Exhibit 1.1
ITC/\DELTACOM, INC.
PLACEMENT AGREEMENT
May 29, 1997
Xxxxxx Xxxxxxx & Co. Incorporated,
for itself and the other
several Placement Agents
named below
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
ITC/\DeltaCom, Inc., a Delaware corporation ("ITC"), proposes to issue
and sell to you (the "Manager") and the other several purchasers named in
Schedule I hereto (collectively with the Manager, the "Placement Agents")
$200,000,000 aggregate principal amount of its 11% Senior Notes due 2007 (the
"Notes") to be issued pursuant to the provisions of an Indenture to be dated as
of June 3, 0000 (xxx "Xxxxxxxxx") xxxxxxx XXX xxx Xxxxxx Xxxxxx Trust Company
of New York, Trustee (the "Trustee"). In connection with the sale of the Notes,
ITC/\DeltaCom, Inc., Eastern Telecom, Inc., ITC Transmission Systems, Inc., ITC
Transmission Systems II, Inc., Interstate FiberNet and Gulf States Transmission
Systems, Inc. (such entities, excluding ITC, collectively referred to as the
"Reorganization Subsidiaries" and, including ITC, collectively referred to as
the "Group") and ITC Holding Company, Inc. ("Holding Co.") will effect a
corporate reorganization (the "Reorganization") pursuant to which ITC will
become the holding company parent of the Reorganization Subsidiaries or their
successors-in-interest. The "Company" refers to the Group prior to the
Reorganization and to ITC after the Reorganization. Capitalized terms used
herein but not defined have the meanings specified therefor in the Final
Memorandum (as defined below).
The net proceeds from the issuance of the Notes will be held by the
Trustee pursuant to a pledge and security agreement to be dated as of the
Closing Date (as defined below) and to be substantially in the form attached
hereto as Exhibit A, with such revisions as shall be reasonably satisfactory to
the Placement Agents and ITC (the "Pledge and Security Agreement"). In
connection with the consummation of the Reorganization, the Trustee will release
Collateral (as defined in the Pledge and Security Agreement) such that the
amount of funds remaining subject to the Pledge and Security Agreement would
equal an amount sufficient to purchase a sufficient amount of Pledged Securities
to provide for the first six
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scheduled interest payments due on the Notes. In the event the Reorganization is
not consummated by September 15, 1997, ITC will be required to consummate a
Special Mandatory Redemption.
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act, in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S") and to institutional
accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) that deliver a letter in the form annexed to the Final
Memorandum.
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement, dated the date
hereof and to be substantially in the form attached hereto as Exhibit B (the
"Registration Rights Agreement").
In connection with the sale of the Notes, the Company has prepared a
preliminary private placement memorandum (the "Preliminary Memorandum") and will
prepare a final private placement memorandum (the "Final Memorandum" and, with
the Preliminary Memorandum, each a "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering and a
description of the Company and its business.
1. Representations and Warranties. Each member of the Group
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represents and warrants to, and agrees with, you that as of the date hereof:
(a) The Preliminary Memorandum does not contain and the Final
Memorandum, in the form used by the Placement Agents to confirm sales and on the
Closing Date, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(a) do not apply to
statements or omissions in either Memorandum based upon information relating to
any Placement Agent furnished to ITC in writing by such Placement Agent through
you expressly for use therein.
(b) Each member of the Group that is a corporation has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in each
Memorandum and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on
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the Company and its subsidiaries, taken as a whole; Schedule 1 to the form of
opinion of Xxxxx & Xxxxxxx L.L.P. attached hereto as Exhibit C, sets forth each
jurisdiction in which the conduct of the Company's business or its ownership or
leasing of property requires any member of the Group (other than DeltaCom, Inc.)
