Exhibit 99.4
------------
[Exhibit C to Merger Agreement]
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ITC/\DELTACOM, INC.
and
MELLON INVESTOR SERVICES LLC
as
WARRANT AGENT
-----------------------------
WARRANT AGREEMENT
Dated as of [ ], 2003
TABLE OF CONTENTS
Page
----
WITNESSETH:....................................................................1
SECTION 1. APPOINTMENT OF WARRANT AGENT......................................1
SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES........................2
2.1 Form and Dating...................................................2
2.2 Execution.........................................................3
2.3 Warrant Registrar.................................................3
2.4 Holder Lists......................................................4
SECTION 3. TERMS OF WARRANTS; EXERCISE OF WARRANTS...........................4
SECTION 4. PAYMENT OF TAXES.................................................10
SECTION 5. RESERVATION OF WARRANT SHARES....................................11
SECTION 6. OBTAINING STOCK EXCHANGE LISTINGS................................11
SECTION 7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES ISSUABLE..................................................12
SECTION 8. FRACTIONAL INTERESTS.............................................25
SECTION 9. WARRANT AGENT....................................................25
9.1 Duties and Obligations; Limitations of Liability.................25
9.2 Merger, Consolidation or Change of Name of Warrant Agent.........31
9.3 Change of Warrant Agent..........................................32
SECTION 10. TRANSFER; REPLACEMENT; CANCELLATION..............................33
10.1 Transfer.........................................................33
10.2 Replacement Warrants.............................................38
10.3 Temporary Warrants...............................................39
10.4 Cancellation.....................................................39
SECTION 11. NOTICES TO COMPANY AND WARRANT AGENT.............................39
SECTION 12. SUPPLEMENTS AND AMENDMENTS.......................................41
SECTION 13. SUCCESSORS.......................................................43
SECTION 14. TERMINATION......................................................43
SECTION 15. CERTAIN DEFINITIONS..............................................44
SECTION 16. WARRANT HOLDER NOT DEEMED A STOCKHOLDER..........................51
SECTION 17. GOVERNING LAW....................................................52
SECTION 18. BENEFITS OF THIS AGREEMENT.......................................52
SECTION 19. COUNTERPARTS.....................................................52
EXHIBIT A
FORM OF WARRANT CERTIFICATE..................................................A-1
Form of Election to Purchase.................................................A-9
Schedule of Exchanges of Interests in Global Warrant........................A-10
EXHIBIT B
FORM OF INVESTMENT LETTER FOR EXERCISE.......................................B-1
EXHIBIT C
FORM OF INVESTMENT LETTER FOR TRANSFER.......................................C-1
ii
WARRANT AGREEMENT
This Warrant Agreement, dated as of [ ], 2003 (this "Warrant
Agreement" or "Agreement"), is between ITC/\DeltaCom, Inc., a Delaware
corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey
limited liability company, as warrant agent (the "Warrant Agent"). Unless
elsewhere defined herein, capitalized terms used herein shall have the meaning
given to them in Section 15.
WITNESSETH:
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
May [ ], 2003, among the Company, Beach Acquisition Corp., W and Beach, Inc.,
the Company proposes to issue and deliver 3,000,000 warrants (each, a "Warrant")
to purchase an equal number of shares, subject to adjustment in accordance with
Section 7 (the "Warrant Shares"), of the Common Stock, par value $.01 per share,
of the Company (the "Common Stock"); and
WHEREAS, the Company wishes the Warrant Agent to act as Warrant
Agent on behalf of the Company, and the Warrant Agent is willing to so act, in
connection with the issuance of the Warrants and the other matters provided
herein;
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT.
The Company hereby appoints the Warrant Agent to act as agent for
the Company in accordance with the express terms and conditions set forth
hereinafter in this Agreement, and the Warrant Agent hereby accepts such
appointment.
SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
2.1 Form and Dating.
(a) The Warrants shall be represented by certificates
substantially in the form of Exhibit A hereto (the "Warrant Certificates"). The
Warrant Certificates may have notations, legends or endorsements required by
law, stock market or stock exchange rule or usage (none of which shall affect
the rights, duties or obligations of the Warrant Agent as set forth in this
Agreement). Each Warrant Certificate shall be dated the date of the
countersignature by the Warrant Agent. The terms and provisions contained in the
Warrant Certificates shall constitute, and are hereby expressly made, a part of
this Warrant Agreement. The Company and the Warrant Agent, by their execution
and delivery of this Warrant Agreement, expressly agree to such terms and
provisions and to be bound thereby. However, to the extent any provision of any
Warrant Certificate conflicts with the express provisions of this Warrant
Agreement, the provisions of this Warrant Agreement shall govern and be
controlling.
(b) Warrants may be issued in global form and shall include the
Global Warrant Legend set forth in Exhibit A hereto and the "Schedule of
Exchanges of Interests in Global Warrant" attached thereto. Warrants may also be
issued in definitive form but without the Global Warrant Legend and without the
"Schedule of Exchanges of Interests in Global Warrant" (the "Definitive
Warrants"). Each Global Warrant shall represent such of the outstanding Warrants
as shall be specified therein and each Global Warrant shall provide that it
shall represent the number of outstanding Warrants from time to time endorsed
thereon and that the number of outstanding Warrants represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions or other adjustments pursuant to Section 7. Any endorsement of a
Global Warrant to reflect the amount of any increase or decrease in the number
of outstanding Warrants represented thereby shall be made by the
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Warrant Agent (upon specific written instruction from the Company) in accordance
with instructions given by the Holder thereof as required by Section 10.
2.2 Execution.
An Officer of the Company shall sign each Warrant Certificate on
behalf of the Company by manual or facsimile signature. If the Officer of the
Company whose signature is on a Warrant no longer holds that office at the time
a Warrant Certificate is countersigned, such Warrant shall nevertheless be
valid. A Warrant shall not be valid until countersigned by the manual or
facsimile signature of the Warrant Agent. The signature of the Warrant Agent
shall be conclusive evidence that the Warrant has been properly issued under
this Warrant Agreement. Upon its receipt of (i) a written order of the Company
containing specific instructions signed by an Officer (a "Warrant
Countersignature Order") and (ii) all other relevant information which the
Warrant Agent may request, the Warrant Agent shall countersign Warrant
Certificates for original issue up to the number of Warrants stated in the
preamble hereto. The Warrant Agent may appoint an agent acceptable to the
Company to countersign Warrants. Such an agent may countersign Warrants whenever
the Warrant Agent may do so. Each reference in this Warrant Agreement to a
countersignature by the Warrant Agent includes a countersignature by such agent.
Such an agent has the same rights as the Warrant Agent to deal with the Company
or an Affiliate of the Company.
2.3 Warrant Registrar.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange (the "Warrant
Registrar"). The Warrant Registrar shall keep a register of the Warrants and of
their transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The
Company may change any Warrant Registrar without notice to any
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Holder. The Company shall notify the Warrant Agent in writing of the name and
address of any agent (including any Warrant Registrar) that is not a party to
this Warrant Agreement. If the Company fails to appoint or maintain another
entity as the Warrant Registrar, the Warrant Agent shall act as the Warrant
Registrar. The Company or any of its subsidiaries may act as Warrant Registrar.
The Company initially appoints the Warrant Agent to act as the Warrant Registrar
with respect to the Global Warrants and The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Warrants. The Warrant Registrar is
hereby granted all of the rights, powers, protections, indemnifications and
exculpations that have been granted to the Warrant Agent under this Agreement,
including, without limitation, the rights, powers, protections, indemnifications
and exculpations granted under Section 9.
2.4 Holder Lists.
The Warrant Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders. The Company shall promptly furnish to the Warrant
Agent, at such times as the Warrant Agent may request in writing, a list, in
such form and as of such date as the Warrant Agent may reasonably require, of
the names and addresses of the Holders.
SECTION 3. TERMS OF WARRANTS;EXERCISE OF WARRANTS.
(a) Subject to the terms of this Agreement, each Holder shall have
the right, which may be exercised at any time and from time to time during the
period commencing on the date of issuance of the Warrants and ending immediately
prior to 5:00 p.m., New York City time, on [ ], [2010] (the "Exercise
Period"), to receive from the Company the number of fully paid and
non-assessable Warrant Shares which the Holder may at the time be entitled to
receive upon exercise of such Warrants upon payment, subject to Section 3(f), of
$8.50 per share of Common Stock, as adjusted from time to time in accordance
with Section 7 (the "Exercise
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Price"), in cash, by wire transfer or by certified or official bank check
payable to the order of the Company; provided that Holders holding Warrants
shall be able to exercise their Warrants only in accordance with the procedures
set forth in this Agreement and the Warrant Certificate and only if (i) a
registration statement relating to the exercise of the Warrants and issuance of
the Warrant Shares upon such exercise is then effective under the Securities Act
of 1933, as amended (the "Securities Act"), or (ii) the exercise of such
Warrants and the issuance of the Warrant Shares upon such exercise is exempt
from the registration requirements of the Securities Act and such Warrant Shares
are qualified for sale or exempt from registration or qualification under the
applicable securities laws of the states in which the various Holders of the
Warrants or other Persons to whom it is proposed that such Warrant Shares be
issued upon exercise of the Warrants reside. Each Warrant not exercised prior to
5:00 p.m., New York City time, on [ ], [2010] (the "Expiration Date") shall
become void and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of such time. No adjustments as to dividends shall
be made upon exercise of the Warrants.
(b) In order to exercise all or any of the Warrants, the Holder
thereof must deliver to the Warrant Agent at its office set forth in Section 11
(i) the Warrant Certificate (in the case of Definitive Warrants), (ii) the form
of election to purchase on the reverse thereof duly and properly filled in and
signed, which signature shall be guaranteed by a bank or trust company having an
office or correspondent in the United States or a broker or dealer which is a
member of a registered securities exchange or the National Association of
Securities Dealers, Inc., and (iii) subject to Section 3(f), payment to the
Warrant Agent for the account of the Company of the Exercise Price for the
number of Warrant Shares in respect of which such Warrants are then exercised,
as provided in Section 3(a).
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(c) If, at the time of the surrender of a beneficial interest in
any Restricted Global Warrant or a Restricted Definitive Warrant in connection
with any exercise of such Warrant, such exercise and the issuance of the Warrant
Shares issuable upon such exercise shall not be registered under the Securities
Act, it shall be a condition to such exercise and the issuance of such Warrant
Shares that (i) the Holder of such Warrant furnish to the Company an investment
letter substantially in the form of Exhibit B hereto and (ii) the Holder or each
other Person to whom it is proposed that such Warrant Shares be issued qualify
as an "accredited investor" as defined in Rule 501(a) of Regulation D under the
Securities Act. The Company may waive compliance with such condition, in whole
or in part, in its sole discretion.
