0000904454-05-000278.txt : 20120615 0000904454-05-000278.hdr.sgml : 20120615 20050406121029 ACCESSION NUMBER: 0000904454-05-000278 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20050406 DATE AS OF CHANGE: 20050406 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ITC DELTACOM INC CENTRAL INDEX KEY: 0001041954 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 582301135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-51889 FILM NUMBER: 05736187 BUSINESS ADDRESS: STREET 1: 1791 O G SKINNER DRIVE CITY: WEST POINT STATE: GA ZIP: 31833 BUSINESS PHONE: 706-385-8000 MAIL ADDRESS: STREET 1: 1791 O G SKINNER DR CITY: WEST POINT STATE: GA ZIP: 31833 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WELSH CARSON ANDERSON STOWE VIII LP CENTRAL INDEX KEY: 0001071870 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 320 PARK AVENUE STREET 2: SUITE 2500 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128415755 MAIL ADDRESS: STREET 1: 320 PARK AVENUE STREET 2: SUITE 2500 CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 s13da_0401-2005itc.txt SCHEDULE 13D AMENDMENT ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------------------------------------------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 8)(1) ------------ ITC DeltaCom, Inc. (Name of Issuer) Common Stock, $.01 par value (Title of Class of Securities) ------------ 45031T 10 4 (CUSIP Number) ------------ Welsh, Carson, Anderson & Stowe VIII, L.P., William J. Hewitt, Esq. 320 Park Avenue, Suite 2500 Ropes & Gray LLP New York, New York 10022 45 Rockefeller Plaza Attention: Jonathan M. Rather New York, New York 10111 Tel. (212) 893-9500 Tel. (212) 841-5700 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) ------------ March 29, 2004 (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [_]_______ (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. ================================================================================ 1) Name of Reporting Person Welsh, Carson, Anderson I.R.S. Identification & Stowe VIII, L.P. No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place Delaware of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including) shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 2 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting PN Person 3 1) Name of Reporting Person WCAS VIII Associates, LLC I.R.S. Identification. No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place Delaware of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 4 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting CO Person 5 1) Name of Reporting Person Welsh Capital Partners III, L.P. I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place Delaware of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 6 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting PN Person 7 1) Name of Reporting Person WCAS CP III Associates, L.L.C. I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place Delaware of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 8 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting CO Person 9 1) Name of Reporting Person Patrick J. Welsh I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 10 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 11 1) Name of Reporting Person Russell L. Carson I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 12 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 13 1) Name of Reporting Person Bruce K. Anderson I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 14 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 15 1) Name of Reporting Person Thomas E. McInerney I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 16 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 17 1) Name of Reporting Person Robert A. Minicucci I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 18 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 19 1) Name of Reporting Person Anthony J. deNicola I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 20 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 21 1) Name of Reporting Person Paul B. Queally I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 22 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 23 1) Name of Reporting Person Jonathan M. Rather I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 24 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 25 1) Name of Reporting Person D. Scott Mackesy I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 26 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 27 1) Name of Reporting Person John D. Clark I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 28 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 29 1) Name of Reporting Person James R. Matthews I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 30 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 31 1) Name of Reporting Person Sanjay Swani I.R.S. Identification No. of Above Person (Entities Only) -------------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [X] if a Member of a Group (b) [ ] -------------------------------------------------------------------------------- 3) SEC Use Only -------------------------------------------------------------------------------- 4) Source of Funds Not Applicable -------------------------------------------------------------------------------- 5) Check if Disclosure of Not Applicable Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) -------------------------------------------------------------------------------- 6) Citizenship or Place United States of Organization -------------------------------------------------------------------------------- Number of 7) Sole Voting -0- Shares Beneficially Power Owned by Each --------------------------------------- Reporting Person 8) Shared Voting 69,701,435 With Power shares of Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 9) Sole Dispositive -0- Power --------------------------------------- 10) Shared 69,701,435 Dispositive shares of Power Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) --------------------------------------- 11) Aggregate Amount Beneficially 69,701,435 shares of Owned by Each Reporting Person Common Stock (including shares issuable upon conversion of preferred stock and exercise of warrants) -------------------------------------------------------------------------------- 32 -------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares -------------------------------------------------------------------------------- 13) Percent of Class 84.6% Represented by Amount in Row (11) -------------------------------------------------------------------------------- 14) Type of Reporting IN Person 33 Amendment No. 8 to Schedule 13D ------------------------------- Reference is hereby made to the statement on Schedule 13D filed with the Securities and Exchange Commission (the "Commission") on November 1, 2002, Amendment No. 1 thereto filed on November 8, 2002, Amendment No. 2 thereto filed on December 18, 2002, Amendment No. 3 thereto filed on December 26, 2002, Amendment No. 4 thereto filed on July 7, 2003, Amendment No. 5 thereto filed on October 14, 2003, Amendment No. 6 thereto filed on September 29, 2004 and Amendment No. 7 thereto filed on November 18, 2004 (as so amended, the "Schedule 13D"). Terms defined in the Schedule 13D are used herein as so defined. The Schedule 13D is hereby amended as follows: ITEM 3. Source and Amount of Funds and Other Consideration. Item 3 is hereby amended by adding the following thereto: On March 29, 2005, the Issuer, Interstate FibreNet, Inc. (a wholly owned subsidiary of the Issuer), certain other subsidiaries of the Issuer and certain of the Reporting Persons and certain other persons ("the Lenders") entered into a Credit Agreement (the "Credit Agreement"), pursuant to which the Lenders loaned $20,000,000 to the Issuer in exchange for 12% notes having a face value of $20,000,00 and 20,000,000 warrants (the "2005 Warrants") to purchase an equal number of shares of the Issuer's Common Stock, par value $0.01 per share. The 2005 Warrants are governed by a Warrant Agreement between the Issuer and Mellon Investor Services LLC (as Warrant Agent), dated as of March 29, 2005 (the "2005 Warrant Agreement"), and have an initial strike price of $0.60 per share, which is subject to adjustment under Section 7 of the 2005 Warrant Agreement upon the occurrence of certain events. ITEM 5. Interest in Securities of the Issuer. Item 5 is hereby amended and restated to read in its entirety as follows: (a) The information below reflects only the direct beneficial ownership of each entity and person named below, and is based on a total of 96,004,792 shares of Common Stock outstanding, calculated based on 55,084,995 shares of Common Stock outstanding on March 17, 2005 as well as 18,184,439 shares of Common Stock issuable upon the conversion of the 8% Series B Convertible Redeemable Preferred Stock of the Issuer and 2,735,358 shares of Common Stock issuable upon the exercise of warrants previously held by the Reporting Persons as of March 17, 2005, as disclosed to the Reporting Persons in Section 4.01(bb) of the Credit Agreement, plus 20,000,000 shares of Common Stock issuable upon exercise of the warrants granted in the transaction described in Items 3 and 6. The total gives effect to the exercise of all warrants and conversion of all shares of Series B Preferred Stock held by each such entity and person. WCAS VIII and VIII Associates WCAS VIII owns 59,080,199 shares of Common Stock, or approximately 66.9% of the Common Stock outstanding. VIII Associates, as the general partner of WCAS VIII, may be deemed to beneficially own the securities owned by WCAS VIII. WCAS CP III and CP III Associates WCAS CP III owns 8,177,175 shares of Common Stock, or approximately 13.3% of the Common Stock outstanding. CP III Associates, as the general partner of WCAS CP III, may be deemed to beneficially own the securities owned by WCAS CP III. Managing Members of VIII Associates and CP III Associates (i) Patrick J. Welsh owns 525,928 of Common Stock, or approximately 0.9% of the Common Stock outstanding. 34 (ii) Russell L. Carson owns 525,928 shares of Common Stock, or approximately 0.9% of the Common Stock outstanding. (iii) Bruce K. Anderson owns 525,928 shares of Common Stock, or approximately 0.9% of the Common Stock outstanding. (iv) Thomas E. McInerney owns 537,073 shares of Common Stock, or approximately 1.0% of the Common Stock outstanding. This excludes an option to purchase 10,000 shares of Common Stock at an exercise price of $4.40 granted on October 28, 2003, 3,333 shares of which vested on October 28, 2004, with 3,333 shares to vest on October 28, 2005 and 3,334 shares to vest on October 28, 2006, and which expires on October 28, 2013. (v) Robert A. Minicucci owns 184,250 shares of Common Stock, or approximately 0.3% of the Common Stock outstanding. (vi) Anthony J. de Nicola owns 64,142 shares of Common Stock, or approximately 0.1% of the Common Stock outstanding. This excludes an option to purchase 10,000 shares of Common Stock at an exercise price of $4.40 granted on October 28, 2003, 3,333 shares of which vested on October 28, 2004, with 3,333 shares to vest on October 28, 2005 and 3,334 shares to vest on October 28, 2006, and which expires on October 28, 2013. (vii) Paul B. Queally owns 37,661 shares of Common Stock, or approximately 0.1% of the Common Stock outstanding. (viii) Jonathan M. Rather owns 12,877 shares of Common Stock, or less than 0.1% of the Common Stock outstanding. (ix) D. Scott Mackesy owns 7,529 shares of Common Stock, or less than 0.1% of the Common Stock outstanding. (x) Sanjay Swani owns 19,555 shares of Common Stock, or less than 0.1% of the Common Stock outstanding. This excludes an option to purchase 10,000 shares of Common Stock at an exercise price of $4.40 granted on October 28, 2003, 3,333 shares of which vested on October 28, 2004, with 3,333 shares to vest on October 28, 2005 and 3,334 shares to vest on October 28, 2006, and which expires on October 28, 2013. (xi) John D. Clark owns no shares of Common Stock. (xii) James R. Matthews owns 3,188 shares of Common Stock, or less than 0.1% of the Common Stock outstanding. (b) The managing members of VIII Associates and CP III Associates may be deemed to share the power to vote or direct the voting of and to dispose or direct the disposition of the securities of the Issuer owned by WCAS VIII and WCAS CP III, respectively. Each of the managing members of VIII Associates and CP III Associates disclaims beneficial ownership of all securities other than those he owns directly or by virtue of his indirect pro rata interest, as a managing member of VIII Associates and/or CP III Associates, in the securities owned by WCAS VIII and WCAS CP III. (c) In addition to the acquisition described in Item 3 above, additional shares of Series B Preferred Stock have been issued to the holders thereof as payment-in-kind dividends thereon on a quarterly basis beginning on January 1, 2004. The last such payment was made on March 31, 2005, and the next such payment will be made on June 30, 2005. (d) Except as described in this statement, no person has the power to direct the receipt of dividends on or the proceeds of sales of the shares of Common Stock owned by WCAS VIII or WCAS CP III. (e) Not applicable. ITEM 6. Contracts, Agreements, Understandings or Relationships with Respect to Securities of the Issuer. 35 Item 6 is hereby amended by adding the following thereto: On March 29, 2005, the Issuer entered into the following four agreements: 1. Credit Agreement, dated as of March 29, 2005, among the Issuer, Interstate FibreNet, Inc. (a wholly owned subsidiary of the Issuer), certain other subsidiaries of the Issuer and certain of the Reporting Persons and others; 2. Warrant Agreement, dated as of March 29, 2005, between the Issuer and Mellon Investor Services LLC, as Warrant Agent; 3. Amendment No. 1, dated as of March 29, 2005, to the Warrant Agreement, dated as of October 6, 2003, between the Issuer and Mellon Investor Services LLC, as Warrant Agent (the "Warrant Amendment Agreement"); and 4. Amendment No. 1, dated as of March 29, 2005, to the Governance Agreement dated as of October 6, 2003, between the Issuer and WCAS Capital Partners III, L.P., Welsh, Carson, Anderson & Stowe, L.P. and certain other individuals and trusts. On March 29, 2005, the Issuer, Interstate FibreNet, Inc. (a wholly owned subsidiary of the Issuer), certain other subsidiaries of the Issuer and certain of the Reporting Persons entered into a Credit Agreement pursuant to which certain of the Reporting Persons loaned the Issuer $20,000,000 (the "Loan"). The Loan is subordinated, secured on a third-lien basis by substantially all of the assets of the Issuer and its subsidiaries, and bears interest at 12% per annum, which interest will be paid-in-kind until the repayment in full of all first and second lien debt. In connection with the Loan, the Issuer issued to certain of the Reporting Persons 20,000,000 warrants to purchase an equal same number of shares of the Issuer's Common Stock, par value $0.01 per share. The Issuer and Mellon Investor Services LLC, as Warrant Agent, entered into a Warrant Agreement, dated as of March 29, 2005 (the "2005 Warrant Agreement"), which governs the 2005 Warrants. The warrants entitle the holder to purchase shares of Common Stock, on a fully paid and non-assessable basis, at an initial strike price of $0.60 per share (subject to adjustment pursuant to Section 7 of the 2005 Warrant Agreement upon the occurrence of certain events). The rights granted by the 2005 Warrants may be exercised at any time during the period commencing on the 21st calendar day following the date on which the Company sends to its stockholders the information statement required pursuant to Regulation 14C under Exchange Act, and ending immediately prior to 5:00 p.m., New York City time, on March 29, 2015. The Issuer and Mellon Investor Services LLC, as Warrant Agent, entered into a Warrant Agreement dated October 6, 2003 (the "2003 Warrant Agreement"), previously filed as Exhibit 99.4 to the Issuer's Form 8-K/A filed on July 3, 2003. Amongst other things, this Agreement provided in Section 7 for an adjustment of the exercise price of the warrants granted thereunder if the Issuer issued or was deemed to issue any shares of Common Stock for no consideration or for consideration per share less than the exercise price of the warrants granted under the 2003 Warrant Agreement in effect on the date of issuance or sale (or deemed issuance or sale) of such Common Stock. In connection with the $20,000,000 loan and the issuance of the 2005 Warrants pursuant to the Credit Agreement, the parties to the 2003 Warrant Agreement agreed to amend Section 7 of the 2003 Warrant Agreement so that the issuance, sale, exercise or other retirement of warrants issued under the 2005 Warrant Agreement would not result in an adjustment of the exercise price of warrants issued under the 2003 Warrant Agreement. The Issuer and WCAS Capital Partners III, L.P., Welsh, Carson, Anderson & Stowe, L.P. and certain other individuals and trusts entered into a Governance Agreement dated as of October 6, 2003 (the "Governance Agreement"), previously filed as Exhibit 99.1 to the Issuer's Form 8-K/A filed on July 3, 2003. The Governance Agreement set forth certain provisions relating to the Issuer's corporate governance and the acquisition and disposition of securities by Welsh, Carson, Anderson & Stowe funds and certain related persons and entities ("WCAS Holders"). Amongst other things, this Agreement imposed limits on the aggregate ownership of Common Stock by WCAS Holders. The Issuer and Welsh, Carson, Anderson & Stowe funds and certain related persons and entities entered into Amendment No. 1 to the Governance Agreement, dated as of March 29, 2005 (the "Governance 36 Agreement Amendment"), in order to amend the term "Initial Ownership Percentage" to reflect the acquisition of the 2005 Warrants by the WCAS Holders and to treat the 2005 Warrants as registrable securities under the registration rights provisions thereof. ITEM 7. Materials to be Filed as Exhibits. Exhibit A - Credit Agreement Exhibit B - 2005 Warrant Agreement Exhibit C - Warrant Amendment Agreement Exhibit D - Governance Agreement Amendment 37 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: April 5, 2005 WELSH, CARSON, ANDERSON & STOWE VIII, L.P. By: WCAS VIII Associates, LLC, General Partner By:/s/ Jonathan M. Rather ------------------------------------------------- Managing Member WCAS VIII ASSOCIATES, LLC By:/s/ Jonathan M. Rather ------------------------------------------------- Managing Member WCAS CAPITAL PARTNERS III, L.P. By: WCAS CP III Associates, LLC, General Partner By:/s/ Jonathan M. Rather ------------------------------------------------- Managing Member WCAS CP III ASSOCIATES, L.L.C. By:/s/ Jonathan M. Rather ------------------------------------------------- Managing Member /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Patrick J. Welsh /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Russell L. Carson /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Bruce K. Anderson /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Thomas E. McInerney /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Robert A. Minicucci 38 /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Anthony J. deNicola /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Paul B. Queally /s/ Jonathan M. Rather --------------------------------------------- /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/D. Scott Mackesy /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/John D. Clark /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/James R. Matthews /s/ Jonathan M. Rather --------------------------------------------- Attorney-in-Fact/Sanjay Swani 39 EX-99 2 exa_0401-2005itc.txt EXHIBIT A - CREDIT AGREEMENT EXECUTION COPY $20,000,000 CREDIT AGREEMENT Dated as of March 29, 2005 Among ITC^DELTACOM, INC. as Parent INTERSTATE FIBERNET, INC. as Borrower THE SUBSIDIARIES NAMED HEREIN THE LENDERS NAMED HEREIN as Lenders WELSH, CARSON, ANDERSON & STOWE VIII, L.P. as Administrative Agent and Collateral Agent TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS Section 1.01. Certain Defined Terms..........................................2 Section 1.02. Computation of Time Periods; Other Definitional Provisions....24 Section 1.03. Accounting Terms..............................................24 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES Section 2.01. Term Commitments..............................................25 Section 2.02. Intentionally omitted.........................................25 Section 2.03. Repayment of Advances.........................................25 Section 2.04. Intentionally omitted.........................................25 Section 2.05. Prepayments...................................................25 Section 2.06. Interest......................................................27 Section 2.07. Increased Costs, Etc..........................................27 Section 2.08. Payments and Computations.....................................27 Section 2.09. Taxes.........................................................29 Section 2.10. Sharing of Payments, Etc......................................31 Section 2.11. Intentionally omitted.........................................32 Section 2.12. Defaulting Lenders............................................32 Section 2.13. Evidence of Debt; Register....................................33 ARTICLE III CONDITIONS OF LENDING Section 3.01. Conditions Precedent to the Effective Date....................35 ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.01. Representations and Warranties of the Borrower................39 ARTICLE V COVENANTS Section 5.01. Affirmative Covenants.........................................47 Section 5.02. Negative Covenants............................................55 Section 5.03. Reporting Requirements........................................65 ARTICLE VI EVENTS OF DEFAULT Section 6.01. Events of Default.............................................69 ARTICLE VII GUARANTY Section 7.01. Parent Guaranty; Limitation of Liability......................72 Section 7.02. Guaranty Absolute.............................................72 Section 7.03. Waivers and Acknowledgments...................................74 Section 7.04. Subrogation...................................................74 Section 7.05. Intentionally omitted.........................................75 Section 7.06. Subordination.................................................75 Section 7.07. Continuing Guaranty; Assignments..............................76 Section 7.08. Release of the Parent.........................................76 ARTICLE VIII THE AGENT Section 8.01. Authorization and Action......................................76 Section 8.02. Agents' Reliance, Etc.........................................77 Section 8.03. WCAS and Affiliates...........................................77 Section 8.04. Lender Credit Decision........................................77 Section 8.05. Indemnification...............................................78 Section 8.06. Successor Agents..............................................78 Section 8.07. Appointment of Subagents......................................79 ARTICLE IX MISCELLANEOUS Section 9.01. Amendments, Etc...............................................79 Section 9.02. Notices, Etc..................................................80 Section 9.03. No Waiver; Remedies...........................................80 Section 9.04. Costs and Expenses............................................80 Section 9.05. Right of Set-off..............................................82 Section 9.06. Binding Effect................................................82 Section 9.07. Assignments and Participations................................82 Section 9.08. Execution in Counterparts.....................................84 Section 9.09. Confidentiality...............................................85 Section 9.10. Release of Collateral.........................................85 Section 9.11. Jurisdiction, Etc.............................................85 Section 9.12. Governing Law.................................................86 Section 9.13. Waiver of Jury Trial..........................................86 ii SCHEDULES Schedule I - Lending Offices Schedule II - Competitors Schedule III - Subsidiaries to be Dissolved Schedule 4.01(a)(ii) - Good Standings Schedule 4.01(a)(iii) - Pending Licenses, Permits and Other Approvals Schedule 4.01(b) - Subsidiaries Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices and Filings Schedule 4.01(f) - Disclosed Litigation Schedule 4.01(n) - Plans, Multiemployer Plans and Welfare Plans Schedule 4.01(p) - Open Years; Unpaid Tax Liabilities; Adjusted Tax Bases Schedule 4.01(r) - Surviving Debt Schedule 4.01(s) - Liens Schedule 4.01(t) - Owned Real Property Schedule 4.01(u) - Leased Real Property Schedule 4.01(v) - Investments Schedule 4.01(w) - Intellectual Property Schedule 4.01(x) - Material Contracts EXHIBITS Exhibit A - Form of Term Note Exhibit B - Form of Assignment and Acceptance Exhibit C - Form of Security Agreement Exhibit D - Form of Third Lien Intercreditor and Subordination Agreement Exhibit E - Form of Capital Lease Assignment Exhibit F - Form of Opinion of Counsel to the Loan Parties iii CREDIT AGREEMENT CREDIT AGREEMENT, dated as of March 29, 2005 (this "Agreement"), among ITC^DeltaCom, Inc., a Delaware corporation (the "Parent"), Interstate FiberNet, Inc., a Delaware corporation (the "Borrower"), the Subsidiaries listed on the signature page hereof, the lenders listed on the signature pages hereof (the "Lenders"), Welsh, Carson, Anderson & Stowe VIII, L.P., as administrative agent (together with any successor administrative agent appointed pursuant to Article VIII, the "Administrative Agent") for the Lenders and as collateral agent (together with any successor collateral agent appointed pursuant to Article VIII, the "Collateral Agent" and, together with the Administrative Agent, the "Agents"). RECITALS: WHEREAS, the Parent, the Borrower, the subsidiary guarantors listed on the signature pages thereto, the Lenders and the Agents are party to the Credit Agreement, dated as of October 6, 2003, as amended (the "Original Second Lien Credit Agreement"); WHEREAS, pursuant to the Credit Agreement, dated as of April 5, 2000, (the "Original ITCD Credit Agreement"), among the Borrower, the Parent, the subsidiary guarantors listed on the signature pages thereof, and the banks, financial institutions and other institutional lenders from time to time parties thereto as lenders or agents, such lenders made available to the Borrower $160,000,000, consisting of $100,000,000 under the Tranche 1 Term B Facility, as defined in the Original ITCD Agreement, and $60,000,000 under the Tranche 2 Term B Facility, as defined in the Original ITCD Agreement in order to finance (a) working capital and certain capital expenditures (including the build-out of the collocation and data services businesses) and other general corporate purposes and (b) the purchase of certain equipment, respectively; WHEREAS, (a) the Borrower, ITC^DeltaCom Communications, Inc. ("Communications" and together with the Borrower, the "Lessees") and NTFC Capital Corporation ("NTFC") are party to that certain Master Lease Agreement, dated December 29, 2000, and the schedules, annexes and security documents related thereto (as amended through the date hereof, the "NTFC Capital Lease"), and (b) Communications and General Electric Capital Corporation ("GE Lessor") are party to that certain Master Lease Agreement, dated December 31, 2001, and the schedules, annexes and security documents related thereto (as amended through the date hereof, the "GECC Capital Lease"); WHEREAS, the Parent, the Borrower, the subsidiary guarantors listed on the signature pages thereof, and the banks, financial institutions and other institutional lenders from time to time parties thereto as lenders or agents, entered into (a) an amendment and restatement, dated as of October 29, 2002, of the Original ITCD Credit Agreement (the "First Amended ITCD Credit Agreement") and (b) a second amendment and restatement, dated as of October 6, 2003, of the First Amended ITCD Credit Agreement (the "Second Amended ITCD Credit Agreement"); and WHEREAS, the Loan Parties (as defined below) have requested (a) that certain First Lien Lenders (as defined below) make additional term loans available to the Borrower under the terms and conditions described in the First Lien Credit Agreement (as defined below), (b) that the Second Lien Lenders (as defined below) consent to an amendment and restatement of the indebtedness owing under the Second Lien Credit Agreement, (c) the First Lien Lenders and the Second Lien Lenders consent to the incurrence by the Borrower of subordinated secured indebtedness pursuant to this Agreement, (d) that the First Lien Lenders, NTFC and the GE Lessor consent to a restructuring of the indebtedness owing under the Second Amended ITCD Credit Agreement, the NTFC Capital Lease and the GECC Capital Lease, and (e) in connection with the foregoing, that the Lenders agree to provide subordinated secured indebtedness pursuant to terms of this Agreement; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS Section 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Administrative Agent" has the meaning specified in the preamble of this Agreement. "Administrative Agent's Account" means the account of the Administrative Agent as the Administrative Agent shall specify in writing to the Lenders. "Advance" means a Term Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Interests of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Interests, by contract or otherwise. "Agents" has the meaning specified in the preamble of this Agreement. "Agreement" means this Credit Agreement, dated as of March 29, 2005, among the Parent, the Borrower, the subsidiaries listed on the signature pages 2 hereto, the Lenders and the Agents, as amended, amended and restated, supplemented or otherwise modified from time to time. "Agreement Value" means, for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent equal to: (a) in the case of a Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc. (the "Master Agreement"), the amount, if any, that would be payable by any Loan Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party or Subsidiary was the sole "Affected Party," and (iii) the Administrative Agent was the sole party determining such payment amount (with the Administrative Agent making such determination pursuant to the provisions of the form of Master Agreement); or (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement determined by the Administrative Agent based on the settlement price of such Hedge Agreement on such date of determination; or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement; capitalized terms used and not otherwise defined in this definition shall have the respective meanings set forth in the above described Master Agreement. "Approved Fund" means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in accordance with Section 9.07 and in substantially the form of Exhibit B hereto. "Assumed BTI Debt" means (a) the Debt evidenced by the Tranche 3 Term B Advances, (as provided and defined in the First Lien Credit Agreement), (b) the Debt under the Second Lien Loan Documents, (c) unsecured Debt in the principal amount of $18,525,000 evidenced by the 10 1/2% Senior Notes due 2007 of BTI and (d) unsecured Debt in the principal amount of $7,100,000 evidenced by the note payable by BTI, Inc. to the order of P&H, Inc. "Bankruptcy Code" means title 11 of the United States Code, as amended. 3 "Benefit Plan Exchange Offer" means any transaction in which the Parent acquires and/or retires Equity Plan Securities in exchange for other Equity Plan Securities. "Board Designees" means individuals whose nomination for election, appointment or election as directors of the Parent is effectuated pursuant to (a) the Governance Agreement or (b) the Series A Certificate of Designation or the Series B Certificate of Designation. "Borrower" has the meaning specified in the preamble of this Agreement. "Borrower's Account" means the account of the Borrower as the Borrower shall specify in writing to the Administrative Agent. "Borrowing" means a Term Borrowing. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City. "BTI" means BTI Telecom Corp. "BTI, Inc." means Business Telecom, Inc. "Capital Lease Assignments" means those certain UCC-3 financing statements authenticated by GE Lessor and NTFC, respectively, pursuant to which GE Lessor and NTFC will assign to the First Lien Agents and the Second Lien Agents their respective security interests in the assets subject to the GECC Capital Lease and the NTFC Capital Lease, respectively. "Capitalized Leases" means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the date of this Agreement or issued thereafter, including, without limitation, all Common Stock and Preferred Stock. "Cash Equivalents" means any of the following, to the extent owned by the Parent or any of its Subsidiaries free and clear of all Liens other than Liens created under the Collateral Documents and having a maturity of not greater than 360 days from the date of issuance thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States; (b) insured certificates of deposit of or time deposits with any commercial bank that is a Lender or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the 4 laws of the United States or any State thereof and has combined capital and surplus of at least $1 billion; (c) commercial paper in an aggregate amount of no more than $160,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least "P-1" (or the then equivalent grade) by Moody's Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.; or (d) obligations issued by any state of the United States of America or any municipality or other political subdivision of any such state or any public instrumentality thereof having, at the time of acquisition, the highest rating obtainable from any of Standard & Poor's, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service, Inc. or Fitch Ratings, Inc., including, without limitation, auction rate certificates. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency. "Change of Control" means the occurrence on any date after the Effective Date of any of the following: (a) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the "beneficial owner" (within the meaning of Rule 13d-3 of the SEC under the Exchange Act) of more than 35% of the total voting power of the Voting Stock of the Parent on a Fully Diluted Basis and such ownership represents a greater percentage of the total voting power of the Voting Stock of the Parent, on a Fully Diluted Basis, than the percentage of the total voting power of the Voting Stock of the Parent, on a Fully Diluted Basis, beneficially owned (within the meaning of Rule 13d-3 of the SEC under the Exchange Act) by the Existing Stockholders on such date; or (b) individuals who on the Effective Date constitute the board of directors of the Parent (together with any new directors whose appointment by the board of directors of the Parent or whose nomination by the board of directors of the Parent for election by the Parent's stockholders was approved by a vote of at least a majority of the members of the board of directors then in office who either were members of the board of directors on the Effective Date or whose appointment or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the board of directors then in office; or (c) the Parent shall cease to own 100% directly of the Equity Interests of the Borrower and 100%, directly or indirectly, of the Equity Interests of the other Loan Parties. For purposes of clause (b) of this definition, all Board Designees shall be deemed to be members of the board of directors of the Parent whose appointment or nomination for election was approved in the manner specified in clause (b). "Chief Financial Officer" means, with respect to any Loan Party, the officer of such Loan Party designated by such Loan Party as its chief financial 5 officer or, if there is no such officer designation, the officer of such Loan Party designated by such Loan Party as its principal accounting officer. "Collateral" means all "Collateral" referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Collateral Agent for the benefit of the Secured Parties. "Collateral Account" has the meaning specified in the Security Agreement. "Collateral Agent" has the meaning specified in the preamble of this Agreement. "Collateral Documents" means the Security Agreement, the Third Lien Intercreditor and Subordination Agreement, the Mortgages and any other agreement that creates or purports to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties. "Commitment" means a Term Commitment. "Common Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's equity, other than Preferred Stock of such Person, whether outstanding on the date of this Agreement or issued thereafter, including, without limitation, all series and classes of such common stock. "Communications" has the meaning specified in the recitals of the parties to this Agreement. "Competitor" shall mean any Person identified on Schedule III hereto (or any Affiliate thereof) and any other Person (or any Affiliate thereof) that engages primarily, or as one of its principal activities, in the business of providing competitive local exchange telecommunications services to business customers. "Confidential Information" means information that any Loan Party furnishes to any Agent or any Lender on a confidential basis, but does not include any such information that is or becomes generally available to the public or that is or becomes available to such Agent or such Lender from a source other than the Loan Parties which such Agent or such Lender do not have reason to believe is confidential information. Notwithstanding anything to the contrary set forth in this definition or in this Agreement, "Confidential Information" shall not include information relating to the tax structure or tax treatment of any structure or transaction and all materials of any kind (including opinions and other tax analyses) that are provided to the party relating to such tax treatment and tax structure, excluding information the confidentiality of which is reasonably necessary to comply with U.S. Federal or state securities laws, it being the intent of the foregoing to cause any structure or transaction not to be treated as having been offered under conditions of confidentiality for purposes of Section 1.6011- 6 4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under Section 6011 of the Internal Revenue Code, and this definition shall be construed in a manner consistent with such purpose. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Contingent Obligation" means, with respect to any Person, any Obligation or arrangement of such Person to guarantee or intended to guarantee any Debt, leases, dividends or other payment Obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the Obligation of a primary obligor, (b) the Obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement or (c) any Obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder), as determined by such Person in good faith. "Conversion Shares" means the Common Stock or other securities issued or issuable upon conversion of the Series A Preferred Stock. "Debt" of any Person means, at any time without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 90 days incurred in the ordinary course of such Person's business, unless such trade payables overdue by more than 90 days are contested in good faith by such Person), (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the 7 event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations of such Person under acceptance, letter of credit or similar facilities, (g) all Obligations of such Person to Redeem any Equity Interests in such Person or in any other Person, or to Redeem options, warrants or other rights to purchase or otherwise acquire such Equity Interests, before the date which is six months after the Termination Date (provided that if the exercise of the right to Redeem such Equity Interests or options, warrants or other rights is at the option of such Person under the terms of such Equity Interests or otherwise, the date of such Person's exercise, if any, of such right to Redeem shall be the date on which such Person shall first be deemed to have an Obligation to Redeem such Equity Interests or options, warrants or other rights for purposes of this definition), valued in the case of Preferred Interests at the stated liquidation preference of such Preferred Interests plus accrued and unpaid dividends from time to time, (h) all Obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof, (i) all Contingent Obligations of such Person and (j) all indebtedness and other payment Obligations referred to in clauses (a) through (i) above of another Person secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment Obligations. Notwithstanding clause (g) of this definition, the Obligations referred to in such clause (g) as constituting "Debt" shall not include Obligations of such Person to Redeem Equity Interests in such Person (or to Redeem options, warrants or other rights to purchase or otherwise acquire such Equity Interests) in exchange for, or out of the proceeds of a substantially concurrent offering of, other Equity Interests (or options, warrants or other rights to purchase or otherwise acquire such other Equity Interests) in such Person, provided that any Obligations of such Person to Redeem such other Equity Interests (or to Redeem options, warrants or other rights to purchase or acquire such other Equity Interests) shall be subject to the provisions of such clause (g). "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Defaulted Amount" means, with respect to any Lender at any time, any amount required to be paid by such Lender to any Agent or any other Lender hereunder or under any other Loan Document at or prior to such time that has not been so paid as of such time, including, without limitation, any amount required to be paid by such Lender to (a) any other Lender pursuant to Section 2.10 to purchase any participation in Advances owing to such other Lender and (b) any Agent pursuant to Section 8.05 to reimburse such Agent for such Lender's ratable share of any amount required to be paid by the Lenders to such Agent. In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.12(a), the remaining portion of such Defaulted Amount shall be 8 considered a Defaulted Amount originally required to be paid hereunder or under any other Loan Document on the same date as the Defaulted Amount so deemed paid in part. "Defaulting Lender" means, at any time, any Lender that, at such time, (a) owes a Defaulted Amount or (b) shall take any action or be the subject of any action or proceeding of a type described in Section 6.01(f). "Disclosed Litigation" has the meaning specified in Section 3.01(c). "Effective Date" means the first date on which the conditions set forth in Section 3.01 shall have been satisfied. "Eligible Assignee" means any commercial bank or financial institution (including, without limitation, any fund that regularly invests in loans similar to the Advances) as approved (so long as no Default has occurred and is continuing at the time of the relevant assignment pursuant to Section 9.07) by the Borrower (such approval not to be unreasonably withheld or delayed); provided, however, that neither any Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under this definition; provided, further, that no Competitor shall qualify as an Eligible Assignee under this definition. