Exhibit 10.8

 

CONSENT AND FIRST AMENDMENT

TO

INTERCREDITOR AND SUBORDINATION AGREEMENT

 

CONSENT AND FIRST AMENDMENT TO INTERCREDITOR AND SUBORDINATION AGREEMENT, dated
as of March 29, 2005 (this “Amendment”) by and among the First Lien Agent, the
First Lien Lenders party hereto, the Second Lien Agent, the Second Lien Lenders
and the Loan Parties (each as defined below);

 

RECITALS:

 

WHEREAS, ITC^DeltaCom, Inc., a Delaware corporation (the “Parent”), Interstate
FiberNet, Inc., a Delaware corporation (the “Borrower”), certain subsidiary
guarantors (the “Subsidiary Guarantors” and together with the Parent and the
Borrower, the “Loan Parties”), Wells Fargo Bank, N.A., as administrative agent
and collateral agent (the “First Lien Agent”), and certain banks, financial
institutions and other institutional lenders (the “First Lien Lenders”) are
party to that certain Second Amended and Restated Credit Agreement dated as of
October 6, 2003 (the “First Lien Second Amended Credit Agreement”);

 

WHEREAS, in connection with the First Lien Second Amended Credit Agreement, (a)
the Parent, the Borrower, the Subsidiary Guarantors, and the banks and financial
institutions listed on the signature pages thereto as Lenders (the “Second Lien
Lenders”) and General Electric Capital Corporation (the “Second Lien Agent”)
entered into a Credit Agreement, dated as of October 6, 2003 (the “Second Lien
Original Credit Agreement”) and (b) the First Lien Agent, the First Lien
Lenders, the Second Lien Agent, the Second Lien Lenders and the Loan Parties
entered into the Intercreditor and Subordination Agreement, dated as of October
6, 2003 (the “Intercreditor Agreement”);

 

WHEREAS, (a) the parties to the First Lien Second Amended Credit Agreement have
entered into a Third Amended and Restated Credit Agreement dated as of the date
hereof (the “First Lien Third Amended Credit Agreement”), (b) the parties to the
Second Lien Original Credit Agreement have entered into an Amended and Restated
Credit Agreement, dated as of the date hereof (the “Second Lien Amended Credit
Agreement”) and (c) in connection with the foregoing, the First Lien Agent, the
First Lien Lenders, the Second Lien Agent, the Second Lien Lenders and the Loan
Parties have determined to amend the Intercreditor Agreement on the terms
described in this Amendment;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree that the Intercreditor Agreement shall be
amended as follows:

 

SECTION 1. Definitions; Section References. Capitalized terms not otherwise
defined in this Amendment have the same meanings as specified in the
Intercreditor Agreement. Unless otherwise specified herein or the context
otherwise indicates, references in this Amendment to any “Section” are to
Sections of the Intercreditor Agreement.

 

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SECTION 2. Amendments to Intercreditor Agreement. Effective as of the Amendment
Effective Date (as such term is defined in Section 3 of this Amendment), the
Intercreditor Agreement is amended as follows:

 

(a) The definitions of “Existing First Lien Loan Agreement,” “First Lien Debt,”
“First Lien Security Agreement,” “First Lien Term Loans,” and “Guarantors,” in
Section 1.1 are hereby amended and restated in their entirety to read as
follows:

 

“Existing First Lien Loan Agreement” shall mean the Third Amended and Restated
Credit Agreement, dated as of March 29, 2005, by and among the Loan Parties and
the First Lien Lender Parties, as the same may be amended in accordance with the
terms hereof.

