borrowings.
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.
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:
3
<PAGE>
. 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.
We must accomplish these tasks 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 to 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.
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 the following:
. 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.
4
<PAGE>
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.
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 offer 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. In addition, successful implementation of our
business plan for provision of local telephone services is dependent on our
ability to obtain local loop and other services and facilities from
BellSouth. We expect that competition from BellSouth in the provision of
local telephone services will continue to be intense. By impeding,
hindering or delaying provision of services and facilities to us, BellSouth
could inhibit or prevent us from providing local telephone service to our
customers, which would place us at a substantial competitive disadvantage.
. Other competitors and technologies in our industries may further
increase competition
Providers of long distance services and Carriers' Carrier Services. We
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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 include or are
likely to include Regional Bell Operating Companies, or RBOCs, 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
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offer products that increasingly become a substitute for, rather than only
a supplement to, 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
5
<PAGE>
years, the 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 technologies
in their networks to upgrade capacity and reduce costs as well as deploying
other advanced networks.
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 of 1996 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. In connection
with those plans, BellSouth has proceeded to file tariffs with some state
regulatory authorities.
. 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. 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 RBOCs, subject to compliance by such companies with
requirements set forth in the Telecommunications Act and implemented by the
FCC. Although the FCC has rejected several RBOC applications to provide
interLATA services, including applications from BellSouth covering the
states of South Carolina and Louisiana, it recently granted the application
of Bell Atlantic to provide interLATA service in New York, and it is
currently considering whether to grant the application of SBC
Communications, Inc. for authority in Texas. BellSouth is actively
pursuing favorable state-level approval in Georgia with the goal of
obtaining FCC approval in early 2000 to provide interLATA services in that
state. BellSouth is also at various stages of the approval process in
other states in its region, and it is possible that interLATA entry could
be approved in one or more of those states in 2000. In addition,
legislation is pending in Congress that, if enacted, would relax interLATA
restriction in some respects. We could be adversely affected if the RBOCs,
and particularly BellSouth, are allowed to provide wireline interLATA long
distance services within their own regions before local competition is
established.
Broadband local services. The FCC has proposed new rules that would give
------------------------
the major incumbent local exchange carriers more freedom if they offer
local 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
6
<PAGE>
FCC recently approved a similar structure in connection with its approval
of the SBC/Ameritech merger. We are evaluating how such actions would
impact our ability to compete with BellSouth and other incumbent local
exchange carriers. In a related development, cable operators are beginning
to offer customers broadband access to the Internet. AT&T intends to use
its own cable systems to provide broadband telecommunications services, and
is pursuing arrangements with other cable operators to do the same over
those operators' facilities. We could be adversely affected if in the
future we are not able to offer broadband services to certain customers due
to limitations on our ability to reach such customers over broadband local
network facilities.
Additional flexibility for incumbent local exchange carriers. The FCC has
------------------------------------------------------------
adopted 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 have approved incumbent
local exchange carrier requests for similar regulatory relief with respect
to intrastate services. Any pricing flexibility or other significant
deregulation of the incumbent local exchange carriers could have a material
adverse effect on our business. To the extent the incumbent local exchange
carriers are permitted to engage in increased volume and discount pricing
practices prior to full competition in local services, or given other
regulatory freedom, 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 us would be particularly adverse to the extent that we bear a
disproportionate share of these costs compared to our 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
telephone services strategy. Because of these and possible other unknown
factors, we cannot assure you that we will be successful in implementing our
local services strategy. Our inability to implement this strategy could have a
material adverse affect on our business, results of operations and financial
condition. To implement our local 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 RBOCs, 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.
7
<PAGE>
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.
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, and BellSouth is likely to
receive authority to use its excess capacity to market in-region
interLATA services;
. 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
optic cable 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; and
. 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. This also
could have a material adverse affect on our business, financial condition and
results of operations. See "--Our business is subject to significant
competitive pressures" for more information on the competitive pressures in our
industry.
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:
8
<PAGE>
. 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.
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. 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.
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 were implemented in July 1999, and others are expected 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. New Internet-based
competitors generally are exempt from these charges, which could give them a
significant cost advantage in this area.
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 RBOCs, to
enter into interconnection agreements with new competitive entrants like
ITC/\DeltaCom. We depend on our interconnection agreements with incumbent local
exchange carriers such as BellSouth, GTE, SBC 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
9
<PAGE>
. obtain operational support to ensure timely delivery to us of network
elements and wholesale services from the incumbent local exchange
carriers.
In January 1999, the U.S. Supreme Court upheld the FCC's authority to adopt
and implement these rules, but required the FCC to reconsider the list of
network elements that incumbent local exchange carriers must make available to
competitors. In September 1999, the FCC largely reaffirmed its existing
requirements.
Incumbent local exchange carriers meet their obligations under the
Telecommunications Act through the use of 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. 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.
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 expired on July 1, 1999. We are in
negotiations with BellSouth to renew the terms of the interconnection agreement.
In addition, we have filed for arbitration of certain unresolved issues with the
relevant state regulatory authorities in all BellSouth states, except Kentucky
and Mississippi. In Mississippi, we opted into an existing interconnection
agreement between BellSouth and another CLEC. The agreement provides that the
parties will continue to exchange traffic under the current agreement after July
1, 1999 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 RBOCs will not be permitted to
provide in-region interLATA long distance services until there is adequate
competition in the local services industry. This provides some incentive to the
RBOCs to provide access to their facilities to competitive new entrants such as
ITC/\DeltaCom. We cannot assure you, however, that once BellSouth or other RBOCs
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
10
<PAGE>
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. In addition, third parties may challenge our use of
rights of way obtained by others. 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. 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.
Our inability to maintain our network infrastructure, portions of which we do
not own, could adversely affect our business, results of operations and
financial condition.
Network agreements may be terminated. We have effectively extended our
------------------------------------
network with minimal capital expenditures by entering into marketing and
management agreements with three 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 two to five
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.
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 years ended December 31, 1999 and 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 Year ended
December 31, 1999 December 31, 1998
------------------------------ ------------------------------
<S> <C> <C>
Two largest Carriers' Carrier customers Approximately 10.6% of Approximately 13.1% of
consolidated revenues consolidated revenues
Five largest Retail Services customers Approximately 11.3% of Approximately 8.5% of
consolidated revenues consolidated revenues
</TABLE>
11
<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.
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 an
"early discontinuance charge" in the event of specified types of outages in
service and for other defined causes. As of December 31, 1999, our Carriers'
Carrier business had remaining future long-term contract commitments totaling
approximately $114.2 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.
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 and financial
condition.
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, including our executive offices. 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.
Our operating results could vary significantly from period to period.
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;
12
<PAGE>
. 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 and
financial condition.
We do not pay dividends on our capital stock.
We have never declared or paid any cash dividends on our capital stock and
we do not anticipate paying cash dividends in the foreseeable future.
Additionally, our indentures under which we have issued our publicly traded
notes and our senior secured credit facility contain restrictions on our ability
to pay dividends.
Several provisions in our certificate of incorporation and bylaws could have
effects that conflict with the interests of our stockholders.
Our certificate of incorporation and bylaws and the general corporation law
of the state of Delaware contain provisions that could make it more difficult
for a third party to acquire control of us, even if such change in control would
be beneficial to our stockholders. In particular, the classification of our
board of directors may delay or impede the removal of incumbent directors and
therefore could have the effect of delaying a change in control. In addition,
our certificate of incorporation authorizes the board of directors to issue
shares of our preferred stock, in one or more series, without further
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the board of directors may determine. Any such
issuances of preferred stock could make it more difficult for a third party to
acquire control of us.
The market price of our common stock has fluctuated significantly and could
fluctuate significantly in the future, as a result of our operating performance
and conditions in our industry.
The market price of our common stock has fluctuated over a wide range since
it began trading publicly after our initial public offering in October 1997. The
market price may continue to fluctuate in the future.
The market price of our common stock could be subject to significant
fluctuations in response to various factors and events, including, among other
things:
. the depth and liquidity of the trading market for our common stock;
. quarterly variations in actual or anticipated operating results and
growth rates;
. changes in estimates by analysts;
. market conditions in the industry;
. announcements by competitors;
. regulatory actions; and
. general economic conditions.
13
<PAGE>
In addition, the stock market in recent years has experienced significant
price and volume fluctuations that have often been unrelated to the operating
performance of companies. These fluctuations have particularly affected the
market prices of the stocks of telecommunications companies.
Any of these events would likely result in a material adverse effect on the
market price of our common stock.
14
<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 Securities 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." We cannot promise you that our expectations in such forward-looking
statements 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 discussed in this prospectus under the caption "Risk Factors"
beginning on page 1 of this prospectus. We undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, further events or otherwise.
As used in this prospectus and the accompanying prospectus supplement,
"ITC/\DeltaCom" means ITC/\DeltaCom, Inc., a Delaware corporation.
15
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process under the Securities Act of 1933. Under
the shelf process, we may, from time to time, sell any combination of the
offered securities described in this prospectus in one or more offerings up to a
total dollar amount of $126,787,500.
This prospectus and the accompanying prospectus supplement do not contain
all of the information included in the registration statement. We have omitted
parts of the registration statement as permitted by the rules and regulations of
the SEC. For further information, we refer you to the registration statement on
Form S-3, including its exhibits. Statements contained in this prospectus and
any accompanying prospectus supplement about the provisions or contents of any
agreement or other document are not necessarily complete. If SEC rules and
regulations require that any agreement or document be filed as an exhibit to the
registration statement, you should refer to that agreement or document for a
complete description of these matters. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of each document.
This prospectus provides you with a general description of the offered
securities. Each time we sell offered securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change any
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with the additional information described
below under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy materials that we have filed
with the SEC, including the registration statement, at the following SEC public
reference rooms:
450 Fifth Street, N.W 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
Our common stock is quoted on The Nasdaq National Market under the symbol
"ITCD," and our SEC filings can also be read at the following Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Our SEC filings are also available to the public on the SEC's Internet site
at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, including any filings after the date of initial
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<PAGE>
filing and prior to the effectiveness of the registration statement of which
this prospectus is a part, until we have sold all of the offered securities to
which this prospectus relates or the offering is otherwise terminated.
. Our Annual Report on Form 10-K for our fiscal year ended December 31,
1999, filed with the SEC on March 30, 2000.
. Description of our common stock included in a registration statement on
Form 8-A, filed with the SEC on October 22, 1997, including any
amendments or reports filed for the purpose of updating that
description.
You may request a copy of these filings, at no cost, by writing to us at
the following address or telephoning us at (706) 385-8012 between the hours of
9:00 a.m. and 4:00 p.m., West Point, Georgia local time:
ITC/\DeltaCom, Inc.
Attention: Investor Relations
1241 O.G. Skinner Drive
West Point, Georgia 31833
17
<PAGE>
ABOUT ITC/\DELTACOM
We are a full service provider of 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 are a full service provider of 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 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;
. primary rate interface connectivity and collocation services to Internet
service providers;
. customer premise equipment sales, installation and repair;
. enhanced services, including conference calling, fax broadcasting and
prepaid calling cards;
. consulting, integration, operation and proactive management of data
networks; and
. in-depth network performance analysis and implementation and design
services for data network deployment.
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 our markets;
. GTE Corporation, for our Alabama market;
. Sprint Corporation, for our Florida markets; and
. SBC Communications, Inc. for our Arkansas 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
certain other markets that we serve or intend to serve.
18
<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., Qwest Communications International, Inc., Sprint Corporation,
Cable & Wireless Communications, Inc., Allnet Communications Services, Inc.
d/b/a Frontier Communications Services and Broadwing.
Our Principal Executive Offices, Telephone Number And Internet Address
Our headquarters are located at 1791 O.G. Skinner Drive, West Point,
Georgia 31833, our telephone number at this address is (706) 385-8000 and our
Internet Web site is located at http://www.itcdeltacom.com. Information
contained on our Web site is not, and should not be deemed to be, a part of this
prospectus.
19
<PAGE>
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we
anticipate that any net proceeds from the sale of offered securities will be
used:
. to fund an accelerated market expansion of our telecommunications
business, including expansion of our fiber optic network, expansion of
our Internet service provider local telecommunications services and the
opening of new sales offices; and
. for additional working capital and other general corporate purposes.
The precise allocation of funds among these uses 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 sale of offered securities may be used to fund any such acquisitions,
joint ventures or strategic alliances.
When we offer a particular series of offered securities, the prospectus
supplement relating to that offering will set forth the intended use of the net
proceeds received from that offering. Pending the specific application of the
net proceeds, we expect to invest the proceeds from the sale of offered
securities in short-term, interest-bearing instruments or other investment-
grade debt securities or to reduce any indebtedness outstanding under our senior
secured credit facility.
ERISA MATTERS
ITC/\DeltaCom and its subsidiaries may each be considered a "party in
interest," within the meaning of the Employee Retirement Income Security Act, or
a "disqualified person," within the meaning of Section 4975 of the Internal
Revenue Code, with respect to many employee benefit plans that are subject to
ERISA. The purchase of offered securities by an ERISA plan, including an
individual retirement plan, that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of the Internal
Revenue Code and with respect to which ITC/\DeltaCom or any of its affiliates is
a service provider, or otherwise is a party in interest or a disqualified
person, may constitute or result in a prohibited transaction under ERISA or the
Internal Revenue Code, unless such offered securities are acquired pursuant to
and in accordance with an applicable federal statutory exemption, or
administrative exemption issued on a class-wide basis by the United States
Department of Labor. Any pension or other employee benefit plan proposing to
acquire any offered securities should consult with its counsel.
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<PAGE>
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth ITC/\DeltaCom's ratio of earnings to
combined fixed charges and preferred stock dividends on a historical basis for
the periods indicated. ITC/\DeltaCom has 1,480,771 shares of Series A Preferred
Stock issued and outstanding. No dividends have been declared or have accrued on
this preferred stock. Therefore, the ratio of earnings to combined fixed charges
and preferred stock dividends is the same as the ratio of earnings to fixed
charges.
The ratio of earnings to combined fixed charges and preferred stock
dividends is computed by dividing income from continuing operations before
income taxes and fixed charges and preferred stock dividends by total fixed
charges and preferred stock dividends. Fixed charges represent interest expense
(including capitalized interest), the amortization of debt issuance costs, and
the portion of rental expense under operating leases representing interest.
<TABLE>
<CAPTION>
Fiscal Year
---------------------------------------------------------------
1999 1998 1997 1996 1995
(in thousands, except ratio data)
<S> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges
and preferred stock dividends -- -- -- -- --
Deficiency of earnings to combined fixed 54,884 32,360 13,663 5,143 807
charges and preferred stock dividends
</TABLE>
21
<PAGE>
DESCRIPTION OF COMMON STOCK
The following description sets forth the general terms of the common stock
which ITC/\DeltaCom may issue. The description set forth below and in any
prospectus supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to ITC/\DeltaCom's certificate of
incorporation and bylaws, each of which will be made available upon request.
General
Our certificate of incorporation provides that we have authority to issue
90,000,000 shares of our common stock, par value $.01 per share. At March 29,
2000 there were 60,016,650 shares of our common stock issued and outstanding.
Voting Rights. Each holder of shares of our common stock is entitled to
attend all special and annual meetings of our stockholders. In addition, each
holder is entitled, together with the holders of all other classes of stock
entitled to attend the special and annual meetings of our stockholders, to cast
one vote for each outstanding share of common stock held upon any matter or
thing, including, without limitation, the election of one or more directors,
properly considered and acted upon by the stockholders.
Liquidation Rights. The holders of our common stock and the holders of any
class or series of stock entitled to participate with the holders of our common
stock as to the distribution of assets in the event of any dissolution,
liquidation, or winding up of ITC/\DeltaCom, whether voluntary or involuntary,
will become entitled to participate in the distribution of any assets of
ITC/\DeltaCom remaining after ITC/\DeltaCom has paid, or provided for the
payment of, all of its debts and liabilities and after ITC/\DeltaCom has paid,
or set aside for payment, to the holders of any class 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.
Dividends. Dividends may be paid on the common stock and on any class or
series of stock entitled to participate with the common stock as to dividends on
an equal per-share basis, but only when and as declared by our Board of
Directors. ITC/\DeltaCom has never paid cash dividends, and the terms of the
indentures pursuant to which our senior notes have been issued restrict the
payment of dividends in the future.
No holder of our common stock has any preemptive right to subscribe for any
of our securities, nor does any holder of our common stock have conversion
rights. The rights, privileges, preferences and priorities of holders of our
common stock are subject to, and may be adversely affected by, the rights of the
holders of our Series A Preferred Stock and shares of any series of Preferred
Stock which we may designate and issue in the future. See "Description of
Preferred Stock."
Some Important Charter and Statutory Provisions
Our certificate of incorporation provides for the division of our Board of
Directors into three classes of directors, each serving staggered, three-year
terms. The certificate further provides that any alteration, amendment or repeal
of certain sections of the certificate relating to the election and
classification of the Board of Directors, indemnification and the vote
requirements for such amendments to the certificate requires the approval of the
holders of at least two-thirds of the shares entitled to vote thereon. These
provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of ITC/\DeltaCom.
ITC/\DeltaCom is subject to the provisions of Section 203 of the Delaware
Corporation Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business
22
<PAGE>
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless:
. prior to that date, the board of directors approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested stockholder;
. upon consummation of the transaction that resulted in that person
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding, for purposes of determining the
number of shares outstanding, shares owned by certain directors or
certain employee stock plans; or
. on or after the date the stockholder became an interested stockholder,
the business combination is approved by the board of directors and
authorized by the affirmative vote, and not by the written consent, of
at least two-thirds of the outstanding voting stock, excluding the stock
owned by the interested stockholder.
A "business combination" includes a merger, asset sale, or other transaction
resulting in a financial benefit to the interested stockholder. An "interested
stockholder" is a person who, other than the corporation and any direct or
indirect majority-owned subsidiary of the corporation, together with affiliates
and associates, owns or, as an affiliate or associate, within three years prior,
did own, 15% or more of the corporation's outstanding voting stock.
The certificate of incorporation empowers our Board of Directors to redeem
any of ITC/\DeltaCom's outstanding capital stock, at a price determined by the
Board, which price shall be at least equal to the lesser of:
. the fair market value as determined in accordance with the certificate
of incorporation; or
. in the case of a "Disqualified Holder," the lesser of fair market value
or such holder's purchase price (if the stock was purchased within one
year of such redemption) to the extent necessary to prevent the loss or
secure the reinstatement of any license, operating authority or
franchise from any governmental agency.
A "Disqualified Holder" is any holder of shares of stock of ITC/\DeltaCom whose
holding of that stock may result in the loss of, or the failure to secure the
reinstatement of, any license or franchise from any governmental agency held by
ITC/\DeltaCom or any of its subsidiaries to conduct any portion of the business
of ITC/\DeltaCom or any of its subsidiaries. Under the Telecommunications Act of
1996, non-U.S. citizens or their representatives, foreign governments of their
representatives, or corporations organized under the laws of a foreign country
may not own, in the aggregate, more than 20% of a common carrier licensee or
more than 25% of the parent of a common carrier licensee if the FCC determines
that the public interest would be served by prohibiting such ownership.
Additionally, the FCC's rules may under certain conditions limit the size of
investments by foreign telecommunications carriers in U.S. international
carriers.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.
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DESCRIPTION OF PREFERRED STOCK
The following description sets forth the general terms of the preferred
stock which ITC/\DeltaCom may issue. The description set forth below and in any
prospectus supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to our certificate of incorporation, the
applicable certificate of designation to our certificate determining the terms
of the related series of preferred stock and our bylaws, each of which will be
made available upon request.
General
Our certificate of incorporation authorizes our Board of Directors from
time to time and without further stockholder action, to provide for the issuance
of up to 5,000,00 shares of preferred stock in one or more series, and to fix
the relative rights and preferences of the shares, including voting powers,
dividend rights, liquidation preferences, redemption rights and conversion
privileges. As of the date of this prospectus, our Board of Directors has not
provided for the issuance of any series of preferred stock, other than the
Series A Preferred Stock, and there are no agreements or understandings for the
issuance of any other series of preferred stock. See "--Series A Preferred
Stock." At March 29, 2000, there were 1,480,771 shares of our Series A Preferred
Stock issued and outstanding.
Because of its broad discretion with respect to the creation and issuance
of preferred stock without stockholder approval, our Board of Directors could
adversely affect the voting power of the holders of our common stock and, by
issuing shares of preferred stock with certain voting, conversion and/or
redemption rights, could discourage any attempt to obtain control of
ITC/\DeltaCom.
Series A Preferred Stock
Conversion rights. Holders of Series A Preferred Stock have the right, at
any time after March 14, 2002, to convert each share of Series A Preferred Stock
into one share of our common stock, subject to adjustment for stock splits,
stock dividends, recapitalizations and other specified events.
Liquidation rights. In the event of any dissolution, liquidation or
winding up of ITC/\DeltaCom, whether voluntary or involuntary, holders of Series
A Preferred Stock will be entitled to receive a distribution of $7.40 per share,
plus any dividends declared and unpaid, prior to any payment or distribution of
assets to holders of our common stock. Holders of our common stock will then be
entitled to any equivalent distribution of $7.40 per share, plus any dividends
declared and unpaid, out of the remaining assets of ITC/\DeltaCom. Holders of
Series A Preferred Stock and our common stock will be entitled to share ratably
in the distribution of any remaining assets of ITC/\DeltaCom, with holders of
Series A Preferred Stock entitled to receive an amount equal to the distribution
made in respect of the number of shares of common stock into which the Series A
Preferred Stock is then convertible.