(d) Subject to the provisions of Section 10, upon specific written
instruction from the Company, the Warrant Agent shall deliver or cause to be
delivered with all reasonable dispatch, in such name or names as the Holder may
designate in writing, a certificate or certificates for the number of whole
Warrant Shares issuable upon exercise of the Warrants delivered by the Holder
for exercise. Such certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and, subject to Section 3(f), payment of the Exercise Price;
provided, however, that if such Person would be so deemed to have become a
holder of record of Warrant Shares as of a date of record referred to in Section
7(d), then, notwithstanding the foregoing, such Person shall be deemed to have
become a holder of record of such Warrant Shares on the first Business Day
immediately following such date of record.
(e) The Warrants shall be exercisable, at the election of the
Holders thereof, either in full or from time to time in part, provided that
Warrants may not be exercised by any
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Holder for an amount less than 100 Warrant Shares unless such Holder only owns,
in the aggregate, such lesser amount. If fewer than all the Warrants represented
by a Warrant Certificate are exercised, such Warrant Certificate shall be
surrendered and a new Warrant Certificate of the same tenor and for the number
of Warrants which were not exercised shall be executed promptly by the Company
and delivered promptly to the Warrant Agent and, upon written notice thereof
from the Company, the Warrant Agent shall countersign the new Warrant
Certificate, registered in such name or names as may be directed in writing by
the Holder, and shall promptly deliver the new Warrant Certificate to the Person
or Persons entitled to receive such new Warrant Certificate (as specified in
writing by the Company).
(f) Subject to the last sentence of this Section 3(f), in lieu of
making the payment of the Exercise Price in connection with the exercise of each
Warrant pursuant to Section 3(a) (but in all other respects in accordance with
the exercise procedure set forth above, as such exercise procedure may be
adjusted to reflect the conversion referred to herein), the Holder of each
Restricted Warrant may elect to convert such Restricted Warrant into shares of
Common Stock by providing the Company and the Warrant Agent with joint written
notification of such election, in which event the Company shall issue to such
Holder the number of shares of Common Stock calculated in accordance with the
following formula:
(A - B) x C
X = -----------
A
where
X = the number of shares of Common Stock issuable upon
exercise pursuant to this Section 3(f)
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A = the Closing Price on the Business Day
immediately preceding the date on which the
Holder delivers the Warrant Certificate and
form of election to purchase to the Company
pursuant to Section 3(b)
B = the Exercise Price
C = the number of shares of Common Stock as to
which such Restricted Warrant is being
exercised pursuant to Section 3(a)
If the foregoing calculation results in a negative number, no shares of Common
Stock shall be issued upon conversion pursuant to this Section 3(f).
Notwithstanding any provision of this Agreement to the contrary, the Holder of
any Restricted Warrant may elect to convert such Restricted Warrant into shares
of Common Stock as provided in this Section 3(f) only if the Board of Directors
shall determine that upon such conversion the Company shall receive
consideration in an amount not less than the par value of the shares of Common
Stock issuable upon such conversion. Any reference in this Agreement or any
Warrant to exercise of a Warrant shall be deemed also to refer to conversion of
a Restricted Warrant in accordance with this Section 3(f), as the context may
require.
(g) All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be disposed of by the Warrant Agent in its customary manner. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.
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(h) The Warrant Agent shall keep copies of this Agreement and any
written notices given or received hereunder available for inspection by the
Holders during normal business hours at its office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agent may reasonably request.
(i) For so long as the Holders of the Warrants on the Issue Date
continue to be the beneficial and record owners of at least 50% of all Warrants
then outstanding, in the event of:
(i) any taking by the Company of a record of the holders of
any class of securities of the Company for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of Capital Stock of any class or any other securities or
property, or to receive any other right, other than, in each case, (A) a
regular quarterly or other periodic dividend publicly announced by the
Company or provided for in the instrument governing such class of
securities (including, without limitation, dividends payable on the Series
A Preferred Stock pursuant to the Series A Certificate of Designation as in
effect on the Issue Date or on the Series B Preferred Stock pursuant to the
Series B Certificate of Designation as in effect on the Issue Date), (B)
any other issuance of Series B Preferred Stock after the Issue Date
pursuant to the Series B Certificate of Designation as in effect on the
Issue Date or (C) a regular quarterly or other periodic payment of interest
in cash or securities on any issue of the Company's indebtedness in
accordance with the instrument governing such indebtedness, or
(ii) the proposed filing of a certificate of dissolution in
connection with any Liquidation Event,
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then and in each such event the Company shall give or cause to be given to each
Holder of the Warrants a written notice (with a copy thereof to the Warrant
Agent) specifying (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right and a description of such
dividend, distribution or right or the date on which the filing of such
certificate of dissolution is expected to be effected, as the case may be, and
(ii) the date, if any, that is to be fixed, on which the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such event. Such notice shall be given at least 20 days prior to the date
specified in such notice on which such event, action or record is to be taken or
on which the filing of such certificate of dissolution is expected to be
effected. Any failure by the Company to provide any such notice required by this
Section 3(i) shall not affect the validity of any event, action or record
required to be specified in such notice.
(j) Without limiting the generality of Section 3(i), any notice
required by Section 3(i) to be given to the Holders of Warrants shall be deemed
delivered (i) upon personal delivery to the Holder to be notified, (ii) when
sent by confirmed telex or 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 deposited into the U.S. mails or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All notices required by Section 3(i) shall be
sent to each Holder at such Holder's address appearing on the books of the
Company.
SECTION 4. PAYMENT OF TAXES.
The Company shall pay any and all taxes and governmental charges
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided that the Company shall not be required to pay any tax or
charge which may be payable in respect of any
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transfer involved in the issue of any Warrant Certificates or any certificates
for Warrant Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, and the Company
and the Warrant Agent shall not be required to issue or deliver such Warrant
Certificates unless or until the Person or Persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or charge or shall
have established to the satisfaction of the Company and the Warrant Agent that
such tax or charge has been paid.
SECTION 5. RESERVATION OF WARRANT SHARES.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock and/or its
authorized and issued Common Stock held in its treasury, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon exercise or
conversion of Warrants, the maximum number of shares of Common Stock which may
then be deliverable upon the exercise or conversion of all outstanding Warrants.
All such shares, when issued upon such exercise or conversion, shall be validly
issued, fully paid and non-assessable, free of all Liens and not subject to
preemptive rights.
SECTION 6. OBTAINING STOCK EXCHANGE LISTINGS.
For so long as the Warrant Shares are outstanding, the Company shall
use reasonable efforts to have the Warrant Shares quoted on the National Market
System of NASDAQ (the "NMS"), or listed on a national securities exchange or
quoted on a national automated quotation system other than the NMS, on which the
Common Stock is then quoted or listed.
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SECTION 7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
During the Exercise Period, the Exercise Price and the number of the
Warrant Shares shall be subject to adjustment from time to time as provided in
this Section 7. In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price shall be
rounded up to the nearest whole cent.
(a) Except as otherwise provided in Section 7(c), if and whenever
during the period beginning on the Issue Date and ending at the close of
business on the second anniversary of the Issue Date the Company issues or
sells, or in accordance with Section 7(b) is deemed to have issued or sold, any
shares of Common Stock for no consideration or for a consideration per share
(calculated as set forth in Section 7(b)) less than the Exercise Price in effect
on the date of issuance or sale (or deemed issuance or sale) of such Common
Stock (a "Dilutive Issuance"), then immediately upon such Dilutive Issuance, the
Exercise Price shall be reduced to a price determined by multiplying the
Exercise Price in effect immediately prior to such Dilutive Issuance by a
fraction, (i) the numerator of which is an amount equal to the sum of (x) the
total number of shares of Common Stock Deemed Outstanding immediately prior to
such Dilutive Issuance plus (y) the quotient of the aggregate consideration,
calculated as set forth in Section 7(b), received or receivable by the Company
upon such Dilutive Issuance divided by the Exercise Price in effect immediately
prior to such Dilutive Issuance, and (ii) the denominator of which is the total
number of shares of Common Stock Deemed Outstanding immediately after such
Dilutive Issuance.
(b) For purposes of determining the adjusted Exercise Price
pursuant to Section 7(a), the following provisions shall be applicable:
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(i) If the Company in any manner issues or grants any
warrants, rights or options, whether or not immediately exercisable, to
subscribe for or to purchase Common Stock, or other securities convertible
into or exchangeable for Common Stock ("Convertible Securities") (such
warrants, rights and options to purchase Common Stock or Convertible
Securities are hereinafter referred to as "Options"), and the price per
share for which Common Stock is issuable upon the exercise of such Options
is less than the Exercise Price in effect on the date of issuance or grant
of such Options, then the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options shall, as of the date of the
issuance or grant of such Options, be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For purposes
of the preceding sentence, the "price per share for which Common Stock is
issuable upon the exercise of such Options" is determined by dividing (x)
the total amount, if any, received or receivable by the Company as
consideration for the issuance or grant of all such Options, plus the
minimum aggregate amount of additional consideration, if any, payable to
the Company upon the exercise of all such Options, plus, in the case of
Convertible Securities issuable upon the exercise of such Options, the
minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities
first become convertible or exchangeable, by (y) the maximum total number
of shares of Common Stock issuable upon the exercise of all such Options
(assuming full conversion of Convertible Securities, if applicable). No
further adjustment to the Exercise Price shall be made upon the actual
issuance of such Common Stock upon the exercise of such Options or upon the
conversion or exchange of Convertible Securities issuable upon exercise of
such Options.
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(ii) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than
where such Convertible Securities are issuable upon the exercise of Options
for which an adjustment of the Exercise Price is made pursuant to Section
7(b)(i)) and the price per share for which Common Stock is issuable upon
such conversion or exchange is less than the Exercise Price in effect on
the date of issuance of such Convertible Securities, then the maximum total
number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities shall, as of the date of the issuance of
such Convertible Securities, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For the purposes
of the preceding sentence, the "price per share for which Common Stock is
issuable upon such conversion or exchange" is determined by dividing (x)
the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by
(y) the maximum total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No further
adjustment of the Exercise Price shall be made upon the actual issuance of
such Common Stock upon conversion or exchange of such Convertible
Securities, and if any such issuance or sale of such Convertible Securities
is made upon exercise of any Options for which adjustments of the Exercise
Price had been or are to be made pursuant to other provisions of this
Section 7(b), no further adjustment of the Exercise Price shall be made by
reason of such issuance or sale.
