NOTE PURCHASE AGREEMENT

Exhibit 10.1

 

NOTE PURCHASE AGREEMENT

 

Dated as of July 26, 2005

 

by and among

 

ITC^DELTACOM, INC.

 

as Parent

 

INTERSTATE FIBERNET, INC.

 

as Issuer

 

THE SUBSIDIARY GUARANTORS NAMED HEREIN

 

as Subsidiary Guarantors

 

THE NOTE PURCHASERS NAMED HEREIN

 

as Note Purchasers

 

TENNENBAUM CAPITAL PARTNERS, LLC

 

as Agent

 

and

 

TCP AGENCY SERVICES, LLC

 

as Collateral Agent

TABLE OF CONTENTS

 

 

i

 

ii

SCHEDULES

 

 

EXHIBITS

 

 

iii

NOTE PURCHASE AGREEMENT

 

This NOTE PURCHASE AGREEMENT is made and entered into as of July 26, 2005 (this “ Agreement ”), by and among ITC^DeltaCom, Inc., a Delaware corporation (the “ Parent ”), Interstate FiberNet, Inc., a Delaware corporation (the “ Issuer ”), the subsidiary guarantors listed on the signature page hereof, the banks, financial institutions and other institutional lenders listed on Schedule I hereto (the “ Note Purchasers ”), Tennenbaum Capital Partners, LLC, a Delaware limited liability company (“ TCP ”), as agent (together with any successor agent appointed pursuant to Article VIII, the “ Agent ”) for the Note Purchasers, and TCP Agency Services, LLC, a Delaware limited liability company, as collateral agent (together with any successor collateral agent the “ Collateral Agent ” and, together with the Agent, the “ Agents ”).

 

RECITALS:

 

WHEREAS, the Parent, the Issuer, the Subsidiary Guarantors, and the banks and financial institutions listed on the signature pages thereof as Lenders (the “ Second Lien Lenders ”) and General Electric Capital Corporation, as administrative and collateral agent, entered into that certain Amended and Restated Credit Agreement, dated as of March 29, 2005 (the “ Existing Second Lien Credit Agreement ”);

 

WHEREAS, the Parent, the Issuer, the Subsidiary Guarantors thereunder, the lenders from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent and collateral agent, entered into that certain Third Amended and Restated Credit Agreement, dated as of March 29, 2005 (the “ Third Amended ITCD Credit Agreement ”);

 

WHEREAS, the Parent, the Issuer, the Subsidiary Guarantors, the lenders from time to time party thereto and WCAS (as defined below), as administrative agent and collateral agent, entered into that certain Credit Agreement, dated as of March 29, 2005 (the “ Original Third Lien Credit Agreement ”);

 

WHEREAS, the parties hereto desire to enter into this Agreement pursuant to which senior secured notes in the aggregate principal amount of $209,000,000 (as more clearly set forth in Section 2.01 hereof) (collectively, the “ Notes ”) shall be purchased by the Note Purchasers, the proceeds from which are to be used to repay any and all amounts owing by the Obligors under the Third Amended ITCD Credit Agreement and for general working capital purposes;

 

WHEREAS, concurrently herewith, the Parent, the Issuer, the Subsidiary Guarantors, certain Lenders (as defined in the Original Third Lien Credit Agreement) and certain of the Note Purchasers (collectively, the “ New Third Lien Lenders ”) are amending and restating the Original Third Lien Credit Agreement (the “ New Third Lien Securities Purchase Agreement ”) pursuant to which the New Third Lien Lenders are purchasing (i) $30,000,000 in aggregate principal amount of newly-issued secured notes (the “ New Third Lien Notes ”) issued by the Issuer and (ii) Warrants issued by the Issuer, the proceeds of such New Third Lien Notes and Warrants to be used by the Issuer for general working capital purposes;

WHEREAS, concurrently herewith, pursuant to that certain Exchange Agreement dated as of even date herewith (the “ Exchange Agreement ”) by and among WCAS, the Parent, the Issuer and the Subsidiary Guarantors, the Existing Third Lien Notes are being exchanged for New Third Lien Notes in the aggregate principal amount equal to the sum of (x) $20,000,000 plus (y) the aggregate amount of capitalized PIK interest on the Existing Third Lien Notes through the Closing Date;

 

WHEREAS, the Obligors have requested (a) the consent of the Second Lien Lenders (as defined below) to incur secured indebtedness pursuant to this Agreement and (b) that the Second Lien Lenders agree to amend and restate the terms of the Existing Second Lien Credit Agreement pursuant to that certain Second Amended and Restated Credit Agreement, dated as of July 26, 2005 (the “ Amended Second Lien Credit Agreement ”), by and among the Parent, the Issuer, the Subsidiary Guarantors, the Second Lien Lenders and the “Agents”, under, and as defined therein (the “ Second Lien Agent ”);

 

WHEREAS, subject to the continuation without interruption of the liens created thereby, it is the intention of the parties that the Original Third Lien Credit Agreement be amended and restated as of Closing Date; and

 

WHEREAS, it is the intention of the parties that the obligations of the Parent and its Subsidiaries under the Third Amended ITCD Credit Agreement be satisfied and paid in full from the proceeds of the Note Purchase (as defined below) and that, from and after the Closing Date, the Third Amended ITCD Credit Agreement shall be extinguished.

 

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 hereto 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):

 

“ Account Control Agreement ” has the meaning specified in Section 5.01(r).

 

“ Additional Guarantor ” has the meaning specified in Section 7.05 .

 

“ 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 Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock or Equity Interests, by contract or otherwise.

 

“ Agent ” has the meaning specified in the preamble of this Agreement.

 

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“ Agents ” has the meaning specified in the preamble of this Agreement.

 

“ Agreement ” means this Note Purchase Agreement, dated as of July 26, 2005, among the Parent, the Issuer, the Note Purchasers, the Subsidiary Guarantors and the Agent and Collateral Agent, as amended, replaced or refinanced from time to time.

 

“ Agreement Value ” means, for each Hedge Agreement, on any date of determination, an amount determined by the 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 Obligor 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 Obligor or Subsidiary was the sole “Affected Party,” and (iii) the Agent was the sole party determining such payment amount (with the 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 shall be the unrealized loss on such Hedge Agreement to the Obligor or Subsidiary of an Obligor to such Hedge Agreement determined by the 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 shall be the unrealized loss on such Hedge Agreement to the Obligor or Subsidiary of an Obligor to such Hedge Agreement determined by the Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Obligor or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Obligor 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.

 

“ Amended Second Lien Credit Agreement ” has the meaning specified in the recitals of the parties to this Agreement, as amended.

 

“ Applicable Law ” means all laws, rules and regulations applicable to a Person, its property or a transaction, as the case may be, including all applicable common law principles and all provisions of all applicable United States federal, state, local and foreign constitutions, treatises, codes, statutes, rules, regulations, orders and ordinances of any Governmental Authority; and writs, orders, judgments, injunctions and decrees of all courts and arbitrators.

 

“ Applicable Lending Office ” means, with respect to each Note Purchaser, such Note Purchaser’s Principal Lending Office.

 

“ Assigned Agreements ” has the meaning specified in the Security Agreement.

 

“ Assignment and Acceptance ” means an assignment and acceptance entered into by a Note Purchaser and an Eligible Assignee, substantially in the form of Exhibit C hereto.

 

“ Bankruptcy Code ” means title 11 of the United States Code, as amended.

 

“ 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.

 

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“ 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) to the extent applicable from time to time, the Series A Certificate of Designation or the Series B Certificate of Designation.

 

“ 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., a North Carolina corporation.

 

“ Capital Expenditures ” means, for any Person for any period, the sum of, without duplication, (a) all expenditures made, directly or indirectly, by such Person or any of its Subsidiaries during such period for equipment, capacity or dark fiber indefeasible rights of use (IRUs), fixed assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Person or have a useful life of more than one year plus (b) the aggregate principal amount of all Debt (including Obligations under Capitalized Leases) assumed or Incurred in connection with any such expenditures. For purposes of this definition, the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price less the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such proceeds, as the case may be.

 

“ 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, the Second Lien Loan Documents and the New Third Lien 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 Note Purchaser 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 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

 

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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 Closing 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; provided , however , that for purposes of calculating the percentage in clause (a) of this definition, any stock of the Parent issued or issuable upon exercise of the Warrants or conversion of the Series C Preferred Stock shall be disregarded; or (b) individuals who on the Closing 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 Closing 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 Issuer and 100%, directly or indirectly, of the Equity Interests of the other Obligors. 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 Obligor, the officer of such Obligor designated by such Obligor as its chief financial officer or, if there is no such officer designation, the officer of such Obligor designated by such Obligor as its principal accounting officer.