to be qualified as a foreign corporation or partnership, other than
jurisdictions in which the failure to be qualified in all such jurisdictions
would not, in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole. Schedule 1 to the form of opinion of Xxxxxx
Xxxxxx attached hereto as Exhibit F sets forth each jurisdiction in which the
conduct of DeltaCom, Inc.'s business or its ownership or leasing of property
requires DeltaCom, Inc. to be qualified as a foreign corporation, other than
jurisdictions in which the failure to be qualified in all such jurisdictions
would not, in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(c) Each member of the Group that is a partnership has been duly
formed and is validly existing as a partnership in good standing under the laws
of the jurisdiction of its organization, has the partnership power and authority
to own its property and to conduct its business as described in each Memorandum
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(d) This Agreement has been duly authorized, executed and
delivered by Holding Co. and each member of the Group.
(e) The Notes have been duly authorized by ITC and, when executed
and authenticated in accordance with the terms of the Indenture and delivered to
and paid for by the Placement Agents in accordance with the terms of this
Agreement, will (x) be valid and binding obligations of ITC enforceable against
ITC in accordance with their terms, except as (A) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (B) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of general
applicability and (y) be entitled to the benefits of the Indenture.
(f) The Indenture has been duly authorized by ITC and, when
executed and delivered by ITC, will be a valid and binding agreement of ITC,
enforceable against ITC in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (y) rights of acceleration, if
applicable, and the availability of equitable remedies may be limited by
equitable principles of general applicability.
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(g) The Registration Rights Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, ITC,
enforceable against ITC in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (y) the availability of equitable
remedies may be limited by equitable principles of general applicability and (z)
the rights to indemnification and contribution thereunder may be limited by
state or federal securities laws or the policies underlying such laws.
(h) The Pledge and Security Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, Holding Co.
and each member of the Group, enforceable against Holding Co. and each member of
the Group in accordance with its terms except as (x) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (y) the availability of equitable remedies may be limited
by equitable principles of general applicability; and upon the Closing Date, the
pledge of the Collateral (as defined in the Pledge and Security Agreement)
securing the payment of the Obligations (as defined in the Pledge and Security
Agreement) for the benefit of the Trustee and the holders of the Notes will
constitute a first priority perfected security interest in such Collateral,
enforceable against all creditors of Holding Co. and any member of the Group.
(i) The execution and delivery by ITC of, and the performance by
ITC of its obligations under, this Agreement, the Indenture, the Registration
Rights Agreement, the Pledge and Security Agreement and the Notes (collectively,
the "Transaction Documents"), the issuance, sale and delivery of the Notes and
the execution and delivery by each other member of the Group and Holding Co. of,
and the performance by each such member of the Group and Holding Co. of their
respective obligations under, this Agreement and the Pledge and Security
Agreement will not contravene any provision of applicable law or the certificate
of incorporation or by-laws or partnership agreement of any member of the Group
or Holding Co. or any material agreement or other material instrument binding
upon any such entity or any of its subsidiaries or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the Company
or any of its subsidiaries, and no permit, license, consent, approval,
authorization or order of, or filing, declaration or qualification with, any
governmental body or agency is required for the performance by any member of the
Group or Holding Co. of their respective obligations under the Transaction
Documents, except (i) such as may be required by the securities or Blue Sky laws
of the various states in connection with the offer and sale of the Notes and
(ii) such as are required to be obtained after the date hereof and specifically
set forth in the Transaction Documents. Schedule 2 to the form of opinion of
Xxxxx & Xxxxxxx L.L.P. attached hereto as Exhibit C sets forth all material
agreements and instruments to which any member of the Group is a party. Schedule
2 to the form of opinion of Xxxxxx Xxxxxx attached hereto as Exhibit F sets
forth all material agreements and instruments to which DeltaCom, Inc. is a
party.
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(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Preliminary Memorandum. Furthermore, except in each case as described in the
Final Memorandum, (i) the Company and its subsidiaries have not incurred any
material liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (ii) neither the
Company nor any of its subsidiaries has purchased any of the Company's
outstanding capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on the Company's capital stock; and (iii) there has not
been any material change in the capital stock, short-term debt or long-term debt
of the Company and its subsidiaries, taken as a whole.