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" means any Federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "Equity Interests" means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership 9 or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination. "Equity Plan Securities" means any Equity Interests awarded, granted, sold or issued pursuant to any stock option, restricted stock, stock incentive, deferred compensation, profit sharing, defined benefit, defined contribution or other benefit plan of any Loan Party or any Subsidiary of any Loan Party. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Loan Party, or under common control with any Loan Party, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC or (ii) the requirements of Section 4043(b) of ERISA apply with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA), excluding, however, a "standard termination" as defined in Section 4041(a)(2) of ERISA; (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan. "Events of Default" has the meaning specified in Section 6.01. 10 "Exchange Act" means the Securities and Exchange Act of 1934, as amended. "Existing Debt Refinancing" has the meaning set forth in Section 5.02(b)(vi). "Existing Stockholders" means the WCAS Securityholders and their Affiliates. For purposes of this definition, "Affiliate" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Extraordinary Receipt" means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including, without limitation, tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments, any net proceeds of any Permitted Refinancing (in excess of the amount necessary to pay in full the obligations in respect of the First Lien Loan Documents and the Second Lien Loan Documents) and any purchase price adjustment received in connection with any purchase agreement; provided, however, that an Extraordinary Receipt shall not include cash receipts, awards or payments received from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or payments (a) are in respect of loss or damage to fixed assets, real property or equipment and are applied to replace or repair such fixed assets, real property or equipment in respect of which such proceeds, awards or payments were received in accordance with the terms of the Loan Documents (or to reimburse such Person for expenditures previously incurred on account of such replacement or repair); provided that such proceeds, awards or payments (i) are immediately deposited into an account held by the Collateral Agent on behalf of the Lenders, and (ii) are applied within nine months after the occurrence of such damage or loss, provided that the Borrower shall have delivered documentation reasonably satisfactory to the Administrative Agent evidencing the cost and proposed use of any equipment repaired or replaced pursuant thereto, or (b) are received by any Person in respect of any third party claim against such Person and applied to pay (or to reimburse such Person for its prior payment of) such claim and the costs and expenses of such Person with respect thereto, or (c) are received by any Person by way of reimbursement or indemnification of such Person for costs and expenses incurred by such Person. "Facility" means the Term Facility. 11 "FCC" means the Federal Communications Commission, or any governmental agency succeeding to the functions thereof. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "First Amended ITCD Credit Agreement" has the meaning specified in the recitals of the parties to this Agreement. "First Lien Collateral Agent" means Wells Fargo Bank, N.A. and any successor collateral agent appointed pursuant to Article VIII of the First Lien Credit Agreement. "First Lien Credit Agreement" means the Third Amended and Restated Credit Agreement, dated as of even date herewith, among the Parent, the Borrower, the subsidiary guarantors listed on the signature pages thereof, the First Lien Lenders and the other parties thereto. "First Lien Facilities" means the "Facilities" (as provided and defined in the First Lien Credit Agreement). "First Lien Lenders" means the "Lenders" (as provided and defined in the First Lien Credit Agreement). "First Lien Loan Documents" means the "Loan Documents" (as provided and defined in the First Lien Credit Agreement). "First Lien Security Agreement" means the "Security Agreement" (as provided and defined in the First Lien Credit Agreement). "Fiscal Year" means a Fiscal Year of the Parent and its Consolidated Subsidiaries ending on December 31 in any calendar year. "Fully Diluted Basis" means, as of any date of determination, the sum of (a) the number of shares of Voting Stock outstanding as of such date of determination plus (b) the number of shares of Voting Stock issuable upon the exercise, conversion or exchange of all then-outstanding warrants, options, convertible Capital Stock or indebtedness, exchangeable Capital Stock or indebtedness, or other rights exercisable for or convertible or exchangeable into, directly or indirectly, shares of Voting Stock, whether at the time of issue or upon 12 the passage of time or upon the occurrence of some future event, and whether or not in the money as of such date of determination. "GAAP" has the meaning specified in Section 1.03. "GECC Capital Lease" has the meaning specified in the recitals of the parties to this Agreement. "GE Lessor" has the meaning specified in the recitals of the parties to this Agreement. "Governance Agreement" means the Governance Agreement, dated as of October 6, 2003, as amended, among the Parent, WCAS Capital Partners III, L.P., Welsh, Carson, Anderson & Stowe VIII, L.P., WCAS Information Partners, L.P. and certain individual investors and trusts listed on the signature pages thereto, , as amended by the Amendment No. 1 to Governance Agreement, dated as of March 29, 2005. "Guaranteed Obligations" has the meaning specified in Section 7.01(a). "Hazardous Materials" means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. "Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other hedging agreements. "Incur" means, with respect to any Debt, to incur, create, issue, assume, guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Debt. "Indemnified Party" has the meaning specified in Section 9.04(b). "Information Statement" has the meaning specified in Section 4.01(cc). "Initial Lenders" means the Lenders party hereto on the Effective Date. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. 13 "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Inventory" means all Inventory referred to in Section 1(b) of the Security Agreement. "Investment" in any Person means any loan or advance to such Person, any purchase or other acquisition of any Equity Interests or Debt or the assets comprising a division or business unit or a substantial part or all of the business of such Person, any capital contribution to such Person or any other direct or indirect investment in such Person, including, without limitation, any acquisition by way of a merger or consolidation and any arrangement pursuant to which the investor Incurs Debt of the types referred to in clause (i) or (j) of the definition of "Debt" in respect of such Person. "Lenders" means the lenders listed on the signature pages hereof and each Person that shall become a Lender hereunder pursuant to Section 9.07 for so long as such Lender or Person, as the case may be, shall be a party to this Agreement. "Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, as the case may be, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "Lessees" has the meaning specified in the recitals of the parties to this Agreement. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Documents" means (a) for purposes of this Agreement and the Notes and any amendment, supplement or modification hereof or thereof, (i) this Agreement, (ii) the Notes and (iii) the Collateral Documents and (b) for purposes of the Collateral Documents and for all other purposes other than for purposes of this Agreement and the Notes, (i) this Agreement, (ii) the Notes and (iii) the Collateral Documents. "Loan Parties" means the Borrower, the Parent and the Subsidiaries of the Parent. "Margin Stock" has the meaning specified in Regulation U. 14 "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Parent and its Subsidiaries, taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of the Loan Parties and the Subsidiaries of the Loan Parties, taken as a whole, (b) the rights and remedies of the Agents or any Lender under any Loan Document or (c) the ability of any Loan Party to perform its Obligations under any Loan Document to which it is or is to be a party. "Material Contract" means, with respect to any Person, each contract to which such Person is a party involving aggregate consideration payable to or by such Person of $10,000,000 or more in any year or otherwise material to the business, condition (financial or otherwise), operations, performance, properties or prospects of such Person. With respect to the Loan Parties, the Merger Agreement shall be deemed to be a Material Contract. "Merger Agreement" means the Agreement and Plan of Merger, dated as of July 2, 2003, as amended, among BTI, the parties identified on the signature pages thereto as the "WCAS Securityholders", the Parent and 8DBC1 Corp. "Merger Agreement Common Stock" means (a) the Common Stock of the Parent issued or issuable pursuant to the Merger Agreement, (b) the Series B Conversion Shares and (c) the Series B Warrant Shares. "Mortgage Policies" has the meaning specified in Section 5.01(n)(i)(B). "Mortgages" has the meaning specified in Section 5.01(n)(i). "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Net Cash Proceeds" means, with respect to any sale, lease, transfer or other disposition of any asset by any Person (excluding Equity Interests), or any Extraordinary Receipt received by or paid to or for the account of any Person, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration) by or on behalf of such Person in connection with such transaction after deducting 15 therefrom only (without duplication) (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees and expenses, finder's fees and other similar fees and commissions and out-of-pocket costs and expenses, and (b) the amount of taxes payable in connection with or as a result of such transaction, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid to a Person that is not an Affiliate of such Person and are properly attributable to such transaction or to the asset that is the subject thereof; provided, however, that in the case of taxes that are deductible under clause (b) above but for the fact that, at the time of receipt of such cash, such taxes have not been actually paid or are not then payable, such Loan Party or such Subsidiary may deduct an amount (the "Reserved Amount") equal to the amount reserved in accordance with GAAP for such Loan Party's or such Subsidiary's reasonable estimate of such taxes, other than taxes for which such Loan Party or such Subsidiary is indemnified; provided, further, however, that, at the time such taxes are paid, an amount equal to the amount, if any, by which the Reserved Amount for such taxes exceeds the amount of such taxes actually paid shall constitute "Net Cash Proceeds" of the type for which such taxes were reserved for all purposes hereunder; provided, further, still that Net Cash Proceeds from Extraordinary Receipts shall not include up to $500,000 of cash proceeds in the aggregate received in connection with one or more such receipts, to the extent such cash proceeds are applied to replace the asset in respect of which such cash proceeds were received or are otherwise invested in such Person's business, so long as application is made within nine months after the occurrence of such receipt. "New Warrants" means warrants issued pursuant to the New Warrant Documents. "New Warrant Documents" means (a) that certain Warrant Agreement, dated as of March 29, 2005, between the Parent and Mellon Investor Services LLC, as warrant agent, as amended, amended and restated, supplemented or otherwise modified from time to time, (b) the Amendment No. 1 to Governance Agreement, dated as of March 29, 2005, by and among the Parent, WCAS Capital Partners III, L.P., WCAS, WCAS Information Partners, L.P. and certain individual investors and trusts listed on the signature pages thereto and (c) each other agreement, certificate, document or instrument delivered in connection with clauses (a) and (b) above. "Note" means a Term Note. "NPL" means the National Priorities List under CERCLA. "NTFC" has the meaning specified in the recitals of the parties to this Agreement. "NTFC Capital Lease" has the meaning specified in the recitals of the parties to this Agreement. 16 "Obligation" means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(f). Without limiting the generality of the foregoing, the Obligations of any Loan Party under the Loan Documents include (a) the obligation to pay principal, interest, charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by such Loan Party under any Loan Document, including any Post-Petition Interest and (b) the obligation of such Loan Party to reimburse any amount in respect of any of the foregoing that any Lender, in its sole discretion, may elect to pay or advance on behalf of such Loan Party. "Open Year" has the meaning specified in Section 4.01(o)(iii). "Ordinary Course Obligations" means obligations (exclusive of obligations for the payment of borrowed money) under letters of credit, surety bonds, pledges, deposits or other arrangements made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers' acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business. "Original ITCD Credit Agreement" has the meaning specified in the recitals of the parties to this Agreement. "Original Second Lien Credit Agreement" has the meaning specified in the recitals of the parties to this Agreement. "Other Taxes" has the meaning specified in Section 2.09(b). "Parent" has the meaning specified in the preamble of this Agreement. "Parent Guaranty" means the guaranty of the Parent set forth in Article VII. "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Permitted Deferred Taxes" has the meaning specified in that certain Limited Waiver to Second Amended and Restated Credit Agreement, dated as of February 28, 2005, by and among the Wells Fargo Bank, N.A., the lenders specified on the signature pages thereto and the Loan Parties. "Permitted Encumbrances" has the meaning specified in the Mortgages. 17 "Permitted Liens" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b); (b) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days; (c) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; and (d) Permitted Encumbrances. "Permitted Parent Debt" has the meaning specified in Section 5.02(b)(iv). "Permitted Refinancing" means a refinancing (satisfying all of the requirements of Section 5.02(b)(vii)) by the Loan Parties of (a) first, all (but not less or more than all) of the principal amount outstanding under the First Lien Loan Documents and the termination of the First Lien Loan Documents upon the consummation of such refinancing and (b) thereafter, all (or such lesser amount as shall be acceptable to the Required Lenders under and as defined in the Second Lien Loan Documents) of the principal amount outstanding under the Second Lien Loan Documents and, if paid in full in cash, the termination of all of the Second Lien Loan Documents upon the consummation of such refinancing. "Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "PIK Amount" has the meaning specified in Section 2.06(a). "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Plan of Reorganization" means the Plan of Reorganization of the Parent under Chapter 11 of the Bankruptcy Code in In re ITC^DeltaCom, Inc. (Case No. 02-11848 (MFW)). "Pledged Debt" has the meaning specified in the Security Agreement. "Pledged Shares" has the meaning specified in the Security Agreement. "Post-Petition Interest" means any and all interest and expenses that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of any one or more of the Loan Parties (or would accrue but for the operation of applicable bankruptcy or insolvency laws) whether or not such interest is allowed or allowable as a claim in any such proceeding. 18 "Pre-Amendment Information" means all of the written information provided by or on behalf of the Borrower to the Lenders prior to the Effective Date. "Preferred Interests" means, with respect to any Person, Equity Interests issued by such Person that are entitled to a preference or priority over any other Equity Interests issued by such Person upon any distribution of such Person's property and assets, whether by dividend or upon liquidation. "Preferred Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's preferred or preference equity, whether outstanding on the date of this Agreement or issued thereafter, including, without limitation, all series and classes of such preferred or preference stock. "PUC" means any state regulatory agency or body that exercises jurisdiction over the rates or services or the ownership, construction or operation of any network facility or long distance telecommunications systems or over Persons who own, construct or operate a network facility or long distance telecommunications systems, in each case by reason of the nature or type of the business subject to regulation and not pursuant to laws and regulations of general applicability to Persons conducting business in such state. "Receivables Financing" means a refinancing (satisfying all of the requirements of Section 5.02 (b)(viii)) by the Loan Parties of (a) first, all (but not less or more than all) of the principal amount outstanding under the First Lien Loan Documents and the termination of all of the First lien Loan Documents upon the consummation of such refinancing and (b) thereafter, all (or such lesser amount shall be acceptable to the Required Lenders under and as defined in the Second Lien Loan Documents) of the principal amount outstanding under the Second Lien Loan Documents and, if paid in full in cash, the termination of all of the Second Lien Loan Documents upon the consummation of such refinancing. "Redeem" means to purchase, redeem or otherwise retire or acquire for value, provided, however, that, notwithstanding the foregoing, "Redeem" shall not include (a) the acquisition and/or retirement by the Parent of Equity Interests of the Parent which are surrendered to the Parent as indemnification payments pursuant to the Merger Agreement, (b) the acquisition and/or retirement by the Parent of Common Stock or other Equity Interests of the Parent tendered by the holder of an Equity Plan Security in payment of an exercise or purchase price specified in such Equity Plan Security or (c) a Benefit Plan Exchange Offer. 19 "Refinanced First Lien Loan Documents" means the loan documents relating to any Permitted Refinancing, any Receivables Financing or any Replacement Financing of the First Lien Loan Documents. "Refinanced Second Lien Loan Documents" means the loan documents relating to any Permitted Refinancing, any Receivables Financing or any Replacement Financing of the Second Lien Loan Documents. "Register" has the meaning specified in Section 2.13(b). "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Reorganization Common Stock" means the Common Stock of the Parent issued or issuable under or in connection with the Plan of Reorganization, including, without limitation, the Conversion Shares and the Warrant Shares. "Reorganization Securities" means (a) the Reorganization Common Stock, (b) the Series A Preferred Stock and (c) the Warrants. "Replaced Lender" has the meaning specified in Section 2.09(g). "Replacement Effective Date" has the meaning specified in Section 2.09(g). "Replacement Financing" means a refinancing (satisfying all of the requirements of Section 5.02(b)(ix)) by the Loan Parties of (a) first, all (but not less than all) of the principal amount outstanding under the First Lien Loan Documents and the termination of all of the First Lien Loan Documents upon the consummation of such refinancing and (b) thereafter, all (or such lesser amount as shall be acceptable to the Required Lenders under and as defined in the Second Lien Loan Documents) of the principal amount outstanding under the Second Lien Loan Documents and if paid in full in cash, the termination of all of the Second Lien Loan Documents upon the consummation of such refinancing. "Replacement Lender" has the meaning specified in Section 2.09(g). "Required Lenders" means, at any time, Lenders owed or holding at least a majority of the aggregate principal amount of the Advances outstanding at such time; provided, however, that if any Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Required Lenders at such time (A) the aggregate principal amount of the Advances owing to such Lender (in its capacity as a Lender) and outstanding at such time and (B) the aggregate unused Commitments of such Lender at such time. "Responsible Officer" means any officer of any Loan Party or any of its Subsidiaries. 20 "Restricted Payment" has the meaning specified in Section 5.02(g). "SEC" means the United States Securities and Exchange Commission. "Second Amended ITCD Credit Agreement" has the meaning specified in the recitals of the parties to this Agreement. "Second Lien Collateral Agent" means General Electric Capital Corporation and any successor collateral agent appointed pursuant to Article VIII of the Second Lien Credit Agreement. "Second Lien Credit Agreement" means the Amended and Restated Credit Agreement, dated as of the date hereof, among the Parent, the Borrower, the subsidiary guarantors listed on the signature pages thereof, the Second Lien Lenders and the other parties thereto. "Second Lien Facility" means the "Facility" (as provided and defined in the Second Lien Credit Agreement). "Second Lien Lenders" means the "Lenders" (as provided and defined in the Second Lien Credit Agreement). "Second Lien Loan Documents" means the "Loan Documents" (as provided and defined in the Second Lien Credit Agreement). "Secured Obligations" has the meaning specified in the Security Agreement. "Secured Parties" means the Agents and the Lenders. "Securities Act" means the Securities Act of 1933, as amended. "Security Agreement" has the meaning specified in Section 3.01(b)(ii). "Series A Certificate of Designation" means the Parent's Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and other Special Rights of 8% Series A Convertible Redeemable Preferred Stock and Qualifications, Limitations and Restrictions thereof, as in effect from time to time. "Series A PIK Dividends" means the shares of Series A Preferred Stock paid or payable as dividends on outstanding shares of Series A Preferred Stock. "Series A Preferred Stock" means the shares of preferred stock of the Parent designated as the 8% Series A Convertible Redeemable Preferred Stock and issued pursuant to the Series A Certificate of Designation, including, without limitation, Series A PIK Dividends. 21 "Series B Certificate of Designation" means the Parent's Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and other Special Rights of 8% Series B Convertible Redeemable Preferred Stock and Qualifications, Limitations and Restrictions thereof, as in effect from time to time. "Series B PIK Dividends" means the shares of Series B Preferred Stock paid or payable as dividends on outstanding shares of Series B Preferred Stock. "Series B Preferred Stock" means the shares of preferred stock of the Parent designated as the 8% Series B Convertible Redeemable Preferred Stock and issued pursuant to the Series B Certificate of Designation, including, without limitation, Series B PIK Dividends. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or any ERISA Affiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Subordinated Debt" means Debt that, by the terms of any agreement or instrument pursuant to which such Debt is Incurred, is expressly made subordinate in right of payment and priority to the Debt under the First Lien Loan Documents and the Second Lien Loan Documents. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Surviving Debt" means Debt of each Loan Party and its Subsidiaries outstanding as of the Effective Date. "Tax Agreement" means the Tax Indemnification Agreement, dated as of August 26, 1997, between ITC Holding Company, Inc. and the Parent. "Tax Certificate" has the meaning specified in Section 5.03(k). "Taxes" has the meaning specified in Section 2.09(a). 22 "Term Advance" means the single advance made by each Term Lender, according to such Lender's Term Commitment. "Term Borrowing" means a borrowing consisting of simultaneous Term Advances made by the Term Lenders. "Term Commitment" means, with respect to any Term Lender at any time, the amount set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 2.13(b) as such Lender's "Term Commitment." "Term Facility" means, at any time, the aggregate amount of the Term Lenders' Term Commitments at such time. "Term Lender" means any Lender that has a Term Commitment. "Term Loan" has the meaning specified in Section 2.01(a). "Term Note" means a promissory note of the Borrower payable to the order of any Term Lender, in substantially the form of Exhibit A hereto, evidencing the indebtedness of the Borrower to such Lender resulting from the Term Advance made by such Lender, as amended. "Termination Date" means the earlier of (a) the date on which the Administrative Agent, by notice to the Borrower, declares the Notes, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable pursuant to Section 6.01 and (b) the date that is the later of (i) December 31, 2009 and (ii) 91 calendar days after the maturity of the Second Lien Facility. "Third Lien Intercreditor and Subordination Agreement" means the Intercreditor and Subordination Agreement, dated as of the date hereof, among each of the Agents, the Lenders, the Agents as provided and defined in the First Lien Credit Agreement, on its behalf and on behalf of the First Lien Lenders, the Agents, as provided and defined in the Second Lien Credit Agreement, the Second Lien Lenders and the Loan Parties, in substantially the form of Exhibit D hereof, as the same may be amended, amended and restated and/or modified from time to time, including any replacement thereof or any additional intercreditor agreement in connection with any Permitted Financing, Receivables Financing, or Replacement Financing. "Transactions" means the transactions contemplated by the Loan Documents. "Unencumbered Parcel" means any parcel of real property owned by any Loan Party or its Subsidiaries that was not previously pledged as Collateral to secure the Obligations of the Loan Parties under the Loan Documents. 23 "Voting Interests" means shares of capital stock issued by a corporation, or equivalent Equity Interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. "Voting Stock" means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person. For purposes of this definition, Common Stock of the Parent shall constitute Voting Stock of the Parent and the Series A Preferred Stock and the Series B Preferred Stock shall not constitute Voting Stock of the Parent.\ "Warrant Shares" means the Common Stock or other securities issued or issuable upon the exercise of the Warrants. "Warrants" means the Common Stock purchase warrants issued by the Parent on the date of the initial issuance of the Series A Preferred Stock and any warrants issued in exchange or substitution therefor or upon exercise thereof in accordance with the warrant agreement pursuant to which such Common Stock purchase warrants were issued. "WCAS" means Welsh, Carson, Anderson & Stowe VIII, L.P. "WCAS Securityholders" means, collectively, (a) WCAS Capital Partners III, L.P., (b) WCAS, (c) WCAS Information Partners, L.P., (d) each of the individual investors and trusts that executed the Governance Agreement as "WCAS Securityholders," (e) the Affiliates of any of the Persons referred to in clauses (a), (b), (c) and (d) above, (f) the related Persons of any of the Persons referred to in clauses (a), (b), (c) and (d) above and (g) the WCAS Securityholder Permitted Transferees. For purposes of this definition, "Affiliate" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "WCAS Securityholder Permitted Transferees" means the individuals who are the heirs, executors, administrators, testamentary trustees, legatees, beneficiaries, spouses or lineal descendants of any of the WCAS Securityholders who are natural Persons. "Welfare Plan" means a welfare plan, as defined in Section 3(1) of ERISA, that is maintained for employees of any Loan Party or in respect of which any Loan Party could have liability. 24 "Withdrawal Liability" has the meaning specified in Part I of Subtitle E of Title IV of ERISA. Section 1.02. COMPUTATION OF TIME PERIODS; OTHER DEFINITIONAL PROVISIONS. In this Agreement and the other Loan Documents in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding." References in the Loan Documents to any agreement or contract "as amended" shall mean and be a reference to such agreement or contract as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms. Section 1.03. ACCOUNTING TERMS. All accounting terms not specifically defined herein, unless otherwise specified herein, shall be construed in accordance with generally accepted accounting principles in the United States of America as in effect from time to time ("GAAP") and consistent with those applied in the preparation of the financial statements of the Parent and its Subsidiaries. ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES Section 2.01. Term Commitments. (a) Subject to the terms and conditions hereof, each Term Lender, severally and not jointly, agrees to make a term loan (a "Term Loan") to the Borrower on the Effective Date in an amount not to exceed the amount of the Term Commitment of such Lender. (b) The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, one Business Day prior to the Effective Date) requesting that the Term Lenders make the Term Advance on the Effective Date and specifying the amount to be borrowed. Upon receipt of such notice the Administrative Agent shall promptly notify each Term Lender thereof. Not later than 12:00 Noon, New York City time, on the Effective Date, each Term Lender shall make available to the Administrative Agent at the Administrative Agent's Account an amount in immediately available funds equal to such Term Lenders' ratable portion of such Term Borrowing in accordance with the respective Term Commitments of such Term Lender and the other Term Lenders. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent shall make such funds available to the Borrower by crediting the Borrower's Account. Section 2.02. Intentionally omitted. Section 2.03. REPAYMENT OF ADVANCES. The Borrower shall repay to the Administrative Agent for the ratable account of the Term Lenders the aggregate outstanding principal amount of the Term Advances on the Termination Date. Each Lender hereby acknowledges that the receipt of any such payments is subject to the Third Lien Intercreditor and Subordination Agreement. 25 Section 2.04. Intentionally omitted. Section 2.05. PREPAYMENTS. (a) OPTIONAL. After indefeasible payment and satisfaction in full of the obligations under the First Lien Loan Documents and the Second Lien Loan Documents and subject to the terms of the Third Lien Intercreditor and Subordination Agreement, the Borrower may, upon at least one Business Day's notice to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Advances in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided, however, that each partial prepayment shall be in an aggregate principal amount of $500,000 or an integral multiple of $500,000 in excess thereof. Each such prepayment of any Advances shall be applied ratably to each Lender. (b) MANDATORY. Subject to the terms and conditions of the Third Lien Intercreditor and Subordination Agreement: (i) Intentionally omitted. (ii) The Borrower shall, within two Business Days after the date of receipt of the Net Cash Proceeds by any Loan Party from (A) the sale, lease, transfer or other disposition of any assets of any Loan Party or any Subsidiary of a Loan Party (other than leases in the ordinary course of business or any sale, lease, transfer or other disposition of assets pursuant to clause (i), (ii), (v)(B), (vi), or (vii) of Section 5.02(e)) prepay an aggregate principal amount of the Advances equal to such Net Cash Proceeds in excess, so long as no Default or Event of Default has occurred and is continuing, of $30,000,000; provided that no portion of the Net Cash Proceeds retained by the Loan Parties pursuant to this subsection (ii) shall be used by any Loan Party in connection with any merger with any Person or acquisition of assets of any Person (other than assets acquired in the ordinary course of the Loan Parties' business); and (B) any Extraordinary Receipt received by, or paid to, or for the account of, any Loan Party or any Subsidiary of a Loan Party and not otherwise included in clause (A) above, prepay an aggregate principal amount of the Advances in any amount equal to the amount of such Net Cash Proceeds. (iii) The Borrower shall, within two Business Days after the date of receipt, prepay an aggregate principal amount of the Advances in an amount equal to 100% of the proceeds received on account of (A) Debt incurred by any Loan Party (other than Special Term B Advances (as defined in the First Lien Loan Agreement) it being understood that the proceeds of any Permitted Refinancing, Receivables Financing or Replacement Financing shall be used to repay the Obligations in respect of the First Lien Facilities and the Second Lien Facility) or (B) any offering of any Equity Interests of the Parent or any other Loan Party except for Equity Interests consisting of any (1) Common Stock of the Parent, the 26 proceeds of the issuance and sale of which are applied to refinance the Series A Preferred Stock or Series B Preferred Stock at not more than 100% of liquidation value plus accrued dividends, (2) Equity Plan Securities (3) New Warrants or (4) Reorganization Securities. (iv) Intentionally omitted. (v) Intentionally omitted. (vi) All prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid and shall be applied ratably to each Lender. Section 2.06. INTEREST. (a) SCHEDULED INTEREST. The Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at a rate of 12% per annum, compounded quarterly, and shall be (i) until the satisfaction in full of the Loan Parties' obligations under the First Lien Loan Documents, the Second Lien Loan Documents, any Permitted Refinancing, any Receivables Financing or any Replacement Financing, added to the principal amount of the Term Loans (the "PIK Amount") and no such interest for such period shall be paid in cash, and (ii) thereafter, at the option of the Borrower, (A) payable in arrears on the last day of each March, June, September and December or (B) added to the principal amount of the Term Loans and no such interest for such period shall be paid in cash. The principal amount of the Term Loans shall, without further action on the part of the Borrower or the Lenders, be deemed to be increased by the PIK Amount so capitalized and added to the principal in accordance with this clause (a). (b) DEFAULT INTEREST. Upon the occurrence and during the continuance of a Default, the Borrower shall pay interest on (i) the unpaid principal amount of each Advance owing to each Lender, in the manner and on the dates referred to in clause (a) above and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable under the Loan Documents that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on the Advance pursuant to clause (a) above. Section 2.07. INCREASED COSTS, ETC. If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the amount of capital required or expected to be maintained by any Lender or any corporation controlling such Lender as a result of or based upon the existence of such Lender's commitment to lend hereunder and other commitments of such type, then, upon demand by such Lender or such corporation (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional 27 amounts sufficient to compensate such Lender in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder. A certificate as to such amounts submitted to the Borrower by such Lender shall be conclusive and binding for all purposes, absent manifest error. Section 2.08. PAYMENTS AND COMPUTATIONS.(a) The Borrower shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.12), not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the Administrative Agent at the Administrative Agent's Account in same day funds, with payments being received by the Administrative Agent after such time being deemed to have been received on the next succeeding Business Day. The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal, interest, commitment fees or any other Obligation then payable hereunder and under the Notes to more than one Lender, to such Lenders for the account of their respective Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lenders and (ii) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Lender, to such Lender for the account of its Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(e), from and after the effective date of such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or, in the case of a Lender, under the Note held by such Lender, to charge from time to time against any or all of the Borrower's accounts with such Lender any amount so due. (c) All computations of interest and fees shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each determination by the Administrative Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fee, as the case may be. (e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Lender hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the 28 Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each such Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each such Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate. (f) If the Administrative Agent receives funds for application to the Obligations under the Loan Documents under circumstances for which the Loan Documents do not specify the Advances to which, or the manner in which, such funds are to be applied, the Administrative Agent may, but shall not be obligated to, elect to distribute such funds to each Lender ratably in accordance with such Lender's proportionate share of the principal amount of all outstanding Advances, in repayment or prepayment of such of the outstanding Advances or other Obligations owed to such Lender, and for application to such principal installments, as the Administrative Agent shall direct. Section 2.09. TAXES. (a) Any and all payments by or for the account of any Loan Party hereunder, or in respect of the Notes or any other Loan Document, shall be made, in accordance with Section 2.08, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and each Agent, taxes that are imposed on its overall net income by the United States and taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Lender or such Agent, as the case may be, is organized or any political subdivision thereof and, in the case of each Lender, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Lender's Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If a Loan Party shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or other Loan Documents to any Lender or any Agent, (i) the sum payable by such Loan Party shall be increased as may be necessary so that after such Loan Party and the Administrative Agent have made all required deductions (including deductions applicable to additional sums payable under this Section 2.09) such Lender or such Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make all such deductions and (iii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, each Loan Party shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Notes or other Loan Documents or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement, the Notes or any other Loan Document (hereinafter referred to as "Other Taxes"). 