EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of ,
2001, is made among ITC/\DeltaCom, Inc., a Delaware corporation (the "Company"),
ITC Holding Company, Inc., a Delaware corporation (the "Initial Purchaser"),
and the other Holders from time to time hereunder.
WITNESSETH:
WHEREAS, in connection with the Investment Agreement, dated as of February
27, 2001, between the Company and the Initial Purchaser (as amended from time
to time, the "Investment Agreement"), the Company has agreed, upon the terms
and subject to the conditions contained therein, to issue and sell (i) shares
of multiple series of the Company's Series B cumulative convertible preferred
stock and (ii) warrants to purchase shares of the Company's common stock; and
WHEREAS, to induce the Initial Purchaser and the other Purchasers party from
time to time to the Investment Agreement to execute and deliver the Investment
Agreement, the Company has agreed to provide the Initial Purchaser, such other
Purchasers and their respective transferees under the Investment Agreement with
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
"Affiliate" has the meaning specified in Rule 12b-2 under the Exchange
Act.
"Blackout Period" has the meaning specified in Section 6(a).
"Business Day" means a day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings or, in the case of determining a
date on which any payment is due, any day which shall not be a legal holiday or
a day on which banking institutions in New York City, New York or the State of
Georgia generally are authorized or required by law or other governmental
actions to close.
"Common Stock" means the Company's common stock, par value $.01 per share.
"Company" has the meaning specified in the first paragraph of this
Agreement.
"Conversion Shares" means, collectively, (i) the shares of Common Stock
issued or issuable upon conversion of the Preferred Shares and (ii) any
securities paid, issued or distributed in respect of any shares of Common Stock
referred to in clause (i) by way of stock dividend or distribution or stock
split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise.
"Draw Down Closing" means the closing of the issuance and sale of the
Series B Preferred Stock and the Warrants by the Company on any Draw Down
Closing Date pursuant to the Investment Agreement.
"Draw-Down Shelf Registrable Securities" has the meaning specified in
Section 4(a)(2).
"Draw-Down Shelf Registration Statement" means a Shelf Registration
Statement relating to Draw-Down Shelf Registrable Securities.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, as the same shall be in effect from time to
time. Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of any
such successor federal statute.
"Excluded Registration" means a registration of Common Stock under the
Securities Act pursuant to a registration statement filed (i) on Form S-4 or
Form S-8 or any successor forms, (ii) in connection with an exchange offer or
an offering of securities solely to existing stockholders of the Company or
employees of the Company or its subsidiaries or (iii) in connection with an
offering of Common Stock issuable upon the conversion or exercise of other
securities.
"Holder" means each Purchaser and, subject to Section 13, any other Person
to which a Purchaser has transferred Registrable Securities and which has
agreed to become bound by the provisions of this Agreement in accordance with
Section 13, but only so long as such Purchaser or other Person holds
Registrable Securities.
"Initial Closing Date" means the date on which the Series B Preferred
Stock and the Warrants are first issued and sold by the Company pursuant to the
Investment Agreement.
"Initial Purchaser" has the meaning specified in the first paragraph of
this Agreement.
"Initial Shelf Registrable Securities" has the meaning specified in
Section 4(a)(1).
"Initial Shelf Registration Statement" means a Shelf Registration
Statement relating to the Initial Shelf Registrable Securities.
"Initiating Holder" has the meaning specified in Section 3(a).
"Investment Agreement" has the meaning specified in the recitals to this
Agreement.
"Losses" has the meaning specified in Section 10(a).
"Majority of the Registrable Securities" means, as of any date of
determination with respect to the designated Holders, a majority of the shares
of Common Stock held by such Holders on an as-converted basis, with the Holders
of Preferred Shares and Warrants deemed to be the Holders of the number of
shares of Common Stock into which the Preferred Shares are or would be
convertible or for which the Warrants are or would be exercisable as of such
date of determination.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or a political subdivision or an agency or instrumentality thereof.
"PIK Dividends" means any shares of the Series B Preferred Stock that have
been issued as dividends on shares of the Series B Preferred Stock.
"Preferred Shares" means the outstanding Series B Preferred Stock,
including the outstanding PIK Dividends.
. "Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
any Registration Statement, and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by reference in such prospectus.
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"Purchaser" means the Initial Purchaser and each other Person that becomes
a party to the Investment Agreement as a "Purchaser" thereunder and that agrees
in writing to become a Holder under this Agreement and to be bound by the
provisions hereof in accordance with Section 13.
"Registrable Securities" means, collectively, (i) the Preferred Shares,
(ii) the Warrants, (iii) the Conversion Shares and (iv) the Warrant Shares.
Securities shall cease to be Registrable Securities in accordance with Section
2.
"Registration Expenses" means any and all out-of-pocket expenses incident
to the Company's performance of or compliance with this Agreement, including,
without limitation, (i) all SEC, NASD and securities exchange registration and
filing fees, (ii) all fees and expenses of complying with state securities or
blue sky laws (including reasonable fees and disbursements of counsel for any
underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or automated quotation system pursuant to
Section 7(h), (v) the fees and disbursements of counsel for the Company and of
its independent public accountants, (vi) the reasonable fees and expenses of
any special experts retained by the Company in connection with the requested
registration, (vii) the reasonable fees and expenses of a single counsel for
the Holders incurred in connection with the preparation and review of any
Registration Statement, and (viii) out-of-pocket expenses for underwriters
customarily paid by the issuer to the extent provided for in any underwriting
agreement, but excluding (x) underwriting discounts and commissions, transfer
taxes, if any, and documentary stamp taxes, if any, and (y) any fees or
disbursements of counsel to the Holders or any Holder, other than the fees and
expenses set forth in clause (vii) above.
"Registration Statement" means any registration statement of the Company
referred to in Section 3 or 4, including any Prospectus, amendments and
supplements to any such registration statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in any
such registration statement.
"Registration Hold Period" means a Section 7(e) Period or a Section 7(l)
Period.
"Related Securities" means any securities of the Company similar or
identical to any of the Registrable Securities, including, without limitation,
the Common Stock and all other options, warrants, rights and other securities
convertible into, or exchangeable or exercisable for, Common Stock.
"Requesting Holder" has the meaning specified in Section 3(a).
"SEC" means the Securities and Exchange Commission.
"Section 7(e) Period" has the meaning specified in Section 7(e).
"Section 7(l) Period" has the meaning specified in Section 7(l).
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, as the same shall be in effect from time to time.
Reference to a particular section of the Securities Act of 1933, as amended,
shall include reference to the comparable section, if any, of any such
successor federal statute.
"Series B Preferred Stock" means, collectively, each series of preferred
stock, par value $.01 per share, of the Company designated by the Company's
Board of Directors as "Series B- Cumulative Convertible Preferred Stock"
which is issued pursuant to the Investment Agreement.
"Shelf Registration" means the registration of Registrable Securities
effected pursuant to Section 4.
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"Shelf Registration Statement" means a shelf registration statement of the
Company filed pursuant to the provisions of Section 4 which covers the Initial
Shelf Registrable Securities, the Draw-Down Shelf Registrable Securities or the
Top-up Registrable Securities on an appropriate form under Rule 415 of the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein. "Shelf
Registration Statement" shall include the Initial Shelf Registration Statement,
each Draw-Down Shelf Registration Statement and each Top-up Shelf Registration
Statement.
"Top-up Shelf Registrable Securities" means, as of any determination date,
(i) the outstanding PIK Dividends which are then Registrable Securities and
(ii) the Conversion Shares issued or issuable thereon.
"Top-up Shelf Registration Statement" means a Shelf Registration Statement
relating to Top-up Shelf Registrable Securities.
"Underwritten Offering" means an underwritten offering in which securities
of the Company are sold to an underwriter for reoffering to the public.
"Warrant Shares" means, collectively, (i) the shares of Common Stock
issued or issuable upon exercise of the Warrants and (ii) any securities paid,
issued or distributed in respect of any such shares of Common Stock referred to
in clause (i) by way of stock dividend or distribution or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise.
"Warrants" means the warrants to purchase Common Stock issued and sold
pursuant to the Investment Agreement and any warrants issued in exchange,
substitution or replacement thereof.
2. Securities Subject to this Agreement. The securities entitled to the
benefits of this Agreement are the Registrable Securities. For the purposes of
this Agreement, any particular Registrable Securities shall cease to be
Registrable Securities on the date and to the extent that (i) a Registration
Statement covering such Registrable Securities has been declared effective
under the Securities Act and such Registrable Securities have been disposed of
pursuant to such effective Registration Statement, (ii) such Registrable
Securities have been distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act, (iii) such
Registrable Securities have been otherwise issued, transferred or disposed of,
certificates therefor not bearing a legend restricting further transfer shall
have been delivered by the Company and, at such time, subsequent transfer or
disposition of such securities shall not require registration or qualification
of such securities under the Securities Act, (iv) all such Registrable
Securities held by any Holder may be sold by such Holder without any time,
volume or manner limitations pursuant to Rule 144(k) (or any similar provision
then in force) under the Securities Act, or (v) such Registrable Securities
have ceased to be outstanding. Without limiting the generality of the
foregoing, (a) Conversion Shares issued or issuable upon conversion of
Preferred Shares shall cease to be Registrable Securities at the same time as
such Preferred Shares cease to be Registrable Securities (other than solely
because such Preferred Shares have ceased to be outstanding), so long as such
Conversion Shares may then or upon issuance be transferred or disposed of by
the holders thereof without restriction under the Securities Act, and (b)
Warrant Shares shall cease to be Registrable Securities if the offering of the
related Warrants has been registered on a Registration Statement and such
Warrant Shares are issued pursuant to the cashless exercise provisions of such
Warrants or the issuance of such Warrant Shares is effected upon exercise of
the related Warrants pursuant to such Registration Statement, so long as such
Warrant Shares may then be transferred or disposed of by the holders thereof
without restriction under the Securities Act.