Dividend rights. The holders of Series A Preferred Stock are entitled to
receive, when, as and if declared by our 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. So long as any
shares of Series A Preferred Stock are outstanding, no dividends may be declared
or paid on any class or series of capital stock ranking on a parity with the
Series A Preferred Stock as to dividends, unless dividends are also paid on the
Series A Preferred Stock in an amount per share equal to the dividends payable
on the number of shares of ITC/\DeltaCom common stock into which one share of
Series A Preferred Stock is convertible.
No redemption rights. The Series A Preferred Stock is not subject to
mandatory or optional redemption.
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Voting rights. Except as set forth in the following sentence, holders of
Series A Preferred Stock have no voting rights. The affirmative vote of holders
of at least two-thirds of the shares of Series A Preferred Stock outstanding is
necessary for:
. the authorization or issuance of any class of stock ranking prior to the
Series A Preferred Stock as to dividends or the distribution of assets
upon dissolution, liquidation or winding up of ITC/\DeltaCom;
. an increase in the authorized or issued amount of Series A Preferred
Stock; or
. the amendment, alteration or repeal, whether by merger, consolidation or
otherwise, of any provision of the certificate of incorporation that
would affect any right, preference or voting power of the Series A
Preferred Stock.
Terms of the Preferred Stock that We May Offer and Sell to You
You should refer to the prospectus supplement relating to the class or
series of preferred stock being offered for the specific terms of that class or
series, including:
(1) the title and stated value of the preferred stock being offered;
(2) the number of shares of preferred stock being offered, their
liquidation preference per share and their purchase price;
(3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculating the payment date(s) applicable to the preferred stock
being offered;
(4) whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock being
offered shall accumulate;
(5) the procedures for any auction and remarketing, if any, for the
preferred stock being offered;
(6) the provisions for a sinking fund, if any, for the preferred stock
being offered;
(7) the provisions for redemption, if applicable, of the preferred stock
being offered;
(8) any listing of the preferred stock being offered on any securities
exchange or market;
(9) the terms and conditions, if applicable, upon which the preferred
stock being offered will be convertible into common stock of
ITC/\DeltaCom, including the conversion price, or the manner of
calculating the conversion price, and the conversion period;
(10) voting rights, if any, of the preferred stock being offered;
(11) whether interests in the preferred stock being offered will be
represented by depositary shares;
(12) a discussion of any material and/or special United States federal
income tax considerations applicable to the preferred stock being
offered;
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(13) the relative ranking and preferences of the preferred stock being
offered as to dividend rights and rights upon liquidation, dissolution
or winding up of the affairs of ITC/\DeltaCom;
(14) any limitations on the issuance of any class or series of preferred
stock ranking senior to or on a parity with the series of preferred
stock being offered as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of ITC/\DeltaCom; and
(15) any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock being offered.
Rank
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock will, with respect to distribution rights and rights upon
liquidation, dissolution or winding up of ITC/\DeltaCom, rank:
(1) senior to all classes or series of common stock of ITC/\DeltaCom and
to all equity securities the terms of which specifically provide that
such equity securities rank junior to the preferred stock being
offered;
(2) on a parity with all equity securities issued by ITC/\DeltaCom other
than those referred to in clauses 1 and 3; and
(3) junior to all equity securities issued by ITC/\DeltaCom the terms of
which specifically provide that such equity securities rank senior to
the preferred stock being offered.
The term "equity securities" does not include convertible debt
securities.
Distributions
Holders of the preferred stock of each series will be entitled to receive,
when, as and if declared by our board of directors, out of assets of
ITC/\DeltaCom legally available for payment to stockholders, cash distributions,
or distributions in kind or in other property if expressly permitted and
described in the applicable prospectus supplement, at such rates and on such
dates as will be set forth in the applicable prospectus supplement. Each such
distribution shall be payable to holders of record as they appear on the stock
transfer books of ITC/\DeltaCom on such record dates as shall be fixed by our
board of directors. Distributions on any series of preferred stock, if
cumulative, will be cumulative from and after the date set forth in the
applicable prospectus supplement.
Redemption
If so provided in the applicable prospectus supplement, the preferred stock
will be subject to mandatory redemption or redemption at the option of
ITC/\DeltaCom, in whole or in part, in each case upon the terms, at the times
and at the redemption prices set forth in such prospectus supplement.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of ITC/\DeltaCom, then, before any distribution or payment shall be
made to the holders of any common stock or any other class or series of shares
of capital stock of ITC/\DeltaCom ranking junior to the preferred stock in the
distribution of assets upon any liquidation, dissolution or winding up of
ITC/\DeltaCom, the holders of each series of preferred stock shall be entitled
to receive out of assets of ITC/\DeltaCom legally available for distribution to
shareholders liquidating distributions in the amount
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of the liquidation preference set forth in the applicable prospectus supplement,
plus an amount equal to all accumulated and unpaid distributions. After payment
of the full amount of the liquidating distributions to which they are entitled,
the holders of shares of preferred stock will have no right or claim to any of
the remaining assets of ITC/\DeltaCom. If, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of
ITC/\DeltaCom are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of preferred stock and the corresponding
amounts payable on all shares of other classes or series of shares of capital
stock of ITC/\DeltaCom ranking on a parity with the preferred stock in the
distribution of assets, then the holders of the preferred stock and all other
such classes or series of shares of capital stock shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
preferred stock, the remaining assets of ITC/\DeltaCom shall be distributed
among the holders of any other classes or series of shares of capital stock
ranking junior to the preferred stock upon liquidation, dissolution or winding
up, according to their respective rights and preferences and in each case
according to their respective number of shares. For such purposes, the
consolidation or merger of ITC/\DeltaCom with or into any other corporation,
trust or entity, or the sale, lease or conveyance of all or substantially all of
the property or business of ITC/\DeltaCom, shall not be deemed to constitute a
liquidation, dissolution or winding up of ITC/\DeltaCom.
Voting Rights
Holders of preferred stock will not have any voting rights, except as set
forth below or as otherwise from time to time required by law, or as indicated
in the applicable prospectus supplement.
Under the Delaware General Corporation Law, holders of outstanding shares
of a series of preferred stock may be entitled to vote as a separate class on a
proposed amendment to the terms of that series of preferred stock or
ITC/\DeltaCom's certificate if the amendment would:
(1) increase or decrease the aggregate number of authorized shares of that
series of preferred stock;
(2) increase or decrease the par value of that series of preferred stock;
or
(3) alter or change the powers, preferences or special rights of the
shares of such class so as to affect them adversely,
in which case the approval of proposed amendment would require the affirmative
vote of at least a majority of the outstanding shares of that series of
preferred stock.
Conversion Rights
The terms and conditions, if any, upon which any series of preferred stock
is convertible into common stock will be set forth in the applicable prospectus
supplement relating thereto. Such terms will include the number of shares of
common stock into which the shares of preferred stock are convertible, the
conversion price or the manner of calculating the conversion price, the
conversion date(s) or period(s), provisions as to whether conversion will be at
the option of the holders of the preferred stock or at ITC/\DeltaCom's option,
the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such series of preferred
stock.
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Transfer Agent and Registrar
The transfer agent and registrar for the preferred stock will be set forth
in the applicable prospectus supplement.
