EXHIBIT 1.1
ITC/\DELTACOM, INC.
PLACEMENT AGREEMENT
October 29, 1998
Xxxxxx Xxxxxxx & Co. Incorporated,
for itself and the other
several Placement Agents
named below
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
ITC/\DeltaCom, Inc., a Delaware corporation (the "Company"), 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")
$125,000,000 aggregate principal amount of its 9 3/4% Senior Notes due 2008 (the
"Notes") to be issued pursuant to the provisions of an Indenture to be dated as
of November 5, 1998 (the "Indenture") between the Company and United States
Trust Company of New York, Trustee (the "Trustee").
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 and in offshore transactions in reliance
on Regulation S under the Securities Act ("Regulation S").
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement, to be dated the
Closing Date (as defined) and to be substantially in the form attached hereto as
Exhibit A (the "Registration Rights Agreement").
In connection with the sale of the Notes, the Company will prepare a
private placement memorandum (the "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.
2
1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, you that as of the date hereof:
(a) The 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 the Memorandum
based upon information relating to any Placement Agent furnished to the Company
in writing by such Placement Agent through you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the 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;
Schedule 1 to the form of opinion of Xxxxx & Xxxxxxx L.L.P. attached hereto as
Exhibit B sets forth each jurisdiction in which the conduct of the Company's
business or its ownership or leasing of property requires the Company 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 subsidiary of the Company 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 the 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; Schedule 2 to the form of
opinion of Xxxxx & Xxxxxxx L.L.P. attached hereto as Exhibit B sets forth each
jurisdiction in which the conduct of the business of Interstate FiberNet, Inc.
("Interstate FiberNet") or its ownership or leasing of property requires
Interstate FiberNet 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. Schedule 1 to the form of opinion of J.
Xxxxxx Xxxxxx, attached hereto as Exhibit E, sets forth each jurisdiction in
which the conduct of the business of ITC/\DeltaCom Communications, Inc.
("DeltaCom") or its ownership or leasing of property requires DeltaCom to be
qualified as a foreign corporation, other than jurisdictions in which the
failure
3
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.
Interstate FiberNet and DeltaCom are the only active subsidiaries, direct or
indirect, of the Company.
(d) This Agreement has been duly authorized, executed and delivered by
the Company.
(e) The Notes have been duly authorized by the Company 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 the Company
enforceable against the Company 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 the Company and, when
executed and delivered by the Company, will be a valid and binding agreement of
the Company, enforceable against the Company 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.
(g) The Registration Rights Agreement has been duly authorized and,
when executed and delivered by the Company, will be a valid and binding
agreement of, the Company, enforceable against the Company 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 execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture, the
Registration Rights Agreement and the Notes (collectively, the "Transaction
Documents") and the issuance, sale and delivery of the Notes will not contravene
any provision of applicable law or the certificate of incorporation or by-laws
of the Company or any material agreement or other material instrument binding
upon the Company 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
4
performance by the Company of its 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 B sets forth all material agreements
and instruments to which the Company or Interstate FiberNet is a party. Schedule
2 to the form of opinion of J. Xxxxxx Xxxxxx attached hereto as Exhibit E sets
forth all material agreements and instruments to which DeltaCom is a party.
(i) 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
Memorandum. Furthermore, except in each case as described in the 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.
(j) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
other than proceedings accurately described in all material respects in the
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
the Company to perform its obligations under the Transaction Documents or to
consummate the transactions contemplated by the Memorandum.
(k) 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.
(l) The Company 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 Memorandum, will
5
not be an "investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(m) 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.
(n) The Company and each of its subsidiaries (i) have all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and have 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 their respective properties and assets and to conduct their
respective businesses in the manner described in the 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 have a material adverse effect on
the Company and its subsidiaries, taken as a whole, except as described in or
contemplated by the Memorandum.
(o) The Company 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 their respective 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.
(p) 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.
6
(q) 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.
(r) The Company 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.
(s) The Company 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 their respective
businesses, in each case free and clear of all liens, encumbrances and defects,
except such as are described in the 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 the Memorandum.
(t) The Company 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 have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(u) No material labor dispute exists with the employees of the Company
or any of its subsidiaries, except as described in or contemplated by the
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
7
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.
(v) The Company 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 the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company 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 the Memorandum.
(w) The historical financial statements included in the 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.
2. Offering. You have advised the Company that the Placement Agents
--------
will make an offering of the Notes purchased by the Placement Agents hereunder
on the terms set forth in the Memorandum as soon as practicable after this
Agreement is entered into as in your judgment is advisable.
