Exhibit 10.5
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS. EXCEPT AS
OTHERWISE SET FORTH HEREIN OR IN THE INVESTMENT AGREEMENT, DATED AS OF
FEBRUARY 27, 2001, BETWEEN ITC/\DELTACOM, INC. (THE "CORPORATION") AND ITC
HOLDING COMPANY, INC., AS AMENDED AS OF MAY 29, 2001 (AS AMENDED FROM TIME
TO TIME, THE "INVESTMENT AGREEMENT"), NEITHER THIS WARRANT NOR ANY OF SUCH
SHARES MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
(A) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE REASONABLY ACCEPTABLE TO THE CORPORATION, THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR SUCH LAWS, OR UNLESS SOLD PURSUANT TO RULