Exhibit 10.1
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[Exhibit I/Exhibit J to Merger Agreement]
-------------------
July 2, 2003
ITC/\DeltaCom, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
BTI Telecom Corp.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ITC/\DeltaCom, Inc. and BTI Telecom Corp.:
In accordance with our recent discussions, the undersigned lenders
("Lenders") are, subject to the terms and conditions of this letter, agree to
extend this commitment to ITC/\DeltaCom, Inc. and BTI Telecom Corp.
(collectively, the "Companies") to modify the terms of both (i) the Amended and
Restated Credit Agreement, dated as of October 29, 2002, among ITC/\DeltaCom,
Inc., Interstate FiberNet, Inc., the subsidiary guarantors listed on the
signature pages thereof, the banks, financial institutions and other
institutional lenders listed on the signature pages thereof (collectively, the
"ITC/\DeltaCom Lenders"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as administrative
agent, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, as collateral agent (the
"ITC/\DeltaCom Financing"), and (ii) the Credit Agreement, dated as of March 30,
2003, among Business Telecom, Inc., BTI Telecom Corp., Business Telecom of
Virginia, Inc., FS Multimedia, Inc., General Electric Capital Corporation, as
Agent and Lender, Banc of America Strategic Solutions, Inc., and Export
Development Canada (f/k/a Export Development Corporation (collectively the "BTI
Lenders"), as amended (the "BTI Financing," and together with the ITC/\DeltaCom
Financing, as modified, amended or created, the "Post-Merger Facility"), in
connection with the proposed combination of the Companies (the "Merger"). The
Companies hereby accept this commitment and agree to be bound by the terms and
conditions as set forth in the term sheet annexed hereto on Exhibit A (the "Term
Sheet") and as contained herein.
1. Complete Agreement; No Oral Modifications.
-----------------------------------------
This commitment letter embodies the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior proposals, letters of intent, negotiations, or agreements, whether written
or oral, relating to the subject matter hereof. This letter may not be modified,
amended, supplemented, or otherwise changed, except by a document in writing
signed by the parties hereto.
2. Indemnification.
---------------
The Companies agree to indemnify, defend, and hold the ITC/\DeltaCom
Lenders, the BTI Lenders and their respective affiliates, and the directors,
officers, employees, agents, attorneys and representatives of any of them,
harmless from and against any and all claims, damages, liabilities, costs, and
expenses (including legal fees, expenses, and disbursements) that may be
incurred by or asserted against any such parties in connection with or arising
out of any investigation, litigation, or proceeding related to the transactions
contemplated hereby. The foregoing indemnification obligation of the Companies
shall apply irrespective of whether definitive documentation for the subject
transaction is executed or whether the financing contemplated by the Post-Merger
Facility is consummated. Under no circumstances shall any ITC/\DeltaCom Lender,
BTI Lender or any of their respective affiliates be liable to any party under
this letter or to any other person for any punitive, exemplary, consequential or
indirect damages in connection with this letter, the ITC/\DeltaCom Financing,
the BTI Financing, the Post-Merger Facility or any documentation related thereto
or any other financing, regardless of whether the commitment herein is
terminated or the financing contemplated by this letter closes.
3. Confidentiality.
---------------
The contents of this commitment letter are confidential. The Companies
agree that they will not show, circulate, or otherwise disclose this letter or
its contents to any other Person (other than its officers, employees, attorneys,
and advisors, on a need-to-know basis), other than as required by law,
regulation or legal process. Without limiting the foregoing, ITC/\DeltaCom and
the WCAS Securityholders (as defined in the Term Sheet) each may file a copy of
this commitment letter and the Term Sheet with the Securities and Exchange
Commission ("SEC") together with the Merger Documents (as defined herein) or in
connection with the Merger. Once filed with the SEC, the parties hereto may
show, circulate or otherwise disclose this commitment letter or its contents to
any other Person. If this commitment letter is not accepted by the Companies,
the Companies immediately shall return to the ITC/\DeltaCom Lenders and the BTI
Lenders all originals and copies of this commitment letter, and any summaries
thereof which the Companies or its officers, employees, attorneys, or advisors
may have created. Prior to acceptance of this commitment letter, any disclosure
by the Companies in violation hereof shall be deemed to constitute the
Companies' acceptance of this commitment letter and agreement to be bound by the
terms and conditions contained herein. Notwithstanding anything to the contrary
set forth herein or in any other agreement to which the parties hereto are
parties or by which they are bound, the obligations of confidentiality contained
herein and therein, as they relate to the transactions contemplated hereby or by
the Merger Documents, shall not apply to the federal tax structure or federal
tax treatment of such transactions, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of such transactions. The preceding sentence is intended to cause
the transactions to be treated as not having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
Internal Revenue Code of 1986, as amended, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no
2
proprietary or exclusive rights to the federal tax structure of any transaction
contemplated hereby or the Merger Documents or any federal tax matter or federal
tax idea related to any transaction contemplated hereby of by the Merger
Documents.
4. Conditions to Effectiveness.
---------------------------
The Companies, the ITC/\DeltaCom Lenders and the BTI Lenders each
acknowledge and agree that the commitments set forth herein are subject to the
following conditions:
(a) Each of the conditions precedent set forth in the Term Sheet as
if fully set forth herein;
(b) Negotiation, execution and delivery of final documentation
incorporating and otherwise consistent with the terms and conditions set forth
in the Term Sheet in a manner acceptable to each of the ITC/\DeltaCom Lenders
and the BTI Lenders;
(c) Consummation of the transactions contemplated by the documents
and forms of agreements submitted to the Lenders on or before the date hereof
regarding the Merger (the "Merger Documents") in the manner set forth in the
Merger Documents (without modification, amendment or supplementation, or other
changes or the waiver of any conditions thereto, in any material respect other
than those consented to in writing by the ITC/\DeltaCom Lenders and the BTI
Lenders) on or before December 31, 2003; and
(d) There having occurred after the date hereof no default or event
of default under the ITC/\DeltaCom Facility or the BTI Facility (that had not
occurred and identified to lenders in writing and had been continuing or
otherwise waived in writing as of the date hereof) or any amendment to the
documentation evidencing the ITC/\DeltaCom Facility.
5. Amendments.
----------
Neither this letter nor the Term Sheet may be amended without the
prior written agreement of each party hereto.
6. Binding Effect.
--------------
This commitment letter shall be binding upon, and inure to the benefit
of, and be enforceable by successors and assigns of the parties and their
successors and assigns, including transferees of interests in the ITC/\DeltaCom
Facility or the BTI Facility on or after the date hereof.
7. Effect on Existing ITC/\DeltaCom Facility or the BTI Facility;
-------------------------------------------------------------
Relationship of Parties.
-----------------------
Each of the ITC/\DeltaCom Facility or the BTI Facility shall be and
remain in full force and effect as originally written, and shall constitute the
legal, valid, binding and enforceable obligations of each of the respective
parties thereto. The relationships of (i) the ITC/\DeltaCom Lenders, on the one
hand, and each other party to the ITC/\DeltaCom Facility, on the other hand, and
(ii) the BTI Lenders, on the one hand, and each other party to the BTI
3
Facility, on the other hand, have been and shall continue to be, at all times,
that of creditor and debtor and not as joint venturers or partners. The
ITC/\DeltaCom Lenders and the BTI Lenders are not, and no actions hereunder
shall be deemed to create of imply any relationship between such parties as,
joint venturers or partners. Nothing contained in this letter or the Term Sheet,
or any instrument, document or agreement delivered in connection herewith, shall
be deemed or construed to create a fiduciary relationship between or among the
parties.
8. GOVERNING LAW; JURY WAIVER.
--------------------------
THIS LETTER SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK
AND THE VALIDITY OF THIS LETTER, AND THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO RELATING TO CLAIMS OR
CAUSES OF ACTION ARISING IN CONNECTION HEREWITH SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THE COMPANIES AND LENDERS HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS LETTER, OR IN ANY WAY RELATED OR INCIDENTAL TO THE DEALINGS OF
THE PARTIES HERETO WITH RESPECT TO THIS LETTER, OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN EACH CASE WHETHER NOW OR HEREAFTER ARISING, IRRESPECTIVE OF WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE. THE COMPANIES AND LENDERS HEREBY AGREE
THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE
DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE OTHER PARTY HERETO TO WAIVE ITS RIGHT TO TRIAL BY
JURY.
9. Counterparts, Expiration.
------------------------
This commitment letter may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Letter shall be of no force and
effect unless and until six fully executed originals of this Commitment Letter
are delivered to each of ▇▇▇▇▇ Fargo Bank Minnesota, National Association (as
agent for the ITC/\DeltaCom Lenders) in care of Torys LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and General Electric Capital
Corporation (as agent for the BTI Lenders) at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ on or before 5:00 p.m. EST on July 2, 2003. This commitment
letter will terminate on December 31, 2003 if the transactions contemplated by
the Merger Documents are not consummated before such date; provided, however,
that the parties' respective rights and obligations under Sections 2 and 3 will
survive any such termination.
4
Very truly yours,
THE ITC/\DELTACOM REQUIRED LENDERS:
▇▇▇▇▇ FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION,
as Successor Agent
By:
------------------------------------
Name:
Title:
5
PW WILLOW FUND, L.L.C.
By Bond Street Capital LLC
By: /s/ ▇▇▇ ▇. ▇▇▇
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇
Title: Managing Member
6
ELC (CAYMAN) LTD. 2000-1
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc.,
as Collateral Manager
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
SUFFIELD CLO, LIMITED
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc.,
as Collateral Manager
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇ CLO LTD. 2000-1
By ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc.,
as Collateral Manager
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
7
GOLDENTREE HIGH YIELD MASTER FUND, LTD.
By Goldentree Asset Management, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Portfolio Manager
GOLDENTREE HIGH YIELD OPPORTUNITIES I,
L.P.
By Goldentree Asset Management, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Portfolio Manager
GOLDENTREE HIGH YIELD OPPORTUNITIES II,
L.P.
By Goldentree Asset Management, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Portfolio Manager
DB STRUCTURED PRODUCTS INC.
By Goldentree Asset Management, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Portfolio Manager
GOLDENTREE LOAN OPPORTUNITIES I, LIMITED
By Goldentree Asset Management, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Portfolio Manager
8
SAFETY NATIONAL CASUALTY CORPORATION
By Goldentree Asset Management, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Portfolio Manager
ALPHA U.S. SUBFUND II, LLC
By Goldentree Asset Management, L.P.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Portfolio Manager
9
SANKATY ADVISORS, LLC, as Collateral
Manager for ▇▇▇▇▇ Point II CBO 2000-1
LTD., as Term Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: SVP
SANKATY ADVISORS, LLC, as Collateral
Manager for Great Point CLO 1999-1 LTD.,
as Term Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: SVP
SANKATY HIGH YIELD PARTNERS III, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: SVP
SANKATY HIGH YIELD PARTNERS II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: SVP
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: SVP
10
SANKATY CREDIT OPPORTUNITIES, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: SVP
11
PACIFICA PARTNERS I, LP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: SVR
12
THE BTI LENDERS:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signatory
13
BANC OF AMERICA STRATEGIC SOLUTIONS,INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: Managing Director
14
EXPORT DEVELOPMENT CANADA (f/k/a
Export Development Corporation)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Loan Asset Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Portfolio Manager
15
Acknowledged and Agreed
as of the date first written above
ITC/\DELTACOM, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Snr. V.P.CFO
INTERSTATE FIBERNET, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Snr. V.P.CFO
ITC/\DELTACOM COMMUNICATIONS , INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Snr. V.P.CFO
DELTACOM INFORMATION SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Snr. V.P.CFO
BUSINESS TELECOM, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, III
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Title: CFO/COO
16
BTI TELECOM CORP.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, III
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Title: CFO/COO
BUSINESS TELECOM OF VIRGINIA, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, III
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Title: CFO/COO
FS MULTIMEDIA, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, III
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Title: CFO/COO
17
Exhibit A
---------
Execution Version
ITC/\DELTACOM, INC. ("ITC")
Proposed Amendment and Restatement to Senior
Secured Credit Facilities
Term Sheet Dated July 2, 2003
The terms set out in this Term Sheet, in the absence of a fully executed
and delivered commitment agreement, do not constitute a commitment to amend the
ITC Amended and Restated Credit Agreement, dated as of October 29, 2002 (the
"Existing Credit Agreement"), nor does this Term Sheet constitute consent for
the Borrower to enter into an additional facility to be financed by the lenders
to BTI Telecom Corp. and its affiliates (collectively, "BTI") in connection with
the acquisition of BTI by ITC. Any amendment of the Existing Credit Agreement is
subject to, inter alia, the approval of the Lenders thereunder (the "ITC
Lenders") and execution and delivery of satisfactory documentation. In addition,
any amendment or refinancing of the BTI Credit Agreement, dated as of March 30,
2001, as amended (the "BTI Facility"), is subject to, inter alia, the approval
of the lenders under the BTI Facility (the "BTI Lenders") and execution and
delivery of satisfactory documentation. Unless otherwise stated in this Term
Sheet or as may be required by (or consistent with) this Term Sheet, it is
intended that the provisions of the Existing Credit Agreement will not be
amended. Any capitalized terms used herein and not defined herein shall have the
meanings set forth in the Existing Credit Agreement.
Borrower: Interstate FiberNet, Inc.
Guarantors: The Post-Merger First Lien Facilities
(as defined below) and the Post-Merger
Second Lien Facility (as defined below)
shall be guaranteed by ITC and each of
its direct and indirect subsidiaries
(excluding the Borrower), including,
without limitation, BTI Telecom Corp.
and BTI Telecom Corp.'s subsidiaries
(collectively, the "Guarantors" and when
taken together with the Borrower, the
"Loan Parties"). Each Loan Party shall
secure its obligations in respect of
such Facilities with a pledge of all of
its assets.
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
Lenders: The ITC Lenders and the BTI Lenders, in
respect of the Post-Merger First Lien
Facilities and, to the extent provided
herein, the Post-Merger Second Lien
Facility.
Administrative Agent and
Collateral Agent under the
Post-Merger First Lien
Facilities (the "First Lien Agent"): ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
Administrative Agent and
Collateral Agent under the
Post-Merger Second Lien
Facility (the "Second Lien Agent"): General Electric Capital Corporation
Amount (the "Loans"): Term Loans in the amount
of all principal outstanding under the
Existing Facilities (as defined below)
and the BTI Facility. All outstanding
current interest under the Existing
Credit Agreement and the BTI Facility
shall be paid on the Closing Date (as
defined below). Outstanding current
interest shall not include past-due or
PIK interest payable to the BTI Lenders
and any such amounts shall be added to
the outstanding principal amount of the
Second Lien Facility. Any outstanding
and unfunded commitments under the BTI
Facility shall be terminated.
Closing Date: The closing date under the
Post-Merger First Lien Facilities and
the Post-Merger Second Lien Facility
(the "Closing Date") shall be the
closing date under the Agreement and
Plan of Merger (the "Merger Agreement")
among ITC, BTI and the other parties
identified therein pursuant to which ITC
will acquire BTI and Welsh, Carson,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII, L.P. and its
Affiliates and related Persons
(collectively, the "WCAS
2
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
Securityholders") will make a new
investment in ITC, as described below.
Maturity Date: As set forth under the Existing
Credit Agreement (June 30, 2006) for (i)
funds advanced under ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇
Advances and ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇ Advances
of the Existing Credit Agreement (the
"Existing Facilities") and (ii)
$30,000,000 in principal amount of the
BTI Facility, all equally secured by the
First Lien (as defined below) (together,
the "Post-Merger First Lien
Facilities"); and, with respect to the
remaining $55,715,294 in principal
amount of the BTI Facility secured by
the Second Lien (as defined below) (the
"Post-Merger Second Lien Facility"),
June 30, 2008
Scheduled Amortization: The Post-Merger First Lien Facilities
shall amortize on the same schedule as
the Existing Facilities (with the amount
of each such scheduled payment to be
increased based upon the additional
amounts outstanding under the
Post-Merger First Lien Facilities on the
Closing Date), on a pro rata basis.
There shall be no amortization of the
Post-Merger Second Lien Facility before
the Post-Merger First Lien Facilities
have been indefeasibly repaid in full in
cash.
Upon repayment of all amounts
outstanding under the Post-Merger First
Lien Facilities, the amortization of the
aggregate unpaid principal amount of the
Post-Merger Second Lien Facility shall
occur as follows: (i) there shall be
mandatory prepayment event provisions
identical in all material respects to
such provisions under the Post-Merger
First Lien Facilities and which shall
become operative at that time and shall
apply to any such mandatory prepayment
events which occur thereafter, but not
before; and (ii) such
3
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
aggregate unpaid principal amount shall
be amortized as follows:
3Q, 4Q/2006; 1Q/2007 $3,979,644
2Q/2007 $13,979,644
3Q/4Q/2007; 1Q/2008 $646,331
June 30, 2008 $27,857,647
Interest Rate: As set forth in the Existing Credit
Agreement (including as to timing and
manner of payment) with respect to the
Post-Merger First Lien Facilities and
the Post-Merger Second Lien Facility;
provided that (i) the Lenders under the
Post-Merger Second Lien Facility shall
not be entitled to any increase of 50
basis points pursuant to Section
5.02(f)(vii) of the Existing Credit
Agreement whether or not the Lenders
under the Post-Merger First Lien
Facilities are entitled to such an
increase, and (ii) subject to clause (i)
of this proviso, all amounts outstanding
under the Post-Merger Second Lien
Facility shall, absent default, bear
interest at a rate that is 25 basis
points higher than the non-default rate
applicable to amounts outstanding under
the Post-Merger First Lien Facilities,
any Permitted Refinancing (as defined
below) or any Receivables Financing (as
defined below) as applicable, but in no
event less than the rates set forth in
the Second Lien Credit Agreement (as
defined below) on the Closing Date.
Security: The obligations of the Borrower and the
Guarantors relating to the Post-Merger
First Lien Facilities shall be secured
by first priority liens on, and security
interests in (the "First Lien"), all of
the assets of the
4
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
Borrower and the Guarantors (the
"Collateral"), subject to Permitted
Liens.
The obligations of the Borrower and the
Guarantors relating to the Post-Merger
Second Lien Facility shall be secured by
second priority liens on, and security
interests in (the "Second Lien"), the
Collateral, subject to Permitted Liens.
Intercreditor Rights and Agreement: The First Lien holders and the Second
Lien holders shall enter into, in
addition to the other documents
described below, an intercreditor
agreement (the "Intercreditor
Agreement"), acknowledging that the
liens and security interests granted to
the First Lien holders in the Collateral
shall be senior in priority and in right
of payment in all respects to the liens
and security interests to the Second
Lien holders, in form and substance
satisfactory to the parties to evidence
the agreed-upon relationship between the
First Lien holders and the Second Lien
holders and, subject to the provisions
of this Term Sheet and not inconsistent
herewith, otherwise to document
(i) the agreement of all Lenders not
to contest the validity of Liens
in favor of the First Lien holders
and the Second Lien holders,
(ii) certain limited approval rights of
the Lenders under the Post-Merger
Second Lien Facility only with
respect to waivers, consents and
amendments of or under the
Post-Merger First Lien Facilities
and/or any Permitted Refinancings
in respect of any changes in the
principal amount, or material
changes in interest rates or in
the
5
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
extension of the amortization
schedule of the Post-Merger First
Lien Facilities and/or any
Permitted Refinancings or any
amendment, waiver or modification
to the limitations set forth in
Section 502(a) under the First
Lien Credit Agreement in respect
of proposed Liens of equal or
higher priority to the Liens of
the Second Lien holders,
(iii) the consent of the Required
Lenders under the Post-Merger
First Lien Facilities required to
make any changes to the principal
amount, the interest rates or
fees, maturity or amortization
schedule, covenants, events of
default or other material
provisions of the Post-Merger
Second Lien Facility, or
(iv) the consent of the Required
Lenders under the Post-Merger
First Lien Facilities and under
the Post-Merger Second Lien
Facility to any changes to the
Intercreditor Agreement.
Except as provided herein, the Lenders
under the Post-Merger Second Lien
Facility will agree to waive compliance
with, modify or amend any covenant or
other term or provision under the
Post-Merger Second Lien Facility (other
than Sections 2.05(b)(ii), 5.02(a), (e),
(g), (k) and (q) in respect of the Total
Leverage Ratio Covenant and the Interest
Coverage Ratio Covenant applicable to
the Post-Merger Second Lien Facility) to
the extent the Agent and the Lenders
under the Post-Merger First Lien
Facilities have agreed to waive
compliance with, modify or amend any
similar covenant or other term or
6
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
provision under the Post-Merger First
Lien Facilities.
The Second Lien shall be a "silent lien"
as long as the Post-Merger First Lien
Facilities or any Permitted Refinancings
remain outstanding, so that no action in
the nature of remedies may be taken by
the Second Lien holders, and any
interest in the Collateral must be
released upon the request of the First
Lien holders to the extent the same is
permitted by the Post-Merger First Lien
Facilities and all proceeds of the
transaction which is the subject of such
release are used solely for the purpose
of repaying (and permanently reducing)
obligations under the Post-Merger First
Lien Facilities and/any Permitted
Refinancings, until the Post-Merger
First Lien Facilities and/any Permitted
Refinancings have been indefeasibly
repaid in full in cash, except as
follows (subject, in each instance, to
the payment over to the First Lien
holders of any proceeds of such action
until such time as the Post-Merger First
Lien Facilities and/or any Permitted
Refinancings have been indefeasibly
repaid in full in cash):
(i) Upon (A) any default in the
payment of interest or fees under
the Post-Merger Second Lien
Facility or (B) any default under
the Post-Merger Second Lien
Facility arising from the breach
of the Financial Covenants (as
applicable to the Post-Merger
Second Lien Facility set forth
herein) or the Second Lien
Negative Covenants (as defined
below), the Second Lien holders
may take actions in the nature of
remedies following a standstill
period of 270 days after written
notice of such default to the
First Lien Agent; provided, that
in
7
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
the case of any breach of the
Second Lien Negative Covenants in
respect of Sections 5.02(e), (g)
and (k), the standstill period
shall be 90 days after written
notice of such default to the
First Lien Agent;
(ii) Upon (A) any default in the
payment of any scheduled
amortization payment under the
Post-Merger Second Lien Facility,
or (B) any default in the payment
in full of all obligations under
the Post-Merger Second Lien
Facility at maturity, (subject to
the 270-day standstill period in
clause (i) above), the Second Lien
holders may accelerate all
obligations under the Post-Merger
Second Lien Facility and may
commence legal action in the
nature of remedies; provided that,
the First Lien holders have not
commenced any similar action in
which case the Second Lien holders
and may join any such action
pursuant to clause (iii) below;
(iii) Upon the commencement of legal
action in the nature of remedies
by the First Lien holders against
the Borrower or the Guarantors,
the Second Lien holders may join
any foreclosure or enforcement
proceeding commenced by the First
Lien holders and shall cooperate
with the First Lien holders in any
such foreclosure or enforcement
action; and
(iv) Upon the occurrence of an
insolvency event, the Second Lien
holders may file a proof of claim
but may not object to (1) the use
of cash collateral or other
financings approved by the First
Lien holders, (2) the priority and
validity of
8
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
the First Lien on the Collateral
or (3) the sale of Collateral free
and clear of all Liens approved by
the First Lien holder; provided
that in connection with any sale
of the Collateral, the Second Lien
holders shall have the right to
purchase the rights and claims of
the First Lien holders at par and
shall retain their right to credit
bid their secured claim at any
such sale in accordance with
Section 363(k) of the United
States Bankruptcy Code.
Upon indefeasible payment in full in
cash of the obligations under the
Post-Merger First Lien Facilities and/or
any Permitted Refinancings, the
obligations relating to the Post-Merger
Second Lien Facility shall be secured by
first priority liens on, and security
interests in, all of the assets of the
Collateral subject to Permitted Liens
and any standstill periods set forth
above shall immediately terminate.
Documentation: The Post-Merger First Lien Facilities
shall be incorporated into an amendment
and restatement of the Existing Credit
Agreement (the "First Lien Credit
Agreement"), and the Post-Merger Second
Lien Facility shall be addressed in a
separate Credit Agreement (the "Second
Lien Credit Agreement"), unless the ITC
Lenders and the BTI Lenders mutually
agree that the Post-Merger First Lien
Facilities and the Post-Merger Second
Lien Facility shall be addressed in a
single credit agreement. Subject to the
provisions of this Term Sheet, the
representations and warranties,
affirmative covenants, events of default
and other applicable provisions of the
First Lien Credit Agreement and the
Second Lien Credit Agreement shall in
form and scope be
9
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
identical in all material respects and
subject to the terms of the
Intercreditor Agreement. In addition to
the foregoing and notwithstanding
anything to the contrary set forth
herein, the Post-Merger Second Lien
Facility shall contain (A) negative
covenants (other than the financial
covenants) substantially similar in all
material respects but "stepped-back" as
applicable from the negative covenants
in the First Lien Credit Agreement (the
"Second Lien Negative Covenants") to the
applicable provisions of the First Lien
Credit Agreement and (B) financial
covenants identical in all material
respects to the applicable provisions of
the First Lien Credit Agreement existing
on the Closing Date, except that such
covenants shall only reflect the
covenant level applicable to the
Borrower on the Closing Date, and not be
subject to adjustment for future
periods. For purposes of illustration,
the Total Leverage Ratio Covenant to be
included in the Second Lien Credit
Agreement shall be set at 5.5x for all
periods prior to repayment in full in
case of the obligations under the
Post-Merger First Lien Facilities and/or
any Permitted Refinancings.
Mandatory Prepayment Provisions,
including Excess Cash Flow, and
Optional Prepayment Provisions: As set forth in the Existing Credit
Agreement (except as stated below) for
the Post-Merger First Lien Facilities,
with funds to be applied on a pro rata
basis.
Representations and Warranties: As set forth in the Existing Credit
Agreement and as customary and
appropriate for transactions of this
type.
EBITDA: For purposes of computing EBITDA, all
restructuring charges incurred under or
in
10
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
connection with the transactions
contemplated by the Merger Agreement
shall be treated as set forth in clause
(h) of the definition of EBITDA in the
Existing Credit Agreement, provided that
the requirements of such clause (h) are
satisfied.