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DESCRIPTION OF DEPOSITARY SHARES
General
ITC/\DeltaCom may issue depositary receipts for depositary shares, each of
which will represent a fractional interest of a share of a particular series of
preferred stock, as specified in the applicable prospectus supplement. Shares of
preferred stock of each series represented by depositary shares will be
deposited under a separate deposit agreement among ITC/\DeltaCom and the
"depositary" named in the deposit agreement. Subject to the terms of the deposit
agreement, each owner of a depositary receipt will be entitled, in proportion to
the fractional interest of a share of a particular series of preferred stock
represented by the depositary shares evidenced by that depositary receipt, to
all the rights and preferences of the preferred stock represented by those
depositary shares, including dividend, voting, conversion, redemption and
liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable deposit agreement. Immediately following the issuance
and delivery of the preferred stock by ITC/\DeltaCom to the depositary,
ITC/\DeltaCom will cause the depositary to issue, on behalf of ITC/\DeltaCom,
the depositary receipts. Copies of the applicable form of deposit agreement and
depositary receipt may be obtained from ITC/\DeltaCom upon request, and the
statements made in this summary relating to the deposit agreement and the
depositary receipts to be issued under the deposit agreement are summaries of
provisions of the deposit agreement and the related depositary receipts. This
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all of the provisions of the applicable deposit
agreement and related depositary receipts.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the record holders
of depositary receipts evidencing the related depositary shares in proportion to
the number of such depositary receipts owned by such holders, subject to the
obligations of holders to file proofs, certificates and other information and to
pay some charges and expenses to the depositary.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
entitled to that property, subject to the obligations of holders to file proofs,
certificates and other information and to pay some charges and expenses to the
depositary, unless the depositary determines that it is not feasible to make the
distribution, in which case the depositary may, with the approval of
ITC/\DeltaCom, sell the property and distribute the net proceeds from the sale
to the holders.
No distribution will be made in respect of any depositary share to the
extent that it represents any preferred stock converted into other securities.
Withdrawal of Stock
Upon surrender of the depositary receipts at the corporate trust office of
the depositary, unless the related depositary shares have previously been called
for redemption or converted into other securities, the holders of those
depositary receipts will be entitled to delivery at the corporate trust office,
to or upon the holder's order, of the number of whole or fractional shares of
the preferred stock and any money or other property represented by the
depositary shares evidenced by the depositary receipts. Holders of depositary
receipts will be entitled to receive whole or fractional shares of the related
preferred stock on the basis of the proportion of preferred stock represented by
the depositary share as specified in the applicable prospectus supplement, but
holders of the shares of preferred stock will not
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thereafter be entitled to receive depositary shares therefor. If the depositary
receipts delivered by the holder evidence a number of depositary shares in
excess of the number of depositary shares representing the number of shares of
preferred stock to be withdrawn, the depositary will deliver to the holder at
the same time a new depositary receipt evidencing the excess number of
depositary shares.
Redemption of Depositary Shares
Whenever ITC/\DeltaCom redeems shares of preferred stock held by the
depositary, the depositary will redeem, as of the same redemption date, the
number of depositary shares representing shares of the preferred stock so
redeemed, provided ITC/\DeltaCom shall have paid in full to the depositary the
redemption price of the preferred stock to be redeemed plus an amount equal to
any accrued and unpaid dividends thereon to the date fixed for redemption. The
redemption price per depositary share will be equal to the corresponding
proportion of the redemption price and any other amounts per share payable with
respect to the preferred stock. If fewer than all the depositary shares are to
be redeemed, the depositary shares to be redeemed will be selected pro rata, as
nearly as may be practicable without creating fractional depositary shares, or
by any other equitable method determined by ITC/\DeltaCom.
From and after the date fixed for redemption, all dividends in respect of
the shares of preferred stock so called for redemption will cease to accrue, the
depositary shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the depositary receipts evidencing
the depositary shares so called for redemption will cease, except the right to
receive any moneys payable upon the redemption and any money or other property
to which the holders of the depositary receipts were entitled the redemption and
surrender thereof to the depositary.
Voting of the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
evidencing the depositary shares which represent the preferred stock. Each
record holder of depositary receipts evidencing depositary shares on the record
date, which will be the same date as the record date for the preferred stock,
will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the amount of preferred stock represented by the holder's
depositary shares. The depositary will vote the amount of preferred stock
represented by the depositary shares in accordance with the instructions, and
ITC/\DeltaCom will agree to take all reasonable action which may be deemed
necessary by the depositary in order to enable the depositary to do so. The
depositary will abstain from voting the amount of preferred stock represented by
the depositary shares to the extent it does not receive specific instructions
from the holders of depositary receipts evidencing the depositary shares. The
depositary shall not be responsible for any failure to carry out any instruction
to vote, or for the manner or effect of any such vote made, as long as such
action or non-action is in good faith and does not result from negligence or
willful misconduct of the depositary.
Liquidation Preference
In the event of the liquidation, dissolution or winding up of
ITC/\DeltaCom, whether voluntary or involuntary, the holders of each depositary
receipt will be entitled to the fraction of the liquidation preference accorded
each share of preferred stock represented by the depositary shares evidenced by
such depositary receipt, as set forth in the applicable prospectus supplement.
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Conversion of Preferred Stock
The depositary shares, as such, are not convertible into common stock or
any other securities or property of ITC/\DeltaCom. Nevertheless, if so specified
in the applicable prospectus supplement relating to an offering of depositary
shares, the depositary receipts may be surrendered by their holders to the
depositary with written instructions to the depositary to instruct ITC/\DeltaCom
to cause conversion of the preferred stock represented by the depositary shares
evidenced by the depositary receipts into whole shares of common stock, other
shares of preferred stock of ITC/\DeltaCom or other shares of stock, and
ITC/\DeltaCom has agreed that upon receipt of those instructions and any amounts
payable in respect thereof, it will cause the conversion thereof utilizing the
same procedures as those provided for delivery of preferred stock to effect such
conversion. If the depositary shares evidenced by a depositary receipt are to be
converted in part only, a new depositary receipt or receipts will be issued for
any depositary shares not to be converted. No fractional shares of common stock
will be issued upon conversion, and if such conversion would result in a
fractional share being issued, an amount will be paid in cash by ITC/\DeltaCom
equal to the value of the fractional interest based upon the closing price of
the common stock on the last business day prior to the conversion.
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares which
represent the preferred stock and any provision of the deposit agreement may at
any time be amended by agreement between ITC/\DeltaCom and the depositary.
However, any amendment that materially and adversely alters the rights of the
holders of depositary receipts or that would be materially and adversely
inconsistent with the rights granted to the holders of the related preferred
stock will not be effective unless such amendment has been approved by the
existing holders of at least 66% of the depositary shares evidenced by the
depositary receipts then outstanding. No amendment shall impair the right,
subject to certain exceptions in the deposit agreement, of any holder of
depositary receipts to surrender any depositary receipt with instructions to
deliver to the holder the related preferred stock and all money and other
property, if any, represented thereby, except in order to comply with law. Every
holder of an outstanding depositary receipt at the time any such amendment
becomes effective shall be deemed, by continuing to hold such receipt, to
consent and agree to such amendment and to be bound by the deposit agreement as
amended thereby.