 

“First Lien Debt” shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description owing by any Loan Party to
any of the First Lien Lender Parties evidenced by, or arising under, the First
Lien Debt Documents, whether direct or indirect, absolute or contingent, joint
or several, due or not due, primary or secondary, liquidated or unliquidated,
including principal, interest, charges, fees, costs, indemnities, expenses and
any amounts previously paid and avoided and recovered by the Loan Parties in
connection with any Proceeding, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, whether now existing or hereafter arising,
whether arising during or after the initial or any renewal term of the First
Lien Loan Agreement or after the commencement of any Proceeding with respect to
such Loan Party. First Lien Debt shall be considered to be outstanding whenever
any loan commitment under the First Lien Debt Documents is outstanding;
provided, however, the principal amount of indebtedness under the First Lien
Loan Agreement shall not constitute First Lien Debt to the extent it exceeds (a)
$208,000,000 minus (b) the sum of (i) scheduled principal payments and (ii)
prepayments (whether optional or mandatory), in each case, actually made on the
First Lien Debt after the date hereof.

 

“First Lien Security Agreement” shall mean the Third Amended and Restated
Security Agreement, dated as of March 29, 2005, by and among the Loan Parties
and the First Lien Agent, and any security agreement or similar agreement
executed and delivered in connection with any Acceptable Refinancing Debt, as
the same may be amended, modified, supplemented, extended, renewed or restated,
to the extent permitted pursuant to the terms hereof.

 

“First Lien Term Loans” shall mean the Tranche 1 Term B Advance, the New Tranche
1 Term B Advance, the Tranche 2 Term B Advance, the New Tranche 2 Term B
Advance, the Tranche 3 Term B Advance, the Tranche 4 Term B Advance and the
Special Term B Advances, as such terms are defined in the First Lien Loan
Agreement.

 

“Guarantors” shall mean the Parent and the Subsidiary Guarantors (as such term
is defined under the First Lien Loan Agreement and the Second Lien Loan
Agreement), as well as any other Person that becomes a Guarantor under the First
Lien Loan Agreement and the Second Lien Loan Agreement after the date hereof,
whether by acquisition or otherwise and any other Person (other than the
Borrower) liable on or in

 

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respect of any First Lien Debt or the Second Lien Debt and their respective
successors and assigns, including, without limitation, any receiver, trustee or
debtor-in-possession on behalf of any such Person or on behalf of any such
successor or assign.

 

(b) Section 3 is hereby amended and restated in its entirety to read as follows:

 

Agent for Purposes of Perfection. The First Lien Agent and the Second Lien Agent
each hereby appoints the other as agent for the purpose of perfecting the
appointing agent’s Liens on any of the Collateral in the possession or control
of such other agent and in connection therewith, each of the First Lien Agent
the Second Lien Agent acknowledges and agrees that it shall hold any collateral
in its possession for the benefit of the other agent, including, without
limitation, for purposes of sections 9-313 and 8-301 of the Uniform Commercial
Code; provided, that the possessing or controlling agent shall not have any duty
or liability to protect or preserve any rights pertaining to any of such
Collateral and, except for gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction,
the non-possessing or non-controlling agent hereby waives and releases the
possessing or controlling agent from all claims and liabilities arising pursuant
to the possessing or controlling agent’s role as possessing or controlling agent
with respect to such Collateral, so long as the possessing or controlling agent
shall use the same degree of care with respect thereto as the possessing or
controlling agent uses for similar property pledged to the possessing or
controlling agent as collateral for indebtedness of others to the possessing or
controlling agent. Upon, and in connection with, the First Lien Lender Parties
receiving indefeasible payment in full of all First Lien Debt, the First Lien
Agent shall (a) assign and deliver to the Second Lien Agent the remainder of
such Collateral, if any, in its possession or control and (b) shall assign and
deliver to the Second Lien Agent (and shall not terminate) each agreement
respecting any Collateral to which the First Lien Agent is a party, including,
without limitation, all rights under account control agreements, landlord’s,
bailee’s or similar waivers and consents; provided, that with respect to any
deposit, securities or other accounts of the Loan Parties (or any of their
respective subsidiaries) subject to a dominion and control agreement in favor of
the First Lien Agent, notwithstanding anything else herein to the contrary, the
First Lien Agent shall continue to serve as the Subagent (as defined in the
Existing First Lien Loan Agreement) of the Second Lien Agent until the earlier
of (a) the receipt of the consent of the applicable financial institutions to
the assignment of the dominion and control agreements (or other action
acceptable to the Second Lien Agent) and (b) the payment in full of the Second
Lien Debt and termination of the Second Lien Debt Documents.

