EXHIBIT C
CONFORMED COPY
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") dated as of October 28, 2002,
by and among Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P. a Delaware limited
partnership (hereinafter called "WCAS VIII") and JPMorgan Chase Bank
(hereinafter called the "Escrow Agent").
WITNESSETH:
WHEREAS, WCAS VIII is the holder of certain (i) 11% Senior Notes due
2007 (the "11% Senior Notes"), (ii) 8 7/8% Senior Notes due 2008 (the "8 7/8%
Senior Notes") and (iii) 9 3/4% Senior Notes due 2008 (the "9 3/4% Senior Notes"
together with the 11% Senior Notes and the 8 7/8% Senior Notes, the "Senior
Notes") of ITC DeltaCom, Inc. a Delaware corporation ("ITC"). ITC desires to
have $15,031,000 face value amount of the 11% Senior Notes, $34,416,000 face
value amount of the 8 7/8% Senior Notes and $24,957,000 face value amount of the
9 3/4% Senior Notes held by the Escrow Agent subject to the terms and conditions
set forth herein.
WHEREAS, Pursuant to ITC's Plan of Reorganization under Chapter 11 of
the Bankruptcy Code, as revised (the "Plan"), which was approved by the US
Bankruptcy Court for the District of Delaware on October 17, 2002, the Senior
Notes are expected to be cancelled and exchanged for shares of Common Stock,
$.01 par value per share (the "Common Stock"), of ITC. WCAS VIII desires to have
the Escrow Agent hold the Senior Notes and the shares of Common Stock exchanged
therefor (the "Shares" and together with the Senior Notes, the "Securities") in
escrow for and on account of WCAS VIII subject to the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. WCAS VIII hereby appoints and designates the Escrow Agent as escrow
agent for the purposes set forth herein, and the Escrow Agent does hereby accept
such appointment under the terms and conditions set forth herein.
(a) WCAS VIII will cause the Senior Notes to be delivered to the
Escrow Agent at the address set forth in Paragraph 15 of this Agreement and WCAS
VIII hereby assigns and transfers the Senior Notes to the Escrow Agent to be
held by the Escrow Agent pursuant to this Agreement and will cooperate to
register such Senior Notes in the name of the Escrow Agent.
(b) Upon cancellation of the Senior Notes in connection with the
Plan, the Escrow Agent shall, at the written instruction of WCAS VIII, take such
actions as may be required pursuant to the Plan to exchange the Senior Notes for
the Shares.
(c) The Escrow Agent shall hold, subject to the terms and
conditions hereof, the Securities (such securities, including any cash exchanged
therefor and any accretions
thereto and reductions therefrom, and any interest and dividends earned thereon
and distributions and exchanges made with respect thereto, being the "Escrow
Account").
2. During the term of this Escrow Agreement, the Escrow Agent shall
maintain the Escrow Account as follows:
(a) The Escrow Account shall reflect (i) the Securities plus (ii)
any interest, dividends, distributions and exchanges received or accrued but
unpaid in respect of the Securities included in the Escrow Account, minus (iii)
any securities distributed to WCAS VIII pursuant to this Agreement, plus (iv)
amounts, if any, earned or realized on any cash or Permitted Investments
allocated to the Escrow Account.
(b) All amounts earned or received with respect to cash or any
Permitted Investments shall be subject to the terms of this Escrow Agreement and
shall become part of the Escrow Account. Cash, if any, held in any Escrow
Account shall, pending disbursement, be invested in Permitted Investments. For
purposes of this Escrow Agreement, "Permitted Investment" shall mean (i)
JPMorgan Chase Bank Cash Escrow Product maintained by Escrow Agent's affiliate,
(ii) money market funds investing primarily in short-term United States Treasury
securities including without limitation, the JPMorgan Fund or any other mutual
fund for which the Escrow Agent or any affiliate of the Escrow Agent serves as
investment manager, (iii) obligations of or obligations guaranteed by the United
States of America, either outright or in connection with repurchase agreements
covering such obligations, with a maturity not later than one (1) year from the
date of investment and (iv) such other investments as may be specified by WCAS
VIII in writing, from time to time. All trust investment orders involving
Treasuries, commercial paper and other direct investments will be executed
through X.X. Xxxxxx Xxxxxxx Asset Management ("JPFAM"), in the investment
management division of X.X. Xxxxxx Chase. Subject to the principles of best
execution, transactions are effected on behalf of the account through
broker-dealer selected by JPFAM. In this regard, JPFAM seeks to attain the best
overall result for the account, taking into consideration quality of service and
reliability. An agency fee will be assessed in connection with each transaction.
In no event shall any cash held in the Escrow Account be invested in a manner
that would prevent such account from being immediately liquidated. If the Escrow
Agent receives no investment direction from WCAS VIII, any cash held in the
Escrow Account shall be invested in the JPMorgan Chase Bank Cash Escrow Product.
Investments may be executed by the Escrow Agent's own or its Affiliates
commercial or bond department.