 

“ Closing ” has the meaning specified in Section 2.02 .

 

“ Closing Date ” means the date on which the Closing occurs.

 

“ Closing Date Mortgage Policies ” has the meaning specified in Section 3.01(b)(xii) .

 

“ Closing Date Mortgaged Properties ” has the meaning specified in Section 3.01(b)(xii) .

 

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“ Closing Date Mortgages ” has the meaning specified in Section 3.01(b)(xv) .

 

“ 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 Intercreditor and Subordination Agreements, the Closing Date Mortgages, 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 with respect to any Note Purchaser at any time, the amount set forth for such Note Purchaser on Schedule I hereto.

 

“ 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.

 

“ Competitor ” shall mean any Person identified on Schedule IV hereto (or any Affiliate thereof) or 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 ” has the meaning specified in Section 10.05 .

 

“ Consolidated ” refers to the consolidation of accounts in accordance with GAAP.

 

“ Consolidated Debt ” means the Debt of the Parent and its Subsidiaries.

 

“ Consolidated Net Income ” means, for any period, the net income (or loss) of the Issuer and its Subsidiaries on a Consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; provided that there shall be excluded (a) the income (or loss) of any Person (other than a Subsidiary of the Issuer) in which any other Person (other than the Issuer or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Issuer or any of its Subsidiaries by such Person during such period, (b) the income (or loss) of any Person accrued prior to the date such Person becomes a Subsidiary of the Issuer or is merged into or consolidated with the Issuer or any of its Subsidiaries or the date on which such Person’s assets are acquired by the Issuer or any of its Subsidiaries, (c) the income of any Subsidiary of the Issuer to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of such income is not at such time permitted by operation of the terms of such Subsidiary’s charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary, and (d) any after-tax gains or losses attributable to asset sales or returned surplus assets of any Plan.

 

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“ Consolidated Net Worth ” means, at any date of determination, stockholders’ equity as set forth on the most recently available quarterly or annual consolidated balance sheet of the Parent and its Subsidiaries (which shall be as of a date not more than 90 days prior to the date of such computation), less any amounts attributable to any equity security convertible into or exchangeable for Debt, the cost of treasury stock and the principal amount of any promissory notes receivable from the sale of the Capital Stock of the Parent or its direct or indirect Subsidiaries, each item to be determined in conformity with GAAP (excluding the effects of foreign currency exchange adjustments under Financial Accounting Standards Board Statement of Financial Accounting Standards No. 52).

 

“ 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 C Preferred Stock.

 

“ Current Assets ” of any Person means all assets of such Person that would, in accordance with GAAP, be classified as current assets of a company conducting a business the same as or similar to that of such Person, after deducting adequate reserves in each case in which a reserve is proper in accordance with GAAP.

 

“ Current Liabilities ” of any Person means (a) all Debt of such Person that by its terms is payable on demand or matures within one year after the date of determination (excluding any Debt renewable or extendible, at the option of such Person, to a date more than

 

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one year from such date or arising under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date), (b) all amounts of Funded Debt of such Person required to be paid or prepaid within one year after such date and (c) all other items (including taxes accrued as estimated) that in accordance with GAAP would be classified as current liabilities of such Person.

 

“ 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 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).

 

“ Debt for Borrowed Money ” of any Person means all items that, in accordance with GAAP, would be classified as indebtedness on a Consolidated balance sheet of such Person; provided , however , notwithstanding the foregoing, “Debt for Borrowed Money” shall not include any trade payables, any Preferred Interests (including, without limitation, with respect to the Obligors, the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock) or any dividends accrued or paid or payable with respect to Preferred Interests.

 

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“ 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.

 

“ Default Interest ” has the meaning specified in Section 2.03(b) .

 

“ Disclosed Litigation ” has the meaning specified in Section 3.01(c) .

 

“ EBITDA ” means, for any Person for any period, the sum, determined on a Consolidated basis, without duplication, of (a) Consolidated Net Income (other than interest income determined in accordance with GAAP), (b) interest expense, (c) income tax expense, (d) depreciation expense, (e) amortization expense, (f) the aggregate of all non-cash items included in arriving at Consolidated Net Income in clause (a) above (other than any such non-cash item to the extent it represents an accrual of or reserve for cash expenditures for any future period or a write-down or write-off of a right to payment), (g) asset impairment charges, and (h) special consulting fees, and other charges incurred pursuant to Statement of Financial Accounting Standard No. 146, all as set forth on Schedule V hereto. Notwithstanding the foregoing and for purposes of the computations of EBITDA with respect to the financial condition covenants set forth in Section 5.02(r) , EBITDA for the Parent and its Subsidiaries for the fiscal quarter ending September 30, 2005 shall be equal to the quotient of (i) the product of (x) EBITDA for the nine-month period then ended multiplied by (y) twelve, (ii) divided by nine; for fiscal quarters ending December 31, 2005 and thereafter, EBITDA for the Parent and its Subsidiaries shall be calculated based on the twelve-month period ending on the last date of the most recently ended fiscal quarter.

 

“ Eligible Assignee ” means (a) any Institutional Investor (and any fund that regularly invests in notes or loans similar to the Notes) that is a Note Purchaser or any Affiliate of a Note Purchaser that has become a holder of a Note in accordance with the terms of this Agreement, or any Institutional Investor or fund that regularly invests in notes or loans similar to the Notes that has been approved by the Issuer (such approval not to be unreasonably withheld or delayed), or (b) for so long as an Event of Default shall have occurred and be continuing, any Institutional Investor or other financial investor (including, without limitation, any fund that regularly invests in notes or loans similar to the Notes); provided , however, that neither any Obligor nor any Affiliate of an Obligor 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.

 

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“ 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 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 Obligor or any Subsidiary of any Obligor.

 

“ 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 Obligor, or under common control with any Obligor, 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 Obligor or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by any Obligor 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

 

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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 .

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Exchange Agreement ” has the meaning specified in the recitals.

 

“ Existing Second Lien Credit Agreement ” has the meaning specified in the recitals of the parties to this Agreement.

 

“ 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.

 

“ Existing Third Lien Notes ” means the notes issued under the Original Third Lien Credit Agreement.

 

“ 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, 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 Note Purchase 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 Note Purchasers, and (ii) are applied within nine months after the occurrence of such damage or loss, provided , that the Issuer shall have delivered documentation reasonably satisfactory to the 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.

 

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“ FCC ” means the Federal Communications Commission, or any governmental agency succeeding to the functions thereof.

 

“ Financial Covenants Certificate ” means the certificate delivered by the Issuer and certified by the Chief Financial Officer of the Issuer demonstrating compliance with the applicable covenants, in the form attached hereto as Exhibit B .

 

“ Fiscal Period ” means a fiscal quarter of the Parent and its Consolidated Subsidiaries ending on March 31, June 30, September 30 and December 31 in any calendar year.

 

“ 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 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.

 

“ Funded Debt ” of any Person means Debt of such Person that by its terms matures more than one year after the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year after such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year after such date, including, without limitation, all amounts of Funded Debt of such Person required to be paid or prepaid within one year after the date of its creation.

 

“ GAAP ” has the meaning specified in Section 1.03 .

 

“ Governance Agreement ” means the Amended and Restated Governance Agreement, dated as of July 26, 2005, among the Parent, WCAS Capital Partners III, L.P., WCAS, WCAS Information Partners, L.P., Special Value Absolute Bond Fund II, LLC, Special Value Absolute Return Fund, LLC, the other Note Purchasers party thereto and certain individual investors and trusts listed on the signature pages thereto, as amended.

 

“ Governing Body ” means the board of directors or other body having the power to direct or cause the direction of the management and policies of a Person that is a corporation, partnership, trust or limited liability company.

 

“ Governmental Authority ” means any political subdivision or department thereof, any other governmental or regulatory body, commission, central bank, board, bureau, organ or instrumentality or any court, in each case whether federal, state, local or foreign.

 

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“ Guaranteed Obligations ” has the meaning specified in Section 7.01(a) .

 

“ Guaranties ” means the Parent Guaranty and the Subsidiary Guaranties.

 

“ Guarantors ” means the Parent and the Subsidiary Guarantors.

 

“ Guaranty Supplement ” has the meaning specified in Section 7.05 .