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(iii) If there is a change at any time in (A) the aggregate
amount of additional consideration payable to the Company upon the exercise
of any Options, (B) the aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange of any
Convertible Securities, or (C) the rate at which any Options or any
Convertible Securities are exercisable for or convertible into or
exchangeable for Common Stock (other than under or by reason of provisions
in such Options or Convertible Securities designed to protect against
dilution), the Exercise Price in effect at the time of such change shall be
readjusted to the Exercise Price which would have been in effect at such
time if such Options or Convertible Securities still outstanding had
provided for such changed additional consideration or changed rate, as the
case may be, at the time such Options or Convertible Securities were
initially granted, issued or sold.
(iv) If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Option or upon conversion or exchange
of any Convertible Securities is not, in fact, issued and the rights to
exercise such Option or to convert or exchange such Convertible Securities
shall have expired or terminated, the Exercise Price then in effect shall
be readjusted to the Exercise Price which would have been in effect at the
time of such expiration or termination if such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration
or termination (other than in respect of the actual number of shares of
Common Stock issued upon exercise, conversion or exchange thereof), had
never been issued.
(v) If any Common Stock, Options or Convertible Securities
are issued, granted or sold for cash, the consideration received therefor
for purposes of this
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Section 7(b) shall be the amount received by the Company therefor before
deduction of commissions, underwriting discounts or allowances or other
expenses paid or incurred by the Company in connection with such issuance,
grant or sale. In case any Common Stock, Options or Convertible Securities
are issued or sold for a consideration part or all of which shall be other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration. If any Common Stock,
Options or Convertible Securities are issued in connection with any
acquisition, merger or consolidation in which the Company is the surviving
corporation, the amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of the
non-surviving entity which is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any
consideration other than cash shall be determined in good faith by the
Board of Directors, whose determination, in the absence of manifest error,
but subject to the following provisions of this Section 7(b)(v), shall be
final and binding upon the Company, the Warrant Agent and the Holders of
the Warrants. The Company shall give prompt written notice to the Required
Initial Holders of the determination of the Board of Directors with respect
to the fair value of such consideration other than cash. If the Required
Initial Holders object to such determination (whether or not in manifest
error) by the Board of Directors of the fair value of such consideration by
giving the Company written notice of such objection within ten Business
Days after their receipt of the Company's written notice of such
determination, and such objection is not withdrawn, the Company shall
retain, at the Company's sole cost, an Independent Appraiser to determine
the fair value of such consideration. The determination of such Independent
Appraiser with respect to
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the fair value of such consideration, or, if the Company is not required to
retain an Independent Appraiser pursuant to this Section 7(b)(v), but
retains an Independent Appraiser pursuant to the Series A Certificate of
Designation, the Series B Certificate of Designation or the Series A
Warrant Agreement to determine the fair value of such consideration for
purposes of the Series A Certificate of Designation, the Series B
Certificate of Designation or the Series A Warrant Agreement, as the case
may be, the determination of such other Independent Appraiser with respect
to the fair value of such consideration, shall be final and binding upon
the Company, the Warrant Agent and the Holders of the Warrants. Any written
notice required to be given by the Company or the Required Initial Holders
pursuant to this Section 7(b)(v) shall be given in the manner, and with the
effect, provided in Section 3(j).
(c) No adjustment of the Exercise Price shall be made pursuant to
Section 7(a) or 7(b) upon the issuance, sale, grant, exercise, conversion,
exchange, reclassification, redemption or other retirement of any of the
following securities on or after the Issue Date:
(i) the Merger Common Stock;
(ii) the Series B Preferred Stock, including the Series B
Preferred Stock issuable as dividends pursuant to the Series B Certificate
of Designation as in effect on the Issue Date or otherwise issuable after
the Issue Date pursuant to the Series B Certificate of Designation as in
effect on the Issue Date, or any shares of Common Stock or other securities
issuable or payable upon conversion of the Series B Preferred Stock
pursuant to the Series B Certificate of Designation as in effect on the
Issue Date;
(iii) any shares of Common Stock, Options or Convertible
Securities issuable as a dividend or distribution on the Series B Preferred
Stock in accordance with
17
the Series B Certificate of Designation as in effect on the Issue Date or
any shares of Common Stock issuable or payable upon exercise of any such
Options or upon conversion or exchange of any such Convertible Securities;
(iv) the Warrants or any shares of Common Stock or other
securities issuable or payable upon exercise or conversion of the Warrants;
(v) the Series A Preferred Stock, including the Series A
Preferred Stock issuable as dividends on the Series A Preferred Stock,
issuable pursuant to the Series A Certificate of Designation as in effect
on or prior to the Issue Date, or any shares of Common Stock or other
securities issuable or payable upon conversion of the Series A Preferred
Stock pursuant to the Series A Certificate of Designation as in effect on
or prior to the Issue Date;
(vi) any shares of Common Stock, Options or Convertible
Securities issuable as a dividend or distribution on the Series A Preferred
Stock in accordance with the Series A Certificate of Designation as in
effect on or prior to the Issue Date, or any shares of Common Stock
issuable or payable upon exercise of any such Options or upon conversion or
exchange of any such Convertible Securities;
(vii) the Series A Warrants or any shares of Common Stock or
other securities issuable or payable upon exercise or conversion of the
Series A Warrants;
(viii) any shares of Common Stock, Options or Convertible
Securities issuable under (A) the Existing Benefit Plan as in effect on the
Issue Date or (B) the Existing Benefit Plan as amended after the Issue Date
and any Benefit Plan which becomes effective after the Issue Date, provided
that any such amendment to the Existing Benefit Plan or the effectiveness
of any such Benefit Plan is approved by the Board of
18
Directors or by the compensation committee or other authorized committee of
the Board of Directors (in either case with the affirmative vote or consent
of the Series B Directors, if any, in each case whether or not serving on
any such committee), or any shares of Common Stock issuable or payable upon
exercise of any such Options or upon conversion or exchange of any such
Convertible Securities;
(ix) any shares of Common Stock issued or deemed to have
been issued in a transaction for which an adjustment of the Exercise Price
is required pursuant to Section 7(d);
(x) any transaction referred to in Section 7(e); or
(xi) any shares of Common Stock, Options or Convertible
Securities issued in connection with the acquisition of all or part of
another business or company, whether by merger, consolidation or otherwise,
which is approved by the Board of Directors or by an authorized committee
of the Board of Directors (in either case with the affirmative vote or
consent of the Series B Directors, if any, in each case whether or not
serving on any such committee), any shares of Common Stock issuable or
payable upon exercise of any such Options or upon conversion or exchange of
any such Convertible Securities, or any shares of Common Stock,
payment-in-kind securities or other securities issuable as a dividend or
distribution on any such shares of Common Stock, Options or Convertible
Securities.
(d) If a date of record should be fixed at any time, whether by
the Company or by operation of law, for the subdivision (by any stock split,
stock dividend, recapitalization, reorganization, reclassification or otherwise)
of the shares of Common Stock acquirable hereunder into a greater number of
shares, or for the determination of the holders of Common
19
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, Convertible Securities or Options without payment of any
consideration for the additional shares of Common Stock, Convertible Securities
or Options (including the additional shares of Common Stock or Convertible
Securities issuable upon conversion or exercise of such Options), then, as of
such date of record, the Exercise Price in effect immediately prior to such date
of record shall be proportionately reduced (with the number of shares of Common
Stock or Convertible Securities issuable with respect to Options determined from
time to time in the manner provided for deemed issuances or sales of Common
Stock in Section 7.2(b)). If a date of record should be fixed at any time,
whether by the Company or by operation of law, for the combination (by reverse
stock split, recapitalization, reorganization, reclassification or otherwise) of
the shares of Common Stock acquirable hereunder into a smaller number of shares
of Common Stock, then, as of such date of record, the Exercise Price in effect
immediately prior to such date of record shall be proportionately increased.
(e) If the Company at any time pays a dividend in property (other
than cash) or securities to all holders of the Common Stock, other than in a
transaction referred to in Section 7(d), then, after the date of record for
determining stockholders entitled to such dividend, each Holder of Warrants
shall be entitled, upon exercise thereof for the purchase of any or all of the
Warrant Shares subject thereto, to receive the amount of such property (other
than cash) or securities which would have been payable to such Holder if such
Holder had been the Holder, on the record date for the determination of
stockholders entitled to such dividend, of such Warrant Shares purchased upon
such exercise.
(f) If an adjustment of the Exercise Price pursuant to Section
7(a), 7(b) or 7(d) shall become effective as of or after the record date for the
applicable Exercise Price
20
Adjustment Event, but before the occurrence of such Exercise Price Adjustment
Event, the Company may elect to defer, until after the occurrence of such
Exercise Price Adjustment Event, (i) issuance to the Holder of any Warrants
exercised after such record date and before the occurrence of such Exercise
Price Adjustment Event the additional shares of Common Stock issuable upon such
exercise in excess of the number of shares issuable on the basis of the Exercise
Price in effect immediately prior to such record date and (ii) payment to such
Holder of any amount in cash in lieu of a fractional share of Common Stock. The
Company shall give written notice of any such election within five Business Days
to (i) the Warrant Agent and (ii) if the Holders of the Warrants on the Issue
Date or any of their Affiliates shall own beneficially and of record Warrants as
of the date of any such election, to such Holders and any such Affiliates. Upon
the request by the Company from time to time, the Holders of the Warrants on the
Issue Date shall certify to the Company the number of Warrants, if any, then so
beneficially owned by such Holders and their Affiliates.
(g) After the occurrence of any Exercise Price Adjustment Event
requiring adjustment of the Exercise Price, the Company shall give written
notice thereof to the Holders of the Warrants and to the Warrant Agent within
ten Business Days following the occurrence of such Exercise Price Adjustment
Event; provided that if an adjustment of the Exercise Price pursuant to Section
7(a), 7(b) or 7(d) shall become effective as of or after the record date for the
applicable Exercise Price Adjustment Event, but before the occurrence of such
Exercise Price Adjustment Event, the Company shall give such written notice
within ten Business Days following such record date or subsequent date. Such
notice shall state the Exercise Price and any change in the number of Warrant
Shares issuable upon exercise of the Warrants resulting from such Exercise Price
Adjustment Event and shall set forth in reasonable detail the method of
21
calculation and the facts upon which such calculation is based. Such calculation
shall be certified by an Officer of the Company. Notice of any Exercise Price
Adjustment Event resulting in an adjustment of the Exercise Price shall be
deemed given to the Holders of Warrants (but not to the Warrant Agent) (i) by
the Company's inclusion of the information specified in the second sentence of
this Section 7(g) in the Company's current report or next quarterly or annual
report filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, or (ii) at the option of the
Company, by the Company's mailing to such Holders of a written notice containing
such information, in each case within the period specified in the first sentence
of this Section 7(g).