3. Piggy-Back Registration Rights.
(a) Whenever the Company shall propose to file a registration statement
under the Securities Act relating to the public offering of Common Stock (other
than in connection with an Excluded Registration) for the Company's own account
or for the account of any holder of Common Stock who holds registration
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rights as of the date hereof (the "Initiating Holder") and on a form and in a
manner that would permit registration of Registrable Securities for sale to the
public under the Securities Act, the Company shall (i) give written notice at
least 15 Business Days prior to the filing thereof to each Holder of
Registrable Securities then outstanding, specifying the approximate date on
which the Company proposes to file such registration statement and advising
such Holder of its right to have any or all of the Registrable Securities then
held by such Holder included among the securities to be covered thereby and
(ii) at the written request of any such Holder given to the Company within 15
days after such Holder's receipt of written notice from the Company, include
among the securities covered by such registration statement the number of
Registrable Securities which such Holder (a "Requesting Holder") shall have
requested be so included (subject, however, to reduction in accordance with
paragraph (b) of this Section 3).
(b) Each Holder of Registrable Securities wishing to participate in an
offering pursuant to Section 3(a) may include shares of Common Stock in any
Registration Statement relating to such offering to the extent that the
inclusion of such shares of Common Stock shall not reduce the number of shares
of Common Stock to be offered and sold by the Company or any Initiating Holder
pursuant thereto. If the lead managing underwriter for an Underwritten Offering
pursuant to Section 3(a) determines that marketing factors require a limitation
on the number of shares of Common Stock to be offered and sold by Requesting
Holders in such offering, there shall be included in such offering only that
number of shares of Common Stock, if any, that such lead managing underwriter
reasonably believes will not jeopardize the success of the offering of all of
the shares of Common Stock that the Company wishes to sell for its own account
or that the Initiating Holder desires to sell for its own account, as the case
may be. In such event, the shares of Common Stock to be included in such
offering shall consist of (i) first, the securities the Company or the
Initiating Holder, as the case may be, proposes to sell, and (ii) second, the
number, if any, of Registrable Securities requested to be included in such
registration that, in the opinion of such lead managing underwriter can be sold
without jeopardizing the success of the offering of all of the securities that
the Company or the Initiating Holder, as the case may be, wishes to sell for
its own account, such amount to be allocated on a pro rata basis among the
Holders of Registrable Securities who have requested that their securities be
so included based on the number of Registrable Securities that each Holder
thereof has requested to be so included.
(c) Nothing in this Section 3 shall create any liability on the part of
the Company to the Holders of Registrable Securities if the Company for any
reason should decide not to file a registration statement proposed to be filed
under Section 3(a) or to withdraw such registration statement subsequent to its
filing, regardless of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by the Company of any notice hereunder or
otherwise.
4. Shelf Registration Statements.
(a) Initial and Draw-Down Shelf Registration Statements.
(1) The Company shall file the Initial Shelf Registration Statement with
the SEC not later than (x) 180 days following the Initial Closing Date or (y)
such later date as the Initial Purchaser shall designate in a written notice to
the Company delivered not later than 150 days following the Initial Closing
Date and from time to time thereafter in written notices to the Company
delivered not later than 30 days before the filing date of the Initial Shelf
Registration Statement designated in any such notice by the Initial Purchaser.
The Company shall use its reasonable best efforts to cause the Initial Shelf
Registration Statement to be declared effective by the SEC as soon as
reasonably practicable after the filing date of the Initial Shelf Registration
Statement. The Initial Shelf Registration Statement shall register the offering
of the Registrable Securities that are outstanding immediately prior to the
filing date of the Initial Shelf Registration Statement (collectively, the
"Initial Shelf Registrable Securities"). The Company shall promptly notify the
applicable Holders of the date and time of declaration of effectiveness of the
Initial Shelf Registration Statement.
(2) The Company shall file a Draw-Down Shelf Registration Statement with
the SEC not later than 30 days following each Draw Down Closing that takes
place after the effective date of the Initial Shelf Registration Statement, and
shall use its reasonable best efforts to cause such Draw-Down Shelf
Registration Statement to be declared effective by the SEC as soon as
reasonably practicable thereafter. Each Draw-Down
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Shelf Registration Statement shall register the offering of the Registrable
Securities that are outstanding immediately prior to the filing date of such
Draw-Down Shelf Registration Statement and that have not been registered
pursuant to any previous Registration Statement (collectively, the "Draw-Down
Shelf Registrable Securities"). The Company shall promptly notify the
applicable Holders of the date and time of declaration of effectiveness of each
Draw-Down Shelf Registration Statement.
(b) Top-up Shelf Registration Statements.
(1) On or before March 31 of each year, beginning on March 31, 2003, the
Company shall file a Top-up Shelf Registration Statement with the SEC
registering the offering of all Top-up Shelf Registrable Securities that are
outstanding immediately prior to such filing date and that have not been
registered pursuant to any previous Registration Statement, and shall use its
reasonable best efforts to cause such Top-up Shelf Registration Statement to be
declared effective by the SEC as soon as reasonably practicable thereafter. The
Company shall promptly notify the applicable Holders of the date and time of
declaration of effectiveness of each Top-up Shelf Registration Statement.