 

“ Hazardous Materials ” means (a) petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls or radon gas and (b) any other chemicals, materials, substances or wastes designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law or with respect to which liability or standards of conduct are imposed 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.

 

“ Highest Lawful Rate ” means the highest lawful interest rate under applicable state law.

 

“ 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 10.17(a) .

 

“ Information Statement ” has the meaning specified in Section 4.01(ee) .

 

“ Institutional Investor ” means (a) any original Note Purchaser of a Note, (b) any holder of a Note, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company or holding company thereof, any broker or dealer, or any other similar financial institution or entity, regardless of legal form.

 

“ 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.

 

“ Interconnection Agreements ” means each Interconnection Agreement entered into by and between the Issuer and/or any Subsidiary Guarantor, on the one hand, and (a) BellSouth Telecommunications, Inc., (b) Sprint companies (including Sprint Florida Incorporated, Carolina Telephone, Telegraph Company and Central Telephone Company – North Carolina Division, United Telephone Company of the Carolinas, United Telephone – Southeast Inc., Central Telephone Company of Virgina and United Telephone – Southeast Inc.), or (c) Verizon companies (including Verizon Florida, Inc., GTE South Incorporated, GTE Southwest Incorporated d/b/a Verizon Southwest, Verizon Delaware, Inc., Verizon South, Inc., Verizon Maryland, Inc., Verizon New Jersey, Inc., Verizon New York, Inc., Verizon

 

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Pennsylvania, Inc., Verizon Virginia, Inc., Verizon Washington D.C. Inc., Verizon West Virginia, Inc.), on the other hand, and any agreement replacing any such Interconnection Agreement from time to time.

 

“ Intercreditor and Subordination Agreements ” means the Second Lien Intercreditor and Subordination Agreement and the Third Lien Intercreditor and Subordination Agreement.

 

“ Interest Coverage Ratio ” means, at any date of determination the ratio of (a) Consolidated EBITDA of the Parent and its Subsidiaries to (b) the cumulative cash interest paid in respect of all Debt for Borrowed Money of or by the Parent and its Subsidiaries. For the fiscal quarter ending September 30, 2005, cumulative cash interest paid shall be calculated as cumulative cash interest paid for the nine-month period then ended multiplied by twelve divided by nine; for fiscal quarters ending December 31, 2005 and thereafter, cumulative cash interest paid shall be calculated based on the twelve-month period ending on the last date of the most recently ended fiscal quarter.

 

“ Interest Payment Date ” means March 31, June 30, September 30 and December 31 of each year, commencing on September 30, 2005; provided , however, that whenever the Interest Payment Date would otherwise occur on a day other than a Business Day, such Interest Payment Date shall be extended to occur on the next succeeding Business Day, unless interest is required to be paid under the Second Lien Loan Documents on the preceding Business Day, in which case the Interest Payment Date shall occur on the preceding Business Day.

 

“ 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.

 

“ Issuer ” has the meaning specified in the preamble of this Agreement.

 

“ LIBOR ” means, at all times during any calendar month, the one-month London Interbank Offered Rate (rounded upward to the nearest 1/16 of one percent) that appears on Bloomberg as of approximately 11:00 a.m. (Los Angeles time) two Business Days prior to the commencement of such calendar month (or, in the case of the month in which the Closing Date occurs, two Business Days prior to the Closing Date); provided , that if such index ceases to exist or is no longer published or announced, then the term “LIBOR” means, at all times during any calendar month, the one-month London Interbank Offered Rate (rounded upward to the nearest 1/16 of one percent) as published in The Wall Street Journal two Business Days prior to the

 

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commencement of such calendar month, and if this latter index ceases to exist or is no longer published or announced, then the term “LIBOR” means, at all times during any calendar month, the Prime Rate (rounded upward to the nearest 1/16 of one percent) as published in The Wall Street Journal two Business Days prior to the commencement of such calendar month. LIBOR shall be determined on any date of determination by the Agent.

 

“ 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.

 

“ Management Plan ” means that certain ITC^DeltaCom 2005-2006 Business Plan, dated March 9, 2005, as delivered by the Parent to the Note Purchasers.

 

“ March 2005 Warrants ” has the meaning specified in Section 5.01(t) .

 

“ Margin Stock ” has the meaning specified in Regulation U.

 

“ Material Adverse Change ” means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Obligors and the Subsidiaries of the Obligors, 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 Obligors and the Subsidiaries of the Obligors, taken as a whole, (b) the rights and remedies of the Agents or any Note Purchaser under any Note Purchase Document or (c) the ability of any Obligor to perform its Obligations under any Note Purchase 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, including but not limited to, in the case of any Obligor or any Subsidiary of any Obligor, the Interconnection Agreements.

 

“ Mortgage Policies ” has the meaning specified in Section 5.01(n)(i)(2) .

 

“ 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 Obligor 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 Obligor or any ERISA Affiliate and at least one Person other than the Obligors and the ERISA Affiliates or (b) was so

 

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maintained and in respect of which any Obligor 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 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 Obligor or such Subsidiary may deduct an amount (the “ Reserved Amount ”) equal to the amount reserved in accordance with GAAP for such Obligor’s or such Subsidiary’s reasonable estimate of such taxes, other than taxes for which such Obligor 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 Third Lien Securities Purchase Agreement ” has the meaning specified in the recitals of the parties to this Agreement, as amended as permitted hereby.

 

“ New Third Lien Documents ” means the New Third Lien Securities Purchase Agreement, the New Third Lien Notes, the Exchange Agreement, the security agreements pursuant thereto and all other agreements related thereto, each as amended as permitted hereby.

 

“ New Third Lien Lenders ” has the meaning specified in the recitals of the parties to this Agreement.

 

“ New Third Lien Notes ” has the meaning specified in the recitals of the parties to this Agreement.

 

“ Non-Consenting Note Purchaser ” has the meaning set forth in Section 10.01(d) .

 

“ Note Purchase ” has the meaning specified in Section 2.01(b) .

 

“ Note Purchase Documents ” means (a) for purposes of this Agreement and the Notes and any amendment, supplement or modification hereof or thereof, (i) this Agreement, (ii)

 

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the Notes, (iii) the Warrant Documents and (iv) 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, in all cases as amended or refinanced from time to time.

 

“ Note Purchasers ” has the meaning set forth in the preamble to this Agreement and includes each Person that shall become a Note Purchaser hereunder for so long as such Note Purchaser or Person, as the case may be, shall be a party to this Agreement.

 

“ Note(s) ” has the meaning specified in Section 2.01(a) .

 

“ NPL ” means the National Priorities List under CERCLA.

 

“ 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 Obligor under the Note Purchase Documents include (a) the obligation to pay principal, interest, charges, the Prepayment Fee, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by such Obligor under any Note Purchase Document, including Post-Petition Interest, and (b) the obligation of such Obligor to reimburse any amount in respect of any of the foregoing that any Note Purchaser, in its sole discretion, may elect to pay or advance on behalf of such Obligor.

 

“ Obligors ” means the Issuer and the Guarantors.

 

“ Open Year ” has the meaning specified in Section 4.01(r)(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 Third Lien Credit Agreement ” has the meaning specified in the recitals of parties to this Agreement.

 

“ Other Taxes ” has the meaning specified in Section 2.07(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.

 

“ Parent Transaction Securities ” means the Notes.

 

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“ PBGC ” means the Pension Benefit Guaranty Corporation (or any successor).

 

“ Permitted Encumbrances ” has the meaning specified in the Mortgages.

 

“ 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)(v) .

 

“ Permitted Reorganization ” means a corporate reorganization transaction or series of transactions approved by the Agent in its reasonable discretion pursuant to which certain business operations of BTI are combined with certain business operations of ITC^DeltaCom Communications, Inc. and DeltaCom Information Systems, Inc. (whether accomplished by merger, share exchange, stock transfer, asset transfer or otherwise) for purposes of avoiding overlapping of certain interconnection agreements, certain duplicative fees and expenses, and otherwise streamlining the business and operations of the Parent and its Subsidiaries; provided, that, in addition to other reasonable conditions the Agent may request, (a) in the case of any merger or consolidation involving the Issuer, the Issuer shall be the surviving Person, (b) the Person formed by or surviving such merger or consolidation (if not the Parent) shall be a direct or indirect wholly-owned Subsidiary of the Parent and if a Subsidiary Guarantor is a party thereto, the Person formed by or surviving such merger or consolidation (if not the Parent or the Issuer) shall be a direct or indirect wholly-owned Subsidiary Guarantor, (c) immediately after giving effect to such reorganization, on a pro forma basis, the Parent and its Subsidiaries, taken as a whole, shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Parent and its Subsidiaries, taken as a whole, immediately prior to such reorganization, and (d) such reorganization does not result in any Obligor or any of its Subsidiaries no longer being wholly owned, directly or indirectly, within the ITC^DeltaCom, Inc. consolidated group of companies. Notwithstanding the Agent’s right to approve the Permitted Reorganization in its reasonable discretion, neither the Agent nor any Note Purchaser shall charge the Obligors a fee for such approval, so long as no other lenders of the Issuer charge any fee for approval and/or consent to the Permitted Reorganization.