(k) There are no legal or governmental proceedings pending or
threatened to which it or any of its subsidiaries is a party or to which any of
its or any of its subsidiaries' properties is subject other than proceedings
accurately described in all material respects in each Memorandum and proceedings
that would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of Holding Co. or any
member of the Group to perform its respective obligations under the Transaction
Documents or to consummate the transactions contemplated by the Final
Memorandum.
(l) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Notes in a
manner that would require the registration under the Securities Act of the Notes
or (ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act) in connection
with the offering of the Notes or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act.
(m) ITC is not and, after giving effect to the offering and sale
of the Notes and the application of the proceeds thereof as described in the
Final Memorandum, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(n) It is not necessary in connection with the offer, sale and
delivery of the Notes to the Placement Agents in the manner contemplated by this
Agreement to register the Notes under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
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(o) It and each of its subsidiaries (i) have all necessary consents,
authorizations, approvals, orders, certificates and permits of and from, and has
made all declarations and filings with, all federal, state, local and other
governmental, administrative or regulatory authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license and use
its properties and assets and to conduct its business in the manner described in
each Memorandum, except to the extent that the failure to obtain such consents,
authorizations, approvals, orders, certificates and permits or make such
declarations and filings would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, and (ii) have not received any notice of
proceedings relating to revocation or modification of any such consent,
authorization, approval, order, certificate or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to result in a material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, except as described in or
contemplated by each Memorandum.
(p) It and each of its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants, including
all such laws and regulations concerning electromagnetic radio frequency
emissions ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
its businesses and (iii) are in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(q) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(r) None of the Company, its Affiliates or any person acting on its
or their behalf (other than the Placement Agents) has engaged in any directed
selling efforts (as that term is defined in Regulation S) with respect to the
Notes and the Company and its Affiliates and any person acting on its or their
behalf (other than the Placement Agents) have complied with the offering
restrictions requirement of Regulation S.
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(s) It and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(t) It and each of its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to its business, in each case free and
clear of all liens, encumbrances and defects, except such as are described in
each Memorandum, such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
them; and any real property and buildings held under lease by them are held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such property and buildings by them, in each case except as described in
or contemplated by each Memorandum.
(u) It and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with their businesses as now operated, and neither it nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
(v) No material labor dispute exists with its employees or the
employees of any of its subsidiaries, except as described in or contemplated by
each Memorandum, or, to its knowledge, is imminent; and it is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken as a
whole.
(w) It and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither it nor any of its subsidiaries has
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been refused any insurance coverage sought or applied for; and neither it nor
any of its subsidiaries has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, except as described in or
contemplated by each Memorandum.
(x) The historical and pro forma financial statements included in
each Memorandum comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the related published rules
and regulations.
(y) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
2. Offering. You have advised ITC that the Placement Agents
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will make an offering of the Notes purchased by the Placement Agents hereunder
on the terms set forth in the Final Memorandum as soon as practicable after this
Agreement is entered into as in your judgment is advisable.
3. Purchase and Delivery. ITC hereby agrees to sell to the
---------------------
several Placement Agents, and the Placement Agents, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agree, severally and not jointly, to purchase from ITC the
respective principal amount of Notes set forth in Schedule I hereto opposite
their names at a purchase price of 97% of the principal amount thereof plus
accrued interest, if any, from June 3, 1997 to the date of payment and
delivery.
Payment for the Notes shall be made against delivery of the Notes at a
closing (the "Closing") to be held at the office of Shearman & Sterling, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 9:00 A.M., local time, on June 3, 1997,
or at such other time on the same or such other date, not later than June 17,
1997, as shall be designated in writing by you. The time and date of such
payment are herein referred to as the Closing Date. Payment for the Notes shall
be made to ITC (which will immediately deposit such funds as required by the
Pledge and Security Agreement) in federal funds or other funds immediately
available in New York City.