(h) Anything in this Section 7 to the contrary notwithstanding,
the Company shall not be required to give effect to any adjustment of the
Exercise Price unless and until the net effect of one or more adjustments
required hereunder (each of which shall be carried forward until counted toward
adjustment), determined as provided therein, shall have resulted in a change of
the Exercise Price by at least 1%, and when the cumulative net effect of more
than one adjustment so determined shall be to change the Exercise Price by at
least 1%, such change of the Exercise Price shall thereupon be given effect.
(i) Upon the occurrence of a Fundamental Change, there shall be no
adjustment of the Exercise Price and each Warrant then outstanding, without the
consent of any Holder of Warrants, shall become exercisable only into the kind
and amount of shares of Capital Stock or other securities (of the Company or
another issuer), cash or other property receivable upon such Fundamental Change
by a holder of the number of shares of Common Stock into which such Warrants
could have been exercised immediately prior to the effective date of such
Fundamental Change, assuming such holder of Common Stock (x) is not a Person (or
a Related
22
Entity of a Person) with which the Company consolidated, into which the Company
merged or which merged into the Company, or to or with which the applicable
sale, conveyance, lease, exchange, transfer or other transaction constituting
such Fundamental Change was effected, and (y) failed to exercise the holder's
rights of election, if any, as to the kind of amount of Capital Stock or other
securities, cash or other property receivable upon such Fundamental Change,
provided that, if such Fundamental Change solely provides for cash payments to
holders of Common Stock at a price that is not greater than the current Exercise
Price, a Holder of Warrants shall not have any right to receive such
consideration and its Warrants shall be automatically cancelled upon
consummation thereof. In any such event, effective provisions shall be made in
the certificate or articles of incorporation of the resulting or surviving
corporation, in any contract of sale, conveyance, lease, exchange or transfer,
or otherwise so that any resulting or surviving corporation or any Transferee in
connection with such Fundamental Change shall expressly assume the obligation to
deliver, to the Holders of the Warrants, such shares of Capital Stock, or other
securities, cash or other property (i) upon exercise of the Warrants, if the
Warrants shall remain outstanding following such Fundamental Change, or (ii)
upon the consummation of such Fundamental Change or thereafter as provided in
such effective provisions, if the Warrants shall not remain outstanding
following such Fundamental Change. The provisions of this Section 7(i) similarly
shall apply to successive Fundamental Changes and shall be the sole right of
Holders of Warrants in connection with any Fundamental Change. The Company shall
notify the Warrant Agent in writing of the occurrence of any Fundamental Change,
and the Warrant Agent shall not be deemed to have knowledge of any such
Fundamental Change unless and until it has actually received written notice
thereof.
23
(j) All Warrants originally issued by the Company subsequent to
any adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of Warrant Shares for which
such Warrants are exercisable after giving effect to any adjustment thereto
pursuant to Section 7(k) in connection with such adjustment of the Exercise
Price, all subject to further adjustment as provided herein.
(k) Upon the occurrence of each Exercise Price Adjustment Event
(or if an adjustment of the Exercise Price pursuant to Section 7(a), 7(b) or
7(d) shall become effective as of or after the record date for such Exercise
Price Adjustment Event, but before the occurrence of such Exercise Price
Adjustment Event, as of or after such record date, as the case may be), each
Warrant outstanding immediately prior to such Exercise Price Adjustment Event
(or immediately prior to such other date as of which the Exercise Price shall
have been adjusted, as aforesaid) shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares of Common Stock
(calculated to the nearest one-one hundredth of a share) obtained by (i)
multiplying (x) the number of Warrant Shares covered by such Warrant immediately
prior to such adjustment of the Exercise Price by (y) the Exercise Price in
effect immediately prior to such adjustment of the Exercise Price and (ii)
dividing the product so obtained by the Exercise Price in effect immediately
after such adjustment of the Exercise Price.
(l) Irrespective of any adjustments of the Exercise Price or in
the number or kind of shares purchasable upon the exercise of the Warrants,
Warrants theretofore and thereafter issued may continue to express the Exercise
Price per share and the number of shares which were expressed upon the initial
Warrant Certificates issued hereunder.
(m) The Company shall calculate or determine any adjustments with
respect to the Exercise Price and the kind or amount of shares or other
securities or any property receivable
24
by Holders upon the exercise of Warrants required from time to time under this
Section 7 in accordance with its provisions and shall give written notice of
each such calculation or determination (including any determination pursuant to
the procedures set forth in Section 7(b)(v), in final form) to the Warrant Agent
as provided herein, as required by the Warrant Agent to perform its duties
expressly set forth herein, or as otherwise requested by the Warrant Agent.
SECTION 8. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares
upon the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same Holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable upon exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 8, be issuable upon the exercise of any Warrants
(or specified portion thereof), the Company may, in its sole discretion, (i)
round such fractional Warrant Share up to the nearest whole number or (ii) pay
an amount in cash equal to the Closing Price per Warrant Share, as determined on
the Business Day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction, rounded up to the nearest whole cent.
SECTION 9. WARRANT AGENT.
9.1 Duties and Obligations; Limitations of Liability
The Warrant Agent undertakes only the duties and obligations
expressly imposed by this Agreement (and no implied duties or obligations) upon
the following terms and conditions, by all of which the Company and the Holders
of Warrants, by their acceptance thereof, shall be bound:
25
(a) The Warrant Agent shall not, by countersigning Warrant
Certificates or by any other act hereunder, be deemed to make any
representations as to validity or authorization of, and shall incur no liability
as a result of, (i) the Warrants or the Warrant Certificates (except as to its
countersignature thereon), (ii) any shares or other securities or any property
delivered upon exercise of any Warrant, (iii) the accuracy of the computation of
the number or kind or amount of shares or other securities or any property
deliverable upon exercise of any Warrant or (iv) the correctness of any of the
representations of the Company made in any such Warrant Certificate. The Warrant
Agent shall not at any time have any duty to calculate or determine whether any
facts exist that may require any adjustments pursuant to Section 7 with respect
to the Exercise Price or the kind and amount of shares or other securities or
any property receivable by Holders upon the exercise of Warrants required from
time to time. The Warrant Agent shall have no duty or responsibility to
determine or verify, and shall incur no liability as a result of any failure to
determine or verify, the accuracy or correctness of any such calculation or
determination or with respect to the methods employed in making such calculation
or determination. The Warrant Agent shall not be accountable with respect to,
and shall incur no liability as a result of, the validity or value (or the kind
or amount) of any Warrant Shares or of other securities or any property which
may at any time be issued or delivered upon the exercise of any Warrant or upon
any adjustment pursuant to Section 7, and it makes no representation with
respect thereto. The Warrant Agent shall not be liable or responsible for any
failure of the Company to make any cash payment or to issue, transfer or deliver
any Warrant Shares or stock certificates or other securities or property upon
the surrender of any Warrant Certificate for the purpose of exercise or upon any
adjustment pursuant to Section 7.
26
(b) The Warrant Agent shall not (i) be liable for any recital or
statement of fact contained herein or in the Warrant Certificates or for any
action taken, suffered or omitted by it on the belief that any Warrant
Certificate or any other documents or any signatures are genuine or properly
authorized, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates or (iii) be liable for any act or omission in
connection with this Agreement except for its own gross negligence or willful
misconduct (which gross negligence or willful misconduct must be determined by a
final, nonappealable order, judgment, decree or ruling of a court of competent
jurisdiction). Anything in this Agreement to the contrary notwithstanding, in no
event shall the Warrant Agent be liable for special, punitive, indirect,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited, to lost profits), even if the Warrant Agent has been advised of
the possibility of such loss or damage. Any and all liability of the Warrant
Agent under this Agreement shall be limited to the higher of (i) the amount of
fees paid by the Company to the Warrant Agent pursuant to this Agreement or (ii)
$50,000.
(c) The Warrant Agent is hereby authorized to accept and is
protected in accepting advice or instructions with respect to the performance of
its duties hereunder by order, instruction or other written notice given by the
Company or by one or more Holders in accordance with the provisions hereof and
to apply to any Officer of the Company named in any such order, instruction or
written notice for advice or instructions (which instructions shall be given in
writing when requested), and the Warrant Agent shall not be liable for any
action taken, suffered or omitted to be taken by it in accordance with the
advice or instructions in any such order, instruction or written notice. The
Warrant Agent shall be fully protected and authorized in relying upon the most
recent instructions received by any such Officer of the Company. The
27
Warrant Agent shall not be deemed to have knowledge of any event of which it was
supposed to receive notice thereof or an order or instruction in regard to
hereunder, and the Warrant Agent shall be fully protected and shall incur no
liability for failing to take any action in connection therewith unless and
until it has received such order, instruction or notice.
(d) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking, omitting or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any Officer of the Company and
delivered to the Warrant Agent, and such certificate shall be full and complete
authorization and protection to the Warrant Agent and the Warrant Agent shall
incur no liability for or in respect of any action taken, omitted or suffered by
it under the provisions of this Agreement in reliance upon such certificate.
(e) In the event the Warrant Agent has any questions or
uncertainty as to what action it should take under this Agreement, the Warrant
Agent is hereby authorized and directed to accept advice and instructions with
respect to the performance of its duties hereunder from any Officer of the
Company, and to apply to any such Officer for advice or instructions in
connection with its duties. Such advice and instructions of any Officer of the
Company shall be full authorization and protection to the Warrant Agent, and the
Warrant Agent shall not be liable for any action taken, omitted or suffered by
it in accordance with advice or instructions, for any delay in acting while
waiting for such advice or instructions, or in refraining from taking any action
prior to receiving such advice or instructions.