29 (c) Each Loan Party shall indemnify each Lender and each Agent for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 2.09, imposed on or paid by such Lender or such Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender or such Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the relevant Loan Party shall furnish to the Administrative Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder or under the Notes or other Loan Documents by or on behalf of such Loan Party through an account or branch outside the United States or by or on behalf of such Loan Party by a payor that is not a United States person, if such Loan Party determines that no Taxes are payable in respect thereof, such Loan Party shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.09, the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) Each Lender organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender, as the case may be, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as requested in writing by the relevant Loan Party (but only so long thereafter as such Lender remains lawfully able to do so), provide each of the Administrative Agent and each Loan Party with two original Internal Revenue Service forms W-8ECI or W-8 or W-8BEN (and, if applicable to the exemption claimed by a Lender that delivers a form W-8 or W-8BEN, a certificate representing that such Lender is not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent shareholder, within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, of the Loan Party and is not a controlled foreign corporation related to the Loan Party, within the meaning of Section 864(d)(4) of the Internal Revenue Code), as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes (or, in the case of a Lender providing a form W-8 or W-8BEN, certifying that such Lender is a foreign corporation, partnership, estate or trust). If the forms provided by a Lender at the time such Lender first becomes a party to this Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such forms; provided, however, that if, at the effective date of the Assignment and Acceptance pursuant to which a Lender becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection (a) of this Section 2.09 in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable 30 with respect to the Lender assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form W-8, W-8BEN or W-8ECI (or the related certificate described above), that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Loan Party and shall not be obligated to include in such form or document such confidential information. (f) For any period with respect to which a Lender has failed to provide the relevant Loan Party with the appropriate form described in subsection (e) above (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above), such Lender shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.09 with respect to Taxes imposed by reason of such failure; provided, however, that should a Lender become subject to Taxes because of its failure to deliver a form required hereunder, the relevant Loan Party shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (g) The Loan Party may replace any Lender that has requested additional amounts under this Section 2.09, by written notice to such Lender and the Administrative Agent and identifying one or more persons each of which shall be reasonably acceptable to the Administrative Agent (each, a "Replacement Lender", and collectively, the "Replacement Lenders") to replace such Lender (the "Replaced Lender"); provided that (i) the notice from such Loan Party to the Replaced Lender and the Administrative Agent provided for herein above shall specify an effective date for such replacement (the "Replacement Effective Date"), which shall be at least five (5) Business Days after such notice is given and (ii) as of the relevant Replacement Effective Date, each Replacement Lender shall enter into an Assignment and Acceptance with the Replaced Lender pursuant to Section 9.07(a) (but shall not be required to pay the processing fee otherwise payable to the Administrative Agent pursuant to Section 9.07(a)), pursuant to which such Replacement Lenders collectively shall acquire, in such proportion among them as they may agree with such Loan Party and the Administrative Agent, all (but not less than all) of the Commitments and outstanding Advances of the Replaced Lender, and, in connection therewith, shall pay to the Replaced Lender, as the purchase price in respect thereof, an amount equal to the sum as of the Replacement Effective Date, without duplication, of (x) the unpaid principal amount of, and all accrued but unpaid interest on, all outstanding Advances of the Replaced Lender and (y) the Replaced Lender's ratable share of all accrued but unpaid fees owing to the Replaced Lender hereunder. Section 2.10. SHARING OF PAYMENTS, ETC. If any Lender shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 9.07) (a) on account of Obligations due and payable to such Lender hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the Notes at such time obtained by all the Lenders at such time or (b) on account of Obligations owing (but not due and 31 payable) to such Lender hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the Notes at such time obtained by all of the Lenders at such time, such Lender shall forthwith purchase from the other Lenders such interests or participating interests in the Obligations due and payable or owing to them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall be rescinded and such other Lender shall repay to the purchasing Lender the purchase price to the extent of such Lender's ratable share (according to the proportion of (i) the purchase price paid to such Lender to (ii) the aggregate purchase price paid to all Lenders) of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such other Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing an interest or participating interest from another Lender pursuant to this Section 2.12 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or participating interest, as the case may be, as fully as if such Lender were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be. Section 2.11. Intentionally omitted. Section 2.12. DEFAULTING LENDERS. (a) In the event that, at any one time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to any Agent or any of the other Lenders and (iii) the Borrower shall make any payment hereunder or under any other Loan Document to the Administrative Agent for the account of such Defaulting Lender, then the Administrative Agent may, on its behalf or on behalf of such other Agents or such other Lenders and to the fullest extent permitted by applicable law, apply at such time the amount so paid by the Borrower to or for the account of such Defaulting Lender to the payment of each such Defaulted Amount to the extent required to pay such Defaulted Amount. In the event that the Administrative Agent shall so apply any such amount to the payment of any such Defaulted Amount on any date, the amount so applied by the Administrative Agent shall constitute for all purposes of this Agreement and the other Loan Documents payment, to such extent, of such Defaulted Amount on such date. Any such amount so applied by the Administrative Agent shall be retained by the Administrative Agent or distributed by the Administrative Agent to such other Agents or such other Lenders, ratably in accordance with the respective portions of such Defaulted Amounts payable at such time to the Administrative Agent, such other Agents and such other Lenders and, if the amount of such payment made by the Borrower shall at such time be insufficient to pay all Defaulted Amounts owing at such time to the Administrative Agent, such other Agents and such other Lenders, in the following order of priority: (i) first, to the Administrative Agent for any Defaulted Amounts then owing to the Administrative Agent hereunder; and 32 (ii) second, to any other Lenders for any Defaulted Amounts then owing to such other Lenders, ratably in accordance with such respective Defaulted Amounts then owing to such other Lenders. Any portion of such amount paid by the Borrower for the account of such Defaulting Lender remaining, after giving effect to the amount applied by the Administrative Agent pursuant to this subsection (b), shall be applied by the Administrative Agent as specified in subsection (b) of this Section 2.12. (b) In the event that, at any one time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Amount and (iii) the Borrower, any Agent or any other Lender shall be required to pay or distribute any amount hereunder or under any other Loan Document to or for the account of such Defaulting Lender, then the Borrower or such Agent or such other Lender shall pay such amount to the Administrative Agent to be held by the Administrative Agent, to the fullest extent permitted by applicable law, in escrow or the Administrative Agent shall, to the fullest extent permitted by applicable law, hold in escrow such amount otherwise held by it. Any funds held by the Administrative Agent in escrow under this subsection (b) shall be deposited by the Administrative Agent in a segregated account, in the name and under the control of the Administrative Agent, but subject to the provisions of this subsection (b). The terms applicable to such account, including the rate of interest payable with respect to the credit balance of such account from time to time, shall be customary terms applicable to escrow accounts maintained with financial institutions. Any interest credited to such account from time to time shall be held by the Administrative Agent in escrow under, and applied by the Administrative Agent from time to time in accordance with the provisions of, this subsection (b). The Administrative Agent shall, to the fullest extent permitted by applicable law, apply all funds so held in escrow from time to time to the extent necessary to make any Advances required to be made by such Defaulting Lender and to pay any amount payable by such Defaulting Lender hereunder and under the other Loan Documents to the Administrative Agent or any other Lender, as and when such Advances or amounts are required to be made or paid and, if the amount so held in escrow shall at any time be insufficient to make and pay all such Advances and amounts required to be made or paid at such time, in the following order of priority: (i) first, to the Administrative Agent for any amounts then due and payable by such Defaulting Lender to the Administrative Agent hereunder; (ii) second, to any other Lenders for any amount then due and payable by such Defaulting Lender to such other Lenders hereunder, ratably in accordance with such respective amounts then due and payable to such other Lenders; and (iii) third, to the Borrower for any Advance then required to be made by such Defaulting Lender pursuant to a Commitment of such Defaulting Lender. 33 In the event that any Lender that is a Defaulting Lender shall, at any time, cease to be a Defaulting Lender, any funds held by the Administrative Agent in escrow at such time with respect to such Lender shall be distributed by the Administrative Agent to such Lender and applied by such Lender to the Obligations owing to such Lender at such time under this Agreement and the other Loan Documents ratably in accordance with the respective amounts of such Obligations outstanding at such time. (c) The rights and remedies against a Defaulting Lender under this Section 2.12 are in addition to other rights and remedies that the Borrower may have against such Defaulting Lender and that any Agent or any Lender may have against such Defaulting Lender with respect to any Defaulted Amount. Section 2.13. EVIDENCE OF DEBT; REGISTER. (a) Each Lender shall maintain, in accordance with its usual practice, an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. The Borrower agrees that upon notice by any Lender to the Borrower (with a copy of such notice to the Administrative Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender, with a copy to the Administrative Agent, a Term Note, in substantially the form of Exhibit A, payable to the order of such Lender in a principal amount equal to the Term Advance of such Lender. The Lenders hereby agree that any promissory notes evidencing the Advances issued by the Borrower to any Lender prior to the date hereof shall be deemed null and void and of no further force or effect for any and all purposes, and each Lender that is a holder of any such note agrees to surrender such note to the Borrower. All references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued hereunder. (b) The Administrative Agent shall maintain at its address referred to in Section 9.02 a register for the recordation of the names and addresses of the Lenders and the Commitment under each Facility of each Lender from time to time (the "Register"). The Register maintained by the Administrative Agent pursuant to this Section shall also include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender's share thereof. (c) Entries made in good faith by the Administrative Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Administrative Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or 34 accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement. (d) The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agents and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice. ARTICLE III CONDITIONS OF LENDING Section 3.01. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE. The occurrence of the Effective Date is subject to the satisfaction of the following conditions precedent: (a) The Effective Date shall occur on or before March 29, 2005. (b) The Administrative Agent shall have received the following, each dated the Effective Date (unless otherwise specified), in form and substance satisfactory to the Administrative Agent (unless otherwise specified) and (except for the Notes) in sufficient copies for each Lender: (i) The Notes payable to the order of the Lenders, to the extent requested by any Lender pursuant to Section 2.13(a). (ii) A security agreement in substantially the form of Exhibit C hereto (together with each other security agreement and security agreement supplement delivered pursuant to Section 5.01(j), in each case as amended, the "Security Agreement"), duly executed by each Loan Party, together with: (A) written confirmation of receipt by the First Lien Collateral Agent of certificates representing the Pledged Shares referred to under the First Lien Security Agreement, the Second Lien Security Agreement and the Security Agreement accompanied by undated stock powers executed in blank and instruments evidencing the Pledged Debt indorsed in blank, to be held by the First Lien Collateral Agent pursuant to the terms of the First Lien Security Agreement and otherwise in accordance with the Third Lien Intercreditor and Subordination Agreement. (B) acknowledgment copies or stamped receipt copies of proper financing statements, duly filed on or before the Effective Date under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may reasonably deem necessary or desirable in order to perfect and protect the priority liens 35 and security interests created under the Security Agreement, covering the Collateral described in the Security Agreement, subject only to the prior Lien of the First Lien Collateral Agent and the Second Lien Collateral Agent and Permitted Liens and otherwise in accordance with the Third Lien Intercreditor and Subordination Agreement, (C) completed requests for information, dated on or before the Effective Date, listing the financing statements referred to in clause (B) above and all other effective financing statements filed in the jurisdictions referred to in clause (B) above that name any Loan Party as debtor, together with copies of such other financing statements, (D) evidence of the completion of all other recordings and filings of or with respect to the Security Agreement that the Administrative Agent may reasonably deem necessary or desirable in order to perfect and protect the Liens created thereby, (E) written confirmation of receipt by the First Lien Collateral Agent of copies of the Assigned Agreements referred to in the Security Agreement, to be held by the First Lien Collateral Agent pursuant to the terms of the First Lien Security Agreement and otherwise in accordance with the Third Lien Intercreditor and Subordination Agreement, and (F) evidence that all other action that the Administrative Agent may deem reasonably necessary or desirable in order to perfect and protect the liens and security interests created under the Security Agreement has been taken (including, without limitation, receipt of duly executed payoff letters, UCC-3 termination statements, landlords' and bailees' waiver and consent agreements and account control and cash management agreements in form and substance satisfactory to the Administrative Agent) subject only to the prior Lien of the First Lien Collateral Agent and the Second Lien Collateral Agent and Permitted Liens and otherwise in accordance with the Third Lien Intercreditor and Subordination Agreement. (iii) Written confirmation of receipt by the First Lien Collateral Agent of copies of the Capital Lease Assignments substantially in the form of Exhibit E hereto. (iv) The Third Lien Intercreditor and Subordination Agreement in substantially the form of Exhibit D hereto, duly executed by each of the parties thereto. 36 (v) Certified copies of the resolutions of the Board of Directors of each Loan Party approving the Transactions and each Loan Document to which it is or is to be a party, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to the Transactions and each Loan Document to which it is or is to be a party. (vi) A copy of a certificate of the Secretary of State of the jurisdiction of incorporation of each Loan Party, dated reasonably near the date of the Effective Date, certifying (A) as to a true and correct copy of the charter of such Loan Party and each amendment thereto on file in such Secretary's office and (B) that (1) such amendments are the only amendments to such Loan Party's charter on file in such Secretary's office, (2) to the extent that the Secretary of State of the applicable jurisdiction of incorporation provides such a certification, such Loan Party has paid all franchise taxes to the date of such certificate and (C) such Loan Party is duly incorporated and in good standing or presently subsisting under the laws of the State of the jurisdiction of its incorporation. (vii) A copy of a certificate of the Secretary of State in each jurisdiction in which each Loan Party is qualified to do business, dated reasonably near the date of the Effective Date, stating that such Loan Party is duly qualified and in good standing as a foreign corporation in such State and has filed all annual reports required to be filed to the date of such certificate. (viii) A certificate of each Loan Party, signed on behalf of such Loan Party by its President or a Vice President and its Secretary or any Assistant Secretary, dated the Effective Date (the statements made in which certificate shall be true on and as of the Effective Date), certifying as to (A) the absence of any amendments to the charter of such Loan Party since the date of the Secretary of State's certificate referred to in Section 3.01(b)(vi), (B) a true and correct copy of the bylaws of such Loan Party as in effect on the date on which the resolutions referred to in Section 3.01(b)(v) were adopted and on the Effective Date, (C) the due incorporation and good standing or valid existence of such Loan Party as a corporation organized under the laws of the jurisdiction of its incorporation, and the absence of any proceeding for the dissolution or liquidation of such Loan Party, (D) the truth of the representations and warranties contained in the Loan Documents as though made on and as of the Effective Date and (E) the absence of any event occurring and continuing, or resulting from entering into this Agreement, that constitutes a Default. (ix) A certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign each Loan Document to which it is 37 or is to be a party and the other documents to be delivered hereunder and thereunder. (x) Evidence of insurance naming the Collateral Agent as additional insured and loss payee with such responsible and reputable insurance companies or associations, and in such amounts and covering such risks, as is reasonably satisfactory to the Lenders. (xi) Favorable opinions of counsel for the Loan Parties, in substantially the form of Exhibit F hereto and as to such other matters as any Lender through the Administrative Agent may reasonably request. (c) There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that could reasonably be expected to have a Material Adverse Effect other than the matters described on Schedule 4.01(f) hereto (the "Disclosed Litigation"). (d) All governmental and third party consents and approvals necessary in connection with the Transactions shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Lenders) and shall remain in effect (other than any consents and approvals the absence of which, either individually or in the aggregate, would not have a Material Adverse Effect); all applicable waiting periods in connection with the Transactions shall have expired without any action being taken by any competent authority (other than any action which either individually or in the aggregate with all such actions would not reasonably be expected to have a Material Adverse Effect), and no law or regulation shall be applicable in the reasonable judgment of the Lenders, in each case that restrains, prevents or imposes materially adverse conditions upon the Transactions or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them. (e) All Pre-Amendment Information shall be true, correct and complete in all material aspects as of the dates specified therein, and no additional information shall have come to the attention of the Loan Parties that could reasonably be expected to have a Material Adverse Effect. (f) The Borrower shall have paid (or made provision therefor in a manner reasonably satisfactory to the Agents) (i) all accrued and unpaid interest, expenses and fees outstanding with respect to the First Amended ITCD Credit Agreement, (ii) all reasonable and documented costs and expenses of the Administrative Agent (including the reasonable fees and expenses of legal counsel and financial advisors to the Administrative Agent) and the Lenders, and (iii) the fees set forth in Section 2.07. (g) The Lenders shall be reasonably satisfied that (i) the Parent and its Subsidiaries will be able to meet their respective obligations under all employee and retiree welfare plans, (ii) the employee benefit plans of the Parent and its ERISA Affiliates are, in all material respects, funded in accordance with the minimum statutory requirements, (iii) no "reportable event" (as defined in ERISA, but excluding events for which reporting has been 38 waived) has occurred as to any such employee benefit plan and (iv) no termination of, or withdrawal from, any such employee benefit plan has occurred or is contemplated that could reasonably be expected to result in a material liability. (h) The parties shall have executed and delivered (i) the First Lien Loan Documents and (ii) the Second Lien Loan Documents, each of which shall be in form and substance reasonable acceptable to the Lenders. (i) The Lessees shall have paid all accrued and outstanding interest under the NTFC Capital Lease and GECC Capital Lease on or before the Effective Date. (j) A copy of the New Warrant Documents and duly executed warrants in definitive form and registered in such names as shall be satisfactory to the Lenders. (k) The Administrative Agent shall have received drafts of the audited Consolidated balance sheet of the Loan Parties as at December 31, 2004, and drafts of the audited, related Consolidated statement of income and Consolidated statement of cash flows of the Loan Parties for the Fiscal Year then ended. ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Loan Parties represent and warrant, jointly and severally, as follows as of the date hereof and the Effective Date: (a) Each Loan Party and each of its respective Subsidiaries (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation (except as set forth in Schedule 4.01(a)(ii) hereto) in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed would not be reasonably likely to have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals (except as set forth on Schedule 4.01(a)(iii) hereto)) to own or lease and operate its properties and to carry on its business as now conducted and as currently proposed to be conducted, except where the failure to have such power or authority would not be reasonably likely to have a Material Adverse Effect. All of the outstanding Equity Interests in the Borrower have been validly issued, are fully paid and non-assessable and are owned by the Parent free and clear of all Liens, except those created under the Loan Documents. (b) Set forth on Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of each Loan Party as of the Effective Date showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation, the 39 number of shares of each class of its Equity Interests authorized, and the number outstanding, on the date hereof and the percentage of each such class of its Equity Interests owned (directly or indirectly) by such Loan Party and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding Equity Interests in each Loan Party's Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens, except those created under the Loan Documents. (c) The execution, delivery and performance by each Loan Party of each Loan Document to which it is or is to be a party, and the consummation of the Transactions, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party's charter or bylaws, (ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any loan agreement, indenture, mortgage, deed of trust, or material contract, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Loan Documents, the First Lien Loan Documents and the Second Lien Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which could be reasonably likely to have a Material Adverse Effect. (d) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (including, without limitation, the FCC or any applicable PUC) or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by any Loan Party of any Loan Document to which it is or is to be a party, or for the consummation of the Transactions, (ii) the grant or affirmation by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created under the Collateral Documents (including the third priority nature thereof), or (iv) the exercise by any Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for the authorizations, approvals, actions, notices and filings listed on Schedule 4.01(d) hereto, all of which have been duly obtained, taken, given or made and are in full force and effect except (A) as set forth in the Loan Documents or (B) for such authorizations, approvals, actions, notices and filings which would not have a Material Adverse Effect if not so made or obtained. All applicable waiting periods in connection with the Transactions have expired without any action 40 having been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the Transactions or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of them. (e) This Agreement has been, and each other Loan Document when delivered hereunder will have been, duly executed and delivered by each Loan Party thereto. This Agreement is, and each other Loan Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party thereto, enforceable against such Loan Party in accordance with its terms. (f) There is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries, including any Environmental Action, pending or, to any Loan Party's knowledge, threatened before any court, governmental agency or arbitrator that (i) would, alone or when considered in conjunction with any other actions, suits, investigation, litigation or proceeding affecting any Loan Party, be reasonably likely to have a Material Adverse Effect other than the Disclosed Litigation or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of Transactions, and there has been no material adverse change in the status, or financial effect on any Loan Party or any of its Subsidiaries, of or as a result of the Disclosed Litigation from that described on Schedule 4.01(f) hereto. (g) The (i) unaudited Consolidated balance sheet of the Loan Parties as at the nine (9) months ended September 30, 2004 and (ii) the unaudited related Consolidated statement of income and Consolidated statement of cash flows of the Loan Parties for the nine (9) months then ended, duly certified by the Chief Financial Officer of the Parent, copies of which have been furnished to the Agents and each Lender, fairly present the Consolidated financial condition of the Loan Parties, as the case may be, as at such date and the Consolidated results of operations of the Parent and its Subsidiaries for the period ended on such date, all in accordance with GAAP applied on a consistent basis, and since December 31, 2004 there has been no Material Adverse Change. (h) Intentionally omitted. (i) The Consolidated balance sheets, income statements and cash flows statements of the Loan Parties delivered to the Lenders pursuant to Section 5.03(e) were or will be, and the unaudited pro forma financial information about the Loan Parties delivered to the Lenders in the ITC^DeltaCom 2005-2006 Business Plan, dated March 9, 2005, was, prepared in good faith on the basis of the assumptions stated therein, which assumptions were or will be fair in light of the conditions existing at the time of delivery of such information, and represented or will represent, at the time of delivery, the Loan Parties' best estimate of the future financial performance of the Loan Parties. 41 (j) No information, exhibit or report furnished by or on behalf of any Loan Party to any Agent or any Lender in connection with the negotiation of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading. (k) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. (l) Neither any Loan Party nor any of its Subsidiaries is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Advances, nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other Transactions, will violate any provision of such Act or any rule, regulation or order of the SEC thereunder. (m) The Collateral Documents create a valid security interest in the Collateral, securing the payment of the Secured Obligations, and at such time as all filings delivered to the Collateral Agent on or before the Effective Date have been duly filed in accordance with the provisions of the Security Agreement, such security interest will be perfected. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for the Liens and security interests created or permitted under the Loan Documents. (n) (i)Set forth on Schedule 4.01(n) hereto is a complete and accurate list of all Plans, Multiemployer Plans and Welfare Plans. (ii) No ERISA Event (i) has occurred and is outstanding or (ii) to the Loan Parties' knowledge, is reasonably expected to occur, in each case with respect to any Plan. (iii) Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Lenders, is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no material adverse change in such funding status. (iv) Neither any Loan Party nor any ERISA Affiliate has incurred or, to the Loan Parties' knowledge, is reasonably expected to incur any Withdrawal Liability exceeding $1,000,000 to any Multiemployer Plan. (v) Neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such 42 Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan, to the Borrower's knowledge, is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA. (o) (i) The operations and properties of each Loan Party and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs, and no circumstances exist that could (A) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (B) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law. (ii) None of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or, to the best of its knowledge, is adjacent to any such property; there are no and or, to the best of its knowledge, never have been any underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or, to the best of its knowledge, operated by any Loan Party or any of its Subsidiaries or, to the best of its knowledge, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries; there is no asbestos or asbestos-containing material on any property currently owned or, to the best of its knowledge, operated by any Loan Party or any of its Subsidiaries; and Hazardous Materials have not been released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries except as specifically permitted under Environmental Laws. (iii) Neither any Loan Party nor any of its Subsidiaries is undertaking, or has completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any governmental or regulatory authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries. 43 (p) (i)Except as set forth in Schedule 4.01(p) hereto, neither any Loan Party nor any of its Subsidiaries is party to any tax sharing agreement. (ii) (x) all tax returns and all material statements, reports and forms (including estimated tax or information returns) (collectively, the "Tax Returns") required to be filed with any taxing authority by, or with respect to, each Loan Party and its Subsidiaries have been timely filed in accordance with all applicable laws and, as of time of filing, each Tax Return was accurate and complete and correctly reflected the facts regarding income, business, assets, operations and the status of each Loan Party and its Subsidiaries; (y) each Loan Party and its Subsidiaries has timely paid or made adequate provision for payment of all taxes (other than the Permitted Deferred Taxes) that are shown as due and payable on Tax Returns that have been so filed or that are otherwise required to be paid, including without limitation, assessments, interest and penalties (other than taxes which are being contested in good faith and for which adequate reserves are reflected on the financial statements delivered hereunder); and (z) each Loan Party and its Subsidiaries have made adequate provision for all taxes payable by such Loan Party and its Subsidiaries for which no Tax Return has yet been filed or which are otherwise due. (iii) Set forth on Part I of Schedule 4.01(p) hereto is a complete and accurate list, as of the date hereof, of each taxable year of each Loan Party and each of its Subsidiaries and Affiliates for which Federal income tax returns have been filed and for which the expiration of the applicable statute of limitations for assessment or collection has not occurred by reason of extension or otherwise (an "Open Year"). (iv) The aggregate unpaid amount, as of the date hereof, of adjustments to the Federal income tax liability of each Loan Party and each of its Subsidiaries and Affiliates proposed by the Internal Revenue Service with respect to Open Years does not exceed $35,000. Set forth on Part II of Schedule 4.01(p) hereto is a complete and accurate description, as of the date hereof, of each such item that separately, for all such Open Years, together with applicable interest and penalties, exceeds $100,000. To the Borrower's knowledge, no issues have been raised by the Internal Revenue Service in respect of Open Years that, in the aggregate, could be reasonably likely to have a Material Adverse Effect. (v) Except as set forth in Schedule 4.01(p) hereto, the aggregate unpaid amount, as of the date hereof, of adjustments to the state, local and foreign tax liability of each Loan Party and its Subsidiaries and Affiliates proposed by all state, local and foreign taxing authorities (other than amounts arising from adjustments to Federal income tax returns) does not exceed $35,000. No issues have been raised by such taxing authorities 44 that, in the aggregate, could be reasonably likely to have a Material Adverse Effect. (q) Neither the business nor the properties of any Loan Party or any of its Subsidiaries have been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could be reasonably likely to have a Material Adverse Effect. (r) Set forth on Schedule 4.01(r) hereto is a complete and accurate list of all Surviving Debt, showing as of the date hereof the obligor and the principal amount outstanding thereunder, the maturity date thereof and the amortization schedule therefor. (s) Set forth on Schedule 4.01(s) hereto is a complete and accurate list of all Liens on the property or assets of any Loan Party or any of its Subsidiaries, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto. (t) Set forth on Schedule 4.01(t) hereto is a complete and accurate list of all real property owned by any Loan Party or any of its Subsidiaries, showing as of the date hereof the street address, county or other relevant jurisdiction, state, record owner and gross book and fair value thereof. Each Loan Party or such Subsidiary has good, marketable and insurable fee simple title to such real property, free and clear of all Liens, other than Liens created or permitted by the Loan Documents. (u) Set forth on Schedule 4.01(u) hereto is a complete and accurate list of all leases of real property under which any Loan Party or any of its Subsidiaries is the lessee, showing as of the date hereof the street address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof. Each such lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms. (v) Set forth on Schedule 4.01(v) hereto is a complete and accurate list of all Investments held by any Loan Party or any of its Subsidiaries on the date hereof, showing as of the date hereof the amount, obligor or issuer and maturity, if any, thereof. (w) Set forth on Schedule 4.01(w) hereto is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of each Loan Party or any of its Subsidiaries, showing as of the date hereof the jurisdiction in which registered, the registration number, the date of registration and the expiration date. (x) Set forth on Schedule 4.01(x) hereto is a complete and accurate list of all Material Contracts of each Loan Party and its Subsidiaries involving 45 aggregate consideration payable to or by such Loan Party or its Subsidiaries of $20,000,000 or more in any year. Each such Material Contract, together with each other Material Contract shows as of the date hereof the parties, subject matter and term thereof. Each such Material Contract has been duly authorized, executed and delivered by all parties thereto, has not been amended or otherwise modified, is in full force and effect and is binding upon and enforceable against all parties thereto in accordance with its terms, and except as set forth on Schedule 4.01(x) hereto, there exists no default under any Material Contract by any party thereto. (y) The New Warrants have been duly authorized by the Parent and, when issued and delivered in accordance with the terms of this Agreement and the New Warrant Documents, will be validly issued and outstanding, fully paid and nonassessable, and free and clear of any Liens, other than Liens arising under the Governance Agreement. The shares of Common Stock issuable upon exercise or conversion of the New Warrants will, when issued, be validly issued and outstanding, fully paid and nonassessable, and free and clear of any Liens, other than Liens arising under the Governance Agreement. The issuance of the New Warrants and the New Warrant Shares will not be subject to preemptive or other similar rights. (z) The New Warrant Documents and the New Warrants constitute valid and binding agreements of the Parent, in each case enforceable against the Parent in accordance with their respective terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and for limitations imposed by general principles of equity. (aa) Neither the Parent nor any Person acting on its behalf has taken or will take any action (including, without limitation, any offering of any securities of the Parent under circumstances which would require, under the Securities Act (the integration of such offering with the offering and sale of the New Warrants) which might subject the offering, issuance or sale of the New Warrants to the registration requirements of Section 5 of the Securities Act. (bb) The authorized capital stock of the Parent consists of 350,000,000 shares of Common Stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. As of March 17, 2005, there were outstanding 55,084,955 shares of Common Stock of the Parent, 179,311 shares of Series A Preferred Stock and 539,078 shares of Series B Preferred Stock. As of March 17, 2005, there were outstanding under the ITC^DeltaCom, Inc. Stock Incentive Plan (i) stock options to purchase an aggregate of 2,694,886 shares of Common Stock of the Parent, of which stock options to purchase an aggregate of 1,927,635 shares of Common Stock of the Parent were exercisable, and (ii) restricted stock units for 1,653,000 shares of Common Stock of the Parent, of which restricted stock units for 791,165 shares of Common Stock were vested. As of March 17, 2005, there were outstanding, currently exercisable warrants to 46 purchase an aggregate of 4,020,000 shares of Common Stock of the Parent. All outstanding shares of capital stock of the Parent have been, and all shares of Common Stock of the Parent that may be issued pursuant to the ITC^DeltaCom, Inc. Stock Incentive Plan will be, when issued in accordance with the terms of such plan, duly authorized and validly issued and fully paid and nonassessable. No Subsidiary of the Parent owns any shares of capital stock of the Parent. (cc) The information statement (the "Information Statement") of the Parent required to be filed with the SEC pursuant to Regulation 14C under the Exchange Act, in connection with the issuance of the New Warrants and New Warrant Shares, and any amendments or supplements thereto, will, when filed, comply as to form in all material respects with the applicable requirements of the Exchange Act. At the time the Information Statement or any amendment or supplement thereto is first mailed to stockholders of the Parent, the Information Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties contained in this 4.01(cc) will not apply to statements or omissions included in the Information Statement based upon information furnished to the Parent in writing by the Initial Lenders specifically for use therein. ARTICLE V COVENANTS Section 5.01. AFFIRMATIVE COVENANTS. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid or any Lender shall have any Commitment hereunder, each Loan Party shall: (a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970, the rules and regulations of the FCC and each applicable PUC. (b) PAYMENT OF TAXES, ETC. Subject to Section 5.01(n)(ii), pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are 47 being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable. (c) COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each of its Subsidiaries and all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew and cause each of its Subsidiaries to obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, to the extent required by and in accordance with all Environmental Laws; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances. (d) MAINTENANCE OF INSURANCE. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Parent or such Subsidiary operates. (e) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its existence, legal structure, legal name, rights (charter and statutory), permits, licenses, approvals, privileges and franchises; provided, however, that the Parent and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(d) and provided further that neither the Parent nor any of its Subsidiaries shall be required to preserve any right, permit, license, approval, privilege or franchise if the Board of Directors of the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Parent or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Parent, such Subsidiary or the Lenders. (f) VISITATION RIGHTS. At any reasonable time upon prior reasonable notice and from time to time, permit any of the Agents or any of the Lenders, or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Parent and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Parent and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (g) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall 48 be made of all financial transactions and the assets and business of the Parent and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (h) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted. (i) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under the Loan Documents with any of their Affiliates on terms that are fair and reasonable and no less favorable to the Parent or such Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate. (j) COVENANT TO GUARANTEE OBLIGATIONS AND GIVE SECURITY. Upon (x) the request of the Collateral Agent (y) the formation or acquisition of any new direct or indirect Subsidiaries by any Loan Party or (z) the acquisition of any property acquired for a purchase price in excess of $1,000,000 in any Fiscal Year and $5,000,000 in the aggregate over the term of this Agreement by any Loan Party, and such property, in the judgment of the Collateral Agent, shall not already be subject to a perfected third priority security interest in favor of the Collateral Agent for the benefit of the Secured Parties, then the Loan Parties shall, in each case at the Loan Parties' expense: (i) Intentionally omitted. (ii) within 30 days after such request, formation or acquisition (or such longer period as the Administrative Agent may permit), furnish to the Collateral Agent a description of the real and personal properties of the Loan Parties and their respective Subsidiaries in detail satisfactory to the Collateral Agent, (iii) within 45 days after such request, formation or acquisition (or such longer period as the Administrative Agent may permit), duly execute and deliver, and cause each such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to duly execute and deliver, to the Collateral Agent mortgages, pledges, assignments, security agreement supplements and other security agreements, as specified by and in form and substance satisfactory to the Collateral Agent, securing payment of all the Obligations of the applicable Loan Party, such Subsidiary or such parent, as the case may be, under the Loan Documents and constituting Liens on all such properties, (iv) within 60 days after such request, formation or acquisition (or such longer period as the Administrative Agent may permit), take, and cause such Subsidiary or such parent to take, whatever 49 action (including, without limitation, the recording of mortgages, the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Collateral Agent to vest in the Collateral Agent (or in any representative of the Collateral Agent designated by it) valid and subsisting Liens on the properties purported to be subject to the mortgages, pledges, assignments, security agreement supplements and security agreements delivered pursuant to this Section 5.01(j), enforceable against all third parties in accordance with their terms, (v) within 60 days after such request, formation or acquisition (or such longer period as the Administrative Agent may permit), deliver to the Collateral Agent, upon the request of the Collateral Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Collateral Agent and the other Secured Parties, of counsel for the Loan Parties reasonably acceptable to the Collateral Agent as to the matters contained in clauses (i), (iii) and (iv) above, as to such guaranties, guaranty supplements, mortgages, pledges, assignments, security agreement supplements and security agreements being legal, valid and binding obligations of each Loan Party thereto enforceable in accordance with their terms, as to the matters contained in clause (iv) above, as to such recordings, filings, notices, endorsements and other actions being sufficient to create valid perfected Liens on such properties, and as to such other matters as the Collateral Agent may reasonably request, (vi) within 60 days after such request, formation or acquisition (or such longer period as the Administrative Agent may permit), deliver, upon the request of the Collateral Agent in its sole discretion, to the Collateral Agent with respect to each parcel of real property owned by the entity that is the subject of such request, formation or acquisition such title reports, surveys and engineering, soils and other reports, and environmental assessment reports, as may be prepared in the ordinary course of business by such entity; provided, however, that to the extent that any Loan Party or any of its Subsidiaries shall have otherwise received any of the foregoing items with respect to such real property, such items shall, promptly after the receipt thereof, be delivered to the Collateral Agent, (vii) upon the occurrence and during the continuance of a Default, promptly cause to be deposited any and all cash dividends paid or payable to it or any of its Subsidiaries from any of its Subsidiaries from time to time into the Collateral Account, and with respect to all other dividends paid or payable to it or any of its Subsidiaries from time to time, promptly execute and deliver, or cause such Subsidiary to promptly execute and deliver, as the case may be, any and all further instruments and take or cause such Subsidiary to take, as the case may be, all such other action as the Collateral Agent may deem necessary or desirable in 50 order to obtain and maintain from and after the time such dividend is paid or payable a perfected, third priority lien on and security interest in such dividends, and (viii) at any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action as the Collateral Agent may deem reasonably necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, such guaranties, mortgages, pledges, assignments, security agreement supplements and security agreements. (k) FURTHER ASSURANCES. (i) Promptly upon request by any Agent, or any Lender through the Administrative Agent, correct, and cause each of its Subsidiaries promptly to correct, any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (ii) Promptly upon request by any Agent, or any Lender through the Administrative Agent, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust, trust deeds, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as any Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (A) carry out more effectively the purposes of the Loan Documents, (B) to the fullest extent permitted by applicable law, subject any Loan Party's or any of its Subsidiaries' properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (C) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (D) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so. Notwithstanding the foregoing, no Loan Party shall be required, solely pursuant to the provisions of this Section 5.01(k), to encumber any assets which were not otherwise required to be encumbered on the Effective Date or pursuant to Section 5.01(j). (l) COMPLIANCE WITH TERMS OF LEASEHOLDS. Make all payments and otherwise perform all obligations in respect of all leases of real property to which the Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Administrative Agent of 51 any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so, except in each of the foregoing cases where the failure to do so would not have a Material Adverse Effect. (m) PERFORMANCE OF MATERIAL CONTRACTS. Perform and observe, and cause each of its Subsidiaries to perform and observe, all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect until the cancellation or termination thereof in accordance with its terms, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by the Administrative Agent (or by the Administrative Agent at the request of the Required Lenders) and, upon request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so, except in each of the foregoing cases where the failure to do so would not have a Material Adverse Effect. (n) CONDITIONS SUBSEQUENT. (i) With respect to (A) any newly-acquired Unencumbered Parcel with a gross book value in excess of $1,000,000, (B) real property that is subject to a mortgage for the benefit of the First Lien Collateral Agent as of the Effective Date, or (C) any Unencumbered Parcel owned by any Loan Party as of the Effective Date in which any such Loan Party has invested such that the gross book value of the land and any buildings thereon after the investment is completed is greater than $1,000,000, the Loan Parties shall deliver to the Administrative Agent, within 60 days after the closing of any such acquisition in clause (A) above or of any such investment in clause (C) above and within 30 days of the Effective Date in the case of clause (B) (or such longer period as the Administrative Agent may agree) with respect to such property, the following, each dated such day (unless otherwise specified) in form and substance substantially similar to the correlative First Lien Loan Documents or the Second Lien Loan Documents but reflecting the third priority nature of the Lien: deeds of trust, trust deeds, mortgages, leasehold mortgages and leasehold deeds of trust in form reasonably satisfactory to the Administrative Agent (together with the Assignments of Leases and Rents referred to therein and each other mortgage delivered pursuant to Section 5.01(j), in each case as amended, the "Mortgages"), duly executed by the appropriate Loan Party, together with: (A) evidence that counterparts of the Mortgages have been duly recorded in all filing or recording offices that the Administrative Agent may reasonably deem necessary or desirable in order to create a valid third priority and subsisting Lien on the property described therein in favor of the Collateral Agent for the benefit of the Secured Parties and that all filing and recording taxes and fees have been paid, 52 (B) fully paid American Land Title Association Lender's Extended Coverage title insurance policies (the "Mortgage Policies") in form and substance, with endorsements and in amount reasonably acceptable to the Administrative Agent, issued, coinsured and reinsured by title insurers acceptable to the Administrative Agent, insuring the Mortgages to be valid third priority and subsisting Liens on the property described therein, free and clear of all defects (including, but not limited to, mechanics' and materialmen's Liens) and encumbrances, excepting only Permitted Encumbrances, Liens securing the First Lien Facilities and Liens securing the Second Lien Facility, and providing for such other affirmative insurance (including endorsements for future advances under the Loan Documents and for mechanics' and materialmen's Liens) and such coinsurance and direct access reinsurance as the Administrative Agent may reasonably deem necessary or desirable, (C) American Land Title Association form surveys, certified to the Administrative Agent and the issuer of the Mortgage Policies in a manner reasonably satisfactory to the Administrative Agent by a land surveyor duly registered and licensed in the States in which the property described in such surveys is located and acceptable to the Administrative Agent, showing all buildings and other improvements, any off-site improvements, the location of any easements, parking spaces, rights of way, building set-back lines and other dimensional regulations and the absence of encroachments, either by such improvements or on to such property, and other defects, other than encroachments and other defects reasonably acceptable to the Administrative Agent, (D) the Assignments of Leases and Rents referred to in the Mortgages, duly executed by the appropriate Loan Party, (E) such consents and agreements of lessors and other third parties, and such estoppel letters and other confirmations, as the Administrative Agent may reasonably deem necessary or desirable, (F) evidence of the insurance required by the terms of the Mortgages, and (G) evidence that all other action that the Administrative Agent may deem reasonably necessary or desirable in order to create valid third priority and subsisting Liens on the property described in the Mortgages (subject to Liens securing the First Lien Facilities and Liens securing the Second Lien Facility) has been taken. 53 (ii) Within thirty (30) days of the Effective Date, the Borrower shall pay, or cause to be paid, the Permitted Deferred Taxes in full (iii) Within thirty (30) days of the Effective Date, the Borrower shall dissolve each of the Subsidiaries listed on Schedule IV hereto or shall comply the provisions of Section 5.01(j) as if such Subsidiary were a newly formed Subsidiary. (iv) Within thirty (30) days of the Effective Date, the Loan Parties shall have entered into new or amended account control agreements, in form and substance reasonably satisfactory to the First Lien Collateral Agent, the Second Lien Collateral Agent and the Collateral Agent, as the Collateral Agent may deem necessary or desirable in order to ensure the priority and perfection of the Collateral Agent's security interests in the deposit, securities and other bank accounts of the Loan Parties. (v) BTI and BTI, Inc. shall use commercially reasonable efforts to enter into an amendment to the promissory note referred to in clause (d) of the definition of "Assumed BTI Debt", which amendment shall extend the maturity date of such note from April 30, 2006 to a date which occurs on or after October 31, 2006. (vi) Within (A) ten (10) days of the Effective Date, the Loan Parties shall deliver to the Administrative Agent a certificate of the Secretary of State in each of the jurisdictions and with respect to each Loan Party described on Schedule 4.01(a)(ii) stating that each Loan Party is duly qualified and in good standing as a foreign corporation in the jurisdictions applicable to each Loan Party and (B) twenty (20) days of the Effective Date, each Loan Party shall have obtained all governmental licenses, permits and other approvals described as pending on Schedule 4.01(a)(iii). (vii) Within ten (10) days of the Effective Date, the Loan Parties shall deliver to the Administrative Agent favorable opinions, in form and substance satisfactory to the Administrative Agent, of counsel to those Subsidiaries of the Parent organized in Alabama, North Carolina and Virginia. (viii) Within three (3) Business Days of the Effective Date, the Borrower shall deliver to the Administrative Agent copies of the audited financial statements of the Loan Parties without any "going-concern" or like qualification to the opinion set forth therein. 54 (ix) (i) As promptly as reasonably practicable after the date hereof, the Parent will prepare and file with the SEC, will use its best efforts to have cleared by the SEC and will thereafter mail to its stockholders as promptly as reasonably practicable the Information Statement and all other related materials, if any, (ii) WCAS and the Parent will cooperate with each other (A) in connection with the preparation of the Information Statement, (B) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official, or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement or the New Warrant Documents and (iii) in taking such actions or making any such filings, furnishing information required in connection therewith or with the Information Statement and seeking timely to obtain any such actions, consents, approvals or waivers. WCAS and its counsel shall be given a reasonable opportunity to review and comment on the Information Statement each time before such document (or any amendment thereto) is filed with the SEC, and reasonable and good faith consideration shall be given to any comments made by WCAS and its counsel. The Parent shall provide WCAS and its counsel with any comments or other communications, whether written or oral, that the Parent or its counsel may receive from time to time from the SEC or its staff with respect to the Information Statement, promptly after receipt of those comments or other communications and a reasonable opportunity to participate in the response to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given), including by participating in any discussions or meetings with the staff of the SEC. (x) The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock and/or its authorized and issued Common Stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise or conversion of Warrants, the maximum number of shares of Common Stock which may then be deliverable upon the exercise or conversion of all outstanding Warrants. All such shares, when issued upon such exercise or conversion, shall be validly issued, fully paid and non-assessable, free of all Liens and not subject to preemptive rights.; 55 (xi) As promptly as reasonably practicable after the Effective Date, the Parent shall use its best efforts to cause the New Warrant Shares to be approved for quotation on the Nasdaq National Market, subject to official notice of issuance. Section 5.02. NEGATIVE COVENANTS. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid or any Lender shall have any Commitment hereunder, no Loan Party shall, at any time: (a) LIENS, ETC. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign, file or authorize the filing or suffer to exist, or permit any of its Subsidiaries to sign, file, or authorize the filing or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement that names the Parent or any of its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any secured party thereunder to file such financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, except: (i) Liens created under the Loan Documents, the First Lien Loan Documents and the Second Lien Loan Documents; (ii) Permitted Liens; (iii) Liens existing on the date hereof and described on Schedule 4.01(r) hereto; (iv) Liens arising in connection with Capitalized Leases permitted under Section 5.02(b)(ii); provided that no such Lien shall extend to or cover any Collateral or assets other than the assets subject to such Capitalized Leases; (v) Liens securing Permitted Refinancings, Receivables Financings, Replacement Financings and Existing Debt Refinancings to the extent permitted under Section 5.02(b), provided that if the Debt referred to in clauses (c) and (d) of the definition of "Assumed BTI Debt" is the subject of an Existing Debt Refinancing, such Debt shall not be secured by any Lien; (vi) (A) deposits of cash, checks or Cash Equivalents to secure Ordinary Course Obligations, (B) letters of credit issued to secure Ordinary Course Obligations or (C) surety, appeal, performance and return-of-money bonds and bonds of a similar nature issued to secure or in respect of Ordinary Course Obligations, in an aggregate amount not to exceed the amount set forth in Section 5.02(b)(xii); 56 (vii) Liens securing Subordinated Debt permitted under Section 5.02(b)(xi) which are subordinated and junior in priority to the Liens securing the First Lien Loan Documents and the Second Lien Loan Documents on terms and conditions acceptable to the First Lien Agents, the Required Lenders under the First Lien Credit Agreement, the Second Lien Agents nad the Required Lenders under the Second Lien Credit Agreement and substantially similar to those set forth in the Third Lien Intercreditor and Subordination Agreement; (b) DEBT. Incur or permit any of its Subsidiaries to Incur any Debt other than: (i) Debt under the Loan Documents, the First Lien Loan Documents and the Second Lien Loan Documents; (ii) Capitalized Leases (other than Surviving Debt) not to exceed in the aggregate $7,500,000; (iii) the Surviving Debt; (iv) unsecured Debt of the Parent ("Permitted Parent Debt") that (A) is not subject to any guarantee by any Subsidiary of the Parent, (B) will not mature prior to the date that is ninety-one (91) days after the Termination Date, (C) has no scheduled amortization or payments of principal, (D) does not permit any payments in cash of interest or other amounts in respect of the principal thereof for at least five (5) years from the date of the issuance or incurrence thereof, and (E) has mandatory prepayment, repurchase or redemption, covenant, default and remedy provisions customary for senior discount notes of an issuer that is the parent of a borrower under senior secured credit facilities, taken as a whole; provided, any such Debt shall constitute Permitted Parent Debt only if both before and after giving effect to the issuance or incurrence thereof, no Default or Event of Default shall have occurred and be continuing, it being understood that any capitalized or paid-in-kind interest or accreted principal on such Debt shall not constitute an issuance or incurrence of Debt for purposes of this proviso; (v) Debt of the Borrower under Hedge Agreements; provided that such agreements (A) are designed solely to protect the Loan Parties against fluctuations in foreign currency exchange rates or interest rates and (B) do not increase the Debt of the obligor thereunder outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; (vi) Debt Incurred in connection with the refinancing of any Debt permitted under Section 5.02(b)(i) or (ii) or clauses (c) or (d) of the 57 definition of Assumed BTI Debt (other than the Debt under the Loan Documents, Permitted Refinancings, Replacement Refinancings or Receivables Refinancings), provided that the Debt Incurred in connection with such refinancing (A) has a scheduled maturity date that is on or after the scheduled maturity date of the Debt being refinanced, (B) has a weighted average life to maturity that is equal to or longer than the remaining weighted average life to maturity of the Debt being refinanced, determined immediately prior to giving effect to such refinancing, (C) does not include any provisions that may require mandatory prepayment of such Debt prior to its scheduled maturity, other than scheduled prepayments taken into consideration in determining compliance with clause (B) above and other provisions that are not materially more burdensome to the obligor thereunder than any such provisions included in the Debt being refinanced, (D) is Incurred by the same Person that Incurred the Debt being refinanced and is not Guaranteed or secured by any Lien unless the Debt being refinanced was Guaranteed or secured by a Lien (in which case such Debt shall not be Guaranteed by any Person that did not Guarantee the Debt being refinanced and shall not be secured by a Lien on any asset that did not secure the Debt being refinanced), (E) if the refinanced Debt was subordinated to the Debt under the Loan Documents, such Debt is subordinated to the Debt under the Loan Documents on terms no less favorable to the Lenders than the terms on which the Debt being refinanced was so subordinated, and (F) has an aggregate principal amount which is equal to the Debt being refinanced, provided that the Debt Incurred in connection with such refinancing may have an aggregate principal amount which is less than the Debt being refinanced in the case of a refinancing of less than all of the Debt referred to in clauses (c) and (d) of the definition of "Assumed BTI Debt" (each refinancing undertaken in accordance with this Section 5.02(b)(vi) shall be referred to herein as an "Existing Debt Refinancing"); (vii) Permitted Refinancing; it being understood that the Loan Parties shall have the right to cause such Permitted Refinancing to be secured and guaranteed in a manner and on terms that are identical in all material respects to the manner in which and the terms on which the Debt under the First Lien Loan Documents (and/or the Second Lien Loan Documents, as applicable) is secured and guaranteed immediately prior to the consummation of such Permitted Refinancing. Effective as of the consummation of such Permitted Refinancing, the Permitted Refinancing lenders shall replace the lenders under the First Lien Loan Documents (and/or the Second Lien Loan Documents, as applicable) as parties to the Third Lien Intercreditor and Subordination Agreement, provided, that (A) there shall be no changes to the provisions of the Third Lien Intercreditor and Subordination Agreement that would adversely affect the rights and obligations thereunder of the Lenders and (B) the Permitted Refinancing documents shall not modify, or prohibit the Borrower from complying 58 with, the provisions of their Agreement with respect to the final maturity date of this Facility. (viii) Receivables Financing; it being understood that (A) the Loan Parties shall have the right to cause such Receivable Financing to be secured by all Receivables of all of the Loan Parties, (B) effective as of the consummation of such Receivables Financing, the Lenders shall release all Liens in their favor on all Receivables of all of the Loan Parties, it being understood that the Receivables Financing shall be secured by a Lien on all such Receivables that is senior in priority to all other Liens thereon (subject to Permitted Liens), and that the Lenders shall not be entitled to any Lien on the Receivables, (C) effective as of the consummation of such Receivables Financing, the Receivables Financing lenders, the Lenders and the Second Lien Lenders shall replace the Third Lien Intercreditor and Subordination Agreement with a mutually acceptable Intercreditor agreement pursuant to which such lenders, the Lenders and the Second Lien Lenders, among other things, acknowledge that the Liens on the Receivables securing the Receivables Financing shall be senior in priority to all other Liens thereon (subject to Permitted Liens) and that the Liens on all other collateral of the Loan Parties shall be senior in priority to all other Liens thereon (subject to Permitted Liens or as otherwise expressly permitted by the Loan Documents); provided, that the documents evidencing the Receivables Refinancing shall not modify, or prohibit the Borrower from complying with, the provisions of this Agreement with respect to the final maturity date of this Facility or otherwise adversely affect the rights and obligations of the Lenders under the Third Lien Intercreditor and Subordination Agreement; (ix) Replacement Financing; it being understood that effective as of the consummation of such Replacement Financing, the Replacement Financing lenders, the Second Lien Lenders, if not paid in full, the Lenders shall replace the Third Lien Intercreditor and Subordination Agreement with mutually acceptable intercreditor agreements pursuant to which such lenders, the Lenders and the Second Lien Lenders, among other things, acknowledge that the Liens securing such Replacement Financing, the Second Lien Facility, and this Facility shall secure the Debt under such facilities and, if relevant, the Second Lien Facility, shall be senior to the obligations under the Loan Documents on substantially similar terms as set forth in the Third Lien Intercreditor Agreement and that such Liens shall be senior in priority to all other Liens, subject to Permitted Liens; (x) Debt of the type described in clause (j) of the definition of "Debt" which is secured by a Permitted Lien, to the extent that such Debt is Incurred in the ordinary course of business and is not the subject of an enforcement, collection, execution, levy or foreclosure proceeding and is not duplicative of Debt Incurred pursuant to Section 5.02(b)(xii); 59 (xi) Subordinated Debt of the Loan Parties outstanding at any time in an aggregate principal amount not to exceed $30,000,000, on terms and conditions no less favorable to the First Lien Lenders and the Second Lien Lenders than under the Loan Documents, provided that (A) the maturity of such Subordinated Debt is at least 91 days following the final maturity date of the Second Lien Facility, (B) the Administrative Agent (as defined in the Second Lien Credit Agreement) and the Required Lenders under the Second Lien Credit Agreement are reasonably satisfied that the Parent and its Subsidiaries shall be in compliance with the provisions of the Second Lien Loan Documents for the period from the Incurrence of such Subordinated Debt through the final maturity date of the First Lien Facility, and (C) the Required Lenders under the Second Lien Credit Agreement have approved the terms of the subordination relating to such Subordinated Debt; and (xii) Debt in respect of Ordinary Course Obligations in an aggregate amount not to exceed $8,000,000 at any time outstanding. Notwithstanding any other provision under this Section 5.02(b), (A) the maximum amount of Debt that the Parent or a Subsidiary may Incur pursuant to this Section 5.02(b) shall not be deemed to be exceeded with respect to any outstanding Debt, solely as a result of fluctuations in the exchange rates of currencies and (B) any Loan Party may Incur Debt owed to any other Loan Party. (c) CHANGE IN NATURE OF BUSINESS. Make, or permit any of its Subsidiaries to make, any material change in the nature of its business as carried on at the date hereof; provided that the Parent or any of its Subsidiaries may engage in activities that are ancillary or related to its business. (d) MERGERS, ETC. Merge into or consolidate with any Person or permit any Person to merge into it, or permit any of its Subsidiaries to do so, except that: (i) any Subsidiary of the Borrower may merge into or consolidate with the Borrower or any other Subsidiary of the Borrower, provided that, in the case of any such merger or consolidation (x) of the Borrower, the Borrower shall be the surviving Person and (y) in the case of a merger among Subsidiaries of the Borrower, the Person formed by such merger or consolidation shall be a Subsidiary of the Borrower; and (ii) in connection with any sale or other disposition permitted under Section 5.02(e) (other than clause (ii) thereof), any Subsidiary of the Borrower may permit any other Person to merge into or consolidate with it; provided that in each case, immediately after giving effect thereto, no event shall occur and be continuing that constitutes a Default. 60 (e) SALES, ETC., of Assets. Sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, other than Inventory to be sold in the ordinary course of its business, except: (i) sales and leases of assets, including, without limitation, fiber sales in the ordinary course of its business consistent with prudent business practice for companies engaged in similar businesses for cash and fair value; (ii) in a transaction authorized by Section 5.02(d) (other than clause (ii) thereof); (iii) sales for cash and for fair value of assets related to the e^deltacom and OSDA businesses; (iv) sales of assets as consented to by the Required Lenders for cash and for fair value; (v) sales of obsolete equipment for cash and for fair value in an aggregate amount not to exceed (A) $2,000,000 and (B) $10,000,000 to the extent the proceeds thereof are used by any Loan Party to purchase replacement equipment that is substantially similar in type and function to the equipment sold; (vi) any sale, lease, transfer or other disposition by the Parent or any Subsidiary of the Parent to the Borrower and its Subsidiaries that are Loan Parties; and (vii) assignments, sales or other dispositions at fair market value for cash of accounts receivable representing amounts owed to any Loan Party by any Person that is subject to a proceeding under the Bankruptcy Code; provided that in the case of sales of assets pursuant to clauses (iii), (iv) and (v)(x) above which (A) occur prior to the date on which all Obligations under first, the First Lien Loan Documents or the Refinanced First Lien Loan Documents have been paid in full, the Borrower shall, on the date of receipt by any Loan Party or any of its Subsidiaries of the Net Cash Proceeds from such sale, prepay the obligations under the First Lien Loan Documents or the Refinanced First Lien Loan Documents pursuant to, and in the amount and order of priority set forth therein, second, the Second Lien Loan Documents or the Refinanced Second Lien Loan Documents have been paid in full, the Borrower shall, on the date of receipt by any Loan Party or any of its Subsidiaries of the Net Cash Proceeds from such sale, prepay the obligations under the Second Lien Loan Documents or the Refinanced Second Lien Loan Documents pursuant to, and thereafter in the amount and order of priority set forth thereinand to the extent all such obligations have been satisfied, prepay the Advances pursuant to, and in the amount and order of priority set forth in, Section 2.04(b)(ii), as specified therein, and (B) occur after the date on 61 which all Obligations under the First Lien Loan Documents or the Refinanced First Lien Loan Documents and the Second Lien Loan Documents or the Refinanced Second Lien Loan Documents, have been paid in full, the Borrower shall, on the date of receipt by any Loan Party or any of its Subsidiaries of the Net Cash Proceeds from such sale, prepay the Advances pursuant to, and in the amount and order of priority set forth in, Section 2.04(b)(ii), as specified therein. Nothing in this Section 5.02(e) shall restrict the Parent from issuing, selling, transferring or otherwise disposing of, for or without consideration and by dividend or otherwise, any Equity Interests in the Parent, or any option, warrant or other right to purchase or otherwise acquire any Equity Interests in the Parent. (f) Investments in Other Persons. Make or hold, or permit any of its Subsidiaries to make or hold, any Investment in any Person, except: (i) equity Investments by the Parent and its Subsidiaries in their Subsidiaries outstanding on the date hereof and other Investments in Loan Parties, including Persons who become Loan Parties in a transaction permitted by Section 5.02(d); (ii) loans and advances to employees in the ordinary course of the business of the Parent and its Subsidiaries in an aggregate principal amount not to exceed $1,000,000 at any time outstanding; (iii) Investments in Cash Equivalents; (iv) Investments existing on the date hereof and described on Schedule 4.01(u) hereto; (v) extension of trade credit in the ordinary course of business; and (vi) Investments permitted pursuant to Section 5.02(d). (g) RESTRICTED PAYMENTS. Declare or pay, any dividends, purchase, redeem, retire, defease or otherwise acquire for value any of its Equity Interests now or hereafter outstanding, return any capital to its stockholders, partners or members (or the equivalent Persons thereof) as such, make any distribution of assets, Equity Interests, obligations or securities to its stockholders, partners or members (or the equivalent Persons thereof) as such (each, a "Restricted Payment") or permit any of its Subsidiaries to make a Restricted Payment except (i) Restricted Payments by a Subsidiary of the Borrower or BTI to the Borrower or BTI, respectively, and to other Subsidiaries of the Borrower and BTI that are its parent (ii) if no Event of Default has occurred and is continuing, the Borrower may declare and pay dividends in cash or otherwise make distributions in cash to the Parent, to pay (A) scheduled interest and principal of Surviving Debt and (B) cash in lieu of issuing fractional shares of its Capital Stock in an aggregate amount not to exceed $250,000, (iii) the declaration or payment of dividends or distributions solely in Equity Interests of the Parent (including Series A PIK Dividends and Series B PIK Dividends) or (iv) the purchase, redemption, 62 retirement, defeasance or other acquisition for value of any of the Equity Interests of the Parent (A) in exchange for other Equity Interests of the Parent (including in connection with a Benefit Plan Exchange Offer), (B) upon the conversion of Preferred Interests of the Parent or the exercise, exchange or conversion of stock options, warrants or similar rights to acquire Equity Interests of the Parent, (C) in connection with any purchase, redemption, retirement, defeasance or other acquisition for value of Equity Interests of the Parent tendered by the holder of such Equity Interests in payment of withholding or other taxes relating to the exercise, exchange or conversion of stock options, warrants or other similar rights to acquire Equity Interests of the Parent or (D) tendered in settlement of indemnification or similar claims by the Parent against a holder of Equity Interests of the Parent. (h) AMENDMENTS OF CONSTITUTIVE DOCUMENTS. Amend, or permit any of its Subsidiaries to amend, its certificate of incorporation or bylaws or other constitutive documents except for any amendment that could not reasonably be expected to have a Material Adverse Effect. (i) ACCOUNTING CHANGES. Make or permit, or permit any of its Subsidiaries to make or permit, any change in (i) accounting policies or reporting practices, except as required by generally accepted accounting principles, or (ii) Fiscal Year. (j) PREPAYMENTS, ETC., OF DEBT. (i) Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled amortization or maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Debt or permit any of its Subsidiaries to do so except (A) the payment or prepayment of any or all of the Obligations under the First Lien Loan Documents or, Refinanced First Lien Loan Documents, the Second Lien Loan Document or the Refinanced Second Lien Loan Documents in accordance with the terms thereof, (B) subject to the Third Lien Intercreditor and Subordination Agreement, the payment or prepayment of any or all of the Obligations under the Loan Documents, (C) regularly scheduled or required repayments or redemptions of Surviving Debt and (D) the prepayment of Debt of any Loan Party by the Parent or any Subsidiary of the Parent or (ii) amend, modify or change in any manner any term or condition of any Surviving Debt or permit any of its Subsidiaries to do so, except for any amendment, modification or change of Surviving Debt that (A) could not reasonably be expected to have a Material Adverse Effect, (B) would not accelerate the scheduled amortization or final maturity date of such Surviving Debt (C) would not increase the applicable interest rate of such Surviving Debt, or permit any of its Subsidiaries to do any of the foregoing and (D) will not contain mandatory redemption prepayment covenant or event of default provisions materially more restrictive than the terms of such Surviving Debt prior to the date of such amendment, modification or change; provided that, notwithstanding the foregoing, the Parent and its Subsidiaries may consummate any Permitted Refinancing, Receivables Financing, Replacement Financing or Existing Debt Refinancing (and thereafter make any regularly scheduled or 63 required repayments or redemptions of Debt incurred in connection with any such Permitted Refinancing, Receivables Financing, Replacement Financing or Existing Debt Refinancing). (k) NEGATIVE PLEDGE. Enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its property or assets except (i) in favor of (A) the Lenders under this Agreement, (B) the First Lien Lenders as provided and defined in the First Lien Loan Documents or (C) the Second Lien Lenders under the Second Lien Loan Documents or (ii) in connection with (A) any Surviving Debt (as such restriction exists on the date hereof) or (B) any Capitalized Lease permitted