Exhibit 10.8

EXCHANGE AGREEMENT

This EXCHANGE AGREEMENT (this “Agreement”), dated as of July 31, 2007, is made
by and among ITC^DeltaCom, Inc., a Delaware corporation (“Parent”), Interstate
FiberNet, Inc., a wholly-owned subsidiary of Parent and a Delaware corporation
(the “Company”), and each of the funds listed on the signature pages hereto
under the heading “Babson Entities” (individually, a “Babson Entity” and
collectively, the “Babson Entities”).

RECITALS

WHEREAS, Parent, the Company, certain subsidiary guarantors of Parent, certain
banks, financial institutions and other institutional lenders, Tennenbaum
Capital Partners, LLC (as agent), and TCP Agency Services, LLC (as collateral
agent), entered into that certain Securities Purchase Agreement dated as of
July 26, 2005, whereby the Company issued third lien, senior secured notes due
September 2009 (the “Third Lien Notes”) in the aggregate principal amount of
$50.8 million to various investors, including the Babson Entities; and

WHEREAS, the Third Lien Notes are supported by Parent’s full and unconditional
guarantee; and

WHEREAS, Parent intends to consummate a recapitalization of its corporate
structure as described in Exhibit A annexed hereto (the “Recapitalization”); and

WHEREAS, the Babson Entities have confirmed, among other things, their intention
to exchange $3.815 million of their existing third lien notes (the “Babson Third
Lien Notes”) and their ownership in Parent’s Series D Warrants for common stock
of Parent, par value $0.01 per share (the “Common Stock”) in connection with the
Recapitalization, and have entered into a commitment letter and lock-up
agreement dated as of July 16, 2007 (the “Lock-Up Agreement”); and

WHEREAS, subject to the terms and conditions of this Agreement, the Babson
Entities agree to exchange the Babson Third Lien Notes for Common Stock, and
Parent agrees to issue to the Babson Entities shares of Common Stock in exchange
for the Babson Third Lien Notes.

NOW, THEREFORE, in consideration of the premises and covenants and agreements
contained herein, the parties hereto agree as follows:

ARTICLE I

EXCHANGE OF THIRD LIEN NOTES

Section 1.1. Exchange of Notes. Upon the terms and subject to the conditions set
forth herein and incorporated by reference, the Babson Entities hereby agree to
exchange their Babson Third Lien Notes for, and Parent hereby agrees to issue
and deliver to the Babson Entities in exchange for such Notes, a total of
1,259,074 shares of Common Stock (the “Babson Third Lien

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Notes Conversion”). Schedule 1 hereto lists, as the date of this Agreement,
(i) each Babson Entity, (ii) the amount of Babson Third Lien Notes held by each
Babson Entity, as of the Closing Date, as reflected in the Company’s books and
records, (iii) the total amount of Babson Third Lien Notes that will be
exchanged, (iv) the amount of cash to be received by the Babson Entities for
Third Lien Notes they own that are not being converted to Common Stock, and
(v) the total number of Common Stock that are being issued to such Babson Entity
upon effectiveness of the Babson Third Lien Notes Conversion (the “Conversion
Shares”). The Babson Third Lien Notes Conversion will be effective, and the
Babson Entities will be deemed to be the holders of the Conversion Shares, as of
the closing date of the Recapitalization (the “Closing Date”).

Section 1.2. Deliveries.

(a) On the Closing Date, each Babson Entity shall tender to the Company for
cancellation all Babson Third Lien Notes held by such Babson Entity, duly
endorsed in blank.

(b) Promptly after Closing Date, Parent shall deliver, or cause Parent’s
transfer agent for the Conversion Shares to deliver, to each Babson Entity a
share certificate or certificates, each in the name of such Babson Entity,
representing the Conversion Shares.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE BABSON ENTITIES

As of the Closing Date, each Babson Entity represents and warrants, severally
and not jointly, to Parent and the Company, as follows:

Section 2.1. Acquisition for Investment. Each Babson Entity is acquiring the
Conversion Shares for its own account, for investment and not with a view to, or
for sale in connection with, the distribution thereof within the meaning of the
Securities Act of 1933, as amended (the “Securities Act”) (it being understood
that except as otherwise provided in this Agreement, the Babson Entity does not
agree to hold the Conversion Shares for any minimum or other specific term and
reserves the right to dispose of the Conversion Shares at any time in accordance
with the Securities Act and state securities laws applicable to such
disposition).

Section 2.2 Accredited Investor Status. Each Babson Entity is an “accredited
investor,” as that term is defined in Rule 501(a) of Regulation D under the
Securities Act. Each Babson Entity has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Conversion Shares and is capable of bearing the
economic risks of such investment. Each Babson Entity understands that its
investment in the Conversion Shares involves a significant degree of risk.