(2) The holders of a majority of the then outstanding Top-up Shelf
Registrable Securities that have not been registered pursuant to any previous
Registration Statement shall have the right to make one request, in writing, at
any date beginning after January 1, 2002, for the Company to file a Top-up
Shelf Registration Statement with the SEC registering the offering of some or
all of the then outstanding Top-up Shelf Registrable Securities that have not
been registered pursuant to any previous Registration Statement. The Company
shall file such Top-up Shelf Registration Statement with the SEC not later than
30 Business Days following its receipt of such request and shall use its
reasonable best efforts to cause such Top-up Registration Statement to be
declared effective by the SEC as soon as reasonably practicable thereafter.
Within ten Business Days following receipt of such request, the Company shall
give written notice to each Holder of such Top-up Shelf Registrable Securities
then outstanding, specifying the approximate date on which the Company proposes
to file such Top-up Shelf Registration Statement and advising such Holder of
its right to have any or all of such Top-up Shelf Registrable Securities then
held by such Holder included among the securities to be covered thereby. At the
written request of any such Holder given to the Company within 15 Business Days
after such Holder's receipt of written notice from the Company, the Company
shall include among the securities covered by such registration statement the
number of such Top-up Shelf Registrable Securities which such Holder shall have
requested be so included.
5. Selection of Underwriters. In connection with any Underwritten Offering
pursuant to a Shelf Registration Statement, the Company shall have the right to
select a lead managing underwriter or underwriters to administer such offering,
which lead managing underwriter or underwriters shall be reasonably
satisfactory to the Holders holding a majority of the Registrable Securities to
be included in such Registration Statement; provided, however, that the Holders
holding a majority of the Registrable Securities to be included in such
Registration Statement shall have the right to select a co-managing underwriter
or underwriters for such offering, which co-managing underwriter or
underwriters shall be reasonably satisfactory to the Company.
6. Blackout Periods; Holdback.
(a) If the Company determines that the registration and distribution of
Registrable Securities (i) would materially impede, delay, interfere with or
otherwise adversely affect any pending financing, registration of securities,
acquisition, corporate reorganization or other significant transaction
involving the Company or (ii) would require disclosure of non-public material
information that the Company has a bona fide business purpose for preserving as
confidential, as determined by the Company's Board of Directors in good faith,
the Company shall promptly give the Holders notice of such determination and
shall be entitled to postpone the filing or effectiveness of a Registration
Statement, or to suspend the use of an effective Registration Statement, for
the shortest period of time reasonably required, but in any event not to exceed
90 days with respect to matters covered by clause (i) above, and not to exceed
30 days with respect to matters covered by clause (ii) above (each such period,
a "Blackout Period"); provided that a Blackout Period pursuant to clause (i)
above with respect to a registration of securities proposed by the Company may,
at the election of the Company, commence on the date that is 30 days prior to
the date the Company in good faith estimates will be the date of filing of such
registration and end no later than the earlier of (x) the date (following the
effective date) specified
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in the form of underwriting agreement relating to such registration during
which the Company shall be prohibited from selling, offering or otherwise
disposing of Common Stock and (y) the 90th day after the commencement of such
Blackout Period; provided further, that the Company shall not be entitled to
obtain deferrals under this Section 6(a) for more than an aggregate of 90 days
in any 12-month period. The Company shall promptly notify each Holder of the
expiration or earlier termination of a Blackout Period.
(b) If requested by the managing underwriter of any offering of securities
of the Company registered under the Securities Act, each Holder shall not, and
shall ensure that its Affiliates do not, directly or indirectly, sell, offer,
pledge, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, warrant or right to purchase, or
otherwise dispose of or transfer, or enter into any swap or other agreement or
any arrangement that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership in, any Registrable Securities or Related
Securities held by such Holder or such Holder's Affiliates during the 90 days
following the effective date of a registration statement of the Company filed
under the Securities Act, except for Registrable Securities included in such
registration. If requested, each Holder shall enter, and shall ensure that all
Affiliates of such Holder holding Registrable Securities or Related Securities
enter, into a lock-up agreement with the applicable underwriters that is
consistent with the agreement in the preceding sentence.
(c) Notwithstanding any provision of Section 6(a) or 6(b), the cumulative
period of any deferrals pursuant to Section 6(a) and the period of any holdback
pursuant to Section 6(b) shall not exceed, in the aggregate, 90 days in any 12-
month period.