The deposit agreement may be terminated by ITC/\DeltaCom upon not less than
30 days prior written notice to the depositary if a majority of each series of
preferred stock affected by such termination consents to such termination,
whereupon the depositary shall deliver or make available to each holder of
depositary receipts, upon surrender of the depositary receipts held by such
holder, such number of whole or fractional shares of preferred stock as are
represented by the depositary shares evidenced by such depositary receipts
together with any other property held by the depositary with respect to such
depositary receipt. In addition, the deposit agreement will automatically
terminate if:
(1) all outstanding depositary shares shall have been redeemed;
(2) there shall have been a final distribution in respect of the related
preferred stock in connection with any liquidation, dissolution or
winding up of ITC/\DeltaCom and such distribution shall have been
distributed to the holders of depositary receipts evidencing the
depositary shares representing such preferred stock; or
(3) each share of the related preferred stock shall have been converted
into securities of ITC/\DeltaCom not so represented by depositary
shares.
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Charges of Preferred Stock Depositary
ITC/\DeltaCom will pay all transfer and other taxes and governmental
charges arising solely from the existence of the deposit agreement. In addition,
ITC/\DeltaCom will pay the fees and expenses of the depositary in connection
with the performance of its duties under the deposit agreement. However, holders
of depositary receipts will pay the fees and expenses of the depositary for any
duties requested by such holders to be performed which are outside of those
expressly provided for in the deposit agreement.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to ITC/\DeltaCom notice
of its election to do so, and ITC/\DeltaCom may at any time remove the
depositary, any such resignation or removal to take effect upon the appointment
of a successor depositary. A successor depositary must be appointed within 60
days after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
Miscellaneous
The depositary will forward to holders of depositary receipts any reports
and communications from ITC/\DeltaCom which are received by the depositary with
respect to the related preferred stock.
Neither the depositary nor ITC/\DeltaCom will be liable if it is prevented
from or delayed in, by law or any circumstances beyond its control, performing
its obligations under the deposit agreement. The obligations of ITC/\DeltaCom
and the depositary under the deposit agreement will be limited to performing
their duties thereunder in good faith and without negligence, in the case of any
action or inaction in the voting of preferred stock represented by the
depositary shares, gross negligence or willful misconduct, and ITC/\DeltaCom and
the depositary will not be obligated to prosecute or defend any legal proceeding
in respect of any depositary receipts, depositary shares or shares of preferred
stock represented thereby unless satisfactory indemnity is furnished.
ITC/\DeltaCom and the depositary may rely on written advice of counsel or
accountants, or information provided by persons presenting shares of preferred
stock represented thereby for deposit, holders of depositary receipts or other
persons believed in good faith to be competent to give such information, and on
documents believed in good faith to be genuine and signed by a proper party.
In the event the depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and
ITC/\DeltaCom, on the other hand, the depositary shall be entitled to act on
such claims, requests or instructions received from ITC/\DeltaCom.
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DESCRIPTION OF WARRANTS
General
ITC/\DeltaCom may issue warrants to purchase its common stock, preferred
stock, or depositary shares. ITC/\DeltaCom may issue warrants independently or
together with any offered securities and may be attached to or separate from
those offered securities. ITC/\DeltaCom will issue the warrants under warrant
agreements to be entered into between ITC/\DeltaCom and a bank or trust company,
as warrant agent, all as shall be set forth in the applicable prospectus
supplement. The warrant agent will act solely as an agent of ITC/\DeltaCom in
connection with the warrants of the series being offered and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of warrants in respect of which this prospectus is being
delivered:
(1) the title of the warrants;
(2) the designation, amount and terms of the securities for which the
warrants are exercisable;
(3) the designation and terms of the other securities, if any, with which
the warrants are to be issued and the number of warrants issued with
each such security;
(4) the price or prices at which the warrants will be issued;
(5) the aggregate number of warrants;
(6) any provisions for adjustment of the number or amount of securities
receivable upon exercise of the warrants or the exercise price of the
warrants;
(7) the price or prices at which the securities purchasable upon exercise
of the warrants may be purchased;
(8) if applicable, the date on and after which the warrants and the
securities purchasable upon exercise of the warrants will be
separately transferable;
(9) if applicable, a discussion of the material United States federal
income tax considerations applicable to the exercise of the warrants;
(10) any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants;
(11) the date on which the right to exercise the warrants shall commence,
and the date on which the right shall expire;
(12) the maximum or minimum number of warrants which may be exercised at
any time; and
(13) information with respect to book-entry procedures, if any.
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Exercise of Warrants
Each warrant will entitle the holder of warrants to purchase for cash the
amount of shares of preferred stock, shares of common stock or depositary shares
at the exercise price as shall in each case be set forth in, or be determinable
as set forth in, the prospectus supplement relating to the warrants offered
thereby. Warrants may be exercised at any time up to the close of business on
the expiration date set forth in the prospectus supplement relating to the
warrants offered thereby. After the close of business on the expiration date,
unexercised warrants will become void.
Warrants may be exercised as set forth in the prospectus supplement
relating to the warrants offered thereby. Upon receipt of payment and the
warrant certificate properly completed and duly executed at the corporate trust
office of the warrant agent or any other office indicated in the prospectus
supplement, ITC/\DeltaCom will, as soon as practicable, forward the shares of
preferred stock, shares of common stock or depositary shares purchasable upon
such exercise. If less than all of the warrants represented by the warrant
certificate are exercised, a new warrant certificate will be issued for the
remaining warrants.
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DESCRIPTION OF STOCK PURCHASE CONTRACTS TO PURCHASE COMMON STOCK OR PREFERRED
STOCK AND STOCK PURCHASE UNITS
Unless otherwise specified in the applicable prospectus supplement,
ITC/\DeltaCom may issue stock purchase contracts, including contracts obligating
holders to purchase from ITC/\DeltaCom, and ITC/\DeltaCom to sell to the
holders, a specified number of shares of common stock or preferred stock at a
future date or dates. The consideration per share of common stock or preferred
stock may be fixed at the time the stock purchase contracts are issued or may be
determined by a specific reference to a formula set forth in the stock purchase
contracts. The stock purchase contracts may be issued separately or as part of
stock purchase units consisting of:
(1) a stock purchase contract and
(2) preferred securities or debt obligations of third parties, including
U.S. Treasury securities, securing the holders' obligations to
purchase the common stock or the preferred stock under the stock
purchase contracts.
The stock purchase contracts may require ITC/\DeltaCom to make periodic
payments to the holders of the stock purchase units or vice versa, and such
payments may be unsecured or prefunded on some basis. The stock purchase
contracts may require holders to secure their obligations thereunder in a
specified manner.
The securities related to the stock purchase contracts will be pledged to a
collateral agent, for the benefit of ITC/\DeltaCom, pursuant to a pledge
agreement. The pledged securities will secure the obligations of holders of
stock purchase contracts to purchase common stock or preferred stock under the
related stock purchase contracts. The rights of holders of stock purchase
contracts to the related pledged securities will be subject to ITC/\DeltaCom's
security interest in those pledged securities. That security interest will be
created by the pledge agreement. No holder of stock purchase contracts will be
permitted to withdraw the pledged securities related to such stock purchase
contracts from the pledge arrangement except upon the termination or early
settlement of the related stock purchase contracts. Subject to that security
interest and the terms of the purchase contract agreement and the pledge
agreement, each holder of a stock purchase contract will retain full beneficial
ownership of the related pledged securities.
Except as described in the applicable prospectus supplement, the collateral
agent will, upon receipt of distributions on the pledged securities, distribute
such payments to ITC/\DeltaCom or a purchase contract agent, as provided in the
pledge agreement. The purchase contract agent will in turn distribute payments
it receives as provided in the stock purchase contract. The applicable
prospectus supplement will describe the terms of any stock purchase contracts or
stock purchase units. The description in the prospectus supplement will not
necessarily be complete and will be qualified in its entirety by reference to
the stock purchase contracts, and, if applicable, collateral arrangements and
depositary arrangements, relating to such stock purchase contracts or stock
purchase units.