Section 2.3 Sales or Transfer. Each Babson Entity understands that the sale or
re-sale of the Conversion Shares has not been and is not being registered under
the Securities Act or any applicable state securities laws, and that the
Conversion Shares may not be sold or otherwise transferred unless (a) the
Conversion Shares are sold or transferred pursuant to an effective registration
statement under the Securities Act and applicable state securities laws,
(b) such

 

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Babson Entity shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Conversion Shares to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration, or (c) the Conversion Shares are sold pursuant to Rule 144 under
the Securities Act.

Section 2.4 Lock-Up Agreement. Such Babson Entity, if a party to the Lock-Up
Agreement, acknowledges and understands that the Conversion Shares are subject
to the Lock-Up Agreement under the terms of which it is agreeing to, among other
things, refrain from offering, selling, issuing, contracting to sell, pledging,
or otherwise disposing of, directly or indirectly, the Conversion Shares for the
period specified therein.

Section 2.5 Authorization. The execution, delivery and performance of this
Agreement and the Babson Third Lien Notes Conversion are within the Babson
Entities’ corporate, partnership or limited liability company, as applicable,
powers and have been duly and validly authorized by all requisite corporate,
partnership or limited liability company, as applicable, action.

Section 2.6 Valid Existence. Each Babson Entity is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation.

Section 2.7 Binding Agreement. This Agreement has been duly executed and
delivered by each Babson Entity, and it constitutes a valid and binding
agreement of such Babson Entity.

Section 2.8 Consents; No Violations. Neither the execution, delivery or
performance by the Babson Entities of this Agreement nor the consummation of the
conversion contemplated hereby shall (a) conflict with, or result in a breach or
a violation of, any provision of the certificate of incorporation, bylaws or
other organizational documents of any Babson Entity, (b) constitute, with or
without notice or the passage of time or both, a breach, violation or default,
create any lien or charge, or give rise to any right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, under any law, or any provision of any agreement or other
instrument to which such Babson Entity is a party or pursuant to which such
Babson Entity or any of its assets or properties is subject, except for
breaches, violations, defaults, liens or charges, or rights of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, which, individually or in the aggregate, would not materially
adversely affect such Babson Entity’s ability to consummate the transactions
contemplated by this Agreement, or (c) require any consents, approvals and
filings on the part of such Babson Entity, from or with any governmental entity
except for the consents, approvals and filings which, if not made or obtained by
such Babson Entity, would not materially adversely affect such Babson Entity’s
ability to consummate the transactions contemplated by this Agreement.

 

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Section 2.9 Restrictive Legends. Such Babson Entity acknowledges that the
Conversion Shares shall bear a restrictive legend substantially in the following
form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAW, (B) AN OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OR
(C) RULE 144 UNDER THE SECURITIES ACT.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND COMPANY

Parent and Company each represent and warrant to the Babson Entities as follows
as of the Closing Date:

Section 3.1 Organization, Standing, etc. Parent and each of its subsidiaries is
a corporation duly organized and validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated, with all corporate power
and authority to own, lease and operate its properties and to conduct its
business as currently owned, leased, operated and conducted.

Section 3.2 Issuance of Conversion Shares. Upon issuance by Parent, the
Conversion Shares will be validly issued, fully paid and non-assessable, free
and clear of all liens and encumbrances and not subject to any preemptive
rights, other than any of the foregoing resulting solely from action by the
holders of the Conversion Shares.

Section 3.3 Corporate Power; Binding Agreement. Parent and the Company have all
requisite corporate power and authority to enter into, execute, deliver and
perform their obligations under this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Parent and the Company, and, assuming the due
authorization, execution and delivery thereof by the Babson Entities,
constitutes the legal, valid and binding obligation of Parent and the Company,
enforceable against Parent and the Company in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors’ rights generally and except
as enforcement thereof is subject to general principles of equity.