Change of Control: The definition of "Existing
Stockholders" shall be amended to refer
to the "WCAS Securityholders and their
Affiliates," (and not the current
"Existing Shareholders") as WCAS
Securityholders is defined for purposes
of this Term Sheet.
Affirmative Covenants: As set forth in the Existing Credit
Agreement.
Financial Covenants: In addition to those set forth in the
Existing Credit Agreement, the
following:
(A) Minimum Cash Covenant, which shall
provide that ITC shall have no less
than $10,000,000 of unrestricted
cash on hand at any time.
(B) Total Leverage Ratio Covenant,
which shall be defined as the ratio
of "total debt" to LTM EBITDA
(pursuant to which EBITDA shall not
be adjusted as provided in Section
5.02(q)(ii)(B)(1)). Total debt
shall be defined to include all
amounts outstanding under long-term
debt agreements, notes or capital
leases of all Loan Parties on a
Consolidated basis (including, for
avoidance of doubt, all Debt
Incurred pursuant to Sections
5.02(b)(i)-(vi) and all Assumed BTI
Debt (as defined below). As of the
last day of each quarter, the ratio
under the Post-Merger First Lien
Facilities shall not be greater
than:
11
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
4Q/2003 - 2Q/2004 5.5
3Q/2004 - 4Q/2004 5.0
1Q/2005 - Maturity Date 4.5
(C) Interest Coverage Ratio (pursuant
to which EBITDA shall not be
adjusted as provided in Section
5.02(q)(ii)(B)(1)). On a
Consolidated basis, as of the last
day of each quarter, based on the
trailing two quarters, the ratio
under the Post-Merger First Lien
Facilities shall not be less than:
4Q/2003 - 2Q/2004 2.5
3Q/2004 - 4Q/2004 3.0
1Q/2005 - 2Q/2005 3.5
3Q/2005 - Maturity Date 4.0
The Borrower shall have a period of 60
days (inclusive of any other cure
periods set forth in the Existing Credit
Agreement) to cure any violation of any
financial covenant before such violation
shall become a Default or an Event of
Default.
If the Closing Date occurs on or before
September 30, 2003, any Debt Incurred by
the Loan Parties in connection with
ITC's acquisition of BTI shall be
excluded from the definition of "Senior
Debt" for purposes of determining
compliance by the Loan Parties with the
Senior Debt Ratio with respect to the
quarter ending September 30, 2003.
Negative Covenants: As set forth in the Existing Credit
Agreement, except as follows:
12
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
(A) The negative covenants in the
Existing Agreement shall be amended
to permit the Incurrence of the
Debt and granting of the Liens with
respect to the Post-Merger First
Lien Facilities and the Post-Merger
Second Lien Facility in the manner
set forth in this Term Sheet;
(B) Section 5.02(a)(v) shall be amended
by deleting it in its entirety and
replacing it with "Liens securing
the Subordinated Debt permitted by
Section 5.02(b)(ii) subordinated
and junior in priority to the Liens
securing the Post-Merger First Lien
Facilities and the Post-Merger
Second Lien Facility on terms and
conditions acceptable to the Agent
and the Required Lenders";
(C) The proviso in first sentence of
Section 5.02(b) shall be amended to
provide that ITC and its
Subsidiaries may Incur Debt
(including, for avoidance of doubt,
all Debt Incurred pursuant to
Sections 5.02(b)(i)-(vi)) if, after
giving effect to the Incurrence of
such Debt and the receipt and
application of the proceeds
therefrom, the Interest Coverage
Ratio (amended as set forth in this
Term Sheet), the Total Leverage
Ratio and the other financial
covenants are satisfied;
(D) Section 5.02(b)(ii) permitting the
Subordinated Debt of the Parent and
the Borrower shall be amended to
provide that (i) the aggregate
amount of such permitted
Subordinated Debt shall be reduced
from $50,000,000 to $30,000,000
(excluding Debt under the
Post-Merger Second Lien Facility),
(ii) the Incurrence of such
permitted
13
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
Subordinated Debt shall be made
subject to the limitations of
clauses (2) and (3) of Section
5.02(b)(v)(where the terms "Loan
Documents" and "Facilities" therein
shall include the First Lien Credit
Agreement, the Second Lien Credit
Agreement, the Post-Merger First
Lien Facilities and the Post-Merger
Second Lien Facility, as
applicable) and the financial
covenants herein, (iii) the term
"Loans" set forth in the definition
of Subordinated Debt shall include
the obligations outstanding under
the Post-Merger First Lien
Facilities and the Post-Merger
Second Lien Facility, as
applicable, and (iv) the Required
Lenders under both the Post-Merger
First Lien Facilities and the
Post-Merger Second Lien Facility
have approved the terms of
subordination;
(E) Clause (ii) of Section 5.02(d)
shall be amended to delete the
reference to Section 5.02(a)(v),
and clause (v) of Section 5.02(d)
shall be amended to expressly
require compliance with Sections
5.02(a), (b) and (f);
(F) Section 5.02(d) shall be further
amended to permit ITC's acquisition
of BTI by a merger of a newly
formed direct, wholly-owned
subsidiary of ITC with and into BTI
Telecom Corp., which shall be the
surviving corporation of such
merger and, immediately after such
merger, shall be a direct,
wholly-owned subsidiary of ITC;
(G) Sections 5.02(d)(v) and (f)(vii)