 

SECTION 3. Amendment Effective Date. The “Amendment Effective Date” shall mean
the time and date on which (i) the First Lien Third Amended Credit Agreement and
the Second Lien Amended Credit Agreement become effective and binding on the
parties thereto and (ii) this Amendment shall be executed by the Required
Lenders under and as defined in the First Lien Third Amended Credit Agreement
and the Required Lenders under and as defined in the Second Lien Amended Credit
Agreement.

 

SECTION 4. Representations and Warranties of the Parties. Each of the parties
represents and warrants that the execution, delivery and performance of this
Amendment by such party is within the corporate powers of each such party and
has been duly authorized by all necessary corporate action by such party, and
this Amendment constitutes a valid and binding agreement of each party,
enforceable against such party in accordance with its terms.

 

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SECTION 5. Acknowledgment and Consent With Respect to Third Amended Credit
Agreement. Notwithstanding Sections 4.1 and 4.2 of the Intercreditor Agreement,
(a) the First Lien Agent and the First Lien Lenders party hereto each
acknowledge and consent to the amendment and restatement of the Second Lien
Original Credit Agreement in accordance with the terms set forth in the Second
Lien Amended Credit Agreement and (b) the Second Lien Agent and the Second Lien
Lenders each acknowledge and consent to the amendment and restatement of the
First Lien Second Amended Credit Agreement in accordance with the terms set
forth in the First Lien Third Amended Credit Agreement.

 

SECTION 6. Effect on the Intercreditor Agreement.

 

(a) The Intercreditor Agreement, as specifically amended by this Amendment, is,
and shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects, except that, on and after the effectiveness of this
Amendment, each reference in the Loan Documents to the “Intercreditor and
Subordination Agreement,” “thereunder,” “thereof” or words of like import shall
mean and be a reference to the Intercreditor Agreement, as amended by this
Amendment.

 

(b) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender or the Administrative Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.

 

SECTION 7. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement. Delivery
of an executed counterpart of a signature page to this Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this
Amendment.

 

SECTION 8. Governing Law. This Amendment shall be governed by and shall be
construed and enforced in accordance with the laws of the State of New York
(excluding the laws applicable to conflicts or choice of law).

 

[signature pages follow]

 

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Exhibit 10.8

 

IN WITNESS WHEREOF, each of the First Lien Agent, the First Lien Lenders party
hereto, the Second Lien Agent, the Second Lien Lenders and the Loan Parties have
caused this Amendment to be executed as of the date first above written.

 

WELLS FARGO BANK, N.A., (as successor by

consolidation to Wells Fargo Bank Minnesota, National

Association)

as the First Lien Agent

By:

 

/s/    JEFFERY ROSE        

   

Duly Authorized Signatory

   

Name:

  Jeffery Rose    

Title:

  Corporate Trust Officer

 

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MUZINICH CASHFLOW CBO II LTD., as First Lien Lender

By:

 

/s/    MICHAEL LUDWIG        

   

Name:

  Michael Ludwig    

Title:

  Chief Financial Officer,         Muzinich & Co., Inc. as Investment Manager
MUZINICH CASHFLOW CBO LTD., as First Lien Lender

By:

 

/s/    MICHAEL LUDWIG        

   

Name:

  Michael Ludwig    

Title:

  Chief Financial Officer,         Muzinich & Co., Inc. as Investment Manager

 

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SANKATY ADVISORS, LLC, as Collateral Manager

for Brant Point II CBO 2000-1 LTD, as First Lien

Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President SANKATY ADVISORS, LLC, as Collateral Manager

for Avery Point CLO Limited, as First Lien Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President SANKATY HIGH YIELD PARTNERS III, L.P., as