35
<PAGE>
DESCRIPTION OF SUBSCRIPTION RIGHTS
General
ITC/\DeltaCom may issue subscription rights to purchase common stock,
preferred stock, depositary shares or warrants to purchase preferred stock or
common stock. ITC/\DeltaCom may issue subscription rights independently or
together with any other offered security and which may or may not be
transferable by the purchaser receiving the subscription rights. In connection
with any subscription rights offering to ITC/\DeltaCom's stockholders,
ITC/\DeltaCom may enter into a standby underwriting arrangement with one or more
underwriters pursuant to which the underwriter(s) will purchase any offered
securities remaining unsubscribed for after the subscription rights offering. In
connection with a subscription rights offering to ITC/\DeltaCom's stockholders,
certificates evidencing the subscription rights and a prospectus supplement will
be distributed to ITC/\DeltaCom's stockholders on the record date for receiving
subscription rights in the subscription rights offering set by ITC/\DeltaCom.
The applicable prospectus supplement will describe the following terms of
subscription rights in respect of which this prospectus is being delivered:
(1) the title of the subscription rights;
(2) the securities for which the subscription rights are exercisable;
(3) the exercise price for the subscription rights;
(4) the number of subscription rights issued to each stockholder;
(5) the extent to which the subscription rights are transferable;
(6) if applicable, a discussion of the material United States federal
income tax considerations applicable to the issuance or exercise of
the subscription rights;
(7) any other terms of the subscription rights, including terms,
procedures and limitations relating to the exchange and exercise of
the subscription rights;
(8) the date on which the right to exercise the subscription rights shall
commence, and the date on which the right shall expire;
(9) the extent to which the subscription rights offering includes an over-
subscription privilege with respect to unsubscribed securities; and
(10) if applicable, the material terms of any standby underwriting
arrangement entered into by ITC/\DeltaCom in connection with the
subscription rights offering.
Exercise of Subscription Rights
Each subscription right will entitle the holder of subscription rights to
purchase for cash the number of shares of preferred stock, depositary shares,
common stock, warrants or any combination thereof, at the exercise price as
shall in each case be set forth in, or be determinable as set forth in, the
prospectus supplement relating to the subscription rights offered thereby.
Subscription rights may be exercised at any time up to the close of business on
the expiration date for such subscription rights set forth in the prospectus
supplement. After the close of business on the expiration date, all unexercised
subscription rights will become void.
36
<PAGE>
Subscription rights may be exercised as set forth in the prospectus
supplement relating to the subscription rights offered thereby. Upon receipt of
payment and the subscription rights certificate properly completed and duly
executed at the corporate trust office of the subscription rights agent or any
other office indicated in the prospectus supplement, ITC/\DeltaCom will, as soon
as practicable, forward the shares of preferred stock or common stock,
depositary shares or warrants purchasable upon such exercise. In the event that
not all of the subscription rights issued in any offering are exercised,
ITC/\DeltaCom may determine to offer any unsubscribed offered securities
directly to persons other than stockholders, to or through agents, underwriters
or dealers or through a combination of such methods, including pursuant to
standby underwriting arrangements, as set forth in the applicable prospectus
supplement.
37
<PAGE>
PLAN OF DISTRIBUTION
ITC/\DeltaCom may sell the offered securities:
. directly to purchasers;
. through agents;
. through dealers;
. through underwriters;
. directly to its stockholders; or
. through a combination of any of these methods of sale.
In addition, ITC/\DeltaCom may issue the offered securities as a dividend or
distribution.
We may effect the distribution of the offered securities from time to time
in one or more transactions either:
. at a fixed price or prices, which may be changed;
. at market prices prevailing at the time of sale;
. at prices related to such prevailing market prices; or
. at negotiated prices.
ITC/\DeltaCom may directly solicit offers to purchase offered securities.
Agents designated by ITC/\DeltaCom from time to time may also solicit offers to
purchase offered securities. Any agent designated by ITC/\DeltaCom, who may be
deemed to be an "underwriter" as that term is defined in the Securities Act,
involved in the offer or sale of the offered securities in respect of which this
prospectus is delivered will be named, and any commissions payable by
ITC/\DeltaCom to such agent will be set forth in the prospectus supplement.
If a dealer is utilized in the sale of the offered securities in respect of
which this prospectus is delivered, ITC/\DeltaCom will sell such offered
securities to the dealer, as principal. The dealer, who may be deemed to be an
"underwriter" as that term is defined in the Securities Act, may then resell
such offered securities to the public at varying prices to be determined by such
dealer at the time of resale.
If an underwriter is, or underwriters are, utilized in the sale,
ITC/\DeltaCom will execute an underwriting agreement with such underwriters at
the time of sale to them and the names of the underwriters will be set forth in
the prospectus supplement, which will be used by the underwriter to make resales
of the offered securities in respect of which this prospectus is delivered to
the public. In connection with the sale of offered securities, such underwriter
may be deemed to have received compensation from ITC/\DeltaCom in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of offered securities for whom they may act as agents. Underwriters
may also sell offered securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Any underwriting compensation paid
38
<PAGE>
by ITC/\DeltaCom to underwriters in connection with the offering of offered
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
prospectus supplement.
Pursuant to any standby underwriting agreement entered into in connection
with a subscription rights offering to ITC/\DeltaCom's stockholders, persons
acting as standby underwriters may receive a commitment fee for all securities
underlying the subscription rights that the underwriter commits to purchase on a
standby basis. Additionally, prior to the expiration date with respect to any
subscription rights, any standby underwriters in a subscription rights offering
to ITC/\DeltaCom's stockholders may offer such securities on a when-issued
basis, including securities to be acquired through the purchase and exercise of
subscription rights, at prices set from time to time by the standby
underwriters. After the expiration date with respect to such subscription
rights, the underwriters may offer securities of the type underlying the
subscription rights, whether acquired pursuant to a standby underwriting
agreement, the exercise of the subscription rights or the purchase of such
securities in the market, to the public at a price or prices to be determined by
the underwriters. The standby underwriters may thus realize profits or losses
independent of the underwriting discounts or commissions paid by ITC/\DeltaCom.
If ITC/\DeltaCom does not enter into a standby underwriting arrangement in
connection with a subscription rights offering to ITC/\DeltaCom's stockholders,
ITC/\DeltaCom may elect to retain a dealer-manager to manage such a subscription
rights offering for ITC/\DeltaCom. Any such dealer-manager may offer securities
of the type underlying the subscription rights acquired or to be acquired
pursuant to the purchase and exercise of subscription rights and may thus
realize profits or losses independent of any dealer-manager fee paid by
ITC/\DeltaCom.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with ITC/\DeltaCom, to indemnification by
ITC/\DeltaCom against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which they may be
required to make in respect thereof. Underwriters and agents may engage in
transactions with, or perform services for, ITC/\DeltaCom in the ordinary course
of business.