under Section 5.02(b)(ii) solely to the extent that such Capitalized Lease prohibits a Lien on the property subject thereto. (l) PARTNERSHIPS, ETC. Become a general partner in any general or limited partnership or joint venture, or permit any of its Subsidiaries to do so. (m) SPECULATIVE TRANSACTIONS. Engage, or permit any of its Subsidiaries to engage, in any transaction involving commodity options or futures contracts or any similar speculative transactions. (n) FORMATION OF SUBSIDIARIES. Organize, or permit any Subsidiary to organize, any new Subsidiary except so long as (i) there exists no Default or Event of Default both before and after giving effect to the creation of any new wholly owned Subsidiary and the transfer of any assets to such wholly owned Subsidiary, and (ii) the applicable Loan Party, owning any portions of the stock of any such new wholly owned Subsidiary immediately delivers all shares of stock of the new wholly owned Subsidiary to the First Lien Collateral Agent or the Second Lien Collateral Agent, as applicable, subject to the provisions of the Third Lien Intercreditor and Subordination Agreement, for the benefit of the Lenders, the Lenders under the First Lien Loan Documents and the Lenders under the Second Lien Loan Documents, together with stock powers executed in blank and executes and delivers to the Collateral Agent pledge agreements pledging all such stock to secure the Obligations and the Obligations under the First Lien Loan Documents and the Second Lien Loan Documents, in form substantially similar to the applicable Loan Document. (o) PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. Directly or indirectly, enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any of its Subsidiaries to declare or pay dividends or other distributions in respect of its Equity Interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or invest in, any Loan Party or any Subsidiary of a Loan Party (whether through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise), except (i) the Loan Documents, (ii) the First Lien Loan Documents, (iii) the Second Lien Loan 64 Documents, and (iv) any agreement or instrument evidencing Surviving Debt (as such restriction exists on the date hereof). (p) AMENDMENT, ETC., OF MATERIAL CONTRACTS. Cancel or terminate (except in accordance with the terms thereof) any Material Contract, or consent to or accept any cancellation or termination thereof (except in accordance with the terms thereof), amend or otherwise modify any such Material Contract or give any consent, waiver or approval thereunder, waive any default under or breach of any such Material Contract, agree in any manner to any other amendment, modification or change of any term or condition of any such Material Contract or take any other action in connection with any such Material Contract that would impair the value of the interest or rights of any Loan Party thereunder or that would impair the interest or rights of any Agent or any Lender, or permit any of its Subsidiaries to do any of the foregoing, except, in each of the foregoing cases, where to do so would not be reasonably likely to have a Material Adverse Effect. (q) Intentionally omitted. Section 5.03. REPORTING REQUIREMENTS. So long as any Advance or any other Obligation of any Loan Party under any Loan Document shall remain unpaid, the Loan Parties shall furnish to the Agents and the Lenders: (a) DEFAULT NOTICE. As soon as possible and in any event within two days after the occurrence of each Default, Event of Default, or any event, development or occurrence reasonably likely to have a Material Adverse Effect continuing on the date of such statement, a statement of the Chief Financial Officer of the Borrower setting forth details of such Default, Event of Default, or any such event, development or occurrence and the action that the Borrower has taken and proposes to take with respect thereto. (b) ANNUAL FINANCIALS. As soon as available and in any event within 90 days after the end of each Fiscal Year, a copy of an annual report on Form 10-K for such year for the Parent and its Subsidiaries, including therein a Consolidated balance sheet of the Parent and its Subsidiaries as of the end of such Fiscal Year and Consolidated statement of income and a Consolidated statement of cash flows of the Parent and its Subsidiaries for such Fiscal Year, in each case accompanied by an opinion acceptable to the Required Lenders of BDO Seidman, LLP or other independent public accountants of recognized standing acceptable to the Required Lenders. (c) QUARTERLY FINANCIALS. As soon as available and in any event within 45 days after the end of each of the first three quarters of each Fiscal Year, (i) Consolidated balance sheet of the Parent and its Subsidiaries as of the end of such quarter and Consolidated statement of income and a Consolidated statement of cash flows of the Parent and its Subsidiaries for the period commencing at the end 65 of the previous fiscal quarter and ending with the end of such fiscal quarter and Consolidated statement of income and a Consolidated statement of cash flows of the Parent and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding Fiscal Year. (d) MONTHLY FINANCIALS. As soon as available and in any event within 30 days after the end of each month, (i) a Consolidated balance sheet of the Parent and its Subsidiaries as of the end of such month, a Consolidated statement of income and a Consolidated statement of cash flows of the Parent and its Subsidiaries for the period commencing at the end of the previous month and ending with the end of such month, and a Consolidated statement of income and a Consolidated statement of cash flows of the Parent and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such month, setting forth in each case in comparative form the corresponding figures for the preceding month, all in reasonable detail and duly certified by the Chief Financial Officer of the Parent and (ii) a condensed receivables aging report, prepared in accordance with the Borrower's customary practice from time to time, for the Loan Parties for such month with respect to their major lines of business and any significant specific accounts review necessary to support bad debt allowances, certified by the Chief Financial Officer of the Parent as fairly and accurately reporting the information described therein. (e) FORECASTS AND BUDGETS. As soon as available and in any event no later than 45 days after the end of each Fiscal Year, the following prepared by management of the Borrower, in form satisfactory to the Administrative Agent (i) balance sheets, income statements and cash flow statements on a monthly and annual basis for the current Fiscal Year; (ii) balance sheets, income statements and cash flow statements on an annual basis for each Fiscal Year thereafter until the Termination Date; and (iii) a selling, general and administrative expense budget and a capital expenditure budget for the Loan Parties for each Fiscal Year in form and substance reasonably satisfactory to the Administrative Agent. (f) LITIGATION. Promptly after the commencement thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting any Loan Party or any of its Subsidiaries of the type described in Section 4.01(f), and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on any Loan Party or any of its Subsidiaries of the Disclosed Litigation from that described on Schedule 4.01(f) hereto. (g) SECURITIES REPORTS. Promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports that any Loan 66 Party or any of its Subsidiaries sends to its stockholders, and copies of all regular, periodic and special reports, and all registration statements, that any Loan Party or any of its Subsidiaries files with the SEC or any governmental authority that may be substituted therefor, or with any national securities exchange. (h) CREDITOR REPORTS. Promptly after the furnishing thereof, copies of any statement or report furnished to any holder of Debt securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 5.03. (i) AGREEMENT NOTICES. Promptly upon receipt thereof, copies of all notices, requests and other documents received by any Loan Party or any of its Subsidiaries under or pursuant to any Material Contract or material instrument, indenture, loan or credit or similar agreement and, from time to time upon request by the Administrative Agent, such information and reports regarding the related documents, the Material Contracts and such instruments, indentures and loan and credit and similar agreements as the Administrative Agent or any Lender may reasonably request. (j) REVENUE AGENT REPORTS. Within 10 days after receipt, copies of all Revenue Agent Reports (Internal Revenue Service Form 886), or other written proposals of the Internal Revenue Service, that propose, determine or otherwise set forth positive adjustments to the Federal income tax liability of the affiliated group (within the meaning of Section 1504(a)(1) of the Internal Revenue Code) of which the Borrower is a member aggregating $2,000,000 or more. (k) TAX CERTIFICATES. (x) Promptly, and in any event within 15 Business Days after the due date (with extensions) for filing the final Federal income tax return in respect of each taxable year, a certificate (a "Tax Certificate"), signed by the President or the Chief Financial Officer of the Borrower, stating that the Loan Parties have paid to the Internal Revenue Service or other taxing authority, the full amount that the Loan Parties are required to pay in respect of Federal income tax for such year and that the Loan Parties have received any amounts payable to them, and have not paid amounts in respect of taxes (Federal, state, local or foreign) in excess of the amount they are required to pay, under the Tax Agreement in respect of such taxable year, and (y) all correspondence between any Loan Party and the Internal Revenue Service or other taxing authority relating to any request for, grant of and compliance with any extensions granted with respect to the filing of any income tax returns. (l) ERISA. (i) ERISA EVENTS AND ERISA REPORTS. (A) Promptly and in any event within 10 days after any Loan Party or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred, a statement of the Chief Financial Officer of the Borrower describing such ERISA Event and the action, if any, that such Loan Party or such ERISA Affiliate has taken and proposes to take with respect thereto and (B) on the date any records, documents or other 67 information must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such records, documents and information. (ii) PLAN TERMINATIONS. Promptly and in any event within two Business Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan. (iii) PLAN ANNUAL REPORTS. Promptly and in any event within 30 days after the filing thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Plan. (iv) MULTIEMPLOYER PLAN NOTICES. Promptly and in any event within five Business Days after receipt thereof by any Loan Party or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning (A) the imposition of Withdrawal Liability by any such Multiemployer Plan, (B) the reorganization or termination, within the meaning of Title IV of ERISA, of any such Multiemployer Plan or (C) the amount of liability incurred, or that is reasonably expected to be incurred, by such Loan Party or any ERISA Affiliate in connection with any event described in clause (A) or (B). (m) ENVIRONMENTAL CONDITIONS. Promptly after the assertion or occurrence thereof, notice of any Environmental Action against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could (i) reasonably be expected to have a Material Adverse Effect or (ii) cause any property described in the Mortgages to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law. (n) REAL PROPERTY. (i) As soon as available and in any event within 30 days after the end of each Fiscal Year, a report supplementing Schedules 4.01(s) and 4.01(t) hereto, including an identification of all owned and leased real property disposed of by any Loan Party or any of its Subsidiaries during such Fiscal Year, a list and description (including the street address, county or other relevant jurisdiction, state, record owner, book value thereof and, in the case of leases of property, lessor, lessee, expiration date and annual rental cost thereof) of all real property acquired or leased during such Fiscal Year and a description of such other changes in the information included in such Schedules as may be necessary for such Schedules to be accurate and complete and (ii) promptly inform the Administrative Agent of any investments in any of the real property listed on Schedule 4.01(s) hereto proposed to be made by any Loan Party or Loan Parties such that thereafter, the value thereof shall exceed $1,000,000 individually. 68 (o) INSURANCE. As soon as available and in any event within 30 days after the end of each Fiscal Year, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Subsidiaries and containing such additional information as any Agent, or any Lender through the Administrative Agent, may reasonably specify. (p) NEW ACCOUNTS. Promptly after opening an account with a bank or other financial institution not subject to an account control agreement, notification thereof. (q) OTHER INFORMATION. Such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of any Loan Party or any of its Subsidiaries as any Agent, or any Lender through the Administrative Agent, may from time to time reasonably request. ARTICLE VI EVENTS OF DEFAULT Section 6.01. EVENTS OF DEFAULT. If any of the following events ("Events of Default") shall occur and be continuing: (a) (i) the Borrower shall fail to pay any principal of any Advance when the same shall become due and payable or (ii) the Borrower shall fail to pay any interest on any Advance, or any Loan Party shall fail to make any other payment under any Loan Document, in each case under this clause (ii) within three Business Days after the same becomes due and payable; or (b) any representation or warranty made by any Loan Party (or any of its officers) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made; or (c) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in Section 2.05(b), 2.13, 5.01(e), (f), (i), (j), (m) or (n), 5.02 or 5.03; provided that failure to comply with the covenant set forth in Section 2.05(b) shall not constitute an Event of Default unless and until such failure shall remain unremedied for three Business Days; or (d) any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 30 days after the earlier of the date on which (i) a Responsible Officer becomes aware of such failure or (ii) written notice thereof shall have been given to the Borrower by any Agent or any Lender; or 69 (e) any Loan Party or any of its Subsidiaries shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Debt that is outstanding in a principal amount (or, in the case of any Hedge Agreement, an Agreement Value) of at least $2,000,000 either individually or in the aggregate (but excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt or otherwise to cause, or to permit the holder thereof to cause, such Debt to mature; or any such Debt shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (f) any Loan Party or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of 60 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or any Loan Party or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or (g) any judgments or orders for the payment of money (individually or in the aggregate) in excess of $5,000,000 shall be rendered against any Loan Party or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgments or orders or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of any such judgments or orders, by reason of a pending appeal or otherwise, shall not be in effect; or (h) any non-monetary judgment or order shall be rendered against any Loan Party or any of its Subsidiaries that could be reasonably likely to have a Material Adverse Effect, and there shall be any period of 10 consecutive days 70 during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (i) any provision of any Loan Document after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason cease to be valid and binding on or enforceable against any Loan Party to it, or any such Loan Party shall so state in writing; or (j) any Collateral Document after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected third priority lien on and security interest in the Collateral purported to be covered thereby (subject to Liens securing the First Lien Facilities and Liens securing the Second Lien Facility); or (k) a Change of Control shall occur; or (l) any ERISA Event shall have occurred with respect to a Plan and the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or the liability of the Loan Parties and the ERISA Affiliates related to such ERISA Event) exceeds $2,000,000; or (m) any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Loan Parties and the ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds $2,000,000 or requires payments exceeding $1,000,000 per annum; or (n) any Loan Party or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, and as a result of such reorganization or termination the aggregate annual contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan years of such Multiemployer Plans immediately preceding the plan year in which such reorganization or termination occurs by an amount exceeding $1,000,000; or (o) an "Event of Default" (as defined in any Mortgage) shall have occurred and be continuing; (p) an "Event of Default" shall have occurred and be continuing under the First Lien Credit Agreement or the Second Lien Credit Agreement; 71 then, and in any such event, the Administrative Agent shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code, the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII GUARANTY Section 7.01. PARENT GUARANTY; LIMITATION OF LIABILITY. (a) The Parent hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of each other Loan Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such obligations being the "Guaranteed Obligations"), and agrees to pay any and all reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Administrative Agent or any other Secured Party in enforcing any rights under this Agreement or any other Loan Document. Without limiting the generality of the foregoing, the Parent's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to any Secured Party under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Loan Party. (b) The Parent, and by its acceptance of this Agreement, the Administrative Agent and each other Secured Party, hereby confirms that it is the intention of all such Persons that this Agreement and the Obligations of the Parent hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Parent Guaranty and the Obligations of the Parent hereunder. To effectuate the foregoing intention, the Administrative Agent, the other Lenders and the Parent hereby irrevocably agrees that the obligations of the Parent under this Parent Guaranty at any time shall be limited to the maximum amount as will result in the Obligations of the Parent under this Agreement not constituting a fraudulent transfer or conveyance. (c) The Parent hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Agreement or any 72 other guaranty, the Parent will contribute, to the maximum extent permitted by law, such amounts to each other guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents. Section 7.02. GUARANTY ABSOLUTE. The Parent guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Lender with respect thereto. The obligations of the Parent under or in respect of this Agreement are independent of the Guaranteed Obligations or any other obligations of any other Loan Party under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against the Parent to enforce this Agreement, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any such action or actions. The liability of the Parent under this Agreement shall be irrevocable, absolute and unconditional irrespective of, and the Parent hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following: (a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any other Loan Party under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise; (c) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations; (d) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other obligations of any Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries; (e) any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries; (f) any failure of any Secured Party to disclose to any Loan Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party now or hereafter known to such Secured Parties (the Parent waiving any duty on the part of the Secured Parties to disclose such information); 73 (g) the failure of any other Person to execute or deliver this Agreement or any other guaranty or agreement or the release or reduction of liability of the Parent or other guarantor or surety with respect to the Guaranteed Obligations; or (h) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Administrative Agent or any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made. Section 7.03. WAIVERS AND ACKNOWLEDGMENTS. (a) The Parent hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Agreement and any requirement that any Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any Collateral. (b) The Parent hereby unconditionally and irrevocably waives any right to revoke this Agreement and acknowledges that this Agreement is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (c) The Parent hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by any Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the Parent or other rights of the Parent to proceed against any of the other Loan Parties, any other guarantor or any other Person or any collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of the Parent hereunder. (d) The Parent hereby unconditionally and irrevocably waives any duty on the part of any Secured Party to disclose to the Parent any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party or any of its Subsidiaries now or hereafter known by such Secured Party. (e) The Parent acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 7.02 and this Section 7.03 are knowingly made in contemplation of such benefits. Section 7.04. SUBROGATION. The Parent hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower or any other Loan Party or any other inside guarantor that arise from the existence, 74 payment, performance or enforcement of the Parent's Obligations under or in respect of this Agreement or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower, any other Loan Party or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, any other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Agreement shall have been paid in full in cash. If any amount shall be paid to the Parent in violation of the immediately preceding sentence at any time prior to the latest of the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Agreement, and (b) the Termination Date, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of the Parent and shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Agreement, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Agreement thereafter arising. If (i) the Parent shall make payment to any Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Agreement shall have been paid in full in cash, and (iii) the Termination Date shall have occurred, the Secured Parties will, at the Parent 's request and expense, execute and deliver to the Parent appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Parent of an interest in the Guaranteed Obligations resulting from such payment made by the Parent pursuant to this Agreement. Section 7.05. Intentionally omitted. Section 7.06. SUBORDINATION. The Parent hereby subordinates any and all debts, liabilities and other Obligations owed to Parent by each other Loan Party (the "Subordinated Obligations") to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 7.06: (a) PROHIBITED PAYMENTS, ETC. Except during the continuance of a Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), the Parent may receive regularly scheduled payments from any other Loan Party on account of the Subordinated Obligations. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any bankruptcy law relating to any other Loan Party), however, unless the Required Lenders otherwise agree, the Parent shall not demand, accept or take any action to collect any payment on account of the Subordinated Obligations. (b) PRIOR PAYMENT OF GUARANTEED OBLIGATIONS. In any proceeding under the Bankruptcy Code (or similar law) relating to any other Loan Party, the Parent agrees that the Secured Parties shall be entitled to receive payment in full in cash of all Guaranteed Obligations 75 (including Pose-Petition Interest) before the Parent receives payment of any Subordinated Obligations. (c) TURN-OVER. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), the Parent shall, if the Administrative Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Secured Parties and deliver such payments to the Administrative Agent on account of the Guaranteed Obligations (including all Post-Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of the Parent under the other provisions of this Agreement. (d) ADMINISTRATIVE AGENT AUTHORIZATION. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under the Bankruptcy Code relating to any other Loan Party), the Administrative Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of the Parent, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post-Petition Interest), and (ii) to require the Parent (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Administrative Agent for application to the Guaranteed Obligations (including any and all Post-Petition Interest). Section 7.07. CONTINUING GUARANTY; ASSIGNMENTS. This Agreement is a continuing guaranty and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Agreement and (ii) the Termination Date, (b) be binding upon the Parent, its successors and assigns and (c) inure to the benefit of and be enforceable by the Secured Parties and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, subject to Section 9.07, any Secured Party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party herein or otherwise, in each case as and to the extent provided in Section 9.07. The Parent shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties. Section 7.08. RELEASE OF THE PARENT. In the event that all of the capital stock of the Parent is sold or otherwise disposed of (except to the Borrower, BTI or any Subsidiary of the Borrower or BTI) or liquidated in compliance with the requirements of this Agreement (or such sale or other disposition or liquidation has been approved in writing by the Required Lenders) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of this Agreement, to the extent applicable, the Parent shall be released from this Agreement and this Agreement shall, as to the Parent, terminate, and have no further force or effect (it being understood and agreed that the sale of one or more persons that own, directly or indirectly, all of the capital stock or partnership interests of the Parent shall be deemed to be a sale of the Parent for the purposes of this Section 7.08). 76 ARTICLE VIII THE AGENT Section 8.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the Notes), no Agent shall be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, however, that no Agent shall be required to take any action that exposes such Agent to personal liability or that is contrary to this Agreement or applicable law. Each Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. Section 8.02. AGENTS' RELIANCE, ETC. Neither any Agent nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (a) may treat the payee of any Note as the holder thereof until, in the case of the Administrative Agent, the Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any other Agent, such Agent has received notice from the Administrative Agent that it has received and accepted such Assignment and Acceptance, in each case as provided in Section 9.07; (b) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or to inspect the property (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or telex) believed by it to be genuine and signed or sent by the proper party or parties. Section 8.03. WCAS AND AFFILIATES. With respect to any Commitments, any Advances made by it and any Notes issued to it, WCAS shall have the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were not 77 an Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include WCAS in its individual capacity. WCAS and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Loan Party, any of its Subsidiaries and any Person that may do business with or own securities of any Loan Party or any such Subsidiary, all as if WCAS was not an Agent and without any duty to account therefor to the Lenders. Section 8.04. LENDER CREDIT DECISION. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Section 8.05. INDEMNIFICATION. (a) Each Lender severally agrees to indemnify each Agent (to the extent not promptly reimbursed by the Borrower) from and against such Lender's ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by such Agent under the Loan Documents; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent's gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender agrees to reimburse each Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 9.04 (other than under Section 9.04(c)), to the extent that such Agent is not promptly reimbursed for such costs and expenses by the Borrower. (b) For purposes of this Section 8.05, the Lenders' respective ratable shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances outstanding at such time and owing to the respective Lenders and (ii) the Commitments of the respective Lenders at such time. The failure of any Lender to reimburse any Agent promptly upon demand for its ratable share of any amount required to be paid by the Lenders to such Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse such Agent for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse such Agent for such other Lender's ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 8.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. Section 8.06. SUCCESSOR AGENTS. Any Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time 78 with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent and, in the case of a successor Collateral Agent, upon the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Agent shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under the Loan Documents. If within 45 days after written notice is given of the retiring Agent's resignation or removal under this Section 8.06 no successor Agent shall have been appointed and shall have accepted such appointment, then on such 45th day (i) the retiring Agent's resignation or removal shall become effective, (ii) the retiring Agent shall thereupon be discharged from its duties and obligations under the Loan Documents and (iii) the Required Lenders shall thereafter perform all duties of the retiring Agent under the Loan Documents until such time, if any, as the Required Lenders appoint a successor Agent as provided above. After any retiring Agent's resignation or removal hereunder as Agent shall have become effective, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. It is understood and agreed that no Competitor shall qualify or be appointed as a successor Agent under this Section 8.06. Section 8.07. APPOINTMENT OF SUBAGENTS. Anything herein to the contrary notwithstanding, the Collateral Agent may from time to time, when the Collateral Agent deems it to be necessary, appoint one or more subagents or collateral co-agents (each, a "Subagent") with respect to all or any part of the Collateral. In the event that the Collateral Agent so appoints any Subagent with respect to any Collateral, (i) the Liens on such Collateral granted pursuant to the applicable Collateral Documents shall be deemed for purposes of this Agreement and the other Loan Documents to have been granted to such Subagent, in addition to the Collateral Agent, for the benefit of the Secured Parties, (ii) such Subagent shall be automatically vested, in addition to the Collateral Agent, with all rights, powers, privileges, interests and remedies of the Collateral Agent under the Loan Documents with respect to such Collateral, (iii) the provisions of this Article VIII and of Section 9.04 that refer to each Agent shall be deemed to be references to each Agent and/or each Subagent, as the context may require, and (iv) the term "Collateral Agent", when used herein or in any of the applicable Collateral Documents in relation to any rights, powers, privileges, interests and remedies of the Collateral Agent with respect to such Collateral shall include such Subagent; provided, however, that no such Subagent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Collateral Agent. 79 ARTICLE IX MISCELLANEOUS Section 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, nor consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral Documents, consented to) by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that (a) no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders (other than any Lender that is, at such time, a Defaulting Lender), do any of the following at any time: (i) waive any of the conditions specified in Section 3.01, (ii) change the number of Lenders or the percentage of (x) the Commitments or (y) the aggregate unpaid principal amount of the Advances that, in each case, shall be required for the Lenders or any of them to take any action hereunder, (iii) reduce or limit the obligations of the Parent under Section 7.01 or release the Parent or otherwise limit the Parent 's liability with respect to the Obligations owing to the Agents and the Lenders, (iv) release all or substantially all of the Collateral in any transaction or series of related transactions or permit the creation, incurrence, assumption or existence of any Lien on all or substantially all of the Collateral in any transaction or series of related transactions to secure any Obligations other than Obligations owing to the Lenders under the Loan Documents, or (v) amend Section 2.10 or this Section 9.01, and (b) no amendment, waiver or consent shall, unless in writing and signed by the Required Lenders and each Lender (other than any Lender that is, at such time, a Defaulting Lender) that has a Commitment under any of the Facility if such Lender is directly affected by such amendment, waiver or consent, (i) increase the Commitments of such Lender or subject such Lender to any additional obligations, (ii) reduce the principal of, or interest on, the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender or (iii) postpone any date fixed for any payment of principal of, or interest on, the Notes held by such Lender or any fees or other amounts payable hereunder to such Lender; and provided further that no amendment, waiver or consent shall, unless in writing and signed by an Agent in addition to the Lenders required above to take such action, affect the rights or duties of such Agent under this Agreement or the other Loan Documents. Section 9.02. NOTICES, ETC. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopy or telex communication) and mailed, telegraphed, telecopied, telexed or delivered, if to the Borrower, at its address at 1791 OG Skinner Drive, West Point, GA 81833, Attention: Chief Financial Officer; if to any Amendment Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto or as otherwise specified in the Assignment and Acceptance pursuant to which it became a Lender; if to the Agent, at its address at 320 Park Avenue, Suite 2500, New York, NY 10022, or, as to any party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed, telegraphed, telecopied or telexed, be effective when deposited in the mails, delivered to the telegraph company, transmitted by telecopier or confirmed by telex answerback, respectively, except that notices and communications to any Agent pursuant to Article II, III or VIII shall not be effective until received by such Agent. Manual delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to 80 be executed and delivered hereunder shall be effective as delivery of an original executed counterpart thereof. Section 9.03. NO WAIVER; REMEDIES. No failure on the part of any Lender or any Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 9.04. COSTS AND EXPENSES. (a) The Borrower agrees to pay on demand (i) all costs and expenses of each Agent in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, computer, duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses and (B) the reasonable and documented fees and expenses of counsel and financial advisors for each Agent with respect thereto, with respect to advising such Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors' rights generally and any proceeding ancillary thereto) and (ii) all costs and expenses of each Agent and each Lender in connection with the enforcement of the Loan Documents, including, without limitation, the negotiation of this Agreement, whether in any action, suit or litigation, or any bankruptcy, insolvency or other similar proceeding affecting creditors' rights generally (including, without limitation, the reasonable and documented fees and expenses of counsel for the Administrative Agent and each Lender with respect thereto). (b) The Borrower agrees to indemnify and hold harmless each Agent, each Lender and each of their Affiliates and their respective officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable and documented fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) any claims by third parties involving (i) the Facility, the actual or proposed use of the proceeds of the Advances, the Loan Documents or any of the transactions contemplated thereby, or (ii) the actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense results from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated by the Loan Documents are consummated. Each of the parties hereto also agrees not to assert any claim against any other party hereto or any of their respective 81 Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facility, the actual or proposed use of the proceeds of the Advances, the Loan Documents or any of the transactions contemplated by the Loan Documents. (c) If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Administrative Agent or any Lender, in its sole discretion. (d) Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrower contained in Sections 2.07 and 2.09 and this Section 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents. Section 9.05. RIGHT OF SET-OFF. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Agent and each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Agent, such Lender or such Affiliate to or for the credit or the account of any Loan Party against any and all of the Obligations of the Borrower now or hereafter existing under the Loan Documents, irrespective of whether such Agent or such Lender shall have made any demand under this Agreement or such Note or Notes and although such obligations may be unmatured. Each Agent and each Lender agrees promptly to notify the Borrower after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Agent and each Lender and their respective Affiliates under this Section 9.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Agent, such Lender and their respective Affiliates may have. Section 9.06. BINDING EFFECT. This Agreement shall become effective when it has been executed by the Borrower and each Agent, and the Administrative Agent has been notified by the Required Lenders that each such Required Lender has executed it, and thereafter this Agreement shall be binding upon and inure to the benefit of the Borrower, each Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders. Section 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender, an Affiliate of 82 any Lender or an Approved Fund of any Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the aggregate amount of the Commitments being assigned to such Eligible Assignee pursuant to such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $1,000,000 (or such lesser amount as shall be approved by the Administrative Agent and, so long as no Event of Default shall have occurred and be continuing at the time of effectiveness of such assignment, the Borrower, such approval, in the case of the Borrower, not to be unreasonably withheld), (ii) each such assignment shall be to an Eligible Assignee, and (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment. No processing and recordation fee shall be due. (b) Upon such execution, delivery, consent, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (ii) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.09, 2.10 and 9.04 to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (c) By executing and delivering an Assignment and Acceptance, each Lender assignor thereunder and each assignee thereunder confirm to and agree with each other and the other parties thereto and hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon any Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance 83 with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender, as the case may be. (d) The Administrative Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee, together with any Note or Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower and each other Agent. In the case of any assignment by a Lender, within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it under each Facility pursuant to such Assignment and Acceptance and, if any assigning Lender has retained a Commitment hereunder under such Facility, a new Note to the order of such assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A hereto. (f) Each Lender may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates or a Competitor) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitments) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release all or substantially all of the Collateral. (g) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant any information relating to the Loan Parties furnished to such Lender by or on behalf of the Loan Parties; provided, however, that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information received by it from such Lender. 84 (h) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. Section 9.08. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Manual delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement. Section 9.09. CONFIDENTIALITY. Neither any Agent nor any Lender shall disclose any Confidential Information to any Person without the consent of the Borrower, other than (a) to such Agent's or such Lender's Affiliates and their officers, directors, employees, agents and advisors and to actual or prospective Eligible Assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) as requested or required by any state, Federal or foreign authority or examiner regulating such Lender, (d) to any rating agency when required by it, provided that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to the Loan Parties received by it from such Lender and (e) to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty's professional advisor, provided, that prior to such disclosure, such contractual counterparty or professional advisor to such contractual counterparty shall undertake to preserve the confidentiality of any Confidential Information relating to the Loan Parties received by it from such Agent or Lender. Section 9.10. RELEASE OF COLLATERAL. Upon the sale, lease, transfer or other disposition of any item of Collateral of any Loan Party (including, without limitation, as a result of the sale, in accordance with the terms of the Loan Documents, of the Loan Party that owns such Collateral) in accordance with the terms of the Loan Documents, the Collateral Agent will, at the Borrower's expense, execute and deliver to such Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents in accordance with the terms of the Loan Documents. Section 9.11. JURISDICTION, ETC. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the 85 judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction. Notwithstanding the foregoing, no party that is a sovereign entity shall be deemed to have waived any immunity against pre-judgment attachment of any of its assets or properties. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. Section 9.12. GOVERNING LAW. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. Section 9.13. WAIVER OF JURY TRIAL. Each of the Loan Parties, the Borrower, the Agents and the Lenders irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the Advances or the actions of any Agent or any Lender in the negotiation, administration, performance or enforcement thereof. 86 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. PARENT: ITC^DELTACOM, INC. By: ____________________________________ Name: Richard E. Fish Title: Chief Administrative Officer BORROWER: INTERSTATE FIBERNET, INC. By: ____________________________________ Name: Richard E. Fish Title: Chief Administrative Officer SUBSIDIARIES: ITC^DELTACOM COMMUNICATIONS, INC By: ____________________________________ Name: Richard E. Fish Title: Chief Administrative Officer DELTACOM INFORMATION SYSTEMS, INC. By: ____________________________________ Name: Richard E. Fish Title: Chief Administrative Officer BUSINESS TELECOM, INC. By: ____________________________________ Name: Richard E. Fish Title: Chief Administrative Officer BTI TELECOM CORP. By: ____________________________________ Name: Richard E. Fish Title: Chief Administrative Officer BUSINESS TELECOM OF VIRGINIA, INC. By: ____________________________________ Name: Richard E. Fish Title: Chief Administrative Officer ADMINISTRATIVE AGENT AND COLLATERAL AGENT: WELSH, CARSON, ANDERSON & STOWE VIII, L.P. By: ____________________________________ Name: Jonathon M. Rather Title: Managing Member LENDERS: WCAS CAPITAL PARTNERS III, L.P. By: WCAS CP III Associates LLC, General Partner By: ____________________________________ Name: Jonathon M. Rather Title: Managing Member Welsh, Carson, Anderson & Stowe VIII, L.P. By: WCAS VIII Associates LLC, General Partner By: ____________________________________ Name: Jonathon M. Rather Title: Managing Member Certain individual investors and trusts By: _______________________________________ Jonathan M. Rather, as Attorney-in-fact for the individual investors listed below: Russell L. Carson Andrew M. Paul Thomas E. McInerney Robert A. Minicucci Paul B. Queally Anthony J. de Nicola D. Scott Mackesy Sanjay Swani Laura VanBuren Sean Traynor John Almeida Eric J. Lee IRA f/b/o Jonathan M. Rather Other trusts: Mary R. Anderson TTEE of The Bruce K. Anderson 2004 Trust The Bruce K. Anderson 2004 Irrevocable Trust By: _______________________________________ Name:_______________________________________ Title:______________________________________ Carol Welsh TTEE of the Patrick Welsh 2004 Irrevocable Trust By: _______________________________________ Name:_______________________________________ Title:______________________________________ SCHEDULE I LENDING OFFICES ---------------------------------- ------------------------------------ --------------------------------------- ------------------- Amount of Advances on Name of Lender Lending Office Wiring Instructions Closing Date ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- ------------------- ---------------------------------- ------------------------------------ --------------------------------------- -------------------