limiting permitted Mergers and
Investments in other Persons shall
be amended to
14
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
(i) permit ITC to acquire all of
the outstanding capital stock of
another Person solely in exchange
for the stock, shares or other
equity securities of the Parent;
provided that such Person has
positive cash flow measured by (1)
LTM EBITDA minus LTM Capital
Expenditures; and (2) Current
Assets minus unsecured debt assumed
minus Capitalized Leases shall have
a positive value; provided,
further, that if ITC seeks to
acquire another Person within 12
months after the closing of its
acquisition of BTI, the Chief
Financial Officer of ITC shall
certify that 60% of the synergies
projected in the synergy study with
respect to ITC's acquisition of BTI
previously delivered to the Agent
shall have been achieved; and (ii)
provide that all other Investments
in other Persons pursuant to
Section 5.02(d)(v) or (f)(vii)
shall require the consent of the
Required Lenders;
(H) Section 5.02(e) shall be amended to
add as clause (vi) thereof the
following: "(vi) assignments, sales
or other dispositions at fair
market value of accounts receivable
representing amounts owed to any
Loan Party by any Person that is
subject to a proceeding under the
Bankruptcy Code";
(I) Clause (v) of Section 5.02(f)
limiting Investments in other
Persons shall be amended by
deleting the reference therein to
"$150,000,000" and substituting
therefor reference to "$10,000,000"
and by deleting the reference
therein to "$10,000,000" and
substituting therefor reference to
"$2,000,000"; and
15
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
(J) Section 5.02(h) shall be amended to
provide that amendments of the
certificate of incorporation and by
laws or other constitutive
documents of ITC and the other Loan
Parties as contemplated by the
Merger Agreement shall not be
deemed to reasonably be expected to
have a Material Adverse Effect.
Refinancing Rights: The Borrower shall have the right to
refinance all (but not less than all) of
the amounts outstanding under the
Post-Merger First Lien Facilities from
time to time, and to cause such
refinancing to be secured and guaranteed
in the same manner as the First Lien
Credit Agreement, provided that (i) the
principal amount of each such
refinancing shall not exceed the then
outstanding principal amount of the
Post-Merger First Lien Facilities being
refinanced, (ii) the maturity date of
such facility shall not be earlier than
the stated maturity date of the
Post-Merger First Lien Facilities and
(iii) to the extent the rate of interest
and fees under such new financing exceed
the rate of interest and fees under the
Post-Merger First Lien Facilities, the
rate of interest and fees under the
Post-Merger Second Lien Facility shall
be adjusted to maintain the spread
existing between such rates and fees
under the Post-Merger First Lien
Facilities and the Post-Merger Second
Lien Facility immediately prior to such
new financing (each such refinancing, a
"Permitted Refinancing"). Any right of
approval with respect to a Permitted
Refinancing shall be subject to approval
by Required Lenders under the
Post-Merger First Lien Facilities.
The Borrower also shall have the right
to incur additional Debt in an amount
not to
16
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
exceed the amount then outstanding
under the Post-Merger First Lien
Facilities secured by the combined
accounts receivable of the Loan Parties
(a "Receivables Financing"), provided
that: (i) all of the proceeds of such
Receivables Financing are used solely to
refinance all (but not less than all) of
the amounts outstanding under the
Post-Merger First Lien Facilities and
all outstanding and unfunded commitments
under the Post-Merger First Lien
Facilities, if any, are terminated; (ii)
the Required Lenders under the
Post-Merger First Lien Facilities have
approved such additional Debt; (iii) any
one or more of the Lenders under the
Post-Merger Second Lien Facility have a
first right of refusal to match the
offer the Borrower has received for such
Receivables Financing; and (iv) upon the
closing of such Receivables Financing,
the Post-Merger Second Lien Facility is
secured by a first priority lien on all
assets of the Borrower and the
Guarantors (other than the accounts
receivable required to be pledged under
the Receivables Financing), subject to
Permitted Liens. Upon the satisfaction
of the conditions set forth in the
foregoing clauses (i) through (iv), the
Lenders under the Post-Merger First Lien
Facilities and the Post-Merger Second
Lien Facility shall release their Liens
on such accounts receivable.
No Permitted Refinancing or Receivables
Financing shall be permitted without the
consent of the Lenders under the
Post-Merger Second Lien Facility if such
Permitted Refinancing or Receivables
Financing shall affect the (i) the
maturity date or any provision with
respect to amortization of the
Post-Merger Second Lien Facility or (ii)
the rights and obligations contemplated
by the Intercreditor Agreement
17
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
(except that the lenders under each
Permitted Refinancing shall become
parties to the Intercreditor Agreement).