First Lien Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President SANKATY HIGH YIELD PARTNERS II, L.P., as

First Lien Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President

SANKATY HIGH ASSET PARTNERS, L.P.,

as First Lien Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President

 

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SANKATY CREDIT OPPORTUNITIES, L.P., as First

Lien Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President SANKATY ADVISORS, LLC, as Collateral Manager RACE POINT
II CLO, LTD., as First Lien Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President SANKATY ADVISORS, LLC, as Collateral Manager for
PROSPECT FUNDING I, LLC, as First Lien Lender

By:

 

/s/    JEFFREY HAWKINS        

   

Name:

  Jeffrey Hawkins    

Title:

  Senior Vice President

 

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Alliance Capital Management L.P., as

Manager on behalf of ALLIANCE CAPITAL

FUNDING LLC

By: Alliance Capital Management Corporation,

General Partner of Alliance Capital Management

L.P., as First Lien Lender

By:

 

/s/    SCOTT VAN DER BOSEL        

   

Name:

  Scott Van der Bosel    

Title:

  Vice President

 

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BANK OF AMERICA STRATEGIC SOLUTIONS

INC., as First Lien Lender

By:

 

/s/    JOHN W. WOODIEL III        

   

Name:

  John W. Woodiel III    

Title:

  Senior Vice President

 

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BANK OF AMERICA, N.A., as First Lien Lender

By:

 

/s/    (illegible)        

   

Name:

  (illegible)    

Title:

  Associate

 

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EXPORT DEVELOPMENT CANADA (f/k/a Export

Development Corporation), as First Lien Lender

By:       /S/    R. HODGES           /S/    KEVIN SKILLITER            

Name:

  R. Hodges   /Kevin Skilliter    

Title:

  Manager, Special Risks   /Loan Asset Manager

 

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GAIA OFFSHORE MASTER FUND, as First Lien

Lender

By Promethean Asset Management LLC, its Investment

Manager

By:

 

/s/    GREGORY MOLLER        

   

Name:

  Gregory Moller    

Title:

  Trader

 

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SUFFIELD CLO, LIMITED, as First Lien Lender

By: Babson Capital Management LLC as Collateral

Manager

By:

 

/s/    MARY ANN SPENCER        

   

Name:

  Mary Ann Spencer    

Title:

  Managing Director

TRYON CLO, LTD. 2000-1, as First Lien Lender

By: Babson Capital Management LLC as Collateral

Manager

By:

 

/s/    MARY ANN SPENCER        

   

Name:

  Mary Ann Spencer    

Title:

  Managing Director

MASSACHUSETTS MUTUAL LIFE INSURANCE

COMPANY, as First Lien Lender

By: Babson Capital Management LLC as Investment

Advisor

By:

 

/s/    MARY ANN SPENCER        

   

Name:

  Mary Ann Spencer    

Title:

  Managing Director

 

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PACIFICA CDO III, LTD., as First Lien Lender By:       /s/    AN PHAM,
JR.            

Name:

  An Pham, Jr.    

Title:

  Authorized Signatory PACIFICA CDO IV, LTD., as First Lien Lender By:      
/s/    AN PHAM, JR.            

Name:

  An Pham, Jr.    

Title:

  Authorized Signatory AVL LOAN FUNDING LLC., as First Lien Lender By:      
/s/    DOMINIC BLEA            

Name:

  Dominic Blea    

Title:

  As Attorney-in-Fact

 

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AVENUE SPECIAL SITUATIONS FUND III, L.P., as First Lien Lender By:   Avenue
Capital Partners III, LLC, its General Partner By:   GL Partners III, LLC, its
Managing Member

By:

      /S/    SONIA GARDNER            

Name:

  Sonia Gardner    

Title:

  Member

 

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SUNRISE PARTNERS LIMITED PARTNERSHIP, as First Lien Lender By:      
/s/    MICHAEL J. BEMER            

Name:

  Michael J. Bemer    

Title:

  Vice President        

Dawn General Partner Corp.