 

“ 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.

 

“ Plan ” means a Single Employer Plan or a Multiple Employer Plan.

 

“ Pledged Debt ” has the meaning specified in the Security Agreement.

 

“ Pledged Shares ” has the meaning specified in the Security Agreement.

 

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“ 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 Obligors (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.

 

“ Pre-Closing Date Information ” means all of the written information provided by or on behalf of the Issuer to the Note Purchasers prior to the Closing 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.

 

“ Prepayment Fee ” has the meaning specified in Section 2.10 .

 

“ Principal Lending Office ” means, with respect to any Note Purchaser, the office of such Note Purchaser specified as its “Principal Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Note Purchaser, as the case may be, or such other office of such Note Purchaser as such Note Purchaser may from time to time specify to the Issuer and the Agent.

 

“ Projections ” has the meaning specified in Section 4.01(i) .

 

“ 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.

 

“ 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 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, (b) a Benefit Plan Exchange Offer, (c) the purchase or redemption of Equity Interests using only Common Stock (or warrants or options to purchase Common Stock) as consideration for such purchase or redemption or (d) the payment by the Parent of cash in lieu of fractional shares of Capital Stock of the Parent in an amount not to exceed $500,000 through the Termination Date.

 

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“ Regulation U ” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“ Replaced Note Purchaser ” has the meaning specified in Section 2.07(g) .

 

“ Replacement Closing Date ” has the meaning specified in Section 2.07(g) .

 

“ Replacement Note Purchaser ” has the meaning specified in Section 2.07(g) .

 

“ Required Holders ” means, at any time, Note Purchasers owed or holding at least a majority of the aggregate principal amount of the Notes outstanding at such time; provided , however , that if any Note Purchaser shall be a Defaulting Note Purchaser at such time, there shall be excluded from the determination of Required Holders at such time the aggregate principal amount of the Notes owing to such Note Purchaser (in its capacity as a Note Purchaser) and outstanding at such time.

 

“ Responsible Officer ” means any officer of any Obligor or any of its Subsidiaries.

 

“ Restricted Payment ” has the meaning specified in Section 5.02(g) .

 

“ SEC ” means the United States Securities and Exchange Commission.

 

“ Second Lien Agent ” has the meaning specified in the recitals of the parties to this Agreement.

 

“ Second Lien Intercreditor and Subordination Agreement ” means the Intercreditor and Subordination Agreement, dated as of the date hereof, among the Agent and the Collateral Agent, on their own behalf and on behalf of the First Lien Lenders, the Second Lien Agent, on their own behalf and on behalf of the Second Lien Lenders, and the Obligors, as amended.

 

“ Second Lien Lenders ” means the “Lenders” under and as defined in the Amended Second Lien Credit Agreement, as amended as permitted hereby.

 

“ Second Lien Loan Documents ” means the “Loan Documents” as defined in the Amended Second Lien Credit Agreement, as amended, refinanced or replaced in accordance with the Second Lien Intercreditor and Subordination Agreement.

 

“ Secured Obligations ” has the meaning specified in the Security Agreement and shall include without limitation the obligations secured by the Mortgages.

 

“ Secured Parties ” means the Agent, the Collateral Agent, and the Note Purchasers.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Security Agreement ” has the meaning specified in Section 3.01(b)(ii) .

 

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“ Senior Debt ” means, for any period, all Debt of the Obligors and their respective Subsidiaries incurred pursuant to this Agreement and secured by a first priority Lien on real or personal property of the Obligors and their respective Subsidiaries.

 

“ Senior Debt Ratio ” means, as of any date of determination, the ratio of (a) Senior Debt as of such date to (b) Consolidated EBITDA of the Parent and its Subsidiaries.

 

“ Senior Officer ” means any Person holding any of the following offices (or any similar position from time to time) of the Parent:

 

Chief Executive Officer;

Chief Financial Officer;

General Counsel;

Senior Vice President, Finance/Controller;

Executive Vice President, Operations;

Senior Vice President, Finance/Treasurer;

Executive Vice President, Retail Sales;

Senior Vice President, Carrier Sales;

Chief Information Officer;

Vice President, Network Planning;

Vice President, Market Optimization & Planning;

Vice President, Systems;

Vice President, Engineering;

Vice President, Marketing & Product Development;

Vice President, IT Services;

Vice President, Account Services;

Vice President, Network Operations; or

Vice President, Human Resources

 

“ 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.

 

“ 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.

 

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“ 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.

 

“ Series C Certificate of Designation ” means the Parent’s Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and other Special Rights of Series C Convertible Preferred Stock and Qualifications, Limitations and Restrictions thereof, as in effect from time to time.

 

“ Series C PIK Dividends ” means the shares of Series C Preferred Stock paid or payable as dividends on outstanding shares of Series C Preferred Stock.

 

“ Series C Preferred Stock ” means the shares of preferred stock of the Parent designated as the Series C Convertible Preferred Stock and issued pursuant to the Series C Certificate of Designation, including, without limitation, Series C 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 Obligor or any ERISA Affiliate and no Person other than the Obligors and the ERISA Affiliates or (b) was so maintained and in respect of which any Obligor or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

 

“ Solvency Certificate ” has the meaning specified in Section 3.01(r) .

 

“ Solvent ” means, with respect to any Person, that as of the date of determination both (a) the then fair market value of the property of such Person is (i) greater than the total amount of liabilities (including contingent liabilities) of such Person and (ii) not less than the amount that is reasonably believed to be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and due considering all financing alternatives and asset sales available to such Person pursuant to the terms of this Agreement and (b) such Person does not believe that it shall be required to incur debts beyond its ability to pay such debts as they become due. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“ Subordinated Debt ” means Debt that, (a) does not have any scheduled principal payment, mandatory principal prepayment, sinking fund payment or similar payment due prior to the maturity date of the Notes, (b) is not secured by any Lien on any Property or assets of any Obligor or any Subsidiaries, (c) is subordinated on terms and conditions reasonably satisfactory to the Required Holders and (d) is subject to such covenants and events of default as may be reasonably acceptable to the Required Holders.

 

“ 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

 

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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.

 

“ Subsidiary Guarantors ” means the Subsidiaries of the Parent listed on Schedule II hereto and each other Subsidiary of the Parent that shall be required to execute and deliver a guaranty pursuant to Section 5.01(j) .

 

“ Subsidiary Guaranty ” means the guaranty of the Subsidiary Guarantors set forth in Article VII.

 

“ Surviving Debt ” means Debt of each Obligor and its Subsidiaries outstanding as of the Closing Date (other than Debt under the Note Purchase Documents, Second Lien Loan Documents and the New Third Lien Documents) as set forth on Schedule 4.01(t) .

 

“ 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(m) .

 

“ Taxes ” has the meaning specified in Section 2.07(a) .

 

“ TCP ” has the meaning specified in the preamble to this Agreement.

 

“ Termination Date ” means the earlier of (a) the date on which the Agent, by notice to the Issuer, declares the Notes, all interest thereon and all other amounts payable under this Agreement and the other Note Purchase Documents to be forthwith due and payable pursuant to Section 6.01 and (b) July 26, 2009.

 

“ Third Amended ITCD Credit Agreement ” has the meaning specified in the Recitals to this Agreement.

 

“ Third Lien Agents ” means the “Agents” under and as defined in the New Third Lien Securities Purchase Agreement.

 

“ Third Lien Intercreditor and Subordination Agreement ” means the Intercreditor and Subordination Agreement, dated as of the date hereof, among each of the Agents on its behalf and on behalf of the Note Purchasers, the Second Lien Agents, on their own behalf and on behalf of the Second Lien Lenders, the Third Lien Agents, the Third Lien Lenders, and the Obligors, as amended as permitted hereby.