(c) The Escrow Agent shall have the right to liquidate any
investments held, in order to provide funds necessary to make required payments
under this Escrow Agreement. The Escrow Agent in its capacity as escrow agent
hereunder shall not have any liability for any loss sustained as a result of any
investment made pursuant to the instructions of the parties hereto or as a
result of any liquidation of any investment prior to its maturity or for the
failure of the parties to give the Escrow Agent instructions to invest or
reinvest the Escrow Account or any earnings thereon.
3. Upon the written instruction of WCAS VIII to the Escrow Agent
requesting return of the Senior Notes, the Escrow Agent shall assign and deliver
the Senior Notes held in the Escrow Account to WCAS VIII or to a person
designated by WCAS VIII, together
with the remainder of the contents of the Escrow Account, if any. Upon such
delivery by the Escrow Agent, this Escrow Agreement shall terminate, subject to
the provisions of Paragraph 12 hereunder, which Paragraph shall survive such
termination.
4. Upon the written instruction of WCAS VIII to the Escrow Agent
requesting sale of the Securities, the Escrow Agent shall sell the Securities
and deliver to WCAS VIII or to a person designated by WCAS VIII all of the
proceeds of such sale together with the remainder of the contents of the Escrow
Account, if any. Upon delivery by the Escrow Agent, this Escrow Agreement shall
terminate, subject to the provisions of Paragraph 12 hereunder, which Paragraph
shall survive such termination.
5. Upon the written instruction of WCAS VIII to the Escrow Agent
requesting delivery of the Shares, the Escrow Agent shall cause the Shares held
in the Escrow Account to be assigned and delivered to WCAS VIII or to a person
designated by WCAS VIII together with the remainder of the contents of the
Escrow Account, if any. Upon such delivery by the Escrow Agent, this Escrow
Agreement shall terminate, subject to the provisions of Paragraph 12 hereunder,
which Paragraph shall survive such termination.
6. On any matter submitted to a vote of the noteholders of ITC, the
Escrow Agent shall vote (or cause to be voted) in person or by proxy the Senior
Notes held by the Escrow Agent as directed by WCAS VIII.
7. On any matter submitted to a vote of stockholders of ITC, the
Escrow Agent shall vote (or cause to be voted) in person or by proxy the Shares
held by the Escrow Agent in the same proportion and in the same manner as the
shares of outstanding Common Stock not held by the Escrow Agent have been voted
on any such matter.
8. The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice, instruction or request furnished
to it hereunder and believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall be under no
duty to inquire into or investigate the validity, accuracy or content of any
such document. The Escrow Agent shall have no duty to solicit payments, if any,
that may be due it hereunder.
9. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith unless a court of competent jurisdiction determines
that the Escrow Agent's willful misconduct was the primary cause of any loss to
WCAS VIII. In the administration of the escrow account hereunder, the Escrow
Agent may execute any of its powers and perform its duties hereunder directly or
through agents or attorneys and may consult with counsel, accountants and other
skilled persons to be selected and retained by it. The Escrow Agent shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the advice or opinion of any such counsel, accountants or other skilled
persons.
10. The Escrow Agent may resign for any reason, upon thirty (30)
calendar days prior written notice to WCAS VIII. Upon expiration of such
thirty-day period, the Escrow Agent may deliver all Securities and other
property in its possession, after the payment of all fees and expenses of the
Escrow Agent, under this Agreement to any successor escrow agent
appointed by WCAS VIII, or if no successor escrow agent has been so appointed,
to any court of competent jurisdiction in the State of New York. Upon either
such delivery, the Escrow Agent shall be released from any and all liability
under this Agreement. A termination under this paragraph shall in no way affect
reimbursement of expenses, indemnity and fees. The Escrow Agent shall have the
right to deduct cash and stock from the Escrow Account to be transferred to any
successor agent for any unpaid fees and expenses in accordance with this
Paragraph.
11. WCAS VIII hereby agrees to (i) pay the Escrow Agent upon execution
of this Agreement reasonable compensation for the services to be rendered
hereunder, as described in Schedule 1 attached hereto, and (ii) pay or reimburse
the Escrow Agent upon written request for all expenses, disbursement and
advances, including reasonable attorneys' fees, incurred or made by it in
connection with the preparation, execution, performance, delivery modification
and termination of this Agreement.
12. (a) WCAS VIII hereby agrees to indemnify and hold the Escrow Agent
and its directors, officers, agents and employees (collectively the
"Indemnitees") harmless from and against any and all claims, liabilities,
losses, damages, fines, penalties, and expenses, including out-of-pocket and
incidental expenses and legal fees ("Losses") that may be imposed on, incurred
by, or asserted against, the Indemnitees or any of them for following any
instructions or other directions upon which the Escrow Agent is authorized to
rely pursuant to the terms of this Agreement.
(b) In addition to and not in limitation of paragraph 12(a)
immediately above, WCAS VIII also agrees to indemnify and hold the Indemnitees
and each of them harmless from and against any and all Losses that may be
imposed on, incurred by, or asserted against, the Indemnitees or any of them in
connection with or arising out of the Escrow Agent's performance under this
Agreement, provided the Indemnitees have not acted with gross negligence or
engaged in willful misconduct.
This Paragraph 12 shall survive termination or expiration of this
Agreement. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Escrow Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.