28
(f) The Warrant Agent may execute and exercise any of the rights
and powers hereby vested in it or perform any duty hereunder either itself
(through its officers, directors and employees) or by or through its attorneys
or agents, and the Warrant Agent shall not be liable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, default, neglect
or misconduct in the absence of gross negligence or willful misconduct of the
Warrant Agent in the selection and in the continued employment of any such
attorney or agent (which gross negligence or willful misconduct must be
determined by a final, nonappealable order, judgment, decree or ruling of a
court of competent jurisdiction).
(g) The Warrant Agent shall not be under any obligation or duty to
institute, appear in or defend any action, suit or legal proceeding in respect
hereof, unless first indemnified to its satisfaction, but this provision shall
not affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without such indemnity. The Warrant
Agent shall promptly notify the Company in writing of any claim made or action,
suit or proceeding instituted against it arising out of or in connection with
this Agreement.
(h) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Warrant
Agent in order to enable it to carry out or perform its duties and obligations
under this Agreement.
(i) The Warrant Agent shall act solely as agent of the Company
hereunder and does not assume any obligation or relationship of agency or trust
for or with any of the Holders or any beneficial owners of Warrants. The Warrant
Agent shall not be liable except for the failure to perform such duties as are
specifically set forth herein or specifically set forth in
29
the Warrant Certificates, and no implied covenants or obligations shall be read
into this Agreement against the Warrant Agent, whose duties and obligations
shall be determined solely by the express provisions hereof or the express
provisions of the Warrant Certificates.
(j) The Company agrees promptly to pay the Warrant Agent from time
to time, on demand of the Warrant Agent, compensation for its services hereunder
as the Company and the Warrant Agent may agree from time to time, and to
reimburse the Warrant Agent for the reasonable costs, expenses and
disbursements, including reasonable counsel fees and expenses incurred in
connection with the preparation, delivery, amendment, execution and
administration of this Agreement and the exercise and performance of its duties
hereunder. The Company agrees to indemnify the Warrant Agent for and save it
harmless against any losses, liabilities, settlements, costs, damages, fines,
judgments, penalties, demands, claims and expenses arising out of or in
connection with the acceptance and administration of this Agreement, including
reasonable costs, legal fees and expenses of investigating or defending any
claim of such liability, except that the Company shall have no liability
hereunder to the extent that any of the foregoing results from the Warrant
Agent's own gross negligence or willful misconduct (which gross negligence or
willful misconduct must be determined by a final, nonappealable order, judgment,
decree or ruling of a court of competent jurisdiction). The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company.
(k) The Warrant Agent may at any time consult with legal counsel
satisfactory to it (who may be internal legal counsel for the Company), and the
advice or opinion of such counsel shall be full and complete authorization and
protection to the Warrant Agent and the Warrant Agent shall incur no liability
or responsibility to the Company or to any Holder for any action taken, suffered
or omitted by it in accordance with the opinion or advice of such counsel.
30
(l) The Warrant Agent shall not be deemed to have knowledge of any
Exercise Price Adjustment Event, any adjustment to the Exercise Price, any
change in the number of Warrant Shares issuable upon exercise of the Warrants or
the kind or amount of shares or other securities or any property receivable by
Holders upon the exercise of Warrants, unless and until it has actually received
written notice from the Company thereof, and the Warrant Agent is hereby
instructed and authorized to rely conclusively on any such written notice.
(m) The provisions of this Section 9.1 shall survive the
termination of this Agreement, the termination, exercise or expiration of the
Warrants, and the resignation or removal of the Warrant Agent.
9.2 Merger, Consolidation or Change of Name of Warrant Agent.
(a) Any Person into which the Warrant Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any Person
succeeding to all or substantially all of the business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
warrant agent under the provisions of Section 9.3. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant
31
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
(b) In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been changed
may adopt the countersignature under its prior name, and in case at that time
any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in
its changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
9.3 Change of Warrant Agent.
The Warrant Agent may resign its duties and be discharged from all
further duties and liability hereunder after giving 30 days' prior written
notice to the Company. If the Warrant Agent shall resign pursuant to the
preceding sentence or if the Warrant Agent shall become incapable of acting as
Warrant Agent, the Company shall appoint a successor to such Warrant Agent. If
the Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such incapacity or resignation by the Warrant
Agent or by the registered holder of a Warrant Certificate, then the Warrant
Agent or any registered holder of any Warrant Certificate may apply at the
expense of the Company to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. The Holders of
a majority of the then outstanding Warrants shall be entitled at any time to
remove the Warrant Agent and appoint a successor to such Warrant Agent. Any
successor to the Warrant Agent need not be approved by the Company or the former
Warrant Agent. After appointment, the successor to the Warrant
32
Agent shall be vested with the same powers, rights, duties and responsibilities
as if such successor had been originally named as Warrant Agent without further
act or deed; provided that the former Warrant Agent upon payment of all amounts
owed to it shall deliver and transfer to the successor to the Warrant Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to give
any notice provided for in this Section 9.3, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
SECTION 10. TRANSFER; REPLACEMENT; CANCELLATION.
10.1 Transfer.
(a) The transfer of beneficial interests in the Global Warrants
shall be effected through the Depositary, in accordance with the provisions of
this Warrant Agreement and the Applicable Procedures.
(b) Subject to any applicable provisions of any Transaction
Document, a sale, pledge, transfer, assignment or other disposition (each, a
"Transfer") of a beneficial interest in any Restricted Global Warrant or the
Transfer of a Restricted Definitive Warrant by a Holder may be made to a Person
if:
(i) such Transfer is made pursuant to an effective
registration statement under the Securities Act; or
(ii) such Holder delivers to the Company (A) at the
Company's request, an opinion of counsel to such Holder, which shall be in
a form, substance and scope customary for opinions in comparable
transactions, as reasonably determined by the Company, to the effect that
such Warrant or the Warrant Shares or other securities issuable upon
exercise thereof may be Transferred without registration under the
33
Securities Act and (B) an investment letter, substantially in the form of
Exhibit C hereto, signed by the proposed transferee.
(c) The following legends (or legends substantially similar
thereto) shall appear on the face of the Warrants issued under this Warrant
Agreement or the certificates representing the Restricted Warrant Shares
issuable upon exercise thereof, as indicated below, unless specifically stated
otherwise in the applicable provisions of this Warrant Agreement.
(i) Private Placement Legend. Each Restricted Global
Warrant and each Restrictive Definitive Warrant shall bear a legend in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS,
AND ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT
AND SUCH LAWS. THE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION WHICH IS
EXEMPT UNDER THE PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH
APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE COMPANY RESERVES
THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO REQUIRE AN OPINION OF
COUNSEL TO THE HOLDER OF THE SECURITIES SATISFACTORY TO IT
34
WITH RESPECT TO COMPLIANCE WITH THE FOREGOING RESTRICTIONS."
(ii) Global Warrant Legend. Each Global Warrant shall bear a
legend in substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN
THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I)
THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
BY THE DEPOSITARY IN ORDER FOR IT TO ACCEPT THE WARRANTS FOR ITS
BOOK-ENTRY SETTLEMENT SYSTEM, (II) THIS GLOBAL WARRANT MAY BE
DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION
10.4 OF THE WARRANT AGREEMENT AND (III) THIS GLOBAL WARRANT MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY ONLY WITH THE PRIOR WRITTEN
CONSENT OF ITC/\DELTACOM, INC."
(iii) Restricted Warrant Shares Legend. Each certificate
representing Restricted Warrant Shares shall bear a legend in substantially
the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS,
AND ARE SUBJECT TO RESTRICTIONS ON
35
TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES MAY
NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION OTHERWISE
IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE
COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO REQUIRE
AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES SATISFACTORY
TO IT WITH RESPECT TO COMPLIANCE WITH THE FOREGOING RESTRICTIONS."
(d) At such time as all beneficial interests in a particular
Global Warrant have been exercised or exchanged for Definitive Warrants or a
particular Global Warrant has been exercised, redeemed, repurchased or cancelled
in whole and not in part, each such Global Warrant shall be returned to or
retained and canceled by the Warrant Agent in accordance with Section 10.4. At
any time prior to such cancellation, if any beneficial interest in a Global
Warrant is exercised or exchanged for or transferred to a Person who shall take
delivery thereof in the form of a beneficial interest in another Global Warrant
or for Definitive Warrants, the amount of Warrants represented by such Global
Warrant shall be reduced accordingly and, upon receipt by the Warrant Agent of
specific written instruction from the Company, an endorsement shall be made on
such Global Warrant by the Warrant Agent or by the Depositary at the direction
of the Warrant Agent (which shall be required so to act only upon direction by
the Company) to
36
reflect such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who shall take delivery thereof in the form of a
beneficial interest in another Global Warrant, such other Global Warrant shall
be increased accordingly and, upon receipt by the Warrant Agent of specific
written instruction from the Company, an endorsement shall be made on such
Global Warrant by the Warrant Agent or by the Depositary at the direction of the
Warrant Agent (which shall be required so to act only upon direction by the
Company) to reflect such increase.
(e) The following additional provisions shall apply to transfers
and exchanges of Warrants hereunder:
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Warrant Agent shall countersign Global
Warrants and Definitive Warrants upon the Company's written order
containing specific instruction or at the Warrant Registrar's written
request containing specific instruction.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Warrant or to a Holder of a Definitive
Warrant for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith.
(iii) All Global Warrants and Definitive Warrants issued upon
any registration of transfer or exchange of Global Warrants or Definitive
Warrants shall be the duly authorized, executed and issued warrants for
Common Stock of the Company, not subject to any preemptive rights, and
entitled to the same benefits under this Warrant Agreement, as the Global
Warrants or Definitive Warrants surrendered upon such registration of
transfer or exchange.
37
(iv) Prior to due presentment for the registration of a
transfer of any Warrant, the Warrant Agent and the Company may deem and
treat the Person in whose name any Warrant is registered as the absolute
owner of such Warrant for all purposes and neither the Warrant Agent nor
the Company shall be affected by notice to the contrary.
(v) The Warrant Agent shall countersign Global Warrants and
Definitive Warrants in accordance with the provisions of Section 2.2.
(f) All certifications, certificates and opinions of counsel
required to be submitted to the Warrant Registrar pursuant to this Section 10 to
effect a registration of transfer or exchange may be submitted by facsimile.
10.2 Replacement Warrants.
If any mutilated Warrant Certificate is surrendered to the Warrant
Agent or the Company and the Warrant Agent receives evidence to its satisfaction
of the destruction, loss or theft of any Warrant Certificate, the Company shall
issue and the Warrant Agent, upon receipt of a Warrant Countersignature Order,
shall countersign a replacement Warrant Certificate if the Warrant Agent's
requirements are met. If required by the Warrant Agent or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Warrant Agent and the Company to protect the Company, the Warrant Agent
and any agent thereof for purposes of the countersignature from any loss that
any of them may suffer if a Warrant Certificate is replaced. The Company may
charge for its expenses in replacing a Warrant Certificate.