 

“ Third Lien Lenders ” means the “Purchasers” from time to time under and as defined in the New Third Lien Securities Purchase Agreement.

 

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“ Title Company ” means one or more title insurance companies reasonably satisfactory to the Collateral Agent.

 

“ Total Leverage Ratio ” means, at any date of determination, the ratio of (x) Consolidated Debt as of such date to (y) Consolidated EBITDA of the Parent and its Subsidiaries. For purposes of computing Total Leverage Ratio only, the term “Debt” as used in clause (x) above means, without duplication, the aggregate of all Debt of the type described in clauses (a), (b), (c), (d), (e), (h) and (j) of the definition of “Debt” and Contingent Obligations (other than Contingent Obligations relating to minimum purchase requirements under agreements entered into in the ordinary course of business of the Parent and its Subsidiaries) of the Parent and its Subsidiaries in respect of the foregoing.

 

“ Transactions ” means the transactions contemplated by the Note Purchase Documents.

 

“ Transferee ” means any direct or indirect transferee of all or any part of a Note in accordance with Section 2.12, as registered in the register maintained by the Issuer pursuant to Section 2.11.

 

“ Unencumbered Parcel ” means any parcel of real property owned by any Obligor or its Subsidiaries that was not previously pledged as Collateral to secure the Obligations of the Obligors under the Existing Second Lien Credit Agreement or the Third Amended ITCD Credit Agreement.

 

“ Voting Stock ” means, with respect to any Person, Capital Stock of any class or kind (or equivalent Equity Interest in any other Person) 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, the Series B Preferred Stock and the Series C Preferred Stock shall not constitute Voting Stock of the Parent.

 

“ Warrants ” means warrants governed by the Warrant Agreement and issued under the New Third Lien Securities Purchase Agreement and the Warrant Agreement.

 

“ Warrant Agreement ” means that certain Warrant Agreement, dated as of July 26, 2005, between the Parent and Mellon Investor Services LLC, as warrant agent, as amended.

 

“ Warrant Documents ” means (a) the Warrant Agreement, (b) the Governance Agreement, and (c) that certain Registration Rights Agreement, dated as of even date herewith, by and among the Parent and the New Purchasers (as defined therein) and (d) each other agreement, certificate, document or instrument delivered in connection with the agreements referred to in clauses (a), (b) and (c) above.

 

“ Warrant Shares ” means the Series C Preferred Stock, the Common Stock of the Parent or the other securities of the Parent issued or issuable upon exercise of the Warrants.

 

“ WCAS ” means Welsh, Carson, Anderson & Stowe VIII, L.P.

 

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“ 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 Obligor or in respect of which any Obligor could have liability.

 

“ 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 Note Purchase 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 Note Purchase 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. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference.

 

(a) References to “Sections” and “Subsections” shall be to Sections and subsections, respectively, of this Agreement and references to a “Schedule” or an “Exhibit” shall be to Schedules and Exhibits, respectively, attached to this Agreement, in each case unless otherwise specifically provided.

 

(b) The use in any of the Note Purchase Documents of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter; unless such term related to a period of time.

 

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(c) References to any document, instrument or agreement shall include all exhibits, schedules and other attachments thereto.

 

Section 1.03 Accounting Terms . Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with generally accepted accounting principles in the United States of America (“ GAAP ”). Financial statements and other information required to be delivered by the Issuer to Agent pursuant to Section 5.03 shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.03(f ), if applicable); provided, that all calculations in connection with financial definitions and financial covenants set forth in Section 5.02 (r) shall utilize accounting principles and policies in conformity with those used to prepare the financial statements referred to in Section 4.01(g)(i); provided, further, if the Issuer notifies the Agent that the Issuer wishes to amend any covenant in Section 5.02(r) or any related definition to eliminate the effect of any change in GAAP occurring after the date hereof on the operation of such covenant (or if Agent notifies the Issuer that the Required Holders wish to amend Section 5.02(r) or any related definition for such purpose), then (i) the Issuer and Agent shall negotiate in good faith to agree upon an appropriate amendment to such covenant and (ii) the Issuer’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective until such covenant is amended in a manner satisfactory to the Issuer and the Required Holders.

 

ARTICLE II. NOTE PURCHASE

 

Section 2.01 Authorization; Purchase and Sale of Notes .

 

(a) The Issuer shall authorize the issue and sale of $209,000,000 aggregate principal amount of Senior Secured Notes due 2009 to be dated the date of issuance thereof (collectively, the “ Notes ”, such term to include any such notes issued in substitution therefor pursuant to this Agreement). The Notes shall be substantially in the form of Exhibit A .

 

(b) Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Issuer hereby agrees to sell, and the Note Purchasers hereby agree to purchase from the Issuer, the Notes. Each Note Purchaser agrees to purchase the amount of such Note Purchaser’s Commitment as set forth on Schedule I hereto at the purchase price of 100% of the principal amount thereof (the “ Note Purchase ”). The Issuer shall execute and deliver a Note to each Note Purchaser. Each Note shall represent the obligation of the Issuer to repay the principal amount set forth thereon, together with interest thereon as prescribed in Section 2.03 . Each Note Purchaser’s Commitment is expressed in U.S. dollars and as a percentage of the whole as of the Closing as set forth in Schedule I hereto.

 

(c) The aggregate outstanding principal balance of the Notes shall be due and payable in full in immediately available funds on the Termination Date, if not sooner paid in full. No payment with respect to the Notes may be reborrowed.

 

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(d) Each Note Purchaser’s obligations under this Agreement is several and not joint and each Note Purchaser shall have no obligation or liability to any Person for the performance or non-performance by any other Note Purchaser hereunder.

 

(e) Each payment of principal with respect to the Notes shall be paid to each Note Purchaser in accordance with Section 2.06 , ratably in proportion to each such Note Purchaser’s respective percentage of the then outstanding principal amount of the Notes.

 

(f) The Notes shall be secured by the Collateral as provided in the Collateral Documents. In addition, payment of the aggregate principal amount of and interest on the Notes and all other Obligations shall be unconditionally guaranteed by the Subsidiary Guarantors pursuant to Article VII .

 

Section 2.02 Closing . The closing of the Note Purchase (as defined above) shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom LLP at Four Times Square, New York, NY 10036, commencing at 10:00 A.M. local time on the Closing Date by wire transfer of immediately available U.S. funds payable to the order of the Issuer against delivery of the Notes in the aggregate amount of the Note Purchase (the “ Closing ”).

 

Section 2.03 Interest .

 

(a) Scheduled Interest . The Issuer shall pay interest on the unpaid principal amount of each Note owing to each Note Purchaser from the date of such Note until such principal amount shall be paid in full, as follows (i) at an adjustable rate of cash interest equal to LIBOR plus 8.0% per annum, payable quarterly; provided, that , if such cash interest rate shall at any time exceed 12.0% per annum, any amount in excess of 12.0% may, at the Issuer’s option, be payable-in-kind by delivery of additional Notes (valued at 100% of the principal amount thereof, which shall be rounded upward to the nearest $1.00) in lieu of cash (“PIK”), or in cash; plus (ii) PIK interest at 0.5% per annum. Any and all PIK interest shall be added to the principal of the Notes quarterly on the applicable Interest Payment Date. The Issuer shall pay cash interest to the Note Purchasers, or issue additional Notes in lieu of cash interest payments as provided herein, quarterly in arrears on each Interest Payment Date; provided , however, that any delay or failure by the Issuer to issue and deliver additional Notes quarterly in lieu of cash interest shall not effect the obligation of the Issuer therefor and this Agreement and the Note Purchasers’ then outstanding Notes shall constitute satisfactory evidence of any such PIK interest due and owing to each Note Purchaser. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of the original issuance of the Notes.

 

(b) Default Interest . Upon the occurrence and during the continuance of a Default, the Issuer shall pay interest on the unpaid principal amount of each Note owing to each Note Purchaser, payable in arrears on the dates referred to in subsection (a) of this Section 2.03 and on demand, at a rate per annum equal at all times to 2.0% per annum above the rate per annum required to be paid on such Note pursuant to subsection (a) of this Section 2.03 to the fullest extent permitted by law (“ Default Interest ”) and to the fullest extent permitted by law, the amount of any interest, fee or other amount payable under the Note Purchase 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

 

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annum equal at all times to 2.0% per annum above the rate per annum required to be paid, in the case of interest, on the Notes on which such interest has accrued pursuant to subsection (a) of this Section 2.03 .

 

Section 2.04 Fees . (a) Concurrently with the Closing, the Issuer shall pay to the Agent (or its designees) a non-refundable financing enhancement fee in the amount agreed to between the Issuer and the Agent in that certain Fee Agreement, dated as of March 31, 2005.

 

(b) Concurrently with the Closing and on each July 26 ^th thereafter through the Termination Date, the Issuer shall pay to the Agent (or its designees) a non-refundable administrative fee equal to $12,500 per year.

 

All fees paid pursuant to this Section 2.04 shall be fully earned and non-refundable as of the date of payment thereof.

 

Section 2.05 Intentionally omitted .

 

Section 2.06 Payments and Computations on the Notes .

 

(a) The Issuer shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided herein), not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to each Note Purchaser at the Note Purchaser’s account in same day funds, with payments being received by any Note Purchaser after such time being deemed to have been received on the next succeeding Business Day.

 

(b) All computations of interest and fees on the Notes shall be made by the Agent on the basis of a year of 360 days 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 Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

(c) 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; provided , however, that, if such extension would cause payment of interest or principal to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

 

(d) Subject to Section 2.06(e) , payments of principal, Prepayment Fees, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of the Bank of New York in such jurisdiction. The Issuer may at any time, by notice to each Note Purchaser and the Agent, change the place of payment of the notes so long as such place of payment shall be either the principal office of the Issuer in such jurisdiction or the principal office of a bank or trust in such jurisdiction.

 

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(e) So long as any Note Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in such Note or Section 2.06(d) to the contrary, the Issuer will pay all sums becoming due on such Note for principal, Prepayment Fees, if any, and interest by the method and at the Principal Lending Office address specified for such purpose opposite such Note Purchaser’s name in Schedule I , or by such other method or at such other address as such Note Purchaser shall have from time to time specified to the Issuer in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Issuer made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Note Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Issuer at its principal executive office or at the place of payment most recently designated by the Issuer pursuant to Section 2.06(d) . Prior to any sale or other disposition of any Note held by a Note Purchaser or its nominee such Note Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Issuer in exchange for a new Note or Notes pursuant to Sections 2.12 and 2.13 .

 

Section 2.07 Taxes .

 

(a) Any and all payments by or for the account of any Obligor hereunder, or in respect of the Notes or any other Note Purchase Document, shall be made 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 Note Purchaser, the Agent and the Collateral 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 Note Purchaser, the Agent or the Collateral Agent, as the case may be, is organized or any political subdivision thereof and, in the case of each Note Purchaser, taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Note Purchaser’s Applicable 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 an Obligor shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or other Note Purchase Documents to Note Purchaser, the Agent, or the Collateral Agent (i) the sum payable by such Obligor shall be increased as may be necessary so that after such Obligor, the Agent and the Collateral Agent have made all required deductions (including deductions applicable to additional sums payable under this Section 2.07 ) such Note Purchaser, the Agent or the Collateral 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 Obligor shall make all such deductions and (iii) such Obligor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

 

(b) In addition, each Obligor 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 Note Purchase Documents or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement, the Notes or any other Note Purchase Document (“ Other Taxes ”).

 

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(c) Each Obligor shall indemnify each Note Purchaser, the Agent and the Collateral 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 2.07 , imposed on or paid by such Note Purchaser, the Agent or the Collateral 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 Note Purchaser, the Agent or the Collateral Agent (as the case may be) makes written demand therefor.

 

(d) Within 30 days after the date of any payment of Taxes, the relevant Obligor shall furnish to the Agent, at its address referred to in Section 10.02 , 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 Note Purchase Documents by or on behalf of such Obligor through an account or branch outside the United States or by or on behalf of such Obligor by a payor that is not a United States person, if such Obligor determines that no Taxes are payable in respect thereof, such Obligor shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.07 , the terms “ United States ” and “ United States person ” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

 

(e) Each Note Purchaser 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 Note Purchaser, as the case may be, and on the date of the Assignment and Acceptance pursuant to which it becomes a Note Purchaser in the case of each other Note Purchaser, and from time to time thereafter as requested in writing by the relevant Obligor (but only so long thereafter as such Note Purchaser remains lawfully able to do so), provide each of the Agent and each Obligor with two original Internal Revenue Service forms W-8ECI or W-8 or W-8BEN (and, if applicable to the exemption claimed by a Note Purchaser that delivers a form W-8 or W-8BEN, a certificate representing that such Note Purchaser 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 Obligor and is not a controlled foreign corporation related to the Obligor, 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 Note Purchaser 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 Note Purchaser providing a form W-8 or W-8BEN, certifying that such Note Purchaser is a foreign corporation, partnership, estate or trust). If the forms provided by a Note Purchaser at the time such Note Purchaser 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 Note Purchaser 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 Note Purchaser becomes a party to this Agreement, the Note Purchaser assignor was entitled to payments under subsection (a) of this Section 2.07 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

 

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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 with respect to the Note Purchaser 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 Note Purchaser reasonably considers to be confidential, the Note Purchaser shall give notice thereof to the Obligor and shall not be obligated to include in such form or document such confidential information.

 

(f) For any period with respect to which a Note Purchaser has failed to provide the relevant Obligor 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 Note Purchaser shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.07 with respect to Taxes imposed by reason of such failure; provided , however, that should a Note Purchaser become subject to Taxes because of its failure to deliver a form required hereunder, the relevant Obligor shall take such steps as such Note Purchaser shall reasonably request to assist such Note Purchaser to recover such Taxes.

 

(g) The Obligor may replace any Note Purchaser that has requested additional amounts under subsection (a) of this Section 2.07 , by written notice to such Note Purchaser and the Agent and identifying one or more persons each of which shall be reasonably acceptable to the Agent (each, a “ Replacement Note Purchaser ”, and collectively, the “ Replacement Note Purchasers ”) to replace such Note Purchaser (the “ Replaced Note Purchaser ”); provided , that (i) the notice from such Obligor to the Replaced Note Purchaser and the Agent provided for herein above shall specify an effective date for such replacement (the “ Replacement Closing Date ”), which shall be at least five (5) Business Days after such notice is given and (ii) as of the relevant Replacement Closing Date, each Replacement Note Purchaser shall enter into an Assignment and Acceptance with the Replaced Note Purchaser, pursuant to which such Replacement Note Purchasers collectively shall acquire, in such proportion among them as they may agree with such Obligor and the Agent, all (but not less than all) of the outstanding Notes of the Replaced Note Purchaser, and, in connection therewith, shall pay to the Replaced Note Purchaser, as the purchase price in respect thereof, an amount equal to the sum as of the Replacement Closing Date, without duplication, of (x) the unpaid principal amount of, and all accrued but unpaid interest on, all outstanding Notes of the Replaced Note Purchaser and (y) the Replaced Note Purchaser’s ratable share of all accrued but unpaid fees owing to the Replaced Note Purchaser hereunder.

 

Section 2.08 Sharing of Payments, Etc . If any Note Purchaser 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 2.12 ) (a) on account of Obligations due and payable to such Note Purchaser 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 Note Purchaser at such time to (ii) the aggregate amount of the Obligations due and payable to all Note Purchasers hereunder and under the Notes at such time) of payments on account of the Obligations due and payable to all Note Purchasers hereunder and under the Notes at such time obtained by all the Note Purchasers at such time or

 

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(b) on account of Obligations owing (but not due and payable) to such Note Purchaser 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 Note Purchaser at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Note Purchasers hereunder and under the Notes at such time) of payments on account of the Obligations owing (but not due and payable) to all Note Purchasers hereunder and under the Notes at such time obtained by all of the Note Purchasers at such time, such Note Purchaser shall forthwith notify the Issuer and the Agent and promptly return such overpayment to the Issuer to be properly applied.

 

Section 2.09 Prepayments .

 

(a) Mandatory Prepayments .

 

(i) The Issuer shall, within two Business Days after the date of receipt of Net Cash Proceeds in excess of $5,000,000 in the aggregate in any fiscal year by any Obligor from (A) the sale, lease, transfer or other disposition of any assets of any Obligor or any Subsidiary of an Obligor (other than leases in the ordinary course of business or any sale, lease, transfer or other disposition of assets pursuant to clause (i), (ii), (iii), (v), (vi), (vii) or (ix) of Section 5.02(e) ) prepay an aggregate principal amount of the Notes equal to 100% of the amount of such Net Cash Proceeds; provided , that no portion of the Net Cash Proceeds retained by the Obligors pursuant to this subsection (i) shall be used by any Obligor in connection with any merger with any Person or acquisition of assets of any Person (other than assets acquired in the ordinary course of such Obligors’ business); and (B) any Extraordinary Receipt received by, or paid to, or for the account of, any Obligor or any Subsidiary of an Obligor and not otherwise included in clause (A) above, prepay an aggregate principal amount of the Notes in an amount equal to 100% of the amount of such Net Cash Proceeds.