 

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Section 3.4 Consents; No Violations. Neither the execution, delivery or
performance by Parent and Company of this Agreement nor the consummation of the
transactions contemplated hereby will (a) conflict with, or result in a breach
or a violation of, any provision of the certificate of incorporation or bylaws
of Parent or the Company, (b) constitute, with or without notice or the passage
of time or both, a breach, violation or default, create any lien or charge, or
give rise to any right of termination, modification, cancellation, prepayment,
suspension, limitation, revocation or acceleration, under any law, or any
provision of any agreement or other instrument to which Parent or any of its
subsidiaries is a party or pursuant to which any of the assets or properties of
Parent or any of its subsidiaries is subject, except for breaches, violations,
defaults, liens or charges, or rights of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
which, individually or in the aggregate, would not materially adversely affect
Parent’s or the Company’s ability to consummate the transactions contemplated by
this Agreement, or (c) require any consents, approvals and filings on the part
of Parent or the Company on or before the Closing Date from or with any
governmental entity, except for such consents, approvals and filings which, if
not made or obtained by Parent or the Company, would not materially adversely
affect the ability of Parent and the Company to consummate the transactions
contemplated by this Agreement.

ARTICLE IV

BABSON REPRESENTATIVE

The Babson Entities hereby appoint Richard E. Spencer the Babson Entities’
exclusive agent to act on the Babson Entities’ behalf with respect to the
matters specified in this Article IV. Such representative, or such other
representative as the Babson Entities may appoint from time to time to replace
Richard E. Spencer, is hereinafter referred to as the “Babson Representative.”
The Babson Representative shall take any and all actions which the Babson
Representative believes are necessary or appropriate under this Agreement for
and on behalf of the Babson Entities as fully as if the Babson Entities were
acting on their own behalf, including, without limitation, making the deliveries
referred to in Section 1.2 and taking any and all other actions specified in or
contemplated by this Agreement to be taken by the Babson Entities prior to, on
or after the Closing Date, receiving notice of and defending any claims pursuant
to this Agreement, giving notice of and asserting any claims pursuant to this
Agreement, consenting to, compromising or settling claims made pursuant to this
Agreement, and engaging counsel, accountants or other representatives in
connection with the foregoing matters. Parent and the Company shall have the
right to rely upon all actions taken or omitted to be taken by the Babson
Representative pursuant to this Agreement, all of which actions or omissions
shall be legally binding upon each of the Babson Entities.

 

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ARTICLE V

MISCELLANEOUS

Section 5.1 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Agreement.

Section 5.2 Survival of Representations and Warranties. All representations and
warranties set forth in this Agreement or in any writing delivered by any party
in connection herewith shall survive the transactions contemplated by this
Agreement to be consummated on the Closing Date (regardless of any
investigation, inquiry, or examination made by any party or on its behalf or any
knowledge of any party or the acceptance by any party of any certificate or
opinion) for a period of one year following the Closing Date.

Section 5.3 Enforcement. The parties hereto agree that (a) irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific intent or were otherwise breached
and (b) the parties shall be entitled to an injunction or injunctions to prevent
or cure breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof, in addition to any other remedy to which they
may be entitled by law or equity.

Section 5.4 Successors and Assigns. Except as otherwise expressly provided
herein, (a) all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors, assigns, heirs and legal representatives of the parties
hereto, whether so expressed or not, and (b) no party may assign or delegate all
or any portion of its rights, obligations or liabilities under this Agreement
without the prior written consent of each other party to this Agreement;
provided, that any such consent required to be given by the Babson Entities
shall be effective if given by the Babson Representative.

Section 5.5 Entire Agreement. This Agreement (including the Exhibits and
Schedule hereto) constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof, and no party shall
be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein.

Section 5.6 Notices. All notices, demands, requests, consents or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given
(a) when delivered personally to the recipient, (b) when telecopied to the
recipient (with hard copy sent to the recipient by reputable overnight courier
service (charges prepaid) that same day) if telecopied before 5:00 p.m. New York
City time on a business day, and otherwise on the next business day, (c) one
business day after being sent to the recipient by reputable overnight courier
service (charges prepaid) or (d) on the first business day that is at least five
days after the date of deposit thereof in the United States mails for delivery
by certified mail. Such notices, demands, requests, consents and other
communications shall be sent to the following persons at the following
addresses:

 

  (i) if to Parent or the Company, to:

ITC^DeltaCom, Inc.

7037 Old Madison Pike

Huntsville, Alabama 35806

Telecopy No.: (256) 382-3936

Attention: J. Thomas Mullis, Esq.

  Senior Vice President–Legal and Regulatory

 

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With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Attention: J. Gregory Milmoe

Facsimile: (917) 777-3770

and

Hogan & Hartson LLP

8300 Greensboro Drive, Suite 1100

McLean, VA 22102

Attention: Richard J. Parrino

Facsimile: (703) 610-6200

 

  (ii) if to the Babson Entities, to:

Babson Capital Management LLC

1500 Main Street, Suite 2200

Springfield, MA 01115

Telecopy No.: (413) 226-2649

Attention: Richard E. Spencer, II

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

Section 5.7 Amendments; Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent thereto of Parent, the Company, and the Babson
Representative. Notwithstanding the foregoing, any such amendment, modification,
supplement, waiver or consent with respect to a matter that relates exclusively
to the rights or obligations of a particular Babson Entity and that does not
directly or indirectly affect the rights or obligations of any other Babson
Entity, may be entered into or given solely by Parent, the Company and such
affected Babson Entity; provided, however, that the provisions of this sentence
may not be amended, modified or supplemented, and no waiver or consent to
departure from such provisions may be given, except in accordance with the
provisions of the immediately preceding sentence.