Every replacement Warrant is an additional warrant of the Company
and shall be entitled to all of the benefits of this Warrant Agreement equally
and proportionately with all other Warrants duly issued hereunder.
38
10.3 Temporary Warrants.
Until certificates representing Warrants are ready for delivery, the
Company may prepare and the Warrant Agent, upon receipt of a Warrant
Countersignature Order, shall issue temporary Warrant Certificates. Temporary
Warrants shall be substantially in the form of certificated Warrants but may
have variations that the Company considers appropriate for temporary Warrants
and as shall be reasonably acceptable to the Warrant Agent (but which shall not
affect the rights, duties or obligations of the Warrant Agent as set forth in
this Agreement). Without unreasonable delay, the Company shall prepare and the
Warrant Agent shall countersign definitive Warrant Certificates in exchange for
temporary Warrant Certificates.
Holders of temporary Warrants shall be entitled to all of the
benefits of this Warrant Agreement.
10.4 Cancellation.
The Company at any time may deliver Warrants to the Warrant Agent
for cancellation. The Warrant Registrar shall forward to the Warrant Agent any
Warrants surrendered to them for registration of transfer, exchange or exercise.
The Warrant Agent and no one else shall cancel all Warrants surrendered for
registration of transfer, exchange, exercise, replacement or cancellation and
shall dispose of such canceled Warrants in its customary manner. The Warrant
Registrar shall provide the Company with a list of all Warrants that have been
cancelled. The Company may not issue new Warrants to replace Warrants that have
been exercised or that have been delivered to the Warrant Agent for
cancellation.
SECTION 11. NOTICES TO COMPANY AND WARRANT AGENT.
Any notice or communication authorized by this Agreement to be given
or made by the Warrant Agent or by the Holder of any Warrant or by the Company
to the Company or the
39
Warrant Agent, as the case may be, shall be sufficiently given or made if in
writing and delivered in person, mailed by first-class mail or sent by facsimile
transmission addressed as follows:
If to the Company:
ITC/\DeltaCom, Inc.
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
If to the Warrant Agent:
Mellon Investor Services LLC
000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Client Services Manager
Fax: 000-000-0000
Attention: Relationship Manager
With a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: General Counsel
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed to
such Holder at its address as it appears on the Warrant Register by first-class
mail and shall be sufficiently given to such Holder if so mailed within the time
prescribed. Copies of any such communication or notice to a Holder shall also be
mailed to the Warrant Agent at the same time.
40
Failure to transmit a notice or communication to a Holder as
provided herein or any defect in any such notice shall not affect its
sufficiency with respect to other Holders. Except for a notice to the Warrant
Agent, which is deemed given only when received, and except as otherwise
provided in this Agreement, if a notice or communication is mailed in the manner
provided in this Section 11, it is duly given, whether or not the addressee
receives it.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Warrant Agent, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Warrant Agent
shall constitute a sufficient notification for every purpose hereunder.
SECTION 12. SUPPLEMENTS AND AMENDMENTS.
(a) The Warrant Agent may, without the consent or concurrence of
the Holders of the Warrants, by supplemental agreement or otherwise, join with
the Company in making any changes or corrections in this Agreement that (i) are
required to cure any ambiguity or to correct any defect or inconsistent
provision or clerical omission or mistake or manifest error herein contained,
provided that such changes or corrections do not and will not adversely affect,
alter or change the rights of the Holders of Warrants, (ii) add to the covenants
and agreements of the Company in this Agreement further covenants and agreements
of the Company thereafter to be observed, or surrender any rights or power
reserved to or conferred upon the Company in this Agreement, provided that such
changes or corrections do not and will not adversely affect, alter
41
or change the rights of the Holders of Warrants, or (iii) will not, in the good
faith opinion of the Board of Directors, as evidenced by a resolution thereof,
adversely affect, alter or change the rights of the Holders of Warrants in any
material respect. Amendments or supplements that do not meet the requirements of
the preceding sentence shall require the written consent of the Holders of a
majority of the then outstanding Warrants; provided, however, that the consent
of each Holder is required for any amendment or supplement pursuant to which the
Exercise Price would be increased or the number of shares of Common Stock
purchasable upon exercise of Warrants would be decreased (other than pursuant to
adjustments as provided in Section 7).
(b) So long as any Warrants are outstanding and held by the Required
Initial Holders, prior to amending the Series A Warrant Agreement in such a
manner as to provide the Holders of the Series A Warrants with rights in
addition or superior to those provided to the Holders of the Warrants under this
Agreement, the Company shall give written notice of any such proposed amendment
(the "Proposed Series A Amendment"), which shall include the text of the
Proposed Series A Amendment, to the Required Initial Holders (with a copy to the
Warrant Agent) and shall offer to the Required Initial Holders to amend this
Agreement (subject to any consent requirements imposed by this Agreement) so as
to provide the Holders of the Warrants with rights no less favorable than the
rights to be provided to the Holders of the Series A Warrants in the Proposed
Series A Amendment. If, within ten Business Days after their receipt of such
written notice from the Company, the Required Initial Holders shall give written
notice to the Company (with a copy to the Warrant Agent) that they seek to have
this Agreement amended to provide the Holders of the Warrants with such rights,
the Company shall not amend the Series A Warrant Agreement to provide for such
rights unless, concurrently with, or immediately prior to, the effectiveness of
the Proposed Series A Amendment, the Company shall
42
amend this Agreement to provide such rights to the Holders of the Warrants. If
within the period of ten Business Days described in the immediately preceding
sentence, the Required Initial Holders do not so provide notice to the Company
that they seek to have this Agreement so amended, or if the Holders of the
Warrants do not approve and consent to such an amendment to this Agreement, the
Company shall be deemed to have complied with this Section 12(b) with respect to
the Proposed Series A Amendment, and the Company shall then have the right to
amend the Series A Warrant Agreement as provided in the Proposed Series A
Amendment without so amending this Agreement. In no event shall the failure of
the Required Initial Holders to seek to have this Agreement amended under this
Section 12(b) with respect to any Proposed Series A Amendment affect the
applicability of this Section 12(b) with respect to any subsequent Proposed
Series A Amendment. Any written notice required to be given by the Company or
the Required Initial Holders pursuant to this Section 12(b) shall be given in
the manner, and with the effect provided in, Section 3(f).
SECTION 13. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder; provided that, except as
otherwise specifically provided in this Agreement, neither the Company nor the
Warrant Agent may assign any of its rights or obligations hereunder (other than
any such assignment by operation of law).
SECTION 14. TERMINATION.
This Agreement shall terminate at 5:00 p.m., New York City time, on
the Expiration Date. Notwithstanding the foregoing, this Agreement shall
terminate on any earlier date if all Warrants have been exercised. The
provisions of Sections, 2.3, 9 and 10 shall survive such termination.
43
SECTION 15. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"Affiliate" has the meaning as in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Warrant, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Beneficially own" and "beneficial owner" have the same meaning as
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
"Board of Directors" means the Board of Directors of the Company.
"Benefit Plan" means any stock option, restricted stock, stock
incentive, deferred compensation, profit sharing, defined benefit or other
benefit plan of the Company or any of its subsidiaries.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New Jersey or Georgia are authorized by
law, regulation or executive order to remain closed.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock or
partnership or membership interests, whether common or preferred.
"Closing Price" means, with respect to the Common Stock, on any
date, (i) the last sales price on the NASDAQ, the OTC Bulletin Board, the NASDAQ
Bulletin Board Exchange or the principal securities exchange or other securities
exchange or other securities market on which the Common Stock is then traded, or
(ii) if the Common Stock is so traded, but
44
not so reported, the average of the last bid and ask prices, as those prices are
reported on the NASDAQ, the OTC Bulletin Board, the NASDAQ Bulletin Board
Exchange or the principal securities exchange or other securities exchange or
other securities market on which the Common Stock is then traded, or (iii) if
the Common Stock is not listed or authorized for trading on the NASDAQ, the OTC
Bulletin Board, the NASDAQ Bulletin Board Exchange or any securities exchange or
comparable securities market, the average of the closing bid and ask prices as
furnished by two members of the National Association of Securities Dealers, Inc.
selected from time to time by the Board of Directors for that purpose. If the
Common Stock is not listed and traded in any manner that the quotations referred
to above are available for the period required hereunder, the Closing Price per
share shall be deemed to be the fair value per share of such Common Stock as
determined by the Board of Directors.
"Common Stock" has the meaning specified in the preamble hereto.
"Common Stock Deemed Outstanding" means, on any date of
determination, the number of shares of Common Stock actually outstanding, plus
the maximum total number of shares of Common Stock issuable as of the date of
such determination upon the exercise of any then outstanding Options (including,
without limitation, the Series A Warrants and the Warrants and any Options
outstanding under the Existing Benefit Plan or any other Benefit Plan) or
issuable as of such date of determination upon conversion or exchange of any
then outstanding Convertible Securities (including, without limitation, the
Series A Preferred Stock and the Series B Preferred Stock), whether or not such
Options or Convertible Securities are actually exercisable, convertible or
exchangeable at such time, without duplication.
"Company" has the meaning specified in the first paragraph hereof.
"Convertible Securities" has the meaning specified in Section 7(b).
45
"Definitive Warrants" has the meaning specified in Section 2.1(b).
"Depositary" means, with respect to the Warrants issuable or issued
in whole or in part in global form, the Person specified in Section 2.3 as the
Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder.
"Dilutive Issuance" has the meaning specified in Section 7(a).
"DTC" has the meaning specified in Section 2.3.
"Exercise Period" has the meaning specified in Section 3(a).
"Exercise Price" has the meaning specified in Section 3(a).
"Exercise Price Adjustment Event" means any event specified in
Section 7 resulting in an adjustment of the Exercise Price.
"Existing Benefit Plan" means the ITC/\DeltaCom, Inc. Stock
Incentive Plan.
"Expiration Date" has the meaning specified in Section 3(a).
"Fundamental Change" means any transaction or event, including,
without limitation, any merger, consolidation, sale, conveyance, lease, exchange
or transfer of assets, tender or exchange offer, reclassification (including any
such reclassification in connection with a consolidation or merger in which the
Company is the surviving corporation), capital reorganization, compulsory share
exchange or liquidation, in each case in which all or substantially all
outstanding shares of the Common Stock, or all or substantially all of the
assets or the property of the Company, are converted into or exchanged for
Capital Stock (of the Company or another issuer) or other securities, cash or
other property.