EX-99 3 exb_0401-2005itc.txt EXHIBIT B - WARRANT AGREEMENT ITC^DELTACOM, INC. and MELLON INVESTOR SERVICES LLC as WARRANT AGENT ------------------------------------------ WARRANT AGREEMENT Dated as of March 29, 2005 TABLE OF CONTENTS Page ---- W I T N E S S E T H:..........................................................1 SECTION 1. APPOINTMENT OF WARRANT AGENT....................................1 SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES......................2 2.1 Form and Dating.................................................2 2.2 Execution.......................................................3 2.3 Warrant Registrar...............................................3 2.4 Holder Lists....................................................4 SECTION 3. TERMS OF WARRANTS; EXERCISE OF WARRANTS.........................4 SECTION 4. PAYMENT OF TAXES...............................................11 SECTION 5. RESERVATION OF WARRANT SHARES..................................11 SECTION 6. OBTAINING STOCK EXCHANGE LISTINGS..............................12 SECTION 7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.............................................12 SECTION 8. FRACTIONAL INTERESTS...........................................26 SECTION 9. WARRANT AGENT..................................................26 9.1 Duties and Obligations; Limitations of Liability...............26 9.2 Merger, Consolidation or Change of Name of Warrant Agent.......32 9.3 Change of Warrant Agent........................................33 SECTION 10. TRANSFER; REPLACEMENT; CANCELLATION............................34 10.1 Transfer.......................................................34 10.2 Replacement Warrants...........................................39 10.3 Temporary Warrants.............................................40 10.4 Cancellation...................................................41 SECTION 11. NOTICES TO COMPANY AND WARRANT AGENT...........................41 SECTION 12. SUPPLEMENTS AND AMENDMENTS.....................................43 SECTION 13. SUCCESSORS.....................................................45 SECTION 14. TERMINATION....................................................45 SECTION 15. CERTAIN DEFINITIONS............................................46 SECTION 16. WARRANT HOLDER NOT DEEMED A STOCKHOLDER........................55 SECTION 17. GOVERNING LAW..................................................55 SECTION 18. BENEFITS OF THIS AGREEMENT.....................................56 SECTION 19. COUNTERPARTS...................................................56 EXHIBIT A 1 [FORM OF WARRANT CERTIFICATE].................................................1 [FACE] 1 WARRANT CERTIFICATE...........................................................3 ITC^DELTACOM, INC.............................................................3 [REVERSE OF WARRANT CERTIFICATE]..............................................6 [FORM OF ELECTION TO PURCHASE]...............................................11 (TO BE EXECUTED UPON EXERCISE OF WARRANT)....................................11 SCHEDULE OF EXCHANGES OF INTERESTS IN GLOBAL WARRANT.........................12 EXHIBIT B 1 [FORM OF INVESTMENT LETTER FOR EXERCISE]......................................1 EXHIBIT C I [FORM OF INVESTMENT LETTER FOR TRANSFER].......................................I ii WARRANT AGREEMENT This Warrant Agreement, dated as of March 29, 2005 (this "Warrant Agreement" or "Agreement"), is between ITC^DeltaCom, Inc., a Delaware corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey limited liability company, as warrant agent (the "Warrant Agent"). Unless elsewhere defined herein, capitalized terms used herein shall have the meaning given to them in Section 15. W I T N E S S E T H: WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof, among the Company, the lenders named therein, the subsidiary guarantors named therein and the other parties thereto (the "Third Lien Credit Agreement"), the Company proposes to issue and deliver 20,000,000 warrants (each, a "Warrant") to purchase an equal number of shares, subject to adjustment in accordance with Section 7 (the "Warrant Shares"), of the Common Stock, par value $.01 per share, of the Company (the "Common Stock"); and WHEREAS, the Company wishes the Warrant Agent to act as Warrant Agent on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance of the Warrants and the other matters provided herein; NOW, THEREFORE, in consideration of the promises and the mutual agreements herein set forth, the parties hereby agree as follows: SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the express terms and conditions set forth hereinafter in this Agreement, and the Warrant Agent hereby accepts such appointment. SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES. 2.1 Form and Dating. (a) The Warrants shall be represented by certificates substantially in the form of Exhibit A hereto (the "Warrant Certificates"). The Warrant Certificates may have notations, legends or endorsements required by law, stock market or stock exchange rule or usage (none of which shall affect the rights, duties or obligations of the Warrant Agent as set forth in this Agreement). Each Warrant Certificate shall be dated the date of the countersignature by the Warrant Agent. The terms and provisions contained in the Warrant Certificates shall constitute, and are hereby expressly made, a part of this Warrant Agreement. The Company and the Warrant Agent, by their execution and delivery of this Warrant Agreement, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Warrant Certificate conflicts with the express provisions of this Warrant Agreement, the provisions of this Warrant Agreement shall govern and be controlling. (b) Warrants may be issued in global form and shall include the Global Warrant Legend set forth in Exhibit A hereto and the "Schedule of Exchanges of Interests in Global Warrant" attached thereto. Warrants may also be issued in definitive form but without the Global Warrant Legend and without the "Schedule of Exchanges of Interests in Global Warrant" (the "Definitive Warrants"). Each Global Warrant shall represent such of the outstanding Warrants as shall be specified therein and each Global Warrant shall provide that it shall represent the number of outstanding Warrants from time to time endorsed thereon and that the number of outstanding Warrants represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions or other adjustments pursuant to Section 7. Any endorsement of a Global Warrant to reflect the amount of any increase or 2 decrease in the number of outstanding Warrants represented thereby shall be made by the Warrant Agent (upon specific written instruction from the Company) in accordance with instructions given by the Holder thereof as required by Section 10. 2.2 Execution. An Officer of the Company shall sign each Warrant Certificate on behalf of the Company by manual or facsimile signature. If the Officer of the Company whose signature is on a Warrant no longer holds that office at the time a Warrant Certificate is countersigned, such Warrant shall nevertheless be valid. A Warrant shall not be valid until countersigned by the manual or facsimile signature of the Warrant Agent. The signature of the Warrant Agent shall be conclusive evidence that the Warrant has been properly issued under this Warrant Agreement. Upon its receipt of (i) a written order of the Company containing specific instructions signed by an Officer (a "Warrant Countersignature Order") and (ii) all other relevant information which the Warrant Agent may request, the Warrant Agent shall countersign Warrant Certificates for original issue up to the number of Warrants stated in the preamble hereto. The Warrant Agent may appoint an agent acceptable to the Company to countersign Warrants. Such an agent may countersign Warrants whenever the Warrant Agent may do so. Each reference in this Warrant Agreement to a countersignature by the Warrant Agent includes a countersignature by such agent. Such an agent has the same rights as the Warrant Agent to deal with the Company or an Affiliate of the Company. 2.3 Warrant Registrar. The Company shall maintain an office or agency where Warrants may be presented for registration of transfer or for exchange (the "Warrant Registrar"). The Warrant Registrar shall keep a register of the Warrants and of their transfer and exchange. The Company 3 may appoint one or more co-Warrant Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The Company may change any Warrant Registrar without notice to any Holder. The Company shall notify the Warrant Agent in writing of the name and address of any agent (including any Warrant Registrar) that is not a party to this Warrant Agreement. If the Company fails to appoint or maintain another entity as the Warrant Registrar, the Warrant Agent shall act as the Warrant Registrar. The Company or any of its subsidiaries may act as Warrant Registrar. The Company initially appoints the Warrant Agent to act as the Warrant Registrar with respect to the Global Warrants and The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Warrants. The Warrant Registrar is hereby granted all of the rights, powers, protections, indemnifications and exculpations that have been granted to the Warrant Agent under this Agreement, including, without limitation, the rights, powers, protections, indemnifications and exculpations granted under Section 9. 2.4 Holder Lists. The Warrant Agent shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. The Company shall promptly furnish to the Warrant Agent, at such times as the Warrant Agent may request in writing, a list, in such form and as of such date as the Warrant Agent may reasonably require, of the names and addresses of the Holders. SECTION 3. TERMS OF WARRANTS; EXERCISE OF WARRANTS. (a) Subject to the terms of this Agreement, each Holder shall have the right, which may be exercised at any time and from time to time during the period commencing on the 21st calendar day following the date on which the Company sends to its stockholders the 4 information statement required pursuant to Regulation 14C under the Securities Exchange Act of 1934, as amended, in connection with stockholder approval of the issuance of the Warrants and the Warrant Shares upon exercise or conversion thereof, and ending immediately prior to 5:00 p.m., New York City time, on March 29, 2015 (the "Exercise Period"), to receive from the Company the number of fully paid and non-assessable Warrant Shares which the Holder may at the time be entitled to receive upon exercise of such Warrants upon payment, subject to Section 3(f), of $0.60 per share of Common Stock, as adjusted from time to time in accordance with Section 7 (the "Exercise Price"), in cash, by wire transfer or by certified or official bank check payable to the order of the Company; provided that Holders holding Warrants shall be able to exercise their Warrants only in accordance with the procedures set forth in this Agreement and the Warrant Certificate and only if (i) a registration statement relating to the exercise of the Warrants and issuance of the Warrant Shares upon such exercise is then effective under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) the exercise of such Warrants and the issuance of the Warrant Shares upon such exercise is exempt from the registration requirements of the Securities Act and such Warrant Shares are qualified for sale or exempt from registration or qualification under the applicable securities laws of the states in which the various Holders of the Warrants or other Persons to whom it is proposed that such Warrant Shares be issued upon exercise of the Warrants reside. Each Warrant not exercised prior to 5:00 p.m., New York City time, on March 29, 2015 (the "Expiration Date") shall become void and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of such time. No adjustments as to dividends shall be made upon exercise of the Warrants. (b) In order to exercise all or any of the Warrants, the Holder thereof must deliver to the Warrant Agent at its office set forth in Section 11 (i) the Warrant Certificate (in the 5 case of Definitive Warrants), (ii) the form of election to purchase on the reverse thereof duly and properly filled in and signed, which signature shall be guaranteed by a bank or trust company having an office or correspondent in the United States or a broker or dealer which is a member of a registered securities exchange or the National Association of Securities Dealers, Inc., and (iii) subject to Section 3(f), payment to the Warrant Agent for the account of the Company of the Exercise Price for the number of Warrant Shares in respect of which such Warrants are then exercised, as provided in Section 3(a). (c) If, at the time of the surrender of a beneficial interest in any Restricted Global Warrant or a Restricted Definitive Warrant in connection with any exercise of such Warrant, such exercise and the issuance of the Warrant Shares issuable upon such exercise shall not be registered under the Securities Act, it shall be a condition to such exercise and the issuance of such Warrant Shares that (i) the Holder of such Warrant furnish to the Company an investment letter substantially in the form of Exhibit B hereto and (ii) the Holder or each other Person to whom it is proposed that such Warrant Shares be issued qualify as an "accredited investor" as defined in Rule 501(a) of Regulation D under the Securities Act. The Company may waive compliance with such condition, in whole or in part, in its sole discretion. (d) Subject to the provisions of Section 10, upon specific written instruction from the Company, the Warrant Agent shall deliver or cause to be delivered with all reasonable dispatch, in such name or names as the Holder may designate in writing, a certificate or certificates for the number of whole Warrant Shares issuable upon exercise of the Warrants delivered by the Holder for exercise. Such certificate or certificates shall be deemed to have been issued and any Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrants and, 6 subject to Section 3(f), payment of the Exercise Price; provided, however, that if such Person would be so deemed to have become a holder of record of Warrant Shares as of a date of record referred to in Section 7(d), then, notwithstanding the foregoing, such Person shall be deemed to have become a holder of record of such Warrant Shares on the first Business Day immediately following such date of record. (e) The Warrants shall be exercisable, at the election of the Holders thereof, either in full or from time to time in part, provided that Warrants may not be exercised by any Holder for an amount less than 100 Warrant Shares unless such Holder only owns, in the aggregate, such lesser amount. If fewer than all the Warrants represented by a Warrant Certificate are exercised, such Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be executed promptly by the Company and delivered promptly to the Warrant Agent and, upon written notice thereof from the Company, the Warrant Agent shall countersign the new Warrant Certificate, registered in such name or names as may be directed in writing by the Holder, and shall promptly deliver the new Warrant Certificate to the Person or Persons entitled to receive such new Warrant Certificate (as specified in writing by the Company). (f) Subject to the last sentence of this Section 3(f), in lieu of making the payment of the Exercise Price in connection with the exercise of each Warrant pursuant to Section 3(a) (but in all other respects in accordance with the exercise procedure set forth above, as such exercise procedure may be adjusted to reflect the conversion referred to herein), the Holder of each Restricted Warrant may elect to convert such Restricted Warrant into shares of Common Stock by providing the Company and the Warrant Agent with joint written notification 7 of such election, in which event the Company shall issue to such Holder the number of shares of Common Stock calculated in accordance with the following formula: X = (A - B) x C ----------- A where X = the number of shares of Common Stock issuable upon exercise pursuant to this Section 3(f) A = the Closing Price on the Business Day immediately preceding the date on which the Holder delivers the Warrant Certificate and form of election to purchase to the Company pursuant to Section 3(b) B = the Exercise Price C = the number of shares of Common Stock as to which such Restricted Warrant is being exercised pursuant to Section 3(a) If the foregoing calculation results in a negative number, no shares of Common Stock shall be issued upon conversion pursuant to this Section 3(f). Notwithstanding any provision of this Agreement to the contrary, the Holder of any Restricted Warrant may elect to convert such Restricted Warrant into shares of Common Stock as provided in this Section 3(f) only if the Board of Directors shall determine that upon such conversion the Company shall receive consideration in an amount not less than the par value of the shares of Common Stock issuable upon such conversion. Any reference in this Agreement or any Warrant to exercise of a Warrant 8 shall be deemed also to refer to conversion of a Restricted Warrant in accordance with this Section 3(f), as the context may require. (g) All Warrant Certificates surrendered upon exercise of Warrants shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then be disposed of by the Warrant Agent in its customary manner. The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all monies received by the Warrant Agent for the purchase of the Warrant Shares through the exercise of such Warrants. (h) The Warrant Agent shall keep copies of this Agreement and any written notices given or received hereunder available for inspection by the Holders during normal business hours at its office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may reasonably request. (i) For so long as the Holders of the Warrants on the Issue Date continue to be the beneficial and record owners of at least 50% of all Warrants then outstanding, in the event of: (i) any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of Capital Stock of any class or any other securities or property, or to receive any other right, other than, in each case, (A) a regular quarterly or other periodic dividend publicly announced by the Company or provided for in the instrument governing such class of securities (including, without limitation, dividends payable on the Series A Preferred Stock pursuant to the Series A Certificate of 9 Designation as in effect on the Issue Date or on the Series B Preferred Stock pursuant to the Series B Certificate of Designation as in effect on the Issue Date), (B) any other issuance of Series B Preferred Stock after the Issue Date pursuant to the Series B Certificate of Designation as in effect on the Issue Date or (C) a regular quarterly or other periodic payment of interest in cash or securities on any issue of the Company's indebtedness in accordance with the instrument governing such indebtedness, or (ii) the proposed filing of a certificate of dissolution in connection with any Liquidation Event, then and in each such event the Company shall give or cause to be given to each Holder of the Warrants a written notice (with a copy thereof to the Warrant Agent) specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right and a description of such dividend, distribution or right or the date on which the filing of such certificate of dissolution is expected to be effected, as the case may be, and (ii) the date, if any, that is to be fixed, on which the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such event. Such notice shall be given at least 20 days prior to the date specified in such notice on which such event, action or record is to be taken or on which the filing of such certificate of dissolution is expected to be effected. Any failure by the Company to provide any such notice required by this Section 3(i) shall not affect the validity of any event, action or record required to be specified in such notice. (j) Without limiting the generality of Section 3(i), any notice required by Section 3(i) to be given to the Holders of Warrants shall be deemed delivered (i) upon personal 10 delivery to the Holder to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient and, if not, then on the next Business Day, (iii) five days after having been deposited into the U.S. mails or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All notices required by Section 3(i) shall be sent to each Holder at such Holder's address appearing on the books of the Company. SECTION 4. PAYMENT OF TAXES. The Company shall pay any and all taxes and governmental charges attributable to the initial issuance of Warrant Shares upon the exercise of Warrants; provided that the Company shall not be required to pay any tax or charge which may be payable in respect of any transfer involved in the issue of any Warrant Certificates or any certificates for Warrant Shares in a name other than that of the registered holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and the Company and the Warrant Agent shall not be required to issue or deliver such Warrant Certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or charge or shall have established to the satisfaction of the Company and the Warrant Agent that such tax or charge has been paid. SECTION 5. RESERVATION OF WARRANT SHARES. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock and/or its authorized and issued Common Stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise or conversion of Warrants, the maximum number of shares of Common Stock which may then be deliverable upon the exercise or conversion of all 11 outstanding Warrants. All such shares, when issued upon such exercise or conversion, shall be validly issued, fully paid and non-assessable, free of all Liens and not subject to preemptive rights. SECTION 6. OBTAINING STOCK EXCHANGE LISTINGS. For so long as the Warrant Shares are outstanding, the Company shall use reasonable efforts to have the Warrant Shares quoted on the National Market System of NASDAQ (the "NMS"), or listed on a national securities exchange or quoted on a national automated quotation system other than the NMS, on which the Common Stock is then quoted or listed. SECTION 7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE. During the Exercise Period, the Exercise Price and the number of the Warrant Shares shall be subject to adjustment from time to time as provided in this Section 7. In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up to the nearest whole cent. (a) Except as otherwise provided in Section 7(c), if and whenever the Company issues or sells, or in accordance with Section 7(b) is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (calculated as set forth in Section 7(b)) less than the Exercise Price in effect on the date of issuance or sale (or deemed issuance or sale) of such Common Stock (a "Dilutive Issuance"), then immediately upon such Dilutive Issuance, the Exercise Price shall be reduced to a price determined by multiplying the Exercise Price in effect immediately prior to such Dilutive Issuance by a 12 fraction, (i) the numerator of which is an amount equal to the sum of (x) the total number of shares of Common Stock Deemed Outstanding immediately prior to such Dilutive Issuance plus (y) the quotient of the aggregate consideration, calculated as set forth in Section 7(b), received or receivable by the Company upon such Dilutive Issuance divided by the Exercise Price in effect immediately prior to such Dilutive Issuance, and (ii) the denominator of which is the total number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance. (b) For purposes of determining the adjusted Exercise Price pursuant to Section 7(a), the following provisions shall be applicable: (i) If the Company in any manner issues or grants any warrants, rights or options, whether or not immediately exercisable, to subscribe for or to purchase Common Stock, or other securities convertible into or exchangeable for Common Stock ("Convertible Securities") (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options"), and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Exercise Price in effect on the date of issuance or grant of such Options, then the maximum total number of shares of Common Stock issuable upon the exercise of all such Options shall, as of the date of the issuance or grant of such Options, be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon the exercise of such Options" is determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the issuance or grant of all such Options, plus the minimum aggregate amount of additional 13 consideration, if any, payable to the Company upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (y) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Exercise Price shall be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options. (ii) If the Company in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where such Convertible Securities are issuable upon the exercise of Options for which an adjustment of the Exercise Price is made pursuant to Section 7(b)(i)) and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Exercise Price in effect on the date of issuance of such Convertible Securities, then the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities shall, as of the date of the issuance of such Convertible Securities, be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the 14 Company upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (y) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Exercise Price had been or are to be made pursuant to other provisions of this Section 7(b), no further adjustment of the Exercise Price shall be made by reason of such issuance or sale. (iii) If there is a change at any time in (A) the aggregate amount of additional consideration payable to the Company upon the exercise of any Options, (B) the aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange of any Convertible Securities, or (C) the rate at which any Options or any Convertible Securities are exercisable for or convertible into or exchangeable for Common Stock (other than under or by reason of provisions in such Options or Convertible Securities designed to protect against dilution), the Exercise Price in effect at the time of such change shall be readjusted to the Exercise Price which would have been in effect at such time if such Options or Convertible Securities still outstanding had provided for such changed additional consideration or changed rate, as the case may be, at the time such Options or Convertible Securities were initially granted, issued or sold. (iv) If, in any case, the total number of shares of Common Stock issuable upon exercise of any Option or upon conversion or exchange of any Convertible 15 Securities is not, in fact, issued and the rights to exercise such Option or to convert or exchange such Convertible Securities shall have expired or terminated, the Exercise Price then in effect shall be readjusted to the Exercise Price which would have been in effect at the time of such expiration or termination if such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination (other than in respect of the actual number of shares of Common Stock issued upon exercise, conversion or exchange thereof), had never been issued. (v) If any Common Stock, Options or Convertible Securities are issued, granted or sold for cash, the consideration received therefor for purposes of this Section 7(b) shall be the amount received by the Company therefor before deduction of commissions, underwriting discounts or allowances or other expenses paid or incurred by the Company in connection with such issuance, grant or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received by the Company shall be the fair value of such consideration. If any Common Stock, Options or Convertible Securities are issued in connection with any acquisition, merger or consolidation in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity which is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash shall be determined in good faith by the Board of Directors, whose determination, in the absence of manifest error, but subject to the following provisions of this Section 7(b)(v), shall be final and binding upon the Company, the 16 Warrant Agent and the Holders of the Warrants. The Company shall give prompt written notice to the Required Initial Holders of the determination of the Board of Directors with respect to the fair value of such consideration other than cash. If the Required Initial Holders object to such determination (whether or not in manifest error) by the Board of Directors of the fair value of such consideration by giving the Company written notice of such objection within ten Business Days after their receipt of the Company's written notice of such determination, and such objection is not withdrawn, the Company shall retain, at the Company's sole cost, an Independent Appraiser to determine the fair value of such consideration. The determination of such Independent Appraiser with respect to the fair value of such consideration, or, if the Company is not required to retain an Independent Appraiser pursuant to this Section 7(b)(v), but retains an Independent Appraiser pursuant to the Series A Certificate of Designation, the Series B Certificate of Designation, the Series A Warrant Agreement or the Series B Warrant Agreement to determine the fair value of such consideration for purposes of the Series A Certificate of Designation, the Series B Certificate of Designation, the Series A Warrant Agreement or the Series B Warrant Agreement, as the case may be, the determination of such other Independent Appraiser with respect to the fair value of such consideration, shall be final and binding upon the Company, the Warrant Agent and the Holders of the Warrants. Any written notice required to be given by the Company or the Required Initial Holders pursuant to this Section 7(b)(v) shall be given in the manner, and with the effect, provided in Section 3(j). 17 (c) No adjustment of the Exercise Price shall be made pursuant to Section 7(a) or 7(b) upon the issuance, sale, grant, exercise, conversion, exchange, reclassification, redemption or other retirement of any of the following securities on or after the Issue Date: (i) the Merger Common Stock; (ii) the Series B Preferred Stock, including the Series B Preferred Stock issuable as dividends pursuant to the Series B Certificate of Designation as in effect on or prior to the Issue Date or otherwise issuable after the Issue Date pursuant to the Series B Certificate of Designation as in effect on or prior to the Issue Date, or any shares of Common Stock or other securities issuable or payable upon conversion of the Series B Preferred Stock pursuant to the Series B Certificate of Designation as in effect on or prior to the Issue Date; (iii) any shares of Common Stock, Options or Convertible Securities issuable as a dividend or distribution on the Series B Preferred Stock in accordance with the Series B Certificate of Designation as in effect on or prior to the Issue Date or any shares of Common Stock issuable or payable upon exercise of any such Options or upon conversion or exchange of any such Convertible Securities; (iv) the Warrants or any shares of Common Stock or other securities issuable or payable upon exercise or conversion of the Warrants; (v) the Series A Preferred Stock, including the Series A Preferred Stock issuable as dividends on the Series A Preferred Stock, issuable pursuant to the Series A Certificate of Designation as in effect on or prior to the Issue Date, or any shares of Common Stock or other securities issuable or payable upon conversion of the Series A 18 Preferred Stock pursuant to the Series A Certificate of Designation as in effect on or prior to the Issue Date; (vi) any shares of Common Stock, Options or Convertible Securities issuable as a dividend or distribution on the Series A Preferred Stock in accordance with the Series A Certificate of Designation as in effect on or prior to the Issue Date, or any shares of Common Stock issuable or payable upon exercise of any such Options or upon conversion or exchange of any such Convertible Securities; (vii) the Series A Warrants, the Series B Warrants or any shares of Common Stock or other securities issuable or payable upon exercise or conversion of the Series A Warrants or the Series B Warrants; (viii) any shares of Common Stock, Options or Convertible Securities issuable under (A) the Existing Benefit Plan as in effect on the Issue Date or (B) the Existing Benefit Plan as amended after the Issue Date and any Benefit Plan which becomes effective after the Issue Date, provided that any such amendment to the Existing Benefit Plan or the effectiveness of any such Benefit Plan is approved by the Board of Directors or by the compensation committee or other authorized committee of the Board of Directors (in either case with the affirmative vote or consent of the Series B Directors, if any, in each case whether or not serving on any such committee), or any shares of Common Stock issuable or payable upon exercise of any such Options or upon conversion or exchange of any such Convertible Securities; 19 (ix) any shares of Common Stock issued or deemed to have been issued in a transaction for which an adjustment of the Exercise Price is required pursuant to Section 7(d); (x) any transaction referred to in Section 7(e); and (xi) any shares of Common Stock, Options or Convertible Securities issued in connection with the acquisition of all or part of another business or company, whether by merger, consolidation or otherwise, which is approved by the Board of Directors or by an authorized committee of the Board of Directors (in either case with the affirmative vote or consent of the Series B Directors, if any, in each case whether or not serving on any such committee), any shares of Common Stock issuable or payable upon exercise of any such Options or upon conversion or exchange of any such Convertible Securities, or any shares of Common Stock, payment-in-kind securities or other securities issuable as a dividend or distribution on any such shares of Common Stock, Options or Convertible Securities. (d) If a date of record should be fixed at any time, whether by the Company or by operation of law, for the subdivision (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) of the shares of Common Stock acquirable hereunder into a greater number of shares, or for the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock, Convertible Securities or Options without payment of any consideration for the additional shares of Common Stock, Convertible Securities or Options (including the additional shares of Common Stock or Convertible Securities issuable upon conversion or exercise of such Options), 20 then, as of such date of record, the Exercise Price in effect immediately prior to such date of record shall be proportionately reduced (with the number of shares of Common Stock or Convertible Securities issuable with respect to Options determined from time to time in the manner provided for deemed issuances or sales of Common Stock in Section 7.2(b)). If a date of record should be fixed at any time, whether by the Company or by operation of law, for the combination (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) of the shares of Common Stock acquirable hereunder into a smaller number of shares of Common Stock, then, as of such date of record, the Exercise Price in effect immediately prior to such date of record shall be proportionately increased. (e) If the Company at any time pays a dividend in property (other than cash) or securities to all holders of the Common Stock, other than in a transaction referred to in Section 7(d), then, after the date of record for determining stockholders entitled to such dividend, each Holder of Warrants shall be entitled, upon exercise thereof for the purchase of any or all of the Warrant Shares subject thereto, to receive the amount of such property (other than cash) or securities which would have been payable to such Holder if such Holder had been the Holder, on the record date for the determination of stockholders entitled to such dividend, of such Warrant Shares purchased upon such exercise. (f) If an adjustment of the Exercise Price pursuant to Section 7(a), 7(b) or 7(d) shall become effective as of or after the record date for the applicable Exercise Price Adjustment Event, but before the occurrence of such Exercise Price Adjustment Event, the Company may elect to defer, until after the occurrence of such Exercise Price Adjustment Event, (i) issuance to the Holder of any Warrants exercised after such record date and before the occurrence of such Exercise Price Adjustment Event the additional shares of Common Stock 21 issuable upon such exercise in excess of the number of shares issuable on the basis of the Exercise Price in effect immediately prior to such record date and (ii) payment to such Holder of any amount in cash in lieu of a fractional share of Common Stock. The Company shall give written notice of any such election within five Business Days to (i) the Warrant Agent and (ii) if the Holders of the Warrants on the Issue Date or any of their Affiliates shall own beneficially and of record Warrants as of the date of any such election, to such Holders and any such Affiliates. Upon the request by the Company from time to time, the Holders of the Warrants on the Issue Date shall certify to the Company the number of Warrants, if any, then so beneficially owned by such Holders and their Affiliates. (g) After the occurrence of any Exercise Price Adjustment Event requiring adjustment of the Exercise Price, the Company shall give written notice thereof to the Holders of the Warrants and to the Warrant Agent within ten Business Days following the occurrence of such Exercise Price Adjustment Event; provided that if an adjustment of the Exercise Price pursuant to Section 7(a), 7(b) or 7(d) shall become effective as of or after the record date for the applicable Exercise Price Adjustment Event, but before the occurrence of such Exercise Price Adjustment Event, the Company shall give such written notice within ten Business Days following such record date or subsequent date. Such notice shall state the Exercise Price and any change in the number of Warrant Shares issuable upon exercise of the Warrants resulting from such Exercise Price Adjustment Event and shall set forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by an Officer of the Company. Notice of any Exercise Price Adjustment Event resulting in an adjustment of the Exercise Price shall be deemed given to the Holders of Warrants (but not to the Warrant Agent) (i) by the Company's inclusion of the information specified in the 22 second sentence of this Section 7(g) in the Company's current report or next quarterly or annual report filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, or (ii) at the option of the Company, by the Company's mailing to such Holders of a written notice containing such information, in each case within the period specified in the first sentence of this Section 7(g). (h) Anything in this Section 7 to the contrary notwithstanding, the Company shall not be required to give effect to any adjustment of the Exercise Price unless and until the net effect of one or more adjustments required hereunder (each of which shall be carried forward until counted toward adjustment), determined as provided therein, shall have resulted in a change of the Exercise Price by at least 1%, and when the cumulative net effect of more than one adjustment so determined shall be to change the Exercise Price by at least 1%, such change of the Exercise Price shall thereupon be given effect. (i) Upon the occurrence of a Fundamental Change, there shall be no adjustment of the Exercise Price and each Warrant then outstanding, without the consent of any Holder of Warrants, shall become exercisable only into the kind and amount of shares of Capital Stock or other securities (of the Company or another issuer), cash or other property receivable upon such Fundamental Change by a holder of the number of shares of Common Stock into which such Warrants could have been exercised immediately prior to the effective date of such Fundamental Change, assuming such holder of Common Stock (x) is not a Person (or a Related Entity of a Person) with which the Company consolidated, into which the Company merged or which merged into the Company, or to or with which the applicable sale, conveyance, lease, exchange, transfer or other transaction constituting such Fundamental Change was effected, and (y) failed to exercise the holder's rights of election, if any, as to the kind of amount of Capital 23 Stock or other securities, cash or other property receivable upon such Fundamental Change, provided that, if such Fundamental Change solely provides for cash payments to holders of Common Stock at a price that is not greater than the current Exercise Price, a Holder of Warrants shall not have any right to receive such consideration and its Warrants shall be automatically cancelled upon consummation thereof. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, conveyance, lease, exchange or transfer, or otherwise so that any resulting or surviving corporation or any Transferee in connection with such Fundamental Change shall expressly assume the obligation to deliver, to the Holders of the Warrants, such shares of Capital Stock, or other securities, cash or other property (i) upon exercise of the Warrants, if the Warrants shall remain outstanding following such Fundamental Change, or (ii) upon the consummation of such Fundamental Change or thereafter as provided in such effective provisions, if the Warrants shall not remain outstanding following such Fundamental Change. The provisions of this Section 7(i) similarly shall apply to successive Fundamental Changes and shall be the sole right of Holders of Warrants in connection with any Fundamental Change. The Company shall notify the Warrant Agent in writing of the occurrence of any Fundamental Change, and the Warrant Agent shall not be deemed to have knowledge of any such Fundamental Change unless and until it has actually received written notice thereof. (j) All Warrants originally issued by the Company subsequent to any adjustment made to the Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the number of Warrant Shares for which such Warrants are exercisable after giving effect to any adjustment thereto pursuant to Section 7(k) in connection with such adjustment of the Exercise Price, all subject to further adjustment as provided herein. 24 (k) Upon the occurrence of each Exercise Price Adjustment Event (or if an adjustment of the Exercise Price pursuant to Section 7(a), 7(b) or 7(d) shall become effective as of or after the record date for such Exercise Price Adjustment Event, but before the occurrence of such Exercise Price Adjustment Event, as of or after such record date, as the case may be), each Warrant outstanding immediately prior to such Exercise Price Adjustment Event (or immediately prior to such other date as of which the Exercise Price shall have been adjusted, as aforesaid) shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of shares of Common Stock (calculated to the nearest one-one hundredth of a share) obtained by (i) multiplying (x) the number of Warrant Shares covered by such Warrant immediately prior to such adjustment of the Exercise Price by (y) the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price. (l) Irrespective of any adjustments of the Exercise Price or in the number or kind of shares purchasable upon the exercise of the Warrants, Warrants theretofore and thereafter issued may continue to express the Exercise Price per share and the number of shares which were expressed upon the initial Warrant Certificates issued hereunder. (m) The Company shall calculate or determine any adjustments with respect to the Exercise Price and the kind or amount of shares or other securities or any property receivable by Holders upon the exercise of Warrants required from time to time under this Section 7 in accordance with its provisions and shall give written notice of each such calculation or determination (including any determination pursuant to the procedures set forth in Section 7(b)(v), in final form) to the Warrant Agent as provided herein, as required by the 25 Warrant Agent to perform its duties expressly set forth herein, or as otherwise requested by the Warrant Agent. SECTION 8. FRACTIONAL INTERESTS. The Company shall not be required to issue fractional Warrant Shares upon the exercise of Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares purchasable upon exercise of the Warrants so presented. If any fraction of a Warrant Share would, except for the provisions of this Section 8, be issuable upon the exercise of any Warrants (or specified portion thereof), the Company may, in its sole discretion, (i) round such fractional Warrant Share up to the nearest whole number or (ii) pay an amount in cash equal to the Closing Price per Warrant Share, as determined on the Business Day immediately preceding the date the Warrant is presented for exercise, multiplied by such fraction, rounded up to the nearest whole cent. SECTION 9. WARRANT AGENT. 9.1 Duties and Obligations; Limitations of Liability The Warrant Agent undertakes only the duties and obligations expressly imposed by this Agreement (and no implied duties or obligations) upon the following terms and conditions, by all of which the Company and the Holders of Warrants, by their acceptance thereof, shall be bound: (a) The Warrant Agent shall not, by countersigning Warrant Certificates or by any other act hereunder, be deemed to make any representations as to validity or authorization 26 of, and shall incur no liability as a result of, (i) the Warrants or the Warrant Certificates (except as to its countersignature thereon), (ii) any shares or other securities or any property delivered upon exercise of any Warrant, (iii) the accuracy of the computation of the number or kind or amount of shares or other securities or any property deliverable upon exercise of any Warrant or (iv) the correctness of any of the representations of the Company made in any such Warrant Certificate. The Warrant Agent shall not at any time have any duty to calculate or determine whether any facts exist that may require any adjustments pursuant to Section 7 with respect to the Exercise Price or the kind and amount of shares or other securities or any property receivable by Holders upon the exercise of Warrants required from time to time. The Warrant Agent shall have no duty or responsibility to determine or verify, and shall incur no liability as a result of any failure to determine or verify, the accuracy or correctness of any such calculation or determination or with respect to the methods employed in making such calculation or determination. The Warrant Agent shall not be accountable with respect to, and shall incur no liability as a result of, the validity or value (or the kind or amount) of any Warrant Shares or of other securities or any property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Section 7, and it makes no representation with respect thereto. The Warrant Agent shall not be liable or responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any Warrant Shares or stock certificates or other securities or property upon the surrender of any Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Section 7. (b) The Warrant Agent shall not (i) be liable for any recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, suffered or omitted by it on the belief that any Warrant Certificate or any other documents or any signatures are 27 genuine or properly authorized, (ii) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in the Warrant Certificates or (iii) be liable for any act or omission in connection with this Agreement except for its own gross negligence or willful misconduct (which gross negligence or willful misconduct must be determined by a final, nonappealable order, judgment, decree or ruling of a court of competent jurisdiction). Anything in this Agreement to the contrary notwithstanding, in no event shall the Warrant Agent be liable for special, punitive, indirect, incidental or consequential loss or damage of any kind whatsoever (including, but not limited, to lost profits), even if the Warrant Agent has been advised of the possibility of such loss or damage. Any and all liability of the Warrant Agent under this Agreement shall be limited to the higher of (i) the amount of fees paid by the Company to the Warrant Agent pursuant to this Agreement or (ii) $50,000. (c) The Warrant Agent is hereby authorized to accept and is protected in accepting advice or instructions with respect to the performance of its duties hereunder by order, instruction or other written notice given by the Company or by one or more Holders in accordance with the provisions hereof and to apply to any Officer of the Company named in any such order, instruction or written notice for advice or instructions (which instructions shall be given in writing when requested), and the Warrant Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with the advice or instructions in any such order, instruction or written notice. The Warrant Agent shall be fully protected and authorized in relying upon the most recent instructions received by any such Officer of the Company. The Warrant Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof or an order or instruction in regard to hereunder, and the Warrant Agent 28 shall be fully protected and shall incur no liability for failing to take any action in connection therewith unless and until it has received such order, instruction or notice. (d) Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking, omitting or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any Officer of the Company and delivered to the Warrant Agent, and such certificate shall be full and complete authorization and protection to the Warrant Agent and the Warrant Agent shall incur no liability for or in respect of any action taken, omitted or suffered by it under the provisions of this Agreement in reliance upon such certificate. (e) In the event the Warrant Agent has any questions or uncertainty as to what action it should take under this Agreement, the Warrant Agent is hereby authorized and directed to accept advice and instructions with respect to the performance of its duties hereunder from any Officer of the Company, and to apply to any such Officer for advice or instructions in connection with its duties. Such advice and instructions of any Officer of the Company shall be full authorization and protection to the Warrant Agent, and the Warrant Agent shall not be liable for any action taken, omitted or suffered by it in accordance with advice or instructions, for any delay in acting while waiting for such advice or instructions, or in refraining from taking any action prior to receiving such advice or instructions. (f) The Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or perform any duty hereunder either itself (through its officers, directors and employees) or by or through its attorneys or agents, and the Warrant Agent shall not be liable or 29 accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or any other Person resulting from any such act, default, neglect or misconduct in the absence of gross negligence or willful misconduct of the Warrant Agent in the selection and in the continued employment of any such attorney or agent (which gross negligence or willful misconduct must be determined by a final, nonappealable order, judgment, decree or ruling of a court of competent jurisdiction). (g) The Warrant Agent shall not be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof, unless first indemnified to its satisfaction, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against it arising out of or in connection with this Agreement. (h) The Company shall perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Warrant Agent in order to enable it to carry out or perform its duties and obligations under this Agreement. (i) The Warrant Agent shall act solely as agent of the Company hereunder and does not assume any obligation or relationship of agency or trust for or with any of the Holders or any beneficial owners of Warrants. The Warrant Agent shall not be liable except for the failure to perform such duties as are specifically set forth herein or specifically set forth in the Warrant Certificates, and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent, whose duties and obligations shall be determined solely by the express provisions hereof or the express provisions of the Warrant Certificates. 30 (j) The Company agrees promptly to pay the Warrant Agent from time to time, on demand of the Warrant Agent, compensation for its services hereunder as the Company and the Warrant Agent may agree from time to time, and to reimburse the Warrant Agent for the reasonable costs, expenses and disbursements, including reasonable counsel fees and expenses incurred in connection with the preparation, delivery, amendment, execution and administration of this Agreement and the exercise and performance of its duties hereunder. The Company agrees to indemnify the Warrant Agent for and save it harmless against any losses, liabilities, settlements, costs, damages, fines, judgments, penalties, demands, claims and expenses arising out of or in connection with the acceptance and administration of this Agreement, including reasonable costs, legal fees and expenses of investigating or defending any claim of such liability, except that the Company shall have no liability hereunder to the extent that any of the foregoing results from the Warrant Agent's own gross negligence or willful misconduct (which gross negligence or willful misconduct must be determined by a final, nonappealable order, judgment, decree or ruling of a court of competent jurisdiction). The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. (k) The Warrant Agent may at any time consult with legal counsel satisfactory to it (who may be internal legal counsel for the Company), and the advice or opinion of such counsel shall be full and complete authorization and protection to the Warrant Agent and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder for any action taken, suffered or omitted by it in accordance with the opinion or advice of such counsel. (l) The Warrant Agent shall not be deemed to have knowledge of any Exercise Price Adjustment Event, any adjustment to the Exercise Price, any change in the number of Warrant Shares issuable upon exercise of the Warrants or the kind or amount of 31 shares or other securities or any property receivable by Holders upon the exercise of Warrants, unless and until it has actually received written notice from the Company thereof, and the Warrant Agent is hereby instructed and authorized to rely conclusively on any such written notice. (m) The provisions of this Section 9.1 shall survive the termination of this Agreement, the termination, exercise or expiration of the Warrants, and the resignation or removal of the Warrant Agent. 9.2 Merger, Consolidation or Change of Name of Warrant Agent. (a) Any Person into which the Warrant Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any Person succeeding to all or substantially all of the business of the Warrant Agent, shall be the successor to the Warrant Agent hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor warrant agent under the provisions of Section 9.3. In case at the time such successor to the Warrant Agent shall succeed to the agency created by this Agreement, and in case at that time any of the Warrant Certificates shall have been countersigned but not delivered, any such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent; and in case at that time any of the Warrant Certificates shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor to the Warrant Agent; and in all such cases such Warrant Certificates shall have the full force and effect provided in the Warrant Certificates and in this Agreement. 32 (b) In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent whose name has been changed may adopt the countersignature under its prior name, and in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name, and in all such cases such Warrant Certificates shall have the full force and effect provided in the Warrant Certificates and in this Agreement. 9.3 Change of Warrant Agent. The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder after giving 30 days' prior written notice to the Company. If the Warrant Agent shall resign pursuant to the preceding sentence or if the Warrant Agent shall become incapable of acting as Warrant Agent, the Company shall appoint a successor to such Warrant Agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such incapacity or resignation by the Warrant Agent or by the registered holder of a Warrant Certificate, then the Warrant Agent or any registered holder of any Warrant Certificate may apply at the expense of the Company to any court of competent jurisdiction for the appointment of a successor to the Warrant Agent. Pending appointment of a successor to such Warrant Agent, either by the Company or by such a court, the duties of the Warrant Agent shall be carried out by the Company. The Holders of a majority of the then outstanding Warrants shall be entitled at any time to remove the Warrant Agent and appoint a successor to such Warrant Agent. Any successor to the Warrant Agent need not be approved by the Company or the former Warrant Agent. After appointment, the successor to the Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if such 33 successor had been originally named as Warrant Agent without further act or deed; provided that the former Warrant Agent upon payment of all amounts owed to it shall deliver and transfer to the successor to the Warrant Agent any property at the time held by it hereunder and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Failure to give any notice provided for in this Section 9.3, however, or any defect therein, shall not affect the legality or validity of the appointment of a successor to the Warrant Agent. SECTION 10. TRANSFER; REPLACEMENT; CANCELLATION. 10.1 Transfer. (a) The transfer of beneficial interests in the Global Warrants shall be effected through the Depositary, in accordance with the provisions of this Warrant Agreement and the Applicable Procedures. (b) Subject to any applicable provisions of any Transaction Document, a sale, pledge, transfer, assignment or other disposition (each, a "Transfer") of a beneficial interest in any Restricted Global Warrant or the Transfer of a Restricted Definitive Warrant by a Holder may be made to a Person if: (i) such Transfer is made pursuant to an effective registration statement under the Securities Act; or (ii) such Holder delivers to the Company (A) at the Company's request, an opinion of counsel to such Holder, which shall be in a form, substance and scope customary for opinions in comparable transactions, as reasonably determined by the Company, to the effect that such Warrant or the Warrant Shares or other securities issuable upon exercise thereof may be Transferred without registration under the 34 Securities Act and (B) an investment letter, substantially in the form of Exhibit C hereto, signed by the proposed transferee. (c) The following legends (or legends substantially similar thereto) shall appear on the face of the Warrants issued under this Warrant Agreement or the certificates representing the Restricted Warrant Shares issuable upon exercise thereof, as indicated below, unless specifically stated otherwise in the applicable provisions of this Warrant Agreement. (i) Private Placement Legend. Each Restricted Global Warrant and each Restrictive Definitive Warrant shall bear a legend in substantially the following form: "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO REQUIRE AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES SATISFACTORY TO IT 35 WITH RESPECT TO COMPLIANCE WITH THE FOREGOING RESTRICTIONS." (ii) Global Warrant Legend. Each Global Warrant shall bear a legend in substantially the following form: "THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED BY THE DEPOSITARY IN ORDER FOR IT TO ACCEPT THE WARRANTS FOR ITS BOOK-ENTRY SETTLEMENT SYSTEM, (II) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 10.4 OF THE WARRANT AGREEMENT AND (III) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY ONLY WITH THE PRIOR WRITTEN CONSENT OF ITC^DELTACOM, INC." (iii) Restricted Warrant Shares Legend. Each certificate representing Restricted Warrant Shares shall bear a legend in substantially the following form: "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO RESTRICTIONS ON 36 TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO REQUIRE AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE FOREGOING RESTRICTIONS." (d) At such time as all beneficial interests in a particular Global Warrant have been exercised or exchanged for Definitive Warrants or a particular Global Warrant has been exercised, redeemed, repurchased or cancelled in whole and not in part, each such Global Warrant shall be returned to or retained and canceled by the Warrant Agent in accordance with Section 10.4. At any time prior to such cancellation, if any beneficial interest in a Global Warrant is exercised or exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Warrant or for Definitive Warrants, the amount of Warrants represented by such Global Warrant shall be reduced accordingly and, upon receipt by the Warrant Agent of specific written instruction from the Company, an endorsement shall be made on such Global Warrant by the Warrant Agent or by the Depositary at the direction of the Warrant Agent (which shall be required so to act only upon direction by the Company) to 37 reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Warrant, such other Global Warrant shall be increased accordingly and, upon receipt by the Warrant Agent of specific written instruction from the Company, an endorsement shall be made on such Global Warrant by the Warrant Agent or by the Depositary at the direction of the Warrant Agent (which shall be required so to act only upon direction by the Company) to reflect such increase. (e) The following additional provisions shall apply to transfers and exchanges of Warrants hereunder: (i) To permit registrations of transfers and exchanges, the Company shall execute and the Warrant Agent shall countersign Global Warrants and Definitive Warrants upon the Company's written order containing specific instruction or at the Warrant Registrar's written request containing specific instruction. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Warrant or to a Holder of a Definitive Warrant for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith. (iii) All Global Warrants and Definitive Warrants issued upon any registration of transfer or exchange of Global Warrants or Definitive Warrants shall be the duly authorized, executed and issued warrants for Common Stock of the Company, not subject to any preemptive rights, and entitled to the same benefits under this Warrant Agreement, as the Global Warrants or Definitive Warrants surrendered upon such registration of transfer or exchange. 38 (iv) Prior to due presentment for the registration of a transfer of any Warrant, the Warrant Agent and the Company may deem and treat the Person in whose name any Warrant is registered as the absolute owner of such Warrant for all purposes and neither the Warrant Agent nor the Company shall be affected by notice to the contrary. (v) The Warrant Agent shall countersign Global Warrants and Definitive Warrants in accordance with the provisions of Section 2.2. (f) All certifications, certificates and opinions of counsel required to be submitted to the Warrant Registrar pursuant to this Section 10 to effect a registration of transfer or exchange may be submitted by facsimile. (g) The Company agrees that, at the request of a Holder, the Company will remove from each Restricted Global Warrant, Restrictive Definitive Warrant and/or Restricted Warrant Share held by such Holder the legends contemplated by Section 10(c) regarding the restriction under the Securities Act in the event that (i) counsel for such Holder determines, and counsel for the Company reasonably concurs in such determination, that the transfer of such securities in no longer restricted by the Securities Act or (ii) such Restricted Global Warrants, Restrictive Definitive Warrants and/or Restricted Warrant Shares, as applicable, are eligible to be transferred under Rule 144(k) under the Securities Act. 10.2 Replacement Warrants. If any mutilated Warrant Certificate is surrendered to the Warrant Agent or the Company and the Warrant Agent receives evidence to its satisfaction of the destruction, loss or theft of any Warrant Certificate, the Company shall issue and the Warrant Agent, upon receipt of a Warrant Countersignature Order, shall countersign a replacement Warrant Certificate if the 39 Warrant Agent's requirements are met. If required by the Warrant Agent or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Warrant Agent and the Company to protect the Company, the Warrant Agent and any agent thereof for purposes of the countersignature from any loss that any of them may suffer if a Warrant Certificate is replaced. The Company may charge for its expenses in replacing a Warrant Certificate. Every replacement Warrant is an additional warrant of the Company and shall be entitled to all of the benefits of this Warrant Agreement equally and proportionately with all other Warrants duly issued hereunder. 10.3 Temporary Warrants. Until certificates representing Warrants are ready for delivery, the Company may prepare and the Warrant Agent, upon receipt of a Warrant Countersignature Order, shall issue temporary Warrant Certificates. Temporary Warrants shall be substantially in the form of certificated Warrants but may have variations that the Company considers appropriate for temporary Warrants and as shall be reasonably acceptable to the Warrant Agent (but which shall not affect the rights, duties or obligations of the Warrant Agent as set forth in this Agreement). Without unreasonable delay, the Company shall prepare and the Warrant Agent shall countersign definitive Warrant Certificates in exchange for temporary Warrant Certificates. Holders of temporary Warrants shall be entitled to all of the benefits of this Warrant Agreement. 40 10.4 Cancellation. The Company at any time may deliver Warrants to the Warrant Agent for cancellation. The Warrant Registrar shall forward to the Warrant Agent any Warrants surrendered to them for registration of transfer, exchange or exercise. The Warrant Agent and no one else shall cancel all Warrants surrendered for registration of transfer, exchange, exercise, replacement or cancellation and shall dispose of such canceled Warrants in its customary manner. The Warrant Registrar shall provide the Company with a list of all Warrants that have been cancelled. The Company may not issue new Warrants to replace Warrants that have been exercised or that have been delivered to the Warrant Agent for cancellation. SECTION 11. NOTICES TO COMPANY AND WARRANT AGENT. Any notice or communication authorized by this Agreement to be given or made by the Warrant Agent or by the Holder of any Warrant or by the Company to the Company or the Warrant Agent, as the case may be, shall be sufficiently given or made if in writing and delivered in person, mailed by first-class mail or sent by facsimile transmission addressed as follows: If to the Company: ITC^DeltaCom, Inc. 1791 O.G. Skinner Drive West Point, Georgia 31833 Facsimile No.: (256) 382-3936 Attention: General Counsel If to the Warrant Agent: Mellon Investor Services LLC 200 Galleria Parkway, Suite 1900 Atlanta, Georgia 30339 Attention: Client Services Manager Fax: 770-933-8336 Attention: Relationship Manager 41 With a copy to: Mellon Investor Services LLC 85 Challenger Road Ridgefield Park, New Jersey 07660-2108 Facsimile No.: (201) 296-4004 Attention: General Counsel In case the Company shall fail to maintain such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations may be made and notices and demands may be served at the principal office of the Warrant Agent. The Company or the Warrant Agent by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Holder shall be mailed to such Holder at its address as it appears on the Warrant Register by first-class mail and shall be sufficiently given to such Holder if so mailed within the time prescribed. Copies of any such communication or notice to a Holder shall also be mailed to the Warrant Agent at the same time. Failure to transmit a notice or communication to a Holder as provided herein or any defect in any such notice shall not affect its sufficiency with respect to other Holders. Except for a notice to the Warrant Agent, which is deemed given only when received, and except as otherwise provided in this Agreement, if a notice or communication is mailed in the manner provided in this Section 11, it is duly given, whether or not the addressee receives it. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, 42 and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Warrant Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Warrant Agent shall constitute a sufficient notification for every purpose hereunder. SECTION 12. SUPPLEMENTS AND AMENDMENTS. (a) The Warrant Agent may, without the consent or concurrence of the Holders of the Warrants, by supplemental agreement or otherwise, join with the Company in making any changes or corrections in this Agreement that (i) are required to cure any ambiguity or to correct any defect or inconsistent provision or clerical omission or mistake or manifest error herein contained, provided that such changes or corrections do not and will not adversely affect, alter or change the rights of the Holders of Warrants, (ii) add to the covenants and agreements of the Company in this Agreement further covenants and agreements of the Company thereafter to be observed, or surrender any rights or power reserved to or conferred upon the Company in this Agreement, provided that such changes or corrections do not and will not adversely affect, alter or change the rights of the Holders of Warrants, or (iii) will not, in the good faith opinion of the Board of Directors, as evidenced by a resolution thereof, adversely affect, alter or change the rights of the Holders of Warrants in any material respect. Amendments or supplements that do not meet the requirements of the preceding sentence shall require the written consent of the Holders of a majority of the then outstanding Warrants; provided, however, that the consent of 43 each Holder is required for any amendment or supplement pursuant to which the Exercise Price would be increased or the number of shares of Common Stock purchasable upon exercise of Warrants would be decreased (other than pursuant to adjustments as provided in Section 7). (b) So long as any Warrants are outstanding and held by the Required Initial Holders, prior to amending the Series A Warrant Agreement or the Series B Warrant Agreement in such a manner as to provide the Holders of the Series A Warrants or the Series B Warrants with rights in addition or superior to those provided to the Holders of the Warrants under this Agreement, the Company shall give written notice of any such proposed amendment (a "Proposed Amendment"), which shall include the text of the Proposed Amendment, to the Required Initial Holders (with a copy to the Warrant Agent) and shall offer to the Required Initial Holders to amend this Agreement (subject to any consent requirements imposed by this Agreement) so as to provide the Holders of the Warrants with rights no less favorable than the rights to be provided to the Holders of the Series A Warrants or the Series B Warrants in the Proposed Amendment. If, within ten Business Days after their receipt of such written notice from the Company, the Required Initial Holders shall give written notice to the Company (with a copy to the Warrant Agent) that they seek to have this Agreement amended to provide the Holders of the Warrants with such rights, the Company shall not amend the Series A Warrant Agreement or the Series B Warrant Agreement to provide for such rights unless, concurrently with, or immediately prior to, the effectiveness of the Proposed Amendment, the Company shall amend this Agreement to provide such rights to the Holders of the Warrants. If within the period of ten Business Days described in the immediately preceding sentence, the Required Initial Holders do not so provide notice to the Company that they seek to have this Agreement so amended, or if the Holders of the Warrants do not approve and consent to such an amendment to 44 this Agreement, the Company shall be deemed to have complied with this Section 12(b) with respect to the Proposed Amendment, and the Company shall then have the right to amend the Series A Warrant Agreement and the Series B Warrant Agreement as provided in the Proposed Amendment without so amending this Agreement. In no event shall the failure of the Required Initial Holders to seek to have this Agreement amended under this Section 12(b) with respect to any Proposed Amendment affect the applicability of this Section 12(b) with respect to any subsequent Proposed Amendment. Any written notice required to be given by the Company or the Required Initial Holders pursuant to this Section 12(b) shall be given in the manner, and with the effect provided in, Section 3(f). SECTION 13. SUCCESSORS. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns hereunder; provided that, except as otherwise specifically provided in this Agreement, neither the Company nor the Warrant Agent may assign any of its rights or obligations hereunder (other than any such assignment by operation of law). SECTION 14. TERMINATION. This Agreement shall terminate at 5:00 p.m., New York City time, on the Expiration Date. Notwithstanding the foregoing, this Agreement shall terminate on any earlier date if all Warrants have been exercised. The provisions of Sections, 2.3, 9 and 10 shall survive such termination. 45 SECTION 15. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "Affiliate" has the meaning as in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Warrant, the rules and procedures of the Depositary that apply to such transfer or exchange. "Beneficially own" and "beneficial owner" have the same meaning as in Rule 13d-3 under the Securities Exchange Act of 1934, as amended. "Board of Directors" means the Board of Directors of the Company. "Benefit Plan" means any stock option, restricted stock, stock incentive, deferred compensation, profit sharing, defined benefit or other benefit plan of the Company or any of its subsidiaries. "Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions in New Jersey or Georgia are authorized by law, regulation or executive order to remain closed. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock or partnership or membership interests, whether common or preferred. 46 "Closing Price" means, with respect to the Common Stock, on any date, (i) the last sales price on the NASDAQ, the OTC Bulletin Board, the NASDAQ Bulletin Board Exchange or the principal securities exchange or other securities exchange or other securities market on which the Common Stock is then traded, or (ii) if the Common Stock is so traded, but not so reported, the average of the last bid and ask prices, as those prices are reported on the NASDAQ, the OTC Bulletin Board, the NASDAQ Bulletin Board Exchange or the principal securities exchange or other securities exchange or other securities market on which the Common Stock is then traded, or (iii) if the Common Stock is not listed or authorized for trading on the NASDAQ, the OTC Bulletin Board, the NASDAQ Bulletin Board Exchange or any securities exchange or comparable securities market, the average of the closing bid and ask prices as furnished by two members of the National Association of Securities Dealers, Inc. selected from time to time by the Board of Directors for that purpose. If the Common Stock is not listed and traded in any manner that the quotations referred to above are available for the period required hereunder, the Closing Price per share shall be deemed to be the fair value per share of such Common Stock as determined by the Board of Directors. "Common Stock" has the meaning specified in the preamble hereto. "Common Stock Deemed Outstanding" means, on any date of determination, the number of shares of Common Stock actually outstanding, plus the maximum total number of shares of Common Stock issuable as of the date of such determination upon the exercise of any then outstanding Options (including, without limitation, the Series A Warrants, the Series B Warrants and the Warrants and any Options outstanding under the Existing Benefit Plan or any other Benefit Plan) or issuable as of such date of determination upon conversion or exchange of 47 any then outstanding Convertible Securities (including, without limitation, the Series A Preferred Stock and the Series B Preferred Stock), whether or not such Options or Convertible Securities are actually exercisable, convertible or exchangeable at such time, without duplication. "Company" has the meaning specified in the first paragraph hereof. "Convertible Securities" has the meaning specified in Section 7(b). "Definitive Warrants" has the meaning specified in Section 2.1(b). "Depositary" means, with respect to the Warrants issuable or issued in whole or in part in global form, the Person specified in Section 2.3 as the Depositary with respect to the Warrants, and any and all successors thereto appointed as Depositary hereunder. "Dilutive Issuance" has the meaning specified in Section 7(a). "DTC" has the meaning specified in Section 2.3. "Exercise Period" has the meaning specified in Section 3(a). "Exercise Price" has the meaning specified in Section 3(a). "Exercise Price Adjustment Event" means any event specified in Section 7 resulting in an adjustment of the Exercise Price. "Existing Benefit Plan" means the ITC^DeltaCom, Inc. Stock Incentive Plan. "Expiration Date" has the meaning specified in Section 3(a). "Fundamental Change" means any transaction or event, including, without limitation, any merger, consolidation, sale, conveyance, lease, exchange or transfer of assets, 48 tender or exchange offer, reclassification (including any such reclassification in connection with a consolidation or merger in which the Company is the surviving corporation), capital reorganization, compulsory share exchange or liquidation, in each case in which all or substantially all outstanding shares of the Common Stock, or all or substantially all of the assets or the property of the Company, are converted into or exchanged for Capital Stock (of the Company or another issuer) or other securities, cash or other property. "Global Warrants" means, individually and collectively, each of the Restricted Global Warrants and the Unrestricted Global Warrants, substantially in the form of Exhibit A hereto, issued in accordance with Sections 2.1(b) and 10. "Global Warrant Legend" means the legend set forth in Section 10.1(c)(ii), which is required to be placed on all Global Warrants issued under this Warrant Agreement. "Holder" means a Person who is listed as the record owner of (i) Warrants, (ii) the Warrant Shares or (iii) any other securities issued or issuable with respect to the Warrants or Warrant Shares by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. "Independent Appraiser" means an independent investment banking firm or independent public accounting firm, in each case of nationally recognized standing in the valuation of businesses similar to the business of the Company. "Initial Holder" means any Holder of Warrants on the Issue Date. "Issue Date" means March 29, 2005. 