Certificates for the Notes shall be in definitive form and registered
in such names and in such denominations as you shall request in writing not less
than one full business day prior to the Closing Date. The certificates
evidencing the Notes shall be delivered to you on the Closing Date for the
respective accounts of the several Placement Agents, with any
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transfer taxes payable in connection with the transfer of the Notes to the
Placement Agents duly paid, against payment of the purchase price therefor.
4. Conditions to Closing. The several obligations of the
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Placement Agents under this Agreement to purchase the Notes will be subject to
the following conditions:
(a) Subsequent to the date of this Agreement and prior to the
Closing Date,
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and its
subsidiaries, taken as a whole, from that set forth in the Preliminary
Memorandum that, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable to market the Notes on the terms and in
the manner contemplated in the Final Memorandum.
(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of each member of the Group,
to the effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of each member of the Group contained in this
Agreement are true and correct in all material respects as of the Closing Date
and that each member of the Group has complied in all material respects with all
of the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.
The officer signing and delivering any such certificate may rely upon
the best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of Xxxxx
& Xxxxxxx L.L.P. counsel for the Company, dated the Closing Date, in the form
set forth in Exhibit C.
The opinion of Xxxxx & Xxxxxxx L.L.P. shall be rendered to you at
the request of ITC and shall so state therein.
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(d) You shall have received on the Closing Date an opinion of
Brantley & Xxxxxxxxx, P.C., Alabama communications counsel for the Company,
dated the Closing Date, in the form set forth in Exhibit D.
The opinion of Xxxxxxxx & Xxxxxxxxx, P.C. shall be rendered to you
at the request of ITC and shall so state therein.
(e) You shall have received on the Closing Date an opinion of
Stowers, Hayes, Xxxxx & Xxxxx, Georgia communications counsel for the Company,
dated the Closing Date, in the form set forth in Exhibit E.
The opinion of Stowers, Hayes, Xxxxx & Xxxxx shall be rendered to
you at the request of ITC and shall so state therein.
(f) You shall have received on the Closing Date an opinion of Xxxxxx
Xxxxxx, General Counsel of DeltaCom, Inc., dated the Closing Date, in the form
set forth in Exhibit F.
The opinion of Xxxxxx Xxxxxx shall be rendered to you at the request
of ITC and DeltaCom, Inc. and shall so state therein.
(g) You shall have received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Placement Agents, dated the Closing Date,
in form and substance satisfactory to you.
(h) You shall have received on each of the date hereof and the
Closing Date a letter, dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to you, from the Company's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Final Memorandum.
(i) You shall have received such other certificates and documents as
you or your counsel may request.
5. Covenants of the Group. In further consideration of the
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agreements of the Placement Agents contained in this Agreement, each member of
the Group (and, with respect to paragraph (m), Holding Co.) covenants as
follows:
(a) To furnish to you, without charge, during the period mentioned
in paragraph (c) below, as many copies of the Final Memorandum and any
supplements and
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amendments thereto as you may reasonably request and to use its best efforts to
deliver such copies to you by 10:00 a.m. (New York City time) on the business
day next following the execution of this Agreement.
(b) Before amending or supplementing either Memorandum, to furnish
to you a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the
date on which all of the Notes shall have been sold by the Placement Agents, any
event shall occur or condition exist as a result of which it is necessary in
your judgment to amend or supplement the Final Memorandum in order to make the
statements therein, in the light of the circumstances when such Memorandum is
delivered to a purchaser, not misleading, or if, in the opinion of counsel to
the Placement Agents, it is necessary to amend or supplement such Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to such
Memorandum so that the statements in such Memorandum as so amended or
supplemented will not, in the light of the circumstances when such Memorandum is
delivered to a purchaser, be misleading or so that such Memorandum, as so
amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Notes for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) Whether or not any sale of such Notes is consummated, to pay all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the preparation of each Memorandum and all amendments and
supplements thereto, (ii) the preparation, issuance and delivery of the Notes,
(iii) the fees and disbursements of the Company's counsel and accountants and
the Trustee and its counsel, (iv) the qualification of such Notes under
securities or Blue Sky laws in accordance with the provisions of Section 5(d),
including filing fees and the fees and disbursements of counsel for the
Placement Agents in connection therewith and in connection with the preparation
of any Blue Sky or legal investment memoranda, (v) the printing and delivery to
the Placement Agents in quantities as hereinabove stated of copies of the
Memorandum and any amendments or supplements thereto, (vi) any fees charged by
rating agencies for the rating of such Notes, (vii) all document production
charges and expenses of counsel to the Placement Agents (but not including their
fees for professional services) in connection with the preparation of this
Agreement, (viii) the fees and expenses, if any, incurred in connection with the
admission of such Notes for trading in PORTAL or any other appropriate market
system, (ix) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the Notes, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in
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connection with the road show presentations with the prior approval of the
Company, travel and lodging expense of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (x) all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section.
(f) Neither the Company nor any Affiliate will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could be integrated with the sale of the
Notes in a manner which would require the registration under the Securities Act
of such Notes.
(g) Not to solicit any offer to buy or offer or sell the Notes by
means of any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(h) While any of the Notes remain outstanding, ITC will make
available, upon request, to any seller of such Notes the information specified
in Rule 144A(d)(4) under the Securities Act, unless ITC is then subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(i) None of the Company, its Affiliates or any person acting on its
or their behalf (other than the Placement Agents) will engage in any directed
selling efforts (as that term is defined in Regulation S) with respect to the
Notes, and the Company and its Affiliates and each person acting on its or their
behalf (other than the Placement Agents) will comply with the offering
restrictions of Regulation S.
(j) To use its best efforts to permit the Notes to be designated
PORTAL securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in the
PORTAL Market.
(k) To use the net proceeds received by it from the sale of the
Notes pursuant to this Agreement in the manner specified in the Final Memorandum
under the caption "Use of Proceeds."
(l) ITC will, and will cause the Trustee to, refuse to register any
transfer of any Notes sold pursuant to Regulation S if such transfer is not made
in accordance with the provisions of Regulation S.
(m) If ITC is required to effect a Special Mandatory Redemption and
for any reason the amount of the Collateral (as defined in the Pledge and
Security Agreement) to
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be released is insufficient to pay the aggregate purchase price to redeem the
Notes as provided in the Indenture, each member of the Group and Holding Co.
jointly and severally agree to pay to the Paying Agent under the Indenture on or
prior to the redemption date the amount of funds necessary to permit all
outstanding Notes to be redeemed in accordance with the provisions of the
Indenture.
(n) Not to consummate any Asset Sale (as defined in the Indenture)
prior to the consummation of the Reorganization other than sales, transfers or
other dispositions of property or equipment having a fair market value not to
exceed $20 million to a Person pursuant to a written agreement which provides
for the repurchase or reacquisition of such property or equipment by the Company
or any of its Restricted Subsidiaries upon termination of such agreement or at
the option of the Company or any of its Restricted Subsidiaries for equal or
lesser consideration.
6. Offering of Notes; Restrictions on Transfer. (a) Each Placement
-------------------------------------------
Agent, severally and not jointly, represents and warrants to the Company that
such Placement Agent is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB"). Each Placement Agent, severally and not
jointly, agrees with the Company that (i) it will not solicit offers for, or
offer or sell, such Notes by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Notes only from,
and will offer such Notes only to, persons that it reasonably believes to be (A)
in the case of offers inside the United States, (x) QIBs or (y) other
institutional accredited investors (as defined in Rule 501(a) (1), (2), (3) or
(7) under the Securities Act) ("institutional accredited investors") that, prior
to their purchase of the Notes, deliver to such Placement Agent a letter
containing the representations and agreements set forth in Appendix A to the
Memorandum and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)) that, in
each case, in purchasing such Notes are deemed to have represented and agreed as
provided in the Final Memorandum under the caption "Transfer Restrictions."
(b) Each Placement Agent, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:
(i) it understands that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of the
Notes, or possession or distribution of either Memorandum or any other
offering or publicity material relating to the Notes, in any country or
jurisdiction where action for that purpose is required;
14
(ii) such Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Notes or has in its possession or distributes either Memorandum or
any such other material, in all cases at its own expense;
(iii) the Notes have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance
with Regulation S under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Notes and will offer and
sell the Notes (A) as part of its distribution at any time and (B)
otherwise until 40 days after the Closing Date, only in accordance with
Rule 903 of Regulation S or another exemption from the registration
requirements of the Securities Act. Accordingly, neither such Placement
Agent, its Affiliates nor any persons acting on its or their behalf have
engaged or will engage in any directed selling efforts (within the meaning
of Regulation S) with respect to the Notes, and any such Placement Agent,
its Affiliates and any such persons have complied and will comply with the
offering restrictions requirements of Regulation S;
(v) such Placement Agent has (A) not offered or sold and, during
the period of six months from the date hereof, will not offer or sell any
Notes to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 (the "Regulations"); (B)
complied and, during the period of six months from the date hereof, will
comply with all applicable provisions of the Financial Services Xxx 0000
and the Regulations with respect to anything done by it in relation to the
Notes in, from or otherwise involving the United Kingdom; and (C) only
issued or passed on and, during the period of six months from the date
hereof, will only issue or pass on to any person in the United Kingdom any
document received by it in connection with the issue of the Notes if that
person is of a kind described in Article 11(3) of the Financial Services
Xxx 0000 (Investment Advertisements) (Exemptions) Order 1996 or is a person
to whom such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Notes have not been
and will not be registered under the Securities and Exchange Law of Japan,
and represents that it has not offered or sold, and agrees that it will not
offer or sell, any Notes, directly or
15
indirectly in Japan or to any resident of Japan except (A) pursuant to an
exemption from the registration requirements of the Securities and Exchange
Law of Japan and (B) in compliance with any other applicable requirements
of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to confirmation
of sales of the Notes, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that
purchases Notes from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the closing date, except
in either case in accordance with Regulation S (or Rule 144A, if
available) under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this Section 6 have the meanings given to them by Regulation S.
7. Indemnification and Contribution. (a) Each member of the
--------------------------------
Group agrees to indemnify and hold harmless each Placement Agent, and each
person, if any, who controls such Placement Agent within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, or is under
common control with, or is controlled by, such Placement Agent, from and against
any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent or any such controlling of affiliated person in connection with defending
or investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if ITC shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except insofar
as such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Placement Agent furnished to ITC in writing by such
Placement Agent through you expressly for use therein; provided, however, that
-------- -------
the foregoing indemnity agreement with respect to a Memorandum shall not inure
to the benefit of any Placement Agent (or any other person indemnified pursuant
to this paragraph (a)) to the extent that any such losses, claims, damages or
liabilities result from the fact that such Placement Agent sold securities to a
person to whom there was not sent or given by or on behalf of such Placement
Agent a copy of the Final Memorandum at or prior to the written confirmation of
the sale of the Notes to such person, and if the losses, claims, damages or
liabilities result from an untrue statement or alleged
16
untrue statement or an omission or alleged omission contained in the Preliminary
Memorandum that was corrected in the Final Memorandum.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless each member of the Group, their respective directors
and officers and each person, if any, who controls any member of the Group
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the members
of the Group to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to ITC in writing by such Placement
Agent through you expressly for use in either Memorandum or any amendments or
supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) of this Section 7 above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated in the case
of parties indemnified pursuant to paragraph (a) of this Section 7 above and by
ITC in the case of parties indemnified pursuant to paragraph (b) of this
Section 7 above. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
17
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 7 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Group, on the one hand, and the Placement Agents, on the other hand, from the
offering of such Notes or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Group on the one hand and the Placement Agents on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Group on the one hand and
the Placement Agents on the other hand in connection with the offering of such
Notes shall be deemed to be in the same respective proportions as the net
proceeds from the offering of such Notes (before deducting expenses) received by
ITC and the total discounts and commissions received by the Placement Agents in
respect thereof bear to the aggregate offering price of such Notes. The relative
fault of the Group on the one hand and of the Placement Agents on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Group or by the
Placement Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Placement Agents' respective obligations to contribute pursuant to this
Section 7 are several in proportion to the respective principal amount of Notes
they have purchased hereunder, and not joint.