"Global Warrants" means, individually and collectively, each of the
Restricted Global Warrants and the Unrestricted Global Warrants, substantially
in the form of Exhibit A hereto, issued in accordance with Sections 2.1(b) and
10.
46
"Global Warrant Legend" means the legend set forth in Section
10.1(c)(ii), which is required to be placed on all Global Warrants issued under
this Warrant Agreement.
"Holder" means a Person who is listed as the record owner of (i)
Warrants, (ii) the Warrant Shares or (iii) any other securities issued or
issuable with respect to the Warrants or Warrant Shares by way of stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise.
"Independent Appraiser" means an independent investment banking firm
or independent public accounting firm, in each case of nationally recognized
standing in the valuation of businesses similar to the business of the Company.
"Initial Holder" means any Holder of Warrants on the Issue Date.
"Issue Date" means [ ], 2003 [the date on which the Warrants are
initially issued].
"Liens" means liens and charges other than liens and charges arising
under (i) any Transaction Document, (ii) any other agreement entered into
between the Company and any Holder of a Warrant from time to time or (iii) any
other agreement to which the Company is not a party.
"Liquidation Event" means a liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary.
"Merger Agreement" means the Agreement and Plan of Merger, dated as
of [ ], 2003, as amended from time to time, among the Company, BTI Telecom,
Inc., 8DBC1 Corp., WCAS Capital Partners III, L.P., Welsh, Carson, Xxxxxxxx &
Xxxxx VIII, L.P., WCAS Information Partners, L.P. and certain individual
investors and trusts listed on the signature pages thereto.
47
"Merger Common Stock" means the Common Stock issued by the Company
pursuant to the Merger Agreement.
"NASDAQ" means The NASDAQ Stock Market, Inc. and shall refer to the
NASDAQ National Market or the NASDAQ SmallCap Market, as the case may be.
"NMS" has the meaning specified in Section 6.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Options" has the meaning specified in Section 7(b)(i).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business.
"Private Placement Legend" means the legend set forth in Section
10.1(c)(i) to be placed on all Warrants issued under this Warrant Agreement,
except where otherwise permitted by the provisions of this Warrant Agreement.
"Proposed Series A Amendment" has the meaning set forth in Section
12(b).
"Related Entity" means, with respect to any Person, (i) if such
Person is an "ultimate parent entity," as defined in the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended and the regulations promulgated
thereunder, each direct or indirect subsidiary of such Person and (ii) if such
Person is not an "ultimate parent entity," as defined in such Act
48
and regulations, each ultimate parent entity (as so defined) of such Person and
each other Person which is a direct or indirect subsidiary of any such ultimate
parent entity.
"Required Initial Holders" means, as of any date of determination,
WCAS Capital Partners III, L.P. and Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P.,
so long as such Initial Holders and their Affiliates are the beneficial and
record owners, as of such date of determination, of a majority of the Warrants
outstanding on such date of determination.
"Restricted Definitive Warrant" means a Definitive Warrant bearing
the Private Placement Legend.
"Restricted Global Warrant" means a Global Warrant bearing the
Private Placement Legend.
"Restricted Warrant" means a Restricted Global Warrant or a
Restricted Definitive Warrant, as the case may be.
"Restricted Warrant Shares" means Warrant Shares issued or issuable
upon exercise of a Restricted Warrant.
"Securities Act" has the meaning specified in Section 3(a).
"Series A Certificate of Designation" means the Certificate of
Designation of the Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of 8% Series A Convertible Redeemable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof.
"Series A Preferred Stock" means the 8% Series A Convertible
Redeemable Preferred Stock of the Company authorized in the Series A Certificate
of Designation.
"Series A Warrants" means the warrants to purchase Common Stock
issued by the Company pursuant to the Warrant Agreement, dated as of October 29,
2002, between the
49
Company and Mellon Investor Services LLC, as Warrant Agent, as amended from time
to time (so long as no amendment to such Warrant Agreement after the Issue Date
shall increase the number of warrants issuable pursuant thereto); provided that
such warrants have the same exercise expiration date and (subject to adjustments
pursuant to antidilution provisions of such Warrant Agreement) the same exercise
price as the warrants issued pursuant to such Warrant Agreement which are
outstanding on the Issue Date.
"Series B Certificate of Designation" means the Certificate of
Designation of the Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of 8% Series B Convertible Redeemable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof.
"Series B Directors" means the directors of the Company who are
appointed to the Board of Directors effective as of the Issue Date as Series B
Directors pursuant to the Series B Certificate of Designation or thereafter (i)
elected to the Board of Directors pursuant to the Series B Certificate of
Designation by the holders of the Series B Preferred Stock voting as a separate
class or (ii) appointed to the Board of Directors pursuant to the Series B
Certificate of Designation.
"Series B Preferred Stock" means the 8% Series B Convertible
Redeemable Preferred Stock of the Company authorized in the Series B Certificate
of Designation.
"Transaction Documents" means (i) the Merger Agreement, (ii) this
Agreement as amended from time to time, (iii) the Governance Agreement, dated as
of [ ], 2003, as amended from time to time, among the Company, WCAS Capital
Partners III, L.P., Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P., WCAS Information
Partners, L.P. and certain individual investors and trusts listed on the
signature pages thereto and (iv) the Registration Rights
50
Agreement, dated as of [ ], 2003, as amended from time to time, among the
Company and the securityholders identified therein.
"Transfer" has the meaning specified in Section 10.1(b).
"Transferee" means any Person that acquires assets of the Company in
connection with any sale, conveyance, lease, exchange or transfer of such assets
by the Company to or with such Person.
"Unrestricted Global Warrant" means a Global Warrant, substantially
in the form of Exhibit A attached hereto, that bears the Global Warrant Legend
and that has the "Schedule of Exchanges of Interests in Global Warrant" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Warrants that do not bear the
Private Placement Legend.
"Warrant" has the meaning specified in the preamble hereto.
"Warrant Agent" (i) has the meaning specified in the first paragraph
hereof and (ii) means any successor or replacement to Mellon Investor Services
LLC as provided in Section 9.
"Warrant Certificate" has the meaning specified in Section 2.1(a).
"Warrant Countersignature Order" has the meaning specified in
Section 2.2.
"Warrant Registrar" has the meaning specified in Section 2.3.
"Warrants" has the meaning specified in the preamble hereto.
"Warrant Shares" has the meaning specified in the preamble hereto.
SECTION 16. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.
Prior to the exercise of the Warrants, no Holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to consent to any
action of the stockholders, to receive dividends or other
51
distributions, to exercise any preemptive right or to receive any notice of
meetings of stockholders.
SECTION 17. GOVERNING LAW.
This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of New York and for
all purposes shall be construed in accordance with the internal laws of the
State of New York, without giving effect to principles of conflict of laws to
the extent the application of the laws of another jurisdiction would be required
thereby.
SECTION 18. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement is intended or shall be construed to give
to any Person other than the Company and the Warrant Agent and their respective
successors and assigns and the registered holders of Warrants any legal or
equitable right, remedy or claim under this Agreement. This Agreement shall be
for the sole and exclusive benefit of the Company and the Warrant Agent and
their respective successors and assigns and the registered holders of Warrants.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
ITC/\DELTACOM, INC.
By:
-------------------------------------
J. Xxxxxx Xxxxxx
Senior Vice President-Legal
and Regulatory
MELLON INVESTOR SERVICES LLC
as Warrant Agent
By:
-------------------------------------
Name:
Title:
53
EXHIBIT A
[Form of Warrant Certificate]
[Face]
[THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO RESTRICTIONS
ON TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES MAY NOT BE
SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL
AND STATE SECURITIES LAWS. THE COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH
TRANSACTION TO REQUIRE AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES
SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE FOREGOING
RESTRICTIONS]/1/
[THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED BY THE DEPOSITARY IN ORDER FOR IT TO ACCEPT
THE WARRANTS
----------
/1/ This paragraph is to be included in Restricted Global Warrants and
Restricted Definitive Warrants.
A-1
FOR ITS BOOK-ENTRY SETTLEMENT SYSTEM, (II) THIS GLOBAL WARRANT MAY BE DELIVERED
TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 10.4 OF THE WARRANT
AGREEMENT AND (III) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY ONLY WITH THE PRIOR WRITTEN CONSENT OF ITC/\DELTACOM, INC.]/2/
[THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
LIMITATIONS ON TRANSFER SET FORTH IN AN AGREEMENT DATED AS OF [ ], 2003
BETWEEN [ISLAND, INC.] AND THE OTHER PARTIES THERETO. A COPY OF SUCH AGREEMENT
IS ON FILE WITH THE SECRETARY OF [ISLAND, INC.]. EXCEPT FOR A DISPOSITION OF
SECURITIES PERMITTED BY THE PROVISIONS OF ARTICLE II OF SUCH AGREEMENT IF THE
PROVISIONS OF SUCH ARTICLE ARE THEN IN EFFECT, SUCH TRANSFER LIMITATIONS SHALL
BE APPLICABLE TO ANY DISPOSITION OF THESE SECURITIES AND THIS LEGEND SHALL BE
STAMPED OR OTHERWISE IMPRINTED ON ANY CERTIFICATE EVIDENCING THESE SECURITIES.]
/3/
No. ___________ ___Warrants
Warrant Certificate
ITC/\DELTACOM, INC.
This Warrant Certificate certifies that ____________, or its
registered assigns, is the registered holder of Warrants expiring [ ], [2010]
(the "Warrants") to purchase Common Stock, par value $.01 per share (the "Common
Stock"), of ITC/\DeltaCom, Inc., a
----------
/2/ This paragraph is to be included only if the Warrant is in global form.
/3/ This paragraph is to be included only if the agreement referred to therein
shall be in effect.
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corporation organized under the laws of the State of Delaware (the "Company").
Each Warrant entitles the registered holder upon exercise at any time from the
date of issuance of such Warrant (the "Exercise Date") until immediately prior
to 5:00 p.m., New York City time, on [ ], [2010], to receive from the Company
one fully paid and non-assessable share of Common Stock (collectively, the
"Warrant Shares") at the initial exercise price (the "Exercise Price") of $8.50
per share of Common Stock payable upon surrender of this Warrant Certificate and
payment, subject to the third paragraph on the reverse side of this Warrant
Certificate, of the Exercise Price at the office or agency of the Warrant Agent,
but only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised on or after 5:00 p.m., New York City
time, on [ ], [2010], and to the extent not exercised by such time such
Warrant shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be signed below.