3. Purchase and Delivery. The Company 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 the
Company the respective principal amount of Notes set forth in Schedule I hereto
opposite their names at a purchase price of 97.50% of the principal amount
thereof plus accrued interest, if any, from November 5, 1998 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, November 5,
1998, or at such other time on the same or such other date, not later than
November 19, 1998, 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 the Company 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
8
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 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 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 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 Memorandum.
(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct in all material respects as of the Closing Date and that the
Company 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 B.
The opinion of Xxxxx & Xxxxxxx L.L.P. shall be rendered to you at the
request of the Company and shall so state therein.
9
(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 C.
The opinion of Xxxxxxxx & Xxxxxxxxx, P.C. shall be rendered to you at
the request of the Company 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 D.
The opinion of Stowers, Hayes, Xxxxx & Xxxxx shall be rendered to you
at the request of the Company and shall so state therein.
(f) You shall have received on the Closing Date an opinion of J.
Xxxxxx Xxxxxx, General Counsel of the Company, dated the Closing Date, in the
form set forth in Exhibit E.
The opinion of J. Xxxxxx Xxxxxx shall be rendered to you at the
request of the Company 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 Xxxxxx Xxxxxxxx LLP, 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 Memorandum.
(i) Interstate FiberNet, Inc., NationsBank, N.A. and the other lenders
party thereto shall have entered into an amendment to the First Amended and
Restated Credit Agreement dated as of February 24, 1998, substantially in the
form set forth in Exhibit F.
(j) You shall have received such other certificates and documents as
you or your counsel may request.
5. Covenants of the Company. In further consideration of the
------------------------
agreements of the Placement Agents contained in this Agreement, the Company
covenants as follows:
10
(a) To furnish to you, without charge, during the period mentioned in
paragraph (c) below, as many copies of the Memorandum and any supplements and
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 the 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 Memorandum in order to make the
statements therein, in the light of the circumstances when the 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 the Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to the
Memorandum so that the statements in the Memorandum as so amended or
supplemented will not, in the light of the circumstances when the Memorandum is
delivered to a purchaser, be misleading or so that the 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 the 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
11
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 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, the Company will make
available, upon request, to any seller of such Notes the information specified
in Rule 144A(d)(4) under the Securities Act, unless the Company 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 Memorandum under the
caption "Use of Proceeds."
(l) The Company 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.
12
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, QIBs and (B) in the case of
offers outside the United States, 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 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 the Memorandum or any other
offering or publicity material relating to the Notes, in any country or
jurisdiction where action for that purpose is required;
(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 the 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
13
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 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."
14
Terms used in this Section 6 have the meanings given to them by Regulation S.
7. Indemnification and Contribution. (a) The Company 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 or 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 the Memorandum (as amended or
supplemented if the Company 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 the Company in writing by such
Placement Agent through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to the 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 an amended or supplemented Memorandum at or prior to the written
confirmation of the sale of the Notes to such person (if the Company shall have
furnished such amendment or supplement to the Memorandum to such Placement Agent
prior to the written confirmation of such sale), and if the losses, claims,
damages or liabilities result from an untrue statement or alleged untrue
statement or an omission or alleged omission contained in the Memorandum that
was corrected in such amendment or supplement to the Memorandum.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company 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 Company to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use in the
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
15
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 the Company 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 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
Company, on the one hand, and the Placement Agents, on the other hand, from the
offering of such Notes or
16
(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 Company 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 Company 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
the Company 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 Company 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
Company 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 Company 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
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 Company 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 Company, any of its officers or directors or any
17
person controlling the Company 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.
8. Termination. This Agreement shall be subject to termination by
-----------
notice given by you to the Company, 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 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 the Company 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 the Company
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 Memorandum
or in any other
18
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.
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.
19
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/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
and Chief Financial Officer
Agreed as of the date first above written
Xxxxxx Xxxxxxx & Co. Incorporated
First Union Capital Markets, a division of
Wheat First Securities, Inc.
By Xxxxxx Xxxxxxx & Co. Incorporated
By /s/ Xxxxxx Xxxxxx
------------------------
Name: Xxxxxx Xxxxxx
Title: Principal
SCHEDULE I
Principal Amount at
Maturity of Notes
Placement Agent To Be Purchased
--------------- ----------------
Xxxxxx Xxxxxxx & Co. Incorporated.......... $100,000,000
First Union Capital Markets, a division
of Wheat First Securities, Inc............ 25,000,000
Total........................ $125,000,000
============
EXHIBIT A
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT B
---------
OPINION OF XXXXX & XXXXXXX L.L.P.
EXHIBIT C
---------
OPINION OF XXXXXXXX & XXXXXXXXX, P.C.
EXHIBIT D
---------
OPINION OF STOWERS, HAYES, XXXXX & XXXXX
EXHIBIT E
---------
OPINION OF J. XXXXXX XXXXXX