13. Within thirty (30) calendar days of the execution and delivery of
this Agreement by the parties hereto, WCAS VIII shall provide the Escrow Agent
with Tax Identification Numbers, as assigned by the Internal Revenue Service.
All dividends and interest and other income, if any (including capital gains)
earned on the Escrow Account under this Agreement shall be income of WCAS VIII
and all parties hereto shall file all tax returns consistent with such
treatment.
14. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein. The duties and responsibilities of the Escrow Agent
hereunder shall be determined solely by the express provisions of this
Agreement, and no other or further duties or responsibilities shall be implied.
The Escrow Agent shall not have any liability under, nor duty to
inquire into the terms and provisions of any agreement or instructions, other
than outlined in this Agreement.
15. All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by first class mail, postage prepaid, a
recognized overnight delivery service, or by facsimile transmission, as follows:
If to WCAS VIII at:
Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Rather
Facsimile: (000) 000-0000
with, a copy of such notice to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esquire
Facsimile: (000) 000-0000
If to the Escrow Agent:
JPMorgan Chase Bank
0 Xxx Xxxx Xxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx / Xxxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
or at such other address or facsimile number as any of the above may have
furnished to the other parties in writing in a manner provided in this Paragraph
15. Any such notice or communication given in the manner specified in this
Paragraph 15 shall be deemed to have been given as of the date so mailed or
otherwise sent except with respect to the Escrow Agent as to which date shall be
deemed to have been given on the date received by the Escrow Agent, In the event
that the Escrow Agent, in its sole discretion, shall determine that an emergency
exists, the Escrow Agent may use such other means of communications as the
Escrow Agent deems advisable.
16. (a) In the event funds transfer instructions are given (other than
in writing at the time of execution of the Agreement), whether in writing, by
telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of
such instructions by telephone callback to the person or persons designated on
Schedule 2 hereto, and the Escrow Agent may rely upon the confirmations of
anyone purporting to be the person or persons so designated. The persons and
telephone numbers for call-backs may be changed only in a writing actually
received and acknowledged by the Escrow Agent. The parties to this Agreement
acknowledge that such security procedure is commercially reasonable.
(b) It is understood that the Escrow Agent and the beneficiary's
bank in any funds transfer may rely solely upon any account numbers or similar
identifying number provided by either of the other parties hereto to identify
(i) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank.
The Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even where its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank, or an intermediary bank designated.
17. The provisions of this Escrow Agreement may be waived, altered,
amended or supplemented, in whole or in part, only by a writing signed by all of
the parties hereto.
18. The provisions of this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other parties hereto.
19. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
20. The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto.
21. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and its
sole obligation shall be to keep safely all property held in escrow until it
shall be directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
22. Any corporation or association into which the Escrow Agent in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation or association resulting from any merger,
conversion or consolidation to which the Escrow Agent in its individual capacity
shall be a party, or any corporation or association to which all or
substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be sold or otherwise transferred, shall be the Escrow
Agent under this Agreement without further act; provided, that any such
successor Escrow Agent shall be a national banking association which has a net
worth in excess of $1,000,000,000 and has a principal place of business located
in the state of New York.
23. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to its principles of
conflicts of laws and any action brought hereunder shall be brought in the
courts of the State of New York, located in New York City or in the United
States District Court for the Southern District of New York. Each party hereto
irrevocably waives any objection on the grounds of venue, forum non-conveniens
or
any similar grounds and irrevocably consents to service of process by mail or
in any other manner permitted by applicable law and consents to the jurisdiction
of said courts.
24. Any provision of this Escrow Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
25. Unless sooner terminated in accordance with Paragraph 3, this
Agreement shall expire on the first anniversary of the date hereof; provided,
that if WCAS VIII has not notified the Escrow Agent in accordance with Paragraph
4 or Paragraph 5 hereof prior to such date, the Escrow Agent shall disburse the
contents of the Escrow Account as WCAS VIII may direct.
26. This Agreement and the schedules and documents referred to herein
and therein contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior negotiations, agreements and
undertakings among the parties with respect to such subject matter. There are no
restrictions, promises, warranties, covenants or undertakings other than those
expressly set forth herein and therein. All agreements, representations and
warranties made expressly in this Agreement or in any document delivered
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the delivery of any such documents.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date and year first above written.
JPMORGAN CHASE BANK
By: /s/ Xxxx Xxxxx
-------------------------------------------
Name: Xxxx Xxxxx
Title: Assistant Vice President
WELSH, CARSON, ANDERSON, &
XXXXX VIII, L.P.
By: WCAS VIII Associates, LLC,
General Partner
By: /s/ Xxxxxxxx X. Rather
-------------------------------------
Name: Xxxxxxxx X. Rather
Title: Managing Member
Schedule 1
Schedule of Fees
$5,000 per annum without proration for partial years. Fees are payable
upon execution.
Schedule 2
Telephone Number for Call-Backs and
Person Designated to Confirm Transfer Instructions
If to WCAS VIII:
Name Telephone Number
---- ----------------
1. Xxxxxxxx Rather (000) 000-0000