Dated: [____________], 2003
ITC/\DELTACOM, INC.
By:
-------------------------------------
Name:
Title:
Countersigned:
MELLON INVESTOR SERVICES LLC
as Warrant Agent
By:
-------------------------
Authorized Signature
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[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring at 5:00 p.m., New York City time, on
[ ], [2010] entitling the holder upon exercise to receive shares of Common
Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as
of [ ], 2003 (as amended from time to time, the "Warrant Agreement"), duly
executed and delivered by the Company to Mellon Investor Services LLC, as
warrant agent (the "Warrant Agent"), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Warrant Agent, the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to the Company. Capitalized
terms herein are used as defined in the Warrant Agreement unless otherwise
indicated. To the extent any provision of this Warrant Certificate conflicts
with the express provisions of the Warrant Agreement, the provisions of the
Warrant Agreement shall govern and be controlling.
Warrants may be exercised at any time and from time to time during
the period commencing on the date of issuance of the Warrants and ending
immediately prior to 5:00 p.m., New York City time, on [ ], [2010]; provided
that either (i) a registration statement relating to the exercise of the
Warrants and issuance of the Warrant Shares upon such exercise is then effective
under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) the
exercise of such Warrants and the issuance of the Warrant Shares upon such
exercise is exempt from the registration requirements of the Securities Act and
such Warrant Shares are qualified for sale or exempt from registration or
qualification under the applicable securities laws of the
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states in which the various holders of the Warrants or other Persons to whom it
is proposed that such Warrant Shares be issued upon exercise of the Warrants
reside. In order to exercise all or any of the Warrants represented by this
Warrant Certificate, the holder must deliver to the Warrant Agent at its office
set forth in Section 11 of the Warrant Agreement (i) this Warrant Certificate,
(ii) the form of election to purchase on the reverse hereof duly and properly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc, and (iii), subject to the following
paragraph, payment to the Warrant Agent for the account of the Company of the
Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then exercised, as provided in the Warrant Agreement. No
adjustments as to dividends shall be made upon exercise of this Warrant.
Subject to the last sentence of this paragraph, in lieu of making
the payment of the Exercise Price in connection with the exercise of each
Warrant (but in all other respects in accordance with the exercise procedure set
forth above, as such exercise procedure may be adjusted to reflect the
conversion referred to herein), the holder of each Restricted Warrant may elect
to convert such Restricted Warrant into shares of Common Stock by providing the
Company and the Warrant Agent with joint written notification of such election,
in which event the Company shall issue to such holder the number of shares of
Common Stock calculated in accordance with formula:
(A - B) x C
X = -----------
A
where
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X = the number of shares of Common Stock
issuable upon exercise pursuant to Section
3(f) of the Warrant Agreement
A = the Closing Price on the Business Day
immediately preceding the date on which the
holder delivers the Warrant Certificate and
form of election to purchase to the Company
pursuant to Section 3(b) of the Warrant
Agreement
B = the Exercise Price
C = the number of shares of Common Stock as to
which such Restricted Warrant is being
exercised pursuant to Section 3(a) of the
Warrant Agreement
If the foregoing calculation results in a negative number, no shares of Common
Stock shall be issued upon conversion pursuant hereto. Notwithstanding any
provision of this Warrant or the Warrant Agreement to the contrary, the holder
of any Restricted Warrant may elect to convert such Restricted Warrant into
shares of Common Stock as provided herein only if the Board of Directors shall
determine that upon such conversion the Company shall receive consideration in
an amount not less than the par value of the shares of Common Stock issuable
upon such conversion.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock shall be issued upon the exercise of any Warrant, but the Company may,
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in its sole discretion, (i) round such fractional share up to the nearest whole
share or (ii) pay the cash value thereof determined as provided in the Warrant
Agreement.
The Warrants shall be exercisable, at the election of the holder,
either in full or from time to time in part, provided that Warrants may not be
exercised by the holder for an amount less than 100 Warrant Shares unless such
holder only owns, in the aggregate, such lesser amount. If fewer than all the
Warrants represented by this Warrant Certificate are exercised, this Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for the number of Warrants which were not exercised shall be delivered to
the person or persons entitled to receive such new Warrant Certificate.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, or any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants represented by this Warrant Certificate nor this Warrant Certificate
shall entitle any holder hereof to any rights of a stockholder of the Company.
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[Form of Election to Purchase]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____________ shares of
Common Stock and herewith tenders payment for such shares to the order of
ITC/\DELTACOM, INC., in the amount of $__________ in accordance with the terms
hereof. If the undersigned hereby elects to convert the Warrants represented by
this Warrant Certificate into shares of Common Stock as provided in this Warrant
Certificate, tender of this Warrant Certificate in lieu of payment as aforesaid
shall be deemed payment for such shares of Common Stock. The undersigned
requests that a certificate for such shares be registered in the name of
_______________, whose address is __________________ and that such shares be
delivered to ___________, whose address is ____________________________. If such
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________________, whose address is ____________________, and that such
Warrant Certificate be delivered to _______________ whose address is
____________________.
----------------------------------------
Signature
Date:
----------------------------------------
Signature Guaranteed
A-9
SCHEDULE OF EXCHANGES OF INTERESTS IN GLOBAL WARRANT
The following exchanges of a part of this Global Warrant have been made:
Number of Warrants
Amount of decrease in this Global
in Number of Amount of increase in Warrant following Signature of
warrants in this Number of Warrants in such decrease or authorized officer
Date of Exchange Global Warrant this Global Warrant increase of Warrant Agent
--------------------- ---------------------- ----------------------- ---------------------- --------------------
A-10
EXHIBIT B
[Form of Investment Letter for Exercise]
ITC/\DeltaCom, Inc.
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Ladies and Gentlemen:
The undersigned (the "Purchaser") refers hereby to the Warrant Agreement,
dated as of [ ], 2003, between ITC/\DeltaCom, Inc. (the "Company") and Mellon
Investor Services LLC, as Warrant Agent (as amended from time to time, the
"Agreement"). Capitalized terms used in this letter and not defined herein have
the meanings given to such terms in the Agreement.
This letter is being furnished to the Company pursuant to Section 3(c) of
the Agreement.
The Warrant Agent has received from a Holder of Warrants an executed
election form for the purchase of ___________ shares of Common Stock (the
"Warrant Shares") issuable upon the exercise of such Warrants. In connection
with its purchase of the Warrant Shares, the Purchaser confirms that:
1. The Purchaser has received such information as it deems necessary in
order to make its investment decision in connection with its purchase of the
Warrant Shares.
2. The Purchaser understands that the offer and sale of the Warrant Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or applicable state securities laws. The Purchaser
understands that any Transfer of the Warrant Shares is subject to certain
restrictions and conditions set forth in the Warrant Agreement and agrees to be
bound by, and not to Transfer the Warrant Shares except in compliance with, such
restrictions and conditions and the Securities Act.
3. The Purchaser understands that, upon any proposed Transfer of any
Warrant Shares, it will be required to furnish to the Warrant Agent and the
Company such certifications, legal opinions and other information as are
specified in the Warrant Agreement or as the Warrant Agent and the Company may
reasonably require to confirm that the proposed Transfer complies with the
foregoing restrictions and conditions. The Purchaser further understands that
the Warrant Shares purchased by it will bear a legend to the foregoing effect
and that the Company may place a "stop transfer order" with any transfer agent
or registrar with respect to the Warrant Shares.
4. The Purchaser is an "accredited investor" (as defined in Rule 501(a) of
Regulation D under the Securities Act) and has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Warrant
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Shares, and it and any account for which it is acting is each able to bear the
economic risk of such an investment.
5. The Purchaser is acquiring the Warrant Shares purchased by it for its
own account or for one or more accounts (each of which is an "accredited
investor") as to each of which the Purchaser exercises sole investment
discretion.
The Company and the Warrant Agent are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
cc: Mellon Investor Services LLC, as Warrant Agent
B-2
EXHIBIT C
[Form of Investment Letter for Transfer]
ITC/\DeltaCom, Inc.
0000 X.X. Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Ladies and Gentlemen:
The undersigned (the "Transferee") refers hereby to the Warrant Agreement,
dated as of [ ], 2003, between ITC/\DeltaCom, Inc. (the "Company") and Mellon
Investor Services LLC, as Warrant Agent (as amended from time to time, the
"Agreement"). Capitalized terms used in this letter and not defined herein have
the meanings given to such terms in the Agreement.
This letter is being furnished to the Company pursuant to Section 10.1(b)
of the Agreement.
A Holder of Warrants proposes to Transfer to the Transferee a beneficial
interest in a Restricted Global Warrant or Restricted Definitive Warrant
(collectively, the "Warrants"). In connection with its acquisition of the
Warrants, the Transferee confirms that:
1. The Transferee understands that the Warrants and the shares of Common
Stock or other securities issuable upon exercise thereof (collectively, the
"Warrant Shares") have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or applicable state securities laws. The
Transferee understands that any subsequent Transfer of the Warrants or the
Warrant Shares is subject to certain restrictions and conditions set forth in
the Warrant Agreement and agrees to be bound by, and not to Transfer, the
Warrants or the Warrant Shares except in compliance with, such restrictions and
conditions and the Securities Act.
2. The Transferee understands that, upon any proposed Transfer of the
Warrants or the Warrant Shares, it will be required to furnish to the Warrant
Agent and the Company such certifications, legal opinions and other information
as are specified in the Warrant Agreement or as the Warrant Agent and the
Company may reasonably require to confirm that the proposed Transfer complies
with the foregoing restrictions and conditions. The Transferee further
understands that the Warrants and the Warrant Shares will bear a legend to the
foregoing effect and that the Company may place a "stop transfer order" with any
transfer agent or registrar with respect to the Warrants and the Warrant Shares.
3. The Transferee is an "accredited investor" (as defined in Rule 501(a)
of Regulation D under the Securities Act) and has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment in the
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Warrants, and it and any account for which it is acting is each able to bear the
economic risk of such an investment.
4. The Transferee is acquiring the Warrants purchased by it for its own
account or for one or more accounts (each of which is an "accredited investor")
as to each of which the Transferee exercises sole investment discretion.
The Company and the Warrant Agent are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
cc: Mellon Investor Services LLC, as Warrant Agent
-C-2-