7. Registration Procedures. In connection with the registration obligations
of the Company under Sections 3 and 4, the Company shall:
(a) prepare and file with the SEC a Registration Statement with respect to
such Registrable Securities on any form for which the Company then qualifies or
which counsel for the Company shall deem appropriate, and which form shall be
available for the sale of the Registrable Securities in accordance with the
intended methods of distribution thereof, and use reasonable best efforts to
cause such Registration Statement to become and remain effective;
(b) prepare and file with the SEC amendments and post-effective amendments
to such Registration Statement and such amendments and supplements to the
Prospectus used in connection therewith as may be necessary to maintain the
effectiveness of such registration or as may be required by the rules,
regulations or instructions applicable to the registration form utilized by the
Company or by the Securities Act or rules and regulations thereunder necessary
to keep such Registration Statement effective (i) in the case of an
Underwritten Offering, until each underwriter has completed the distribution of
all securities purchased by it, and (ii) in the case of any other registration,
until the Registrable Securities covered thereby cease to be Registrable
Securities, and cause the Prospectus as so amended and supplemented to be filed
pursuant to Rule 424 under the Securities Act, and otherwise use reasonable
best efforts to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement
until such time as is specified in clause (i) or (ii) above, as the case may
be;
(c) furnish to each Holder of such Registrable Securities such number of
copies of such Registration Statement and of each amendment and post-effective
amendment thereto, any Prospectus or Prospectus supplement and such other
documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities by such Holder (the Company hereby
consenting to the use (subject to the limitations set forth in Section 8(b)) of
the Prospectus or any amendment or supplement thereto in connection with such
disposition);
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(d) use reasonable best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such other securities
or blue sky laws of such jurisdictions as each Holder shall reasonably request,
and to do any and all other acts and things which may be reasonably necessary
to enable such Holder to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such Holder, except that the Company shall
not be required for any such purpose to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the requirements of this
Section 7(d), it would not be obligated to be so qualified, to subject itself
to taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(e) notify each Holder of any such Registrable Securities covered by such
Registration Statement, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act within the applicable period
referred to in Section 7(b), that the Company has become aware that the
Prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of the material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing (the period during
which the Holders are required in such case pursuant to Section 8(b) to refrain
from effecting public sales or distributions of Registrable Securities being
referred to as a "Section 7(e) Period"), and prepare and furnish to such
Holder, as soon as reasonably practicable, a reasonable number of copies of an
amendment to such Registration Statement or supplement to such related
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing;
(f) notify each Holder of Registrable Securities covered by such
Registration Statement at any time,
(i) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the Registration Statement or such post-
effective amendment has become effective;
(ii) of the issuance by the SEC of any stop order of which the Company is
aware suspending the effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation of any
proceedings for such purposes; and
(iii) of the receipt of the Company of any written notification of the
suspension of the qualification of any of the Registrable Securities for sale
in any jurisdiction or the initiation of any proceeding for such purpose;
(g) make available to its stockholders an earnings statement which shall
satisfy the provisions of Section 11(a) of the Securities Act, provided that
the Company shall be deemed to have complied with this Section 7(g) if it has
complied with Rule 158 under the Securities Act;
(h) use reasonable best efforts (i) to cause all Conversion Shares and
Warrant Shares covered by such Registration Statement to be listed on any
securities exchange or automated quotation system on which the Common Stock is
then listed, if such Conversion Shares and Warrant Shares are not already so
listed and if such listing is then permitted under the rules of such exchange
or automated quotation system, (ii) to provide a transfer agent and registrar
for Registrable Securities covered by such Registration Statement no later than
the effective date of such Registration Statement and (iii) prepare and file
with the SEC, within the time period specified by Section 12(g) of the Exchange
Act, a Registration Statement on Form 8-A registering the Preferred Shares and
the Warrants if such filing is required pursuant to Section 12(g) of the
Exchange Act;
(i) if the registration involves an Underwritten Offering, enter into a
customary underwriting agreement and in connection therewith:
(i) make such representations and warranties to the underwriters in form,
substance and scope as are customarily made by issuers to underwriters in
comparable Underwritten Offerings;
(ii) use reasonable best efforts to obtain opinions of counsel to the
Company (in form, scope and substance reasonably satisfactory to the managing
underwriters), addressed to the underwriters, and covering the matters
customarily covered in opinions requested in comparable Underwritten Offerings;
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(iii) use reasonable best efforts to obtain "cold comfort" letters and
bring-downs thereof from the Company's independent certified public accountants
addressed to the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters by
independent accountants in connection with Underwritten Offerings; and
(iv) deliver such documents and certificates as may be reasonably
requested by the managing underwriters to evidence compliance with any
customary conditions contained in the underwriting agreement;
(j) cooperate with the Holders of Registrable Securities covered by such
Registration Statement and the managing underwriter or underwriters or agents,
if any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing the securities to be sold under
such Registration Statement, and enable such securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters or agents, if any, or such Holders may request;
(k) if reasonably requested by the managing underwriter or underwriters or
a Holder of Registrable Securities being sold in connection with an
Underwritten Offering, incorporate in a Prospectus supplement or post-effective
amendment to the Registration Statement such information as the managing
underwriters and the Holders of a majority in number of the Registrable
Securities being sold agree should be included therein relating to the plan of
distribution with respect to such Registrable Securities, including, without
limitation, information with respect to the principal amount of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and any other terms of the Underwritten Offering
of the Registrable Securities to be sold in such offering and make all required
filings of such Prospectus supplement or post-effective amendment as promptly
as practicable upon being notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(l) if reasonably requested by the managing underwriter or underwriters or
a Holder of Registrable Securities being sold in an Underwritten Offering,
cause appropriate representatives of the Company to participate in any "road
shows" or similar marketing activities;
(m) in the event of the issuance of any stop order of which the Company is
aware suspending the effectiveness of the Registration Statement, or of any
order suspending or preventing the use of any related Prospectus or suspending
the qualification of any Registrable Securities included in the Registration
Statement for sale in any jurisdiction, use reasonable best efforts promptly to
obtain the withdrawal of such stop order or other order, and the period for
which the Registration Statement shall be kept effective shall be extended by a
number of days equal to the number of days between the issuance and withdrawal
of any stop order or other order (a "Section 7(l) Period"); and
(n) disclose in each Registration Statement that, pursuant to Rule 416
under the Securities Act, such Registration Statement shall register the
offering of an indeterminate number of shares of Common Stock which may become
issuable pursuant to the antidilution provisions of the Preferred Shares and
the Warrants.