If so indicated in the applicable prospectus supplement, ITC/\DeltaCom will
authorize underwriters, dealers or other persons to solicit offers by certain
institutions to purchase offered securities pursuant to contracts providing for
payment and delivery on a future date or dates. Institutions with which such
contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and
others. The obligations of any purchasers under any such contract will not be
subject to any conditions except that:
. the purchase of the offered securities shall not at the time of delivery
be prohibited under the laws of the jurisdiction to which such purchaser
is subject; and
. if the offered securities are also being sold to underwriters,
ITC/\DeltaCom shall have sold to such underwriters the offered
securities not sold for delayed delivery.
The underwriters, dealers and such other persons will not have any
responsibility in respect of the validity or performance of such contracts. The
prospectus supplement relating to such contracts will set forth the price to be
paid for offered securities pursuant to such contracts, the commission payable
for solicitation of such contracts and the date or dates in the future for
delivery of offered securities pursuant to such contracts.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act. Rule 104
permits stabilizing bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. The underwriters may over-
allot shares of the offered securities in connection with an offering of offered
securities, thereby creating
39
<PAGE>
a short position in the underwriters' account. Syndicate covering transactions
involve purchases of the offered securities in the open market after the
distribution has been completed in order to cover syndicate short positions.
Stabilizing and syndicate covering transactions may cause the price of the
offered securities to be higher than it would otherwise be in the absence of
such transactions. These transactions, if commenced, may be discontinued at any
time.
The anticipated date of delivery of offered securities will be set forth in
the applicable prospectus supplement relating to each offer.
40
<PAGE>
LEGAL MATTERS
The validity of the offered securities will be 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 of ITC/\DeltaCom and Campbell B. Lanier, III. If the offered
securities are distributed in an underwritten offering or through agents,
certain legal matters may be passed upon for any agents or underwriters by
counsel for such agents or underwriters identified in the applicable prospectus
supplement.
EXPERTS
The consolidated balance sheets of ITC/\DeltaCom, Inc. and subsidiaries as
of December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1999 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.
41
<PAGE>
$126,787,500
[ITC/\DeltaCom LOGO]
Common Stock, Preferred Stock,
Depositary Shares, Warrants,
Subscription Rights, Stock Purchase
Contracts to Purchase Common Stock
or Preferred Stock and Stock
Purchase Units
Prospectus
Dated , 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated fees and expenses, other than
underwriting discounts and commissions, payable by ITC/\DeltaCom in connection
with the issuance and distribution of the securities being registered:
Registration Fee..................................... $33,472
Printing and Duplicating Expenses.................... *
Legal Fees and Expenses.............................. *
Accounting Fees and Expenses......................... *
Miscellaneous........................................ *
-------
Total................................................ $ *
* To be included by amendment.
Item 15. 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.
ITC/\DeltaCom's Restated Certificate of Incorporation 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 Amended and
Restated 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions,
II-1
<PAGE>
ITC/\DeltaCom has been informed 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.
Item 16. Exhibits
<TABLE>
<S> <C>
*1.1 Form of Underwriting Agreement
4.1 Form of Common Stock Certificate of the Company (Filed as Exhibit 4.1 to
Registration Statement on Form S-1, as amended, File No. 333-36683, and
incorporated herein by reference).
4.2 Certificate of Designations of Series A Preferred Stock (included as Attachment 1
to the Company's Restated Certificate of Incorporation filed as Exhibit 3.1 to
Registration Statement on Form S-4, as amended, File No. 333-71735, and
incorporated herein by reference).
*5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality of the securities being
registered.
12.1 Statement Regarding Computation of Ratios (Filed as Exhibit 12.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, Commission File
No. 0-23252, and incorporated herein by reference).
23.1 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5.1).
**23.2 Consent of Arthur Andersen LLP, independent public accountants.
24.1 Power of Attorney (included in signature page).
_______
*To be filed by amendment or by a Current Report on Form 8-K pursuant to Registration S-K, Item 601(b).
**Filed herewith.
</TABLE>
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) 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 of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent 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
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20
percent change in the maximum aggregate
II-2
<PAGE>
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in this registration statement;
provided, however, that subparagraphs (i) and (ii) above shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
Offered Securities offered herein, and the offering of such
Offered Securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) 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.
(b) The undersigned Registrant hereby further undertakes that, for the
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the Offered
Securities offered herein, and the offering of such Offered Securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The undersigned Registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set
forth the results of the subscription offer, the transactions by the
underwriters during the subscription period, the amount of
unsubscribed securities to be purchased by the underwriters, and the
terms of any subsequent reoffering thereof. If any public offering by
the underwriters is to be made on terms differing from those set forth
on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to existing provisions
or arrangements whereby the Registrant may indemnify a director,
officer or controlling person of the Registrant against liabilities
arising under the Securities Act of 1933, 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 of 1933 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
II-3
<PAGE>
whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(e) The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act of 1933, 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 a part of this registration
statement as of the time it was declared effective; and
(ii) For the purpose of determining any liability under the
Securities Act of 1933, 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and 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 31st day of
March, 2000.
ITC/\DELTACOM, INC.
/s/ Douglas A. Shumate
By: ______________________________
Douglas A. Shumate
Senior Vice President and Chief Financial
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 any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, 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 31st day of March, 2000.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/ Campbell B. Lanier, III
_____________________________ Chairman, Director
Campbell B. Lanier, III
/s/ Andrew M. Walker
_____________________________ Chief Executive Officer, Vice Chairman and
Andrew M. Walker Director (Principal Executive Officer)
/s/ Douglas A. Shumate
_____________________________ Senior Vice President and Chief Financial
Douglas A. Shumate Officer (Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
/s/ James H. Black, Jr.
______________________________________ Director
James H. Black, Jr.
/s/ Donald W. Burton
______________________________________ Director
Donald W. Burton
/s/ Malcolm C. Davenport, V
______________________________________ Director
Malcolm C. Davenport, V
/s/ Robert A. Dolson
______________________________________ Director
Robert A. Dolson
/s/ O. Gene Gabbard
______________________________________ Director
O. Gene Gabbard
/s/ William T. Parr
______________________________________ Director
William T. Parr
/s/ William H. Scott, III
______________________________________ Director
William H. Scott, III
/s/ William B. Timmerman
______________________________________ Director
William B. Timmerman
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
*1.1 Form of Underwriting Agreement
4.1 Form of Common Stock Certificate of the Company (Filed as Exhibit
4.1 to Registration Statement on Form S-1, as amended, File No.
333-36683, and incorporated herein by reference).
4.2 Certificate of Designations of Series A Preferred Stock (included
as Attachment 1 to the Company's Restated Certificate of
Incorporation filed as Exhibit 3.1 to Registration Statement on
Form S-4, as amended, File No. 333-71735, and incorporated herein
by reference).
*5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality of the
securities being registered.
12.1 Statement Regarding Computation of Ratios (Filed as Exhibit 12.1
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, Commission File No. 0-23252, and incorporated
herein by reference).
23.1 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit
5.1).
**23.2 Consent of Arthur Andersen LLP, independent public accountants.
24.1 Power of Attorney (included in signature page).
_______
*To be filed by amendment or by a Current Report on Form 8-K pursuant to
Registration S-K, Item 601(b).
**Filed herewith.
<PAGE>
EXHIBIT 23.2
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 11, 2000
on the financial statements of ITC/\DeltaCom, Inc. and Subsidiaries and the
related financial statement schedule included in ITC/\DeltaCom, Inc.'s Form 10-K
for the year ended December 31, 1999, and to all references to our Firm included
in this registration statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
April 6, 2000