49 "Liens" means liens and charges other than liens and charges arising under (i) any Transaction Document, (ii) any other agreement entered into between the Company and any Holder of a Warrant from time to time or (iii) any other agreement to which the Company is not a party. "Liquidation Event" means a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. "Merger Agreement" means the Agreement and Plan of Merger, dated as of July 2, 2003, as amended from time to time, among the Company, BTI Telecom Corp., 8DBC1 Corp. and each Person set forth on the signature pages thereof under the heading "WCAS Securityholders." "Merger Common Stock" means the Common Stock issued by the Company pursuant to the Merger Agreement. "NASDAQ" means The NASDAQ Stock Market, Inc. and shall refer to the NASDAQ National Market or the NASDAQ SmallCap Market, as the case may be. "NMS" has the meaning specified in Section 6. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Options" has the meaning specified in Section 7(b)(i). 50 "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof, including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business. "Private Placement Legend" means the legend set forth in Section 10.1(c)(i) to be placed on all Warrants issued under this Warrant Agreement, except where otherwise permitted by the provisions of this Warrant Agreement. "Proposed Amendment" has the meaning set forth in Section 12(b). "Related Entity" means, with respect to any Person, (i) if such Person is an "ultimate parent entity," as defined in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and the regulations promulgated thereunder, each direct or indirect subsidiary of such Person and (ii) if such Person is not an "ultimate parent entity," as defined in such Act and regulations, each ultimate parent entity (as so defined) of such Person and each other Person which is a direct or indirect subsidiary of any such ultimate parent entity. "Required Initial Holders" means, as of any date of determination, WCAS Capital Partners III, L.P. and Welsh, Carson, Anderson & Stowe VIII, L.P., so long as such Initial Holders and their Affiliates are the beneficial and record owners, as of such date of determination, of a majority of the Warrants outstanding on such date of determination. "Restricted Definitive Warrant" means a Definitive Warrant bearing the Private Placement Legend. 51 "Restricted Global Warrant" means a Global Warrant bearing the Private Placement Legend. "Restricted Warrant" means a Restricted Global Warrant or a Restricted Definitive Warrant, as the case may be. "Restricted Warrant Shares" means Warrant Shares issued or issuable upon exercise of a Restricted Warrant. "Securities Act" has the meaning specified in Section 3(a). "Series A Certificate of Designation" means the Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of 8% Series A Convertible Redeemable Preferred Stock and Qualifications, Limitations and Restrictions Thereof. "Series A Preferred Stock" means the 8% Series A Convertible Redeemable Preferred Stock of the Company authorized in the Series A Certificate of Designation. "Series A Warrants" means the warrants to purchase Common Stock issued by the Company pursuant to the Warrant Agreement, dated as of October 29, 2002, between the Company and Mellon Investor Services LLC, as Warrant Agent, as amended from time to time (so long as no amendment to such Warrant Agreement after the Issue Date shall increase the number of warrants issuable pursuant thereto); provided that such warrants have the same exercise expiration date and (subject to adjustments pursuant to antidilution provisions of such Warrant Agreement) the same exercise price as the warrants issued pursuant to such Warrant Agreement which are outstanding on the Issue Date. 52 "Series B Certificate of Designation" means the Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of 8% Series B Convertible Redeemable Preferred Stock and Qualifications, Limitations and Restrictions Thereof. "Series B Directors" means the directors of the Company who are serving on the Board of Directors effective as of the Issue Date as Series B Directors pursuant to the Series B Certificate of Designation or thereafter (i) elected to the Board of Directors pursuant to the Series B Certificate of Designation by the holders of the Series B Preferred Stock voting as a separate class or (ii) appointed to the Board of Directors pursuant to the Series B Certificate of Designation. "Series B Preferred Stock" means the 8% Series B Convertible Redeemable Preferred Stock of the Company authorized in the Series B Certificate of Designation. "Series B Warrant Agreement" means the Warrant Agreement, dated as of October 6, 2003, between the Company and Mellon Investor Services LLC, as Warrant Agent, as amended from time to time, so long as no amendment to such Warrant Agreement after the date hereof shall increase the number of warrants issuable pursuant thereto. "Series B Warrants" means the warrants to purchase Common Stock issued by the Company pursuant to the Series B Warrant Agreement; provided that such warrants have the same exercise expiration date and (subject to adjustments pursuant to antidilution provisions of the Series B Warrant Agreement) the same exercise price as the warrants issued pursuant to the Series B Warrant Agreement which are outstanding on the Issue Date. 53 "Third Lien Credit Agreement" has the meaning specified in the preamble hereto. "Transaction Documents" means (i) the Third Lien Credit Agreement, as amended from time to time, (ii) this Agreement, as amended from time to time, (iii) the Merger Agreement, (iv) the Governance Agreement, dated as of October 6, 2003, as amended from time to time, among the Company, WCAS Capital Partners III, L.P., Welsh, Carson, Anderson & Stowe VIII, L.P., WCAS Information Partners, L.P. and certain individual investors and trusts listed on the signature pages thereto and (v) the Registration Rights Agreement, dated as of October 6, 2003, as amended from time to time, among the Company and the securityholders identified therein. "Transfer" has the meaning specified in Section 10.1(b). "Transferee" means any Person that acquires assets of the Company in connection with any sale, conveyance, lease, exchange or transfer of such assets by the Company to or with such Person. "Unrestricted Global Warrant" means a Global Warrant, substantially in the form of Exhibit A attached hereto, that bears the Global Warrant Legend and that has the "Schedule of Exchanges of Interests in Global Warrant" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Warrants that do not bear the Private Placement Legend. "Warrant" has the meaning specified in the preamble hereto. 54 "Warrant Agent" (i) has the meaning specified in the first paragraph hereof and (ii) means any successor or replacement to Mellon Investor Services LLC as provided in Section 9. "Warrant Certificate" has the meaning specified in Section 2.1(a). "Warrant Countersignature Order" has the meaning specified in Section 2.2. "Warrant Registrar" has the meaning specified in Section 2.3. "Warrants" has the meaning specified in the preamble hereto. "Warrant Shares" has the meaning specified in the preamble hereto. SECTION 16. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Prior to the exercise of the Warrants, no Holder of a Warrant Certificate, as such, shall be entitled to any rights of a stockholder of the Company, including, without limitation, the right to vote or to consent to any action of the stockholders, to receive dividends or other distributions, to exercise any preemptive right or to receive any notice of meetings of stockholders. SECTION 17. GOVERNING LAW. This Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflict of laws to the extent the application of the laws of another jurisdiction would be required thereby. 55 SECTION 18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement is intended or shall be construed to give to any Person other than the Company and the Warrant Agent and their respective successors and assigns and the registered holders of Warrants any legal or equitable right, remedy or claim under this Agreement. This Agreement shall be for the sole and exclusive benefit of the Company and the Warrant Agent and their respective successors and assigns and the registered holders of Warrants. SECTION 19. COUNTERPARTS. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 56 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. ITC^DELTACOM, INC. By: --------------------------------------- Name: J. Thomas Mullis Title: Senior Vice President- Legal and Regulatory MELLON INVESTOR SERVICES LLC as Warrant Agent By: --------------------------------------- Name: Title: EXHIBIT A [Form of Warrant Certificate] [Face] [THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO REQUIRE AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE FOREGOING RESTRICTIONS]1 [THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH -------- 1 This paragraph is to be included in Restricted Global Warrants and Restricted Definitive Warrants. A-1 NOTATIONS HEREON AS MAY BE REQUIRED BY THE DEPOSITARY IN ORDER FOR IT TO ACCEPT THE WARRANTS FOR ITS BOOK-ENTRY SETTLEMENT SYSTEM, (II) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 10.4 OF THE WARRANT AGREEMENT AND (III) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY ONLY WITH THE PRIOR WRITTEN CONSENT OF ITC^DELTACOM, INC.]2 [THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER SET FORTH IN AN AGREEMENT DATED AS OF OCTOBER 6, 2003 BETWEEN ITC^DELTACOM, INC. AND THE OTHER PARTIES THERETO. A COPY OF SUCH AGREEMENT IS ON FILE WITH THE SECRETARY OF ITC^DELTACOM, INC. EXCEPT FOR A DISPOSITION OF SECURITIES PERMITTED BY THE PROVISIONS OF ARTICLE II OF SUCH AGREEMENT IF THE PROVISIONS OF SUCH ARTICLE ARE THEN IN EFFECT, SUCH TRANSFER LIMITATIONS SHALL BE APPLICABLE TO ANY DISPOSITION OF THESE SECURITIES AND THIS LEGEND SHALL BE STAMPED OR OTHERWISE IMPRINTED ON ANY CERTIFICATE EVIDENCING THESE SECURITIES.]3 No. ___________ ___Warrants 2 This paragraph is to be included only if the Warrant is in global form. 3 This paragraph is to be included only if the agreement referred to therein shall be in effect. A-2 Warrant Certificate ITC^DELTACOM, INC. This Warrant Certificate certifies that ____________, or its registered assigns, is the registered holder of Warrants expiring March 29, 2015 (the "Warrants") to purchase Common Stock, par value $.01 per share (the "Common Stock"), of ITC^DeltaCom, Inc., a corporation organized under the laws of the State of Delaware (the "Company"). Each Warrant entitles the registered holder upon exercise at any time from the 21st calendar day following the date on which the Company sends to its stockholders the information statement required pursuant to Regulation 14C under the Securities Exchange Act of 1934, as amended, in connection with stockholder approval of the issuance of the Warrants and the Warrant Shares upon exercise or conversion thereof (the "Exercise Date") until immediately prior to 5:00 p.m., New York City time, on March 29, 2015, to receive from the Company one fully paid and non-assessable share of Common Stock (collectively, the "Warrant Shares") at the initial exercise price (the "Exercise Price") of $0.60 per share of Common Stock payable upon surrender of this Warrant Certificate and payment, subject to the third paragraph on the reverse side of this Warrant Certificate, of the Exercise Price at the office or agency of the Warrant Agent, but only subject to the conditions set forth herein and in the Warrant Agreement referred to on the reverse hereof. The Exercise Price and number of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement. No Warrant may be exercised on or after 5:00 p.m., New York City time, on March 29, 2015, and to the extent not exercised by such time such Warrant shall become void. A-3 Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, and such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement. This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York. A-4 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed below. Dated: [____________], 20__ ITC^DELTACOM, INC. By: --------------------------------------- Name: Title: Countersigned: MELLON INVESTOR SERVICES LLC as Warrant Agent By: ------------------------------------------- Authorized Signature A-5 [Reverse of Warrant Certificate] The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants expiring at 5:00 p.m., New York City time, on March 29, 2015 entitling the holder upon exercise to receive shares of Common Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as of March 29, 2005 (as amended from time to time, the "Warrant Agreement"), duly executed and delivered by the Company to Mellon Investor Services LLC, as warrant agent (the "Warrant Agent"), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Capitalized terms herein are used as defined in the Warrant Agreement unless otherwise indicated. To the extent any provision of this Warrant Certificate conflicts with the express provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall govern and be controlling. Warrants may be exercised at any time and from time to time during the period commencing on the 21st calendar day following the date on which the Company sends to its stockholders the information statement required pursuant to Regulation 14C under the Securities Exchange Act of 1934, as amended, in connection with stockholder approval of the issuance of the Warrants and the Warrant Shares upon exercise or conversion thereof and ending immediately prior to 5:00 p.m., New York City time, on March 29, 2015; provided that either (i) a registration statement relating to the exercise of the Warrants and issuance of the Warrant Shares upon such exercise is then effective under the Securities Act of 1933, as amended (the A-6 "Securities Act"), or (ii) the exercise of such Warrants and the issuance of the Warrant Shares upon such exercise is exempt from the registration requirements of the Securities Act and such Warrant Shares are qualified for sale or exempt from registration or qualification under the applicable securities laws of the states in which the various holders of the Warrants or other Persons to whom it is proposed that such Warrant Shares be issued upon exercise of the Warrants reside. In order to exercise all or any of the Warrants represented by this Warrant Certificate, the holder must deliver to the Warrant Agent at its office set forth in Section 11 of the Warrant Agreement (i) this Warrant Certificate, (ii) the form of election to purchase on the reverse hereof duly and properly filled in and signed, which signature shall be guaranteed by a bank or trust company having an office or correspondent in the United States or a broker or dealer which is a member of a registered securities exchange or the National Association of Securities Dealers, Inc, and (iii), subject to the following paragraph, payment to the Warrant Agent for the account of the Company of the Exercise Price for the number of Warrant Shares in respect of which such Warrants are then exercised, as provided in the Warrant Agreement. No adjustments as to dividends shall be made upon exercise of this Warrant. Subject to the last sentence of this paragraph, in lieu of making the payment of the Exercise Price in connection with the exercise of each Warrant (but in all other respects in accordance with the exercise procedure set forth above, as such exercise procedure may be adjusted to reflect the conversion referred to herein), the holder of each Restricted Warrant may elect to convert such Restricted Warrant into shares of Common Stock by providing the Company and the Warrant Agent with joint written notification of such election, in which event the Company shall issue to such holder the number of shares of Common Stock calculated in accordance with formula: A-7 X = (A - B) x C ----------- A where X = the number of shares of Common Stock issuable upon exercise pursuant to Section 3(f) of the Warrant Agreement A = the Closing Price on the Business Day immediately preceding the date on which the holder delivers the Warrant Certificate and form of election to purchase to the Company pursuant to Section 3(b) of the Warrant Agreement B = the Exercise Price C = the number of shares of Common Stock as to which such Restricted Warrant is being exercised pursuant to Section 3(a) of the Warrant Agreement If the foregoing calculation results in a negative number, no shares of Common Stock shall be issued upon conversion pursuant hereto. Notwithstanding any provision of this Warrant or the Warrant Agreement to the contrary, the holder of any Restricted Warrant may elect to convert such Restricted Warrant into shares of Common Stock as provided herein only if the Board of Directors shall determine that upon such conversion the Company shall receive consideration in an amount not less than the par value of the shares of Common Stock issuable upon such conversion. The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price set forth on the face hereof may, subject to certain conditions, be adjusted. If the A-8 Exercise Price is adjusted, the Warrant Agreement provides that the number of shares of Common Stock issuable upon the exercise of each Warrant shall be adjusted. No fractions of a share of Common Stock shall be issued upon the exercise of any Warrant, but the Company may, in its sole discretion, (i) round such fractional share up to the nearest whole share or (ii) pay the cash value thereof determined as provided in the Warrant Agreement. The Warrants shall be exercisable, at the election of the holder, either in full or from time to time in part, provided that Warrants may not be exercised by the holder for an amount less than 100 Warrant Shares unless such holder only owns, in the aggregate, such lesser amount. If fewer than all the Warrants represented by this Warrant Certificate are exercised, this Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants which were not exercised shall be delivered to the person or persons entitled to receive such new Warrant Certificate. Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. The Company and the Warrant Agent may deem and treat the registered holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, or any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor A-9 the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants represented by this Warrant Certificate nor this Warrant Certificate shall entitle any holder hereof to any rights of a stockholder of the Company. A-10 [Form of Election to Purchase] (To Be Executed Upon Exercise of Warrant) The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive _____________ shares of Common Stock and herewith tenders payment for such shares to the order of ITC^DELTACOM, INC., in the amount of $__________ in accordance with the terms hereof. If the undersigned hereby elects to convert the Warrants represented by this Warrant Certificate into shares of Common Stock as provided in this Warrant Certificate, tender of this Warrant Certificate in lieu of payment as aforesaid shall be deemed payment for such shares of Common Stock. The undersigned requests that a certificate for such shares be registered in the name of _______________, whose address is __________________ and that such shares be delivered to ___________, whose address is ____________________________. If such number of shares is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of ______________________, whose address is ____________________, and that such Warrant Certificate be delivered to _______________ whose address is ____________________. ---------------------------------------- Signature Date: ---------------------------------------- Signature Guaranteed A-11 SCHEDULE OF EXCHANGES OF INTERESTS IN GLOBAL WARRANT The following exchanges of a part of this Global Warrant have been made: Number of Warrants Amount of decrease in this Global in Number of Amount of increase in Warrant following Signature of warrants in this Number of Warrants in such decrease or authorized officer Date of Exchange Global Warrant this Global Warrant increase of Warrant Agent ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
A-12 EXHIBIT B [Form of Investment Letter for Exercise] ITC^DeltaCom, Inc. 1791 O.G. Skinner Drive West Point, GA 31833 Ladies and Gentlemen: The undersigned (the "Purchaser") refers hereby to the Warrant Agreement, dated as of March 29, 2005, between ITC^DeltaCom, Inc. (the "Company") and Mellon Investor Services LLC, as Warrant Agent (as amended from time to time, the "Agreement"). Capitalized terms used in this letter and not defined herein have the meanings given to such terms in the Agreement. This letter is being furnished to the Company pursuant to Section 3(c) of the Agreement. The Warrant Agent has received from a Holder of Warrants an executed election form for the purchase of ___________ shares of Common Stock (the "Warrant Shares") issuable upon the exercise of such Warrants. In connection with its purchase of the Warrant Shares, the Purchaser confirms that: 1. The Purchaser has received such information as it deems necessary in order to make its investment decision in connection with its purchase of the Warrant Shares. 2. The Purchaser understands that the offer and sale of the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or applicable state securities laws. The Purchaser understands that any Transfer of the Warrant Shares is subject to certain restrictions and conditions set forth in the Warrant Agreement and agrees to be bound by, and not to Transfer the Warrant Shares except in compliance with, such restrictions and conditions and the Securities Act. 3. The Purchaser understands that, upon any proposed Transfer of any Warrant Shares, it will be required to furnish to the Warrant Agent and the Company such certifications, legal opinions and other information as are specified in the Warrant Agreement or as the Warrant Agent and the Company may reasonably require to confirm that the proposed Transfer complies with the foregoing restrictions and conditions. The Purchaser further understands that the Warrant Shares purchased by it will bear a legend to the foregoing effect and that the Company may place a "stop transfer order" with any transfer agent or registrar with respect to the Warrant Shares. 4. The Purchaser is an "accredited investor" (as defined in Rule 501(a) of Regulation D under the Securities Act) and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Warrant B-1 Shares, and it and any account for which it is acting is each able to bear the economic risk of such an investment. 5. The Purchaser is acquiring the Warrant Shares purchased by it for its own account or for one or more accounts (each of which is an "accredited investor") as to each of which the Purchaser exercises sole investment discretion. The Company and the Warrant Agent are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, cc: Mellon Investor Services LLC, as Warrant Agent B-2 EXHIBIT C [Form of Investment Letter for Transfer] ITC^DeltaCom, Inc. 1791 O.G. Skinner Drive West Point, GA 31833 Ladies and Gentlemen: The undersigned (the "Transferee") refers hereby to the Warrant Agreement, dated as of March 29, 2005, between ITC^DeltaCom, Inc. (the "Company") and Mellon Investor Services LLC, as Warrant Agent (as amended from time to time, the "Agreement"). Capitalized terms used in this letter and not defined herein have the meanings given to such terms in the Agreement. This letter is being furnished to the Company pursuant to Section 10.1(b) of the Agreement. A Holder of Warrants proposes to Transfer to the Transferee a beneficial interest in a Restricted Global Warrant or Restricted Definitive Warrant (collectively, the "Warrants"). In connection with its acquisition of the Warrants, the Transferee confirms that: 1. The Transferee understands that the Warrants and the shares of Common Stock or other securities issuable upon exercise thereof (collectively, the "Warrant Shares") have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or applicable state securities laws. The Transferee understands that any subsequent Transfer of the Warrants or the Warrant Shares is subject to certain restrictions and conditions set forth in the Warrant Agreement and agrees to be bound by, and not to Transfer, the Warrants or the Warrant Shares except in compliance with, such restrictions and conditions and the Securities Act. 2. The Transferee understands that, upon any proposed Transfer of the Warrants or the Warrant Shares, it will be required to furnish to the Warrant Agent and the Company such certifications, legal opinions and other information as are specified in the Warrant Agreement or as the Warrant Agent and the Company may reasonably require to confirm that the proposed Transfer complies with the foregoing restrictions and conditions. The Transferee further understands that the Warrants and the Warrant Shares will bear a legend to the foregoing effect and that the Company may place a "stop transfer order" with any transfer agent or registrar with respect to the Warrants and the Warrant Shares. C-1 3. The Transferee is an "accredited investor" (as defined in Rule 501(a) of Regulation D under the Securities Act) and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Warrants, and it and any account for which it is acting is each able to bear the economic risk of such an investment. 4. The Transferee is acquiring the Warrants purchased by it for its own account or for one or more accounts (each of which is an "accredited investor") as to each of which the Transferee exercises sole investment discretion. The Company and the Warrant Agent are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, cc: Mellon Investor Services LLC, as Warrant Agent C-2 EX-99 4 exc_0401-2005itc.txt EXHIBIT C - AMENDMENT NO. 1 TO WARRANT AGREEMENT AMENDMENT NO. 1 TO WARRANT AGREEMENT AMENDMENT NO. 1 TO WARRANT AGREEMENT (this "Amendment"), dated as of March 29, 2005, is made between ITC^DeltaCom, Inc., a Delaware corporation (the "Company"), and Mellon Investors Services LLC, as Warrant Agent (the "Warrant Agent"). W I T N E S S E T H : WHEREAS, the Company wishes to enter into a Credit Agreement, dated as of [the date hereof], with the borrower and the subsidiary guarantors named therein and the other parties thereto (the "Third Lien Credit Agreement"), pursuant to which certain Welsh, Carson, Anderson & Stowe funds and related persons will lend $20,000,000 to the Company; WHEREAS, in connection with the execution and delivery of the Third Lien Credit Agreement, the Company proposes to issue and deliver to Welsh, Carson, Anderson & Stowe funds and related persons pursuant to a Warrant Agreement, dated as of the date hereof, between the Company and Mellon Investor Services LLC, as Warrant Agent, 20,000,000 warrants (the "March 2005 Warrants") to purchase an equal number of shares of the Common Stock, par value $.01 per share, of the Company (the "Common Stock") at an initial exercise price of $0.60 per share; WHEREAS, Sections 7(a) and 7(b) of the Warrant Agreement, dated as of October 6, 2003, between the Company and the Warrant Agent (the "Agreement") provide for an adjustment of the Exercise Price (as defined in the Agreement, the "Exercise Price") of the Warrants (as defined in the Agreement, the "Warrants") if the Company issues, or is deemed to have issued, any shares of the Common Stock for no consideration or for a consideration per share less than the Exercise Price in effect on the date of issuance or sale (or deemed issuance or sale) of such Common Stock; and WHEREAS, to facilitate the issuance of the March 2005 Warrants and the shares of Common Stock or other securities issuable from time to time upon exercise or conversion of the March 2005 Warrants (collectively, the "March 2005 Warrant Shares"), the Company wishes to amend Section 7(c) of the Agreement so that none of the issuance, sale, grant, exercise, conversion, exchange, reclassification, redemption or other retirement of the March 2005 Warrants or the 2005 Warrant Shares will result in an adjustment of the Exercise Price of the Warrants; and WHEREAS, as required pursuant to Section 12(a) of the Agreement, Holders of more than a majority of the outstanding Warrants outstanding on the date hereof have consented in writing to this Amendment; NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Definitions. All capitalized terms that we used but not defined in this Amendment (including the preamble and recitals hereof) shall have the meanings given to such terms in the Agreement. 2. Amendments. (a) This Amendment amends clause 7(c)(x) of the Agreement by deleting the word "or" at the end thereof. (b) This Amendment amends clause 7(c)(xi) of the Agreement by deleting the punctuation mark at the end thereof and substituting "; or" therefor. (c) This Amendment amends Section 7(c) of the Agreement by adding at the end of such Section 7(c) a new clause 7(c)(xii), which shall read in its entirety as follows: (xii) the March 2005 Warrants or any shares of Common Stock or other securities issuable or payable upon exercise or conversion of the March 2005 Warrants. (d) This Amendment amends Section 15 of the Agreement by adding to such Section 15, in the appropriate alphabetical order, the following definition, which shall read in its entirety as follows: "March 2005 Warrants" means the warrants to purchase Common Stock issued by the Company pursuant to the Warrant Agreement, dated as of March 29, 2005, between the Company and Mellon Investor Services LLC, as Warrant Agent, as amended from time to time (so long as no amendment to such Warrant Agreement shall increase the number of warrants issuable pursuant thereto); provided that such warrants have the same exercise expiration date and (subject to adjustment pursuant to antidilution provisions of such Warrant Agreement) the same exercise price as the Warrants issued pursuant to such Warrant Agreement on March 29, 2005. 3. Counterparts; Facsimile Delivery. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures on all such counterparts were upon the same instrument. This Amendment, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto, each other party hereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract, and each such party forever waives any such defense. 4. Governing Law. This Amendment shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance with the internal laws of the State of New York, without giving effect to principles of -2- conflict of laws to the extent the application of the laws of another jurisdiction would be required thereby. [signature page follows] -3- IN WITNESS WHEREOF, the parties have executed this Amendment as of the date set forth in the first paragraph hereof. COMPANY: ITC^DELTACOM, INC. By: ------------------------------------------ Name: J. Thomas Mullis Title: Senior Vice President- Legal and Regulatory WARRANT AGENT: MELLON INVESTOR SERVICES LLC By: ------------------------------------------ Name: --------------------------------------- Title: -------------------------------------- EX-99 5 exd_0401-2005itc.txt EXHIBIT D - AMEND NO. 1 TO GOVERNANCE AGT AMENDMENT NO. 1 TO GOVERNANCE AGREEMENT AMENDMENT NO. 1 dated as of March 29, 2005 to the Governance Agreement dated as of October 6, 2003 among ITC^DeltaCom, Inc., a Delaware corporation ("ITC^DeltaCom"), and each Person listed on the signature pages thereof or otherwise a party thereto in accordance with its terms (the "Governance Agreement"); W I T N E S S E T H : WHEREAS, ITC^DeltaCom and certain of the Persons listed on the signature pages hereof under the heading "WCAS Current Securityholders" (each, a "Current Securityholder" and collectively, the "WCAS Holders") have entered into the Credit Agreement dated as of the date hereof with the subsidiary guarantors named therein and the other parties thereto (the "Third Lien Credit Agreement"), pursuant to which WCAS is lending $20,000,000 to ITC^DeltaCom; WHEREAS, in connection therewith, ITC^DeltaCom, Inc. proposes to issue and deliver to the WCAS Holders pursuant to a Warrant Agreement dated as of the date hereof between ITC^DeltaCom, Inc. and Mellon Investor Services LLC, as Warrant Agent, 20,000,000 warrants (each, a "March 2005 Warrant") to purchase an equal number of shares of the Common Stock, par value $.01 per share, of ITC^DeltaCom, Inc. (along with any shares of Common Stock that may be issued pursuant to certain antidilution provisions of the March 2005 Warrants, the "March 2005 Warrant Shares"); WHEREAS, in connection with the issuance of the March 2005 Warrants, the parties hereto desire to (i) amend the Governance Agreement to modify the limitations on the WCAS Holders or their Affiliates acquiring Voting Securities of Parent and (ii) acknowledge that the March 2005 Warrants and the March 2005 Warrant Shares are "Registrable Securities" under and for purposes of the Registration Rights Agreement; WHEREAS, the Persons signing this Amendment under the heading "WCAS Current Securityholders" beneficially own a majority of the Voting Power represented by the Voting Securities beneficially owned by the WCAS Holders and their Affiliates; and WHEREAS, this Amendment has been duly approved by Parent pursuant to a Determination of the Committee of Independent Directors to approve this Amendment; NOW, THEREFORE, the parties hereto agree as follows: 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein, including in the preamble hereof, that is defined in the Governance Agreement has the meaning assigned to such term in the Governance Agreement. Each reference to "hereof," "hereunder," "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Governance Agreement shall, after this Amendment becomes effective, refer to the Governance Agreement as amended hereby. 2. Preamble. The first paragraph of the preamble of the Governance Agreement is amended in its entirety to read as follows: GOVERNANCE AGREEMENT, dated as of October 6, 2003 (this "Agreement"), between ITC^DeltaCom Inc., a Delaware corporation ("Parent"), and each Person listed on the signature pages hereof under the heading "WCAS Securityholders" (each, and each Permitted Transferee of such Person that agrees in writing to be bound by the terms and conditions of this Agreement, a "WCAS Securityholder" and collectively, "W") and each Other Holder (as defined in Section 1.1). 3. Definition of Amended Ownership Percentage. The following definition of "Amended Ownership Percentage" is added in alphabetical order to Section 1.1 of the Governance Agreement: "Amended Ownership Percentage" means the Ownership Percentage represented by the number of shares of Common Stock beneficially owned by W immediately following the issuance of the March 2005 Warrants. For purposes of this definition, the number of shares of Common Stock beneficially owned by W immediately following the issuance of the March 2005 Warrants shall be calculated assuming the conversion, exchange or exercise into or for shares of Common Stock of all Voting Securities beneficially owned by W at such time. 4. Definition of March 2005 Warrants. The following definition of "March 2005 Warrants" is added in alphabetical order to Section 1.1 of the Governance Agreement. "March 2005 Warrants" means the 20,000,000 warrants to purchase an equal number of shares of Common Stock issued pursuant to the Warrant Agreement dated as of March 29, 2005 between Parent and Mellon Investor Services LLC, as Warrant Agent. 2 5. Acquisition of Voting Securities and Business Combinations. Section 3.1 of the Governance Agreement is amended in its entirety to read as follows: SECTION 3.1. Purchases of Voting Securities. W agrees and covenants that following the Effective Time W shall not, and shall cause each of its Affiliates not to, acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, beneficial ownership of any Voting Securities, except (i) as approved by a Determination of the Committee of Independent Directors, (ii) upon exercise or conversion of any Voting Securities or Voting Security Equivalents then owned by W and its Affiliates, (iii) upon the issuance of any Voting Securities or Voting Security Equivalents, as dividends or otherwise, in respect of securities beneficially owned by W or its Affiliates on the date of the Effective Time or March 29, 2005 or in substitution therefor, or in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or similar reorganization, (iv) as contemplated by Section 8.21 or Article 10 of the Merger Agreement, (v) during the Transfer Restriction Period, W and its Affiliates may acquire, in addition to any acquisitions pursuant to clauses (i) through (iv), in the open market or through privately negotiated transactions or from Parent, beneficial ownership of Voting Securities as long as W and its Affiliates do not, following any such acquisition, have an aggregate Ownership Percentage in excess of the sum of the Amended Ownership Percentage, plus 5%, or (vi) following the Transfer Restriction Period, W and its Affiliates may acquire, in addition to any acquisitions pursuant to clauses (i) through (iv), in the open market or through privately negotiated transactions or from Parent, beneficial ownership of Voting Securities as long as W and its Affiliates do not, following any such acquisition, have an aggregate Ownership Percentage in excess of the sum of the Amended Ownership Percentage, plus 15%. 6. Acknowledgment. ITC^DeltaCom acknowledges that the March 2005 Warrants and the March 2005 Warrant Shares are "Registrable Securities" under and for purposes of the Registration Rights Agreement. 7. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware. 8. Counterparts. This Amendment may be executed and delivered (including by facsimile transmission) in any number of counterparts, each of 3 which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 9. Effectiveness. This Amendment shall become effective as of the date hereof. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. ITC^DELTACOM, INC. By: ------------------------------------------ Name: J. Thomas Mullis Title: Senior Vice President- Legal and Regulatory WCAS CURRENT SECURITYHOLDERS: WCAS CAPITAL PARTNERS III, L.P. By: WCAS CP III Associates L.L.C. General Partner By: ------------------------------------------ Name: Title: WELSH, CARSON, ANDERSON & STOWE VIII, L.P. By: WCAS VIII Associates LLC, General Partner By: ------------------------------------------ Name: Title: Certain individual investors and trusts By: ------------------------------------------ Jonathan M. Rather, as Attorney-in-fact for the individual investors listed below: Patrick J. Welsh Russell L. Carson Bruce K. Anderson Andrew M. Paul Thomas E. McInerney Robert A. Minicucci Paul B. Queally Anthony J. de Nicola D. Scott Mackesy Sanjay Swani Laura VanBuren Sean Traynor John Almeida Eric J. Lee James R. Matthews IRA f/b/o Jonathan M. Rather Other trusts: Mary R. Anderson TTEE of The Bruce K. Anderson 2004 Trust The Bruce K. Anderson 2004 Irrevocable Trust By: ------------------------------------------ ------------------------------------------ Name: ---------------------------------------- ---------------------------------------- Title: --------------------------------------- --------------------------------------- Carol Welsh TTEE of the Patrick Welsh 2004 Irrevocable Trust By: ------------------------------------------ Name: ---------------------------------------- Title: --------------------------------------- OTHER HOLDERS: Campbell B. Lanier, III ---------------------------------------------