8. Agreements of Holders.
(a) As a condition to the Company's obligation under this Agreement to
cause Registrable Securities of any Holder to be included in a Registration
Statement, such Holder shall timely provide the Company with all of the
information required to be provided in the Registration Statement with respect
to such Holder pursuant to Items 507 and 508 of Regulation S-K under the
Securities Act or as otherwise may reasonably be required by the Company in
connection with the Registration Statement.
(b) Each Holder shall comply with the prospectus delivery requirements of
the Securities Act in connection with the offer and sale of Registrable
Securities made by such Holder pursuant to the Registration Statement. Upon
receipt of any notice from the Company of the happening of any event of the
kind described in Section 7(e) or Section 7(l), each Holder of Registrable
Securities shall forthwith discontinue the disposition of Registrable
Securities pursuant to the Prospectus or Registration Statement covering such
Registrable Securities until
9
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(e) or the withdrawal of any stop order or other order
referred to in Section 7(l), and, if so directed by the Company, shall deliver
to the Company all copies, other than permanent files copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities at
the time of receipt of such notice.
(c) To the extent required by the Securities Act or rules or regulations
thereunder, as reasonably determined by the Company, a Holder shall consent to
disclosure in any Registration Statement to the effect that such Holder is or
may be deemed to be an underwriter for purposes of the Securities Act in
connection with the offering of Registrable Securities of such Holder included
in such Registration Statement.
(d) Each Holder shall comply, and shall cause its Affiliates to comply,
with Regulation M under the Exchange Act in connection with the offer and sale
of Registrable Securities made by such Holder pursuant to any Registration
Statement. Each Holder shall use its commercially reasonable efforts to provide
the Company with such information about such Holder's offer and sale of
Registrable Securities pursuant to any Registration Statement as the Company
shall reasonably require to enable it and its Affiliates to comply with
Regulation M under the Exchange Act in connection with any such offer and sale.
9. Registration Expenses. The Company shall pay all Registration Expenses in
connection with all registrations pursuant to this Agreement. In connection
with all such registrations, each Holder shall pay all underwriting discounts
and commissions, all transfer taxes, if any, all documentary stamp taxes, if
any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Registration Statement, and all fees and expenses of
counsel to such Holder except as provided in clause (vii) of the definition of
Registration Expenses.
10. Indemnification; Contribution.
(a) The Company shall indemnify and hold harmless each Holder of
Registrable Securities and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees, disbursements and expenses, as incurred)
(collectively, "Losses") incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in, or
any omission or alleged omission of a material fact required to be stated in,
the Registration Statement, Prospectus or preliminary Prospectus or any
amendment or supplement to any of the foregoing or necessary to make the
statements therein (in the case of a Prospectus or a preliminary Prospectus, in
the light of the circumstances then existing) not misleading, except in each
case insofar as such statements or omissions arise out of or are based upon (i)
any such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance on and in conformity with information with respect to
such Holder furnished in writing to the Company by such Holder or its counsel
expressly for use therein, (ii) the use of any Prospectus after such time as
the obligation of the Company to keep effective the Registration Statement of
which such Prospectus forms a part has expired or (iii) the use of any
Prospectus after such time as the Company has advised the Holders that the
filing of an amendment or supplement thereto is required, except such
Prospectus as so amended or supplemented. Notwithstanding the foregoing
provisions of this Section 10(a), the Company shall not be liable to any Holder
or to any Person who controls such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) under the indemnity
agreement in this Section 10(a) for any Losses that arise out of or are based
upon any of the matters specified in clause (ii) or (iii) of the immediately
preceding sentence or that arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
Prospectus if either (i) (A) such Holder failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written confirmation of the
sale of Registrable Securities by such Holder to the Person asserting the claim
from which such Losses arise and (B) the Prospectus would have corrected such
untrue statement or alleged untrue statement or such omission or alleged
omission, or (ii) (x) such untrue statement or alleged untrue statement or
omission or alleged omission is corrected in an amendment or supplement to the
Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such
Holder thereafter fails to deliver such Prospectus, as so amended or
supplemented, with or prior to the delivery of written confirmation of the sale
of Registrable Securities by such Holder to the Person asserting the claim from
which such Losses arise.