 

(ii) The Issuer shall, within two Business Days after the date of receipt thereof, prepay the Notes in an amount equal to 100% of the proceeds, if any, received from an Obligor’s issuance of Debt, other than Debt permitted to be Incurred under this Agreement that is Incurred pursuant to the terms of (A) the Note Purchase Documents, (B) the Second Lien Documents, or (C) the New Third Lien Documents.

 

All mandatory prepayments under this Section 2.09 shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid, shall include the Prepayment Fee set forth in Section 2.10 for the applicable period, and shall be applied to each Note Purchaser in accordance with Section 9.01 .

 

(b) Optional Prepayment . The Notes shall be pre-payable at the option of the Issuer, in whole or in part, in increments of not less than $5,000,000, at any time at a prepayment price determined in accordance with the schedule set forth in Section 2.10 . If the Notes are prepaid in part, prepayment on account of the Notes shall be allocated in accordance with Section 9.01 .

 

Section 2.10 Prepayment Price Schedule . Any Notes to be pre-paid in accordance with Section 2.09 shall be prepaid at a price determined in accordance with the

 

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following schedule if pre-paid during the twelve-month period beginning on July 31 of the years indicated below (or as otherwise indicated):

 

 

The portion of the prepayment price at which the Notes must be prepaid (as set forth above) in excess of the principal amount thereof is referred to as the “ Prepayment Fee ”. If the Obligations are accelerated for any reason, including, without limitation, because of default (including acceleration by operation of law or otherwise), the Prepayment Fee set forth above shall also be due and payable as though such indebtedness was voluntarily prepaid and shall constitute part of the Obligations in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Note Purchaser’s lost profits as a result thereof. The Prepayment Fee shall be presumed to be the liquidated damages sustained by each Note Purchaser as the result of such early termination and the Issuer agrees that payment of the Prepayment Fee is reasonable under the circumstances currently existing. THE ISSUER EXPRESSLY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW WHICH PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING PREPAYMENT FEE (WHETHER OR NOT DEEMED TO BE LIQUIDATED DAMAGES).

 

The Issuer expressly agrees that: (i) the Prepayment Fee provided for herein is reasonable; (ii) the Prepayment Fee shall be payable notwithstanding the then prevailing market rates at the time payment is made; (iii) there has been a course of conduct between Note Purchasers and the Issuer giving specific consideration in this transaction for such agreement to pay the Prepayment Fee; and (iv) the Issuer shall be estopped hereafter from claiming differently than as agreed to in this paragraph. The Issuer expressly acknowledges that its agreement to pay the Prepayment Fee to Note Purchasers as herein described is a material inducement to Note Purchasers to purchase the Notes.

 

Section 2.11 Registration of Notes . The Issuer shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name, email address and address of each holder of one or more Notes, each transfer thereof and the

 

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name, email address and address of each Transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Issuer shall not be affected by any notice or knowledge to the contrary. The Issuer shall give to the Agent promptly upon request therefor, a complete and correct copy of the names, addresses, and email addresses of contact persons for all registered Note Purchasers.

 

Section 2.12 Transfer and Exchange of Notes . Notwithstanding anything else herein to the contrary, any Note Purchaser, may from time to time, at its option, sell, assign, transfer, negotiate or otherwise dispose of all or a portion of one or more of its Notes (including the Note Purchaser’s interest in this Agreement and the other Note Purchase Documents) to any Eligible Assignee. In the event of any such sale, transfer or other disposition, the Note Purchaser and relevant Transferee shall execute and deliver to the Agent and the Issuer an Assignment and Acceptance Agreement evidencing such sale, assignment, transfer or other disposition and the Issuer shall thereafter promptly register the Transferee thereof as the registered holder of the transferred Notes (provided, that any such Transferee shall be deemed a registered holder of the applicable Notes and a “ Transferee ” hereunder in the event of the Issuer’s failure to so register any such Transferee after it has received written notice of any such transfer) and Schedule I shall be automatically amended to reflect such transfer and any new Transferee and Notes held thereby. Upon surrender of any Note at the principal executive office of the Issuer for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Issuer shall execute and deliver, at the Issuer’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit A . Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Issuer may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than (i) $400,000 at any time within five Business Days of the Closing Date, and (ii) $1,000,000 at any time thereafter, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $1,000,000, provided further that Notes may be transferred in any denomination from a group of Affiliated holders to any Eligible Assignee or group of Eligible Assignees so long as (i) in respect of a transfer to a group of Eligible Assignees, such Eligible Assignees shall be Affiliates of each other, and (ii) the aggregate principal amount of Notes concurrently transferred shall be $1,000,000 or more. Any Transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representations set forth in Section 4.02 .

 

Section 2.13 Replacement of Notes . Upon receipt by the Issuer of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of

 

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any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and

 

(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Note Purchaser or another holder of a Note with a minimum net worth of at least $10,000,000 in excess of the outstanding principal amount of such Note, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

 

(b) in the case of mutilation, upon surrender and cancellation thereof, the Issuer at its own expense shall execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

 

ARTICLE III. CONDITIONS OF NOTE PURCHASE

 

Section 3.01 Conditions Precedent to the Closing Date . The Closing is subject to the satisfaction of the following conditions precedent:

 

(a) The Closing shall occur on or before July 31, 2005.

 

(b) The Agent shall have received the following, each dated the Closing Date (unless otherwise specified), in form and substance satisfactory to the Agent (unless otherwise specified) and (except for the Notes) in sufficient copies for each Note Purchaser:

 

(i) The Notes payable to the order of the Note Purchasers.

 

(ii) A security agreement in substantially the form of Exhibit D hereto (together with each other security agreement and security agreement supplement delivered pursuant to Section 5.01(j) , the “ Security Agreement ”), duly executed by each Obligor, together with:

 

(A) certificates representing the Pledged Shares referred to therein accompanied by undated stock powers executed in blank and instruments evidencing the Pledged Debt indorsed in blank,

 

(B) acknowledgment copies or stamped receipt copies of proper financing statements, duly filed on or before the Closing Date under the Uniform Commercial Code of all jurisdictions that the Agent may reasonably deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement, covering the Collateral described in the Security Agreement,

 

(C) completed requests for information, dated on or before the Closing 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 Obligor as debtor, together with copies of such other financing statements,

 

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(D) evidence of the completion of all other recordings and filings of or with respect to the Security Agreement that the Agent may reasonably deem necessary or desirable in order to perfect and protect the Liens created thereby,

 

(E) copies of the Assigned Agreements referred to in the Security Agreement, and

 

(F) evidence that all other action that the Agent may deem reasonably necessary or desirable in order to perfect and protect the first priority 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’, mortgagees’ and bailees’ waiver and consent agreements and account control and cash management agreements in form and substance satisfactory to the Agent).

 

(iii) The Intercreditor and Subordination Agreements in substantially the form of Exhibit E hereto, duly executed by each of the parties thereto.

 

(iv) Certified copies of the resolutions of the Board of Directors of each Obligor approving the Transactions and each Note Purchase Document to which it is or is to be a party, and of all documents evidencing other necessary corporate action with respect to the Transactions and each Note Purchase Document to which it is or is to be a party.

 

(v) A copy of a certificate of the Secretary of State of the jurisdiction of incorporation of each Obligor, dated reasonably near the date of the Closing Date, certifying (A) as to a true and correct copy of the charter of such Obligor and each amendment thereto on file in such Secretary’s office and (B) that (1) such amendments are the only amendments to such Obligor’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 Obligor has paid all franchise taxes to the date of such certificate and (C) such Obligor is duly incorporated and in good standing or presently subsisting under the laws of the State of the jurisdiction of its incorporation.

 

(vi) A copy of a certificate of the Secretary of State in each jurisdiction in which each Obligor is qualified to do business, dated reasonably near the date of the Closing Date, stating that such Obligor 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 except where the failure to be so qualified and in good standing does not have a Material Adverse Effect.