General Partner

 

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UBS AG STAMFORD BRANCH, as First Lien Lender By:       /s/    WILFRED V.
SAINT            

Name:

  Wilfred V. Saint    

Title:

  Director         Banking Products Services, US By:       /s/    TOBA
LUMBANTOBING            

Name:

  Toba Lumbantobing    

Title:

  Associate Director         Banking Products Services, US

 

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BEAR STEARNS INVESTMENT PRODUCTS INC., as First Lien Lender By:      
/S/    RICHARD BRAM SMITH            

Name:

  Richard Bram Smith, Vice President    

Title:

   

 

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LONG LANE MASTER TRUST IV, as First Lien Lender By:       /S/    ANN E.
MORRIS            

Name:

  Ann E. Morris    

Title:

  Authorized Agent

 

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MORGAN STANLEY SENIOR FUNDING INC., as First Lien Lender By:       /S/    EUGENE
F. MARTIN            

Name:

  Eugene F. Martin    

Title:

  Vice President         Morgan Stanley Senior Funding, Inc.

 

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FIELD POINT I LTD., as First Lien Lender By:       /s/    JEFFREY A.
GELFAND            

Name:

  Jeffrey A. Gelfand    

Title:

  Authorized Signatory FIELD POINT II LTD., as First Lien Lender By:      
/S/    JEFFREY A. GELFAND            

Name:

  Jeffrey A. Gelfand    

Title:

  Authorized Signatory

 

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GENERAL ELECTRIC CAPITAL CORPORATION, as First Lien Lender By:       /S/    KARL
KIEFFER            

Name:

  Karl Kieffer    

Title:

  Duly Authorized Signatory

 

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NTFC CAPITAL CORPORATION By:       /S/    MARK R. O’LEARY            

Name:

  Mark R. O’Leary    

Title:

  Vice President

 

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EXPORT DEVELOPMENT CANADA (f/k/a/ Export Development Corporation), as Second
Lien Lender By:       /S/    R. HODGES           /S/    KEVIN SKILLITER        
   

Name:

  R. Hodges   /Kevin Skilliter    

Title:

  Manager, Special Risks   /Loan Asset Manager

 

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BANC OF AMERICA STRATEGIC SOLUTIONS INC., as Second Lien Lender By:      
/S/    JOHN W. WOODIEL III            

Name:

  John W. Woodiel III    

Title:

  Senior Vice President

 

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INTERSTATE FIBERNET INC., as Borrower By:       /S/    RICHARD E. FISH          
 

Name:

  Richard E. Fish    

Title:

  Chief Administrative Officer

ITC^DELTACOM, INC., as Guarantor

By:       /S/    RICHARD E. FISH            

Name:

  Richard E. Fish    

Title:

  Chief Administrative Officer ITC^DELTACOM COMMUNICATIONS, INC., as Guarantor
By:       /S/    RICHARD E. FISH            

Name:

  Richard E. Fish    

Title:

  Chief Administrative Officer DELTACOM INFORMATION SYSTEMS, INC., as Guarantor
By:       /S/    RICHARD E. FISH            

Name:

  Richard E. Fish    

Title:

  Chief Administrative Officer

 

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BTI TELECOM CORP., as Guarantor By:       /S/    RICHARD E. FISH            

Name:

  Richard E. Fish    

Title:

  Chief Administrative Officer BUSINESS TELECOM, INC., as Guarantor By:      
/S/    RICHARD E. FISH            

Name:

  Richard E. Fish    

Title:

  Chief Administrative Officer BUSINESS TELECOM OF VIRGINIA, INC., as Guarantor
By:       /S/    RICHARD E. FISH            

Name:

  Richard E. Fish    

Title:

  Chief Administrative Officer