10
(b) In connection with any Registration Statement filed pursuant hereto,
each Holder of Registrable Securities to be covered thereby shall, jointly and
severally with all other Holders that are Affiliates of such Holder (and,
otherwise, severally and not jointly with any other Holders), indemnify and
hold harmless the Company, its directors and officers, and each Person, if any,
who controls the Company (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and all other Holders against all Losses
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in, or any omission or alleged
omission of a material fact required to be stated in, the Registration
Statement, Prospectus or preliminary Prospectus or any amendment or supplement
to any of the foregoing or necessary to make the statements therein (in case of
a Prospectus or preliminary Prospectus, in the light of the circumstances then
existing) not misleading, but only to the extent that any such untrue statement
or omission is made in reliance on and in conformity with information with
respect to such Holder furnished in writing to the Company by such Holder or
its counsel specifically for use therein; provided, however, that the liability
of each Holder hereunder shall be limited to the proportion of any such Losses
that is equal to the proportion that the net proceeds from the sale of
Registrable Securities sold by such Holder under such Registration Statement
bears to the total net proceeds from the sale of all securities sold
thereunder, but not in any event to exceed the net proceeds received by such
Holder from the sale of Registrable Securities covered by such Registration
Statement.
(c) Any Person entitled to indemnification hereunder agrees to give prompt
written notice to the indemnifying party after the receipt by such indemnified
party of any written notice of the commencement of any action, suit, proceeding
or investigation or threat thereof made in writing for which such indemnified
party may claim indemnification or contribution pursuant to this Agreement,
provided that failure to give such notification shall not affect the
obligations of the indemnifying party pursuant to this Section 10 except to the
extent the indemnifying party shall have been actually prejudiced as a result
of such failure. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation, unless in the reasonable judgment of any indemnified party,
based on the written opinion of counsel, a conflict of interest is likely to
exist between the indemnifying party and such indemnified party and any other
of such indemnified parties with respect to such claim, in which event the
indemnifying party shall not be liable for the fees and expenses of (i) more
than one counsel for all Holders of Registrable Securities who are indemnified
parties, selected by the Holders of a majority of the Registrable Securities
who are indemnified parties (which selection shall be reasonably satisfactory
to the Company), (ii) more than one counsel for the underwriters or (iii) more
than one counsel for the Company, in each case in connection with any one
action or separate but similar or related actions. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in
the reasonable judgment of any indemnified party, based on the written opinion
of counsel, a conflict of interest is likely to exist between an indemnified
party and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel, provided that the indemnifying party shall
not be liable for the fees and expenses of (i) more than one counsel for all
Holders of Registrable Securities who are indemnified parties (the selection of
which counsel by such Holders of a majority of such Registrable Securities
shall be reasonably satisfactory to the Company), (ii) more than one counsel
for the underwriters or (iii) more than one counsel for the Company, in each
case in connection with any one action or separate but similar or related
actions. No indemnifying party, in defense of any such action, suit, proceeding
or investigation, shall, except with the consent of each indemnified party,
consent to the entry of any judgment or entry into any settlement which does
not include as an unconditional
11
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such action, suit, proceeding or
investigation to the extent such liability is covered by the indemnity
obligations set forth in this Section 10. No indemnified party shall consent to
entry of any judgment or entry into any settlement without the consent of each
indemnifying party.
(d) If the indemnification from the indemnifying party provided for in
this Section 10 is unavailable to an indemnified party hereunder in respect to
any Losses, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations; provided, however, that
the liability of each Holder hereunder shall be limited to the proportion of
any such Losses that is equal to the proportion that the net proceeds from the
sale of Registrable Securities sold by such Holder under a Registration
Statement bears to the total net proceeds from the sale of all securities sold
thereunder, but not in any event to exceed the net proceeds received by such
Holder from the sale of Registrable Securities covered by such Registration
Statement. The relative fault of such indemnifying party and indemnified party
shall be determined by reference to, among other things, whether any action in
question, including any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Losses referred to above shall be
deemed to include, subject to the limitations set forth in Section 10(c), any
legal or other fees and expenses reasonably incurred by such indemnified party
in connection with any investigation or proceeding. 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 parties agree that it would
not be just and equitable if contribution pursuant to this Section 10(d) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the consideration referred to in this Section 10(d).
If indemnification is available under this Section 10, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Section
10(a) or 10(b), as the case may be, without regard to the relative fault of
such indemnifying parties or indemnified party or any other equitable
consideration provided for in this Section 10(d).
(e) The provisions of this Section 10 shall be in addition to any
liability which any indemnifying party may have to any indemnified party and
shall survive the termination of this Agreement.
11. Participation in Underwritten Offerings. No Holder of Registrable
Securities may participate in any Underwritten Offering pursuant to this
Agreement unless such Holder (i) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Company and (ii) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting
arrangements.
12. Reports Under the Exchange Act. For so long as any Registrable
Securities remain outstanding, the Company shall use reasonable best efforts to
file with the SEC in a timely manner all reports required to be filed by the
Company pursuant to Section 13 or 15(d) of the Exchange Act and shall furnish
to any Holder, promptly upon request by such Holder, a written statement by the
Company as to whether it has complied with the current public information
requirements of Rule 144(c) under the Securities Act.