 

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Section 5.8 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.

Section 5.9 Headings. The descriptive headings of this Agreement are inserted
for convenience only and do not constitute a substantive part of this Agreement.

Section 5.10 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware applicable to contracts executed and to be performed wholly within such
state.

Section 5.11 Exclusive Jurisdiction; Venue. Any process against the Company,
Parent or a Babson Entity in, or in connection with, any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, may be served personally or by certified mail pursuant to
the notice provision set forth in Section 5.6 with the same effect as though
served on it personally. Each of the parties hereto hereby irrevocably submits
in any suit, action or proceeding by the parties hereto arising out of or
relating to this Agreement or any of the transactions contemplated hereby, to
the exclusive jurisdiction and venue of the federal and state courts of the
State of Delaware and irrevocably waives any and all objections to exclusive
jurisdiction and review of venue that any such party may have under the laws of
the State of Delaware or the United States. Without limiting the other remedies,
this Agreement shall be enforceable by specific performance.

Section 5.12 Waiver of Jury Trial. Parent, the Company and the Babson Entities
hereby waive any right they may have to a trial by jury in respect of any
action, proceeding or litigation directly or indirectly arising out of, under or
in connection with this Agreement.

Section 5.13 Delivery by Facsimile. This Agreement and each other agreement or
instrument entered into in connection herewith or contemplated hereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract, and each such party forever waives
any such defense.

[The remainder of this page is intentionally left blank]

 

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IN WITNESS WHEREOF, the Company and the Babson Entities have caused this
Agreement to be duly executed as of the date first written above.

 

FOR PARENT ITC^DELTACOM, INC. By:   /s/ J. Thomas Mullis Name:   J. Thomas
Mullis Title:   Senior Vice President–Legal and Regulatory FOR COMPANY
INTERSTATE FIBERNET INC. By:   /s/ J. Thomas Mullis Name:   J. Thomas Mullis
Title:   Senior Vice President–Legal and Regulatory

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BABSON ENTITIES

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By:   Babson Capital Management LLC, as Investment Advisor

By:   /s/ Richard E. Spencer, II   Name:   Richard E. Spencer, II   Title:  
Managing Director

MASS MUTUAL CORPORATE INVESTORS By:   /s/ Richard E. Spencer, II   Name:  
Richard E. Spencer, II   Title:   Vice President

The foregoing is executed on behalf of MassMutual Corporate Investors, organized
under a Declaration of Trust, dated September 13, 1985, as amended from time to
time. The obligations of such Trust are not personally binding upon, nor shall
resort be had to the property of, any of the Trustees, shareholders, officers,
employees or agents of such Trust, but the Trust’s property only shall be bound.

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MASS MUTUAL PARTICIPATION INVESTORS By:   /s/ Richard E. Spencer, II   Name:  
Richard E. Spencer, II   Title:   Vice President

The foregoing is executed on behalf of MassMutual Participation Investors,
organized under a Declaration of Trust, dated April 7, 1988, as amended from
time to time. The obligations of such Trust are not personally binding upon, nor
shall resort be had to the property of, any of the Trustees, shareholders,
officers, employees or agents of such Trust, but the Trust’s property only shall
be bound.

 

WINTERSET MASTER FUND LP By:   Babson Capital Management LLC, as Investment
Manager By:   /s/ Richard E. Spencer, II   Name:   Richard E. Spencer, II  
Title:   Managing Director

 

MILL RIVER MASTER FUND LP By:   Babson Capital Management LLC, as Investment
Manager By:   /s/ Richard E. Spencer, II   Name:   Richard E. Spencer, II  
Title:   Managing Director

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J/Z CBO (DELAWARE) LLC By:   Babson Capital Management LLC, as Collateral
Manager By:   /s/ Richard E. Spencer, II   Name:   Richard E. Spencer, II  
Title:   Managing Director

 

TOWER SQUARE CAPITAL PARTNERS, LP By:   Babson Capital Management LLC, as
Investment Manager By:   /s/ Richard E. Spencer, II   Name:   Richard E.
Spencer, II   Title:   Managing Director