In addition to the foregoing, the
Borrower shall have the right at any
time to refinance the entire amount
outstanding under and thereupon
terminate the Post-Merger First Lien
Facilities and, in connection therewith,
to incur additional Debt in excess of
the amount necessary to refinance the
entire amount of the Post-Merger First
Lien Facilities (a "Replacement
Financing") if the following conditions
are satisfied:
(i) the obligations outstanding under
the Post-Merger Second Lien
Facility and the Replacement
Financing are secured, from and
after the date of closing of the
Replacement Facility, by the First
Lien, on a pro rata basis;
(ii) the maximum aggregate principal
amount permitted under the
Replacement Financing (together
with (a) the maximum aggregate
principal amount permitted under
any Receivables Financing and (b)
the principal amount then
outstanding under the Post-Merger
Second Lien Facility) does not
exceed $250,000,000;
(iii) (A) the maturity date and
amortization schedule under the
Post-Merger Second Lien Facility
shall not be affected, and (B) the
rate of interest and fees under
the Post-Merger Second Lien
Facility shall be increased to
equal any higher rate of interest
or fees provided under any such
Replacement Facility;
18
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
(iv) the Borrower can demonstrate pro
forma compliance with the
financial covenants in the
Post-Merger First Lien Facilities;
and
(v) the term and provisions of the
documents governing the
Replacement Financing (including,
without limitation, financial
covenants and events of default)
are substantially similar in all
material respects to those
contained in the First Lien Credit
Agreement (subject to
proportionate adjustment to
reflect the increase, if any, in
the amounts available under the
Replacement Financing) or
otherwise reasonably acceptable to
the Lenders under the Second Lien
Credit Agreement. If a Replacement
Financing is closed and documented
as a single facility, the
Intercreditor Agreement will be
terminated on the date of such
closing.
Other Provisions: (A) The definition of "Cash
Equivalents" shall be amended to
add as clause (d) thereof the
following: "(d) investments in
marketable direct obligations
issued by any state of the United
States of America or any
municipality or other political
subdivision of any such state or
any public instrumentality thereof
having, at the time of
acquisition, the highest rating
obtainable from any of Standard &
Poor's, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
▇▇▇▇▇'▇ Investors Service, Inc. or
Fitch Ratings, Inc., including,
without limitation, auction rate
certificates";
(B) The definition of "Contingent
Payments" shall be amended by
deleting
19
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
the reference therein to
$19,600,000 and substituting
therefor reference to $21,400,000;
(C) The definition of "Lien" shall be
amended by deleting the references
therein to $2,000,000 and
$5,000,000 and substituting
therefor references to $4,000,000
and $6,000,000 plus an amount
reasonably acceptable to the Agent
and the Lenders in respect of the
BTI business not to exceed
$4,000,000, respectively; and
(D) Covenants and agreements in
Sections 2.05(b)(iii) and 5.02(h)
of the Existing Credit Agreement
in respect of "Reorganization
Securities" shall be made
applicable to the Common Stock,
Series B Convertible Redeemable
Preferred Stock and Common Stock
Purchase Warrants of ITC issuable
by ITC pursuant to the Merger
Agreement and the securities of
ITC issuable upon conversion or
exercise of, or as payment-in-kind
dividends on, the foregoing
securities in accordance with
their terms in the First Lien
Credit Agreement and the Second
Lien Credit Agreement.
Conditions Precedent: Customary and appropriate for
transactions of this type, including,
without limitation, (i) execution and
delivery of satisfactory definitive
documentation customary for such
transactions, (ii) obtaining necessary
third party approvals (if any), (iii)
evidence of the existence of control and
cash management agreements in form and
substance satisfactory to the Lenders,
(iv) completion of due diligence
satisfactory to the Agent and the
Lenders and (v) execution and delivery
of
20
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
the Successor Agent Agreement (pursuant
to which the First Lien Agent shall be
appointed).
ITC shall have acquired BTI pursuant to
the Merger Agreement on terms and
conditions acceptable in form and
substance to the Agent and the Lenders
including, without limitation,
(i) the initial investment by the WCAS
Securityholders of $35,000,000 in
ITC in the form of a new issue of
Series B Convertible Redeemable
Preferred Stock for cash and
cancellation of the Post-July 31
Notes and the Transaction Expenses
Notes (as such terms are defined
in the Merger Agreement) as set
forth in the Merger Agreement;
(ii) a commitment by the WCAS
Securityholders to invest an
additional $10,000,000 in such
Series B Convertible Redeemable
Preferred Stock for cash as set
forth in the Merger Agreement;
(iii) assumption of Debt consisting of
the obligations under the BTI
Facility (on the terms and
conditions set forth herein),
certain vendor notes in the
aggregate principal amount of
$7,100,000, certain outstanding
101/2% Senior Notes due 2007 in
the aggregate principal amount of
$18,525,000 (but not Debt held by
the WCAS Securityholders, which
shall be treated only as set forth
in Section 8.09(a) of the Merger
Agreement) in an aggregate
principal amount of not more than
$112,500,000, plus any
21
ITC/\DELTACOM, INC.
Term Sheet Dated July 2, 2003
fully cash-collateralized letters
of credit and ordinary course of
business obligations in an
aggregate amount reasonably
acceptable to all of the Lenders
(all such Debt to be assumed, the
"Assumed BTI Debt"); and
(iv) satisfaction of the condition
relating to Working Capital (as
defined in the Merger Agreement)
of BTI as of the Closing Date as
set forth in Section 9.02(e) of
the Merger Agreement.
Default Rate: As set forth in the Existing Credit
Agreement.
Costs and Expenses: On the Closing Date, the Borrower shall
reimburse the ITC Lenders and the BTI
Lenders for the costs and expenses
(including reasonable fees and expenses
of attorneys, including one law firm for
the BTI Lenders, and financial advisors)
incurred in connection with the
transaction and the documentation of the
First Lien Credit Agreement and the
Second Lien Credit Agreement.
Events of Default: As set forth in the Existing Credit
Agreement.
Governing Law: New York
22