 

(vii) A certificate of each Obligor, signed on behalf of such Obligor by its President or a Vice President and its Secretary or any Assistant Secretary, dated the Closing Date (the statements made in which certificate shall be true on and as of the

 

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Closing Date), certifying as to (A) the absence of any amendments to the charter of such Obligor 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 Obligor as in effect on the date on which the resolutions referred to in Section 3.01(b)(iv) were adopted and on the Closing Date, (C) the due incorporation and good standing or valid existence of such Obligor 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 Obligor, (D) the truth of the representations and warranties contained in the Note Purchase Documents as though made on and as of the Closing Date, (E) the absence of any event occurring and continuing, or resulting from entering into this Agreement, that constitutes a Default and (F) the absence of any event occurring and continuing that constitutes a Default (as defined in the Third Amended ITCD Credit Agreement) under the Third Amended ITCD Credit Agreement or a statement as to such Default and a reasonably detailed description thereof.

 

(viii) A certificate of the Secretary or an Assistant Secretary of each Obligor certifying the names and true signatures of the officers of such Obligor authorized to sign each Note Purchase Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

 

(ix) Evidence of insurance naming the Collateral Agent as additional insured and loss payee with such responsible and reputable insurance companies or associations and evidence of directors and officers’ liability insurance naming the individuals of the Agent who are elected to the board of directors of the Parent as additional insureds and loss payees with such responsible and reputable insurance companies or associations.

 

(x) Favorable opinions of counsel for the Obligors in form and substance reasonably satisfactory to the Agent, in the form of Exhibit F hereto and as to such other matters as any Note Purchaser through the Agent may reasonably request.

 

(xi) Such other certificates and documents as the Agent may reasonably request.

 

(xii) (A) American Land Title Association Extended Coverage mortgagee title insurance policies or unconditional commitments therefor (the “ Closing Date Mortgage Policies ”) issued by the Title Company with respect each of the real property assets listed in Schedule 4.01(w) that shall be subject to a Closing Date Mortgage (each, a “ Closing Date Mortgaged Property ” and, collectively, the “ Closing Date Mortgaged Properties ”), in amounts not less than the respective amounts designated therein with respect to any particular Closing Date Mortgaged Property, insuring fee simple title to, or a valid leasehold interest in, each such Closing Date Mortgaged Property vested in such Obligor and assuring the Collateral Agent that the applicable Closing Date Mortgages create valid and enforceable first priority mortgage Liens on the respective Closing Date Mortgaged Properties encumbered thereby which Closing Date Mortgage Policies (1) shall include an endorsement for mechanics’ liens and for any other matters reasonably requested by the Collateral Agent and (2) shall provide for

 

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affirmative insurance and such reinsurance as the Collateral Agent may reasonably request, all of the foregoing in form and substance reasonably satisfactory to the Collateral Agent; and (B) evidence satisfactory to the Collateral Agent that such Obligor has (1) delivered to the Title Company all certificates and affidavits required by the Title Company in connection with the issuance of the Closing Date Mortgage Policies and (2) paid to the Title Company all expenses and premiums of the Title Company in connection with the issuance of the Closing Date Mortgage Policies and to the appropriate governmental authorities all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Closing Date Mortgages in the appropriate real estate records.

 

(xiii) With respect to each Closing Date Mortgaged Property, a title report issued by the Title Company with respect thereto, dated not more than 30 days prior to the Closing Date and satisfactory in form and substance to the Collateral Agent.

 

(xiv) No Event of Default or event that, with notice and/or the passage of time, could constitute, an Event of Default, shall have occurred.

 

(xv) the Obligors shall have entered into the Mortgages (the “ Closing Date Mortgages ”), in form and substance reasonably acceptable to the Collateral Agent, as the Collateral Agent may deem necessary or desirable in order to ensure the grant of a security interest in the real property Collateral covered thereby in order to secure the full amount of the Obligations.

 

(c) There shall exist no action, suit, investigation, litigation or proceeding affecting any Obligor 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 set forth on Part I of Schedule 4.01(d) in connection with the Transactions shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Note Purchasers) 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 Note Purchasers in each case that restrains, prevents or imposes materially adverse conditions upon the Transactions or the rights of the Obligors 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-Closing Date 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 Obligors that could reasonably be expected to have a Material Adverse Effect.

 

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(f) The Issuer shall have paid (or made provision therefor in a manner reasonably satisfactory to the Agent) (i) all accrued fees and out-of-pocket expenses of the Agents and (ii) the fees set forth in Section 2.05 (including the accrued reasonable and documented fees and expenses of legal counsel and financial advisors, including Milbank, Tweed, Hadley & McCloy LLP and Swidler Berlin LLP).

 

(g) The Note Purchasers shall be reasonably satisfied that (i) the Parent and its Subsidiaries shall 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 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 Third Amended ITCD Credit Agreement shall have been extinguished and all security interests released.

 

(i) The Second Lien Lenders shall have approved this Agreement which approval shall be in form and substance reasonably acceptable to the Note Purchasers.

 

(j) The Amended Second Lien Credit Agreement shall have been amended to the reasonable satisfaction of the Agent to permit the issuance of the Notes hereunder and to incorporate other changes related to the transactions contemplated hereby.

 

(k) The Original Third Lien Credit Agreement shall have been amended and restated and the relevant parties shall have executed and delivered the New Third Lien Documents, in form and substance reasonably acceptable to the Note Purchasers, and the New Third Lien Lenders shall have advanced to the Obligors an aggregate principal amount of not less than $30,000,000 pursuant to the New Third Lien Documents.

 

(l) The obligations under the Original Third Lien Credit Agreement shall have been exchanged for New Third Lien Notes pursuant to the Exchange Agreement and no amount of New Third Lien Notes greater than the sum of (x) $50,000,000 plus (y) the aggregate amount of capitalized PIK interest on the Existing Third Lien Notes through the Closing Date, shall be outstanding immediately after the Closing.

 

(m) The parties shall have executed and delivered the Warrants, in form and substance reasonably acceptable to the Note Purchasers and registered in such names as shall be satisfactory to the New Third Lien Lenders, and the issuance of such Warrants shall not have triggered any preemptive rights of holders of the Obligors’ outstanding securities, or such rights shall have been waived to the satisfaction of the Note Purchasers.

 

(n) The Agent shall have received the unaudited Consolidated balance sheet of the Obligors as at March 31, 2005, and the related Consolidated statement of income and Consolidated statement of cash flows of the Obligors for the month then ended and the Projections certified by the Chief Executive Officer and Chief Financial Officer of the Parent as having been prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such information.

 

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(o) There shall have been no Material Adverse Change since December 31, 2004, it being understood that the Defaults or Events of Default set forth on Schedule VI hereto shall not be deemed to have a Material Adverse Change.

 

(p) The Obligors shall have delivered to the Agent favorable opinions, in form and substance satisfactory to the Agent, of counsel to those Subsidiary Guarantors organized in Alabama, North Carolina and Virginia.

 

(q) The purchase of Notes by the Note Purchasers shall (i) be permitted by the laws and regulations of each jurisdiction to which the Note Purchasers are subject, (ii) not violate any Applicable Law (including, without limitation, Regulation U, T or X of the Board of Governors of the Federal Reserve System), (iii) not require registration or qualification of the Notes under any Applicable Law (including, without limitation, any applicable federal or state securities laws), and (iv) not subject the Note Purchasers to any tax, penalty or liability under or pursuant to any Applicable Law which was not in effect on the date hereof. If requested by the Note Purchasers or the Agent, the Note Purchasers or the Agent shall have received an officer’s certificate certifying as to such matters of fact as the Note Purchasers or the Agent may reasonably specify to enable the Note Purchasers or the Agent to determine whether such purchase is permitted.

 

(r) The Agent shall have received an officer’s certificate duly executed by the Chief Financial Officer of the Issuer in substantially the form of Exhibit I hereto (a “ Solvency Certificate ”) (i) to the effect that the Parent and its Subsidiaries shall be Solvent upon the consummation of the transactions contemplated herein and in the other Note Purchase Documents; and (ii) containing such other statements with respect to the solvency of the Parent and its Subsidiaries and matters related thereto as the Agent or the Note Purchasers shall request.

 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

 

Section 4.01 Representations and Warranties of the Obligors . The Obligors represent and warrant, jointly and severally, to the Agents and the Note Purchasers as follows as of the date hereof and the Closing Date:

 

(a) Each Obligor 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 on Schedule 4.01(a)(ii) hereto) in each other jurisdiction in which it owns or leases property or in wh