AMENDMENT NO. 1 TO GOVERNANCE AGREEMENT
AMENDMENT NO. 1 dated as of March 29, 2005 to the Governance Agreement
dated as of October 6, 2003 among ITC^DeltaCom, Inc., a Delaware corporation
("ITC^DeltaCom"), and each Person listed on the signature pages thereof or
otherwise a party thereto in accordance with its terms (the "Governance
Agreement");
W I T N E S S E T H :
WHEREAS, ITC^DeltaCom and certain of the Persons listed on the signature
pages hereof under the heading "WCAS Current Securityholders" (each, a "Current
Securityholder" and collectively, the "WCAS Holders") have entered into the
Credit Agreement dated as of the date hereof with the subsidiary guarantors
named therein and the other parties thereto (the "Third Lien Credit Agreement"),
pursuant to which WCAS is lending $20,000,000 to ITC^DeltaCom;
WHEREAS, in connection therewith, ITC^DeltaCom, Inc. proposes to issue
and deliver to the WCAS Holders pursuant to a Warrant Agreement dated as of the
date hereof between ITC^DeltaCom, Inc. and Mellon Investor Services LLC, as
Warrant Agent, 20,000,000 warrants (each, a "March ▇▇▇▇ ▇▇▇▇▇▇▇") to purchase an
equal number of shares of the Common Stock, par value $.01 per share, of
ITC^DeltaCom, Inc. (along with any shares of Common Stock that may be issued
pursuant to certain antidilution provisions of the March 2005 Warrants, the
"March 2005 Warrant Shares");
WHEREAS, in connection with the issuance of the March 2005 Warrants, the
parties hereto desire to (i) amend the Governance Agreement to modify the
limitations on the WCAS Holders or their Affiliates acquiring Voting Securities
of Parent and (ii) acknowledge that the March 2005 Warrants and the March 2005
Warrant Shares are "Registrable Securities" under and for purposes of the
Registration Rights Agreement;
WHEREAS, the Persons signing this Amendment under the heading "WCAS
Current Securityholders" beneficially own a majority of the Voting Power
represented by the Voting Securities beneficially owned by the WCAS Holders and
their Affiliates; and
WHEREAS, this Amendment has been duly approved by Parent pursuant to a
Determination of the Committee of Independent Directors to approve this
Amendment;
NOW, THEREFORE, the parties hereto agree as follows:
1. Defined Terms; References. Unless otherwise specifically defined
herein, each term used herein, including in the preamble hereof, that is defined
in the Governance Agreement has the meaning assigned to such term in the
Governance Agreement. Each reference to "hereof," "hereunder," "herein" and
"hereby" and each other similar reference and each reference to "this Agreement"
and each other similar reference contained in the Governance Agreement shall,
after this Amendment becomes effective, refer to the Governance Agreement as
amended hereby.
2. Preamble. The first paragraph of the preamble of the Governance
Agreement is amended in its entirety to read as follows:
GOVERNANCE AGREEMENT, dated as of October 6, 2003 (this
"Agreement"), between ITC^DeltaCom Inc., a Delaware corporation
("Parent"), and each Person listed on the signature pages hereof
under the heading "WCAS Securityholders" (each, and each
Permitted Transferee of such Person that agrees in writing to be
bound by the terms and conditions of this Agreement, a "WCAS
Securityholder" and collectively, "W") and each Other Holder (as
defined in Section 1.1).
3. Definition of Amended Ownership Percentage. The following definition
of "Amended Ownership Percentage" is added in alphabetical order to Section 1.1
of the Governance Agreement:
"Amended Ownership Percentage" means the Ownership
Percentage represented by the number of shares of Common Stock
beneficially owned by W immediately following the issuance of
the March 2005 Warrants. For purposes of this definition, the
number of shares of Common Stock beneficially owned by W
immediately following the issuance of the March 2005 Warrants
shall be calculated assuming the conversion, exchange or
exercise into or for shares of Common Stock of all Voting
Securities beneficially owned by W at such time.
4. Definition of March 2005 Warrants. The following definition of "March
2005 Warrants" is added in alphabetical order to Section 1.1 of the Governance
Agreement.
"March 2005 Warrants" means the 20,000,000 warrants to
purchase an equal number of shares of Common Stock issued
pursuant to the Warrant Agreement dated as of March 29, 2005
between Parent and Mellon Investor Services LLC, as Warrant
Agent.
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5. Acquisition of Voting Securities and Business Combinations. Section
3.1 of the Governance Agreement is amended in its entirety to read as follows:
SECTION 3.1. Purchases of Voting Securities. W agrees
and covenants that following the Effective Time W shall not, and
shall cause each of its Affiliates not to, acquire, offer or
propose to acquire, or agree to acquire, directly or indirectly,
by purchase or otherwise, beneficial ownership of any Voting
Securities, except (i) as approved by a Determination of the
Committee of Independent Directors, (ii) upon exercise or
conversion of any Voting Securities or Voting Security
Equivalents then owned by W and its Affiliates, (iii) upon the
issuance of any Voting Securities or Voting Security
Equivalents, as dividends or otherwise, in respect of securities
beneficially owned by W or its Affiliates on the date of the
Effective Time or March 29, 2005 or in substitution therefor, or
in connection with any stock split, dividend or combination, or
any reclassification, recapitalization, merger, consolidation,
exchange or similar reorganization, (iv) as contemplated by
Section 8.21 or Article 10 of the Merger Agreement, (v) during
the Transfer Restriction Period, W and its Affiliates may
acquire, in addition to any acquisitions pursuant to clauses (i)
through (iv), in the open market or through privately negotiated
transactions or from Parent, beneficial ownership of Voting
Securities as long as W and its Affiliates do not, following any
such acquisition, have an aggregate Ownership Percentage in
excess of the sum of the Amended Ownership Percentage, plus 5%,
or (vi) following the Transfer Restriction Period, W and its
Affiliates may acquire, in addition to any acquisitions pursuant
to clauses (i) through (iv), in the open market or through
privately negotiated transactions or from Parent, beneficial
ownership of Voting Securities as long as W and its Affiliates
do not, following any such acquisition, have an aggregate
Ownership Percentage in excess of the sum of the Amended
Ownership Percentage, plus 15%.
6. Acknowledgment. ITC^DeltaCom acknowledges that the March 2005
Warrants and the March 2005 Warrant Shares are "Registrable Securities" under
and for purposes of the Registration Rights Agreement.
7. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
8. Counterparts. This Amendment may be executed and delivered (including
by facsimile transmission) in any number of counterparts, each of
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which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
9. Effectiveness. This Amendment shall become effective as of the date
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
ITC^DELTACOM, INC.
By:
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Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President-
Legal and Regulatory
WCAS CURRENT SECURITYHOLDERS:
WCAS CAPITAL PARTNERS III, L.P.
By: WCAS CP III Associates L.L.C.
General Partner
By:
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Name:
Title:
WELSH, CARSON, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII, L.P.
By: WCAS VIII Associates LLC,
General Partner
By:
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Name:
Title:
Certain individual investors and trusts
By:
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for the individual investors listed below:
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By:
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Name:
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Title:
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Irrevocable Trust
By:
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Name:
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Title:
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OTHER HOLDERS:
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