13. Assignment of Registration Rights. The right to cause the Company to
register Registrable Securities pursuant to Section 3 may be assigned (but only
with all related obligations hereunder) by any Purchaser in connection with a
transfer to any transferee of the Registrable Securities permitted under the
Investment Agreement and the terms of the Preferred Shares and the Warrants
who, after such transfer, holds at least 5% of the then-outstanding Registrable
Securities, provided that such assignment of rights under this Agreement shall
be effective only if (i) immediately thereafter the further disposition of such
securities by such transferee is restricted under the Securities Act and (ii)
such transferee agrees in writing to become a Holder
12
under this Agreement and to be bound by the provisions hereof. The right to
cause the Company to register Registrable Securities pursuant to Section 4 may
be assigned (but only with all related obligations hereunder) by any Purchaser
in connection with a transfer to any transferee of the Registrable Securities
permitted under the Investment Agreement and the terms of the Preferred Shares
and the Warrants, provided that such assignment of rights under this Agreement
shall be effective only if (i) immediately thereafter the further disposition
of such securities by such transferee is restricted under the Securities Act
and (ii) such transferee agrees in writing to become a Holder under this
Agreement and to be bound by the provisions hereof. If a Holder transfers
Registrable Securities in connection with the immediately preceding sentence,
the Company agrees promptly to amend any Shelf Registration Statement or to
file a supplement to the Prospectus included therein to disclose that any
transferee referred to in such sentence is a Holder of Registrable Securities.
14. Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, any Holder and any successor, permitted
assign, heir and legal representative thereof; provided, however, that, except
as provided in Section 13, this Agreement and the provisions of this Agreement
that are for the benefit of the Holders shall not be assignable by any Holder,
and any such purported assignment shall be null and void. Except to the extent
provided in Section 10, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto, the Holders and
their respective successors, permitted assigns, heirs and legal representatives
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
15. Amendments and 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,
unless the Company has obtained the written consent thereto of Holders of a
majority of the Registrable Securities. Notwithstanding the foregoing, a waiver
or consent to departure from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders of
Registrable Securities may be given by Holders of at least a majority of the
Registrable Securities being sold by such Holders pursuant to such Registration
Statement; provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence. Each Holder of Registrable Securities
outstanding at the time of any such amendment, modification, supplement, waiver
or consent or thereafter shall be bound by any such amendment, modification,
supplement, waiver or consent effected pursuant to this Section 15, whether or
not any notice, writing or marking indicating such amendment, modification,
supplement, waiver or consent appears on the Registrable Securities or is
delivered to such Holder.
16. Notices. All notices and other communications given or made pursuant
hereto, unless otherwise specified, shall be in writing and shall be deemed to
be effectively given as follows: (i) upon personal delivery to the party to be
notified; (ii) when sent by facsimile, if sent during normal business hours of
the recipient and if not, then on the next Business Day; (iii) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (iv) two days after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the parties hereto at the
respective addresses set forth below, or as notified by such party from time to
time at least ten days prior to the effectiveness of such notice:
If to the Company:
ITC/\DeltaCom, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Tel.: (000) 000-0000
Fax: (000) 000-0000
13
If to Initial Purchaser:
ITC Holding Company, Inc.
0000 00xx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: General Counsel
Tel.: (000) 000-0000
Fax: (000) 000-0000
Any Person who becomes a Holder shall provide its address and facsimile
transmission number to the Company, which shall promptly provide such
information to each other Holder.
17. Headings. The headings contained in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
20. Termination. This Agreement shall terminate with respect to any Holder
when such Holder no longer holds any Registrable Securities, except for any
liabilities or obligations under Sections 9 and 10, which shall remain in
effect in accordance with their terms. No termination of any provision of this
Agreement shall relieve any party of any liability for any breach of such
provision occurring prior to such termination.
21. Entire Agreement. This Agreement is intended by the parties to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities. Except as provided in the Investment Agreement and in the
instruments authorizing or evidencing the Preferred Shares and the Warrants,
there are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein, with respect to the registration rights
granted by the Company with respect to the Registrable Securities. This
Agreement supersedes all prior agreements and undertakings among the parties
with respect to such registration rights. No party hereto shall have any
rights, duties or obligations other than those specifically set forth in this
Agreement.
22. Specific Performance. Without limiting the rights of each party hereto
to pursue all other legal and equitable rights available to such party for any
other parties' failure to perform their obligations under this Agreement, the
parties hereto acknowledge and agree that the remedy at law for any failure to
perform their obligations hereunder would be inadequate and that each of them,
respectively, to the extent permitted by applicable law, shall be entitled to
specific performance, injunctive relief or other equitable remedies in the
event of any such failure.
23. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the parties
shall negotiate in good faith with a view to the substitution therefor of a
suitable and equitable solution in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid provision, provided,
however, that the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be in any way impaired thereby, it being intended that all of the rights
and privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law.
[Signature page follows]
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth in the first paragraph hereof.
ITC/\DELTACOM, INC.
By:
---------------------------------
Name:
Title:
ITC HOLDING COMPANY, INC.
By:
---------------------------------
Name:
Title:
15