(e) The Group and the Placement Agents agree that it would not be
just or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Placement Agents were treated as one entity for
--- ----
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
18
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes resold by it in
the initial placement of such Notes were offered to investors exceeds the amount
of any damages that such Placement Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution provisions contained in this Section 7
and the representations and warranties of the Group contained in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Placement Agents or any person controlling the Placement Agents or by or on
behalf of the Group, any of their respective officers or directors or any person
controlling any member of the Group and (iii) acceptance of and payment for any
of the Notes. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
19
8. Termination. This Agreement shall be subject to termination by
-----------
notice given by you to ITC, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Notes on the terms and in the manner contemplated in the Final
Memorandum.
9. Miscellaneous. If, on the Closing Date, any one or more of the
-------------
Placement Agents shall fail or refuse to purchase Notes that it or they have
agreed to purchase hereunder on such date, and the aggregate principal amount of
Notes which such defaulting Placement Agent or Placement Agents agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of Notes to be purchased on such date, the other Placement
Agents shall be obligated severally in the proportions that the principal amount
of Notes set forth opposite their respective names in Schedule I bears to the
aggregate principal amount of Notes set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Notes which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
--------
that in no event shall the principal amount of Notes that any Placement Agent
has agreed to purchase pursuant to Section 3 be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such principal amount of Notes
without the written consent of such Placement Agent. If, on the Closing Date,
any Placement Agent or Placement Agents shall fail or refuse to purchase Notes
which it or they have agreed to purchase hereunder on such date and the
aggregate principal amount of Notes with respect to which such default occurs is
more than one-tenth of the aggregate principal amount of Notes to be purchased
on such date and arrangements satisfactory to you and ITC for the purchase of
such Notes are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Placement Agent or
of the Company. In any such case either you or ITC shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Final Memorandum or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Placement Agent from liability in
respect of any default of such Placement Agent under this Agreement.
20
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
If this Agreement shall be terminated by the Placement Agents, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Placement Agents or such Placement
Agents as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Placement Agents in connection
with this Agreement or the offering contemplated hereunder.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
21
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
ITC/\DeltaCom, Inc.
By /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
ITC Holding Company, Inc.
By /s/ Xxxxxxxx B. Lancer, III
------------------------------
Name: Xxxxxxxx B. Lancer, III
Title: Chairman
DeltaCom, Inc.
By /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
Eastern Telecom, Inc.
By /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
Interstate FiberNet
By ITC Transmission Systems, Inc.,
its General Partner
By /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
22
Gulf States Transmission Systems, Inc.
By /s/ Xxxxxx Xxxxxx
-----------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
ITC Transmission Systems, Inc.
By /s/ Xxxxxx Xxxxxx
-----------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
ITC Transmission Systems II, Inc.
By /s/ Xxxxxx Xxxxxx
-----------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
Agreed as of the date first above written
Xxxxxx Xxxxxxx & Co. Incorporated
Acting severally on behalf
of itself and the several
Placement Agents named herein.
By Xxxxxx Xxxxxxx & Co. Incorporated
By /s/ Xxxxxx Xxxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Principal
SCHEDULE I
Principal Amount at
Maturity of Notes
Placement Agent To Be Purchased
--------------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated $130,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated 40,000,000
First Union Capital Markets Corp. 20,000,000
NationsBanc Capital Markets, Inc. 10,000,000
------------
Total............................... $200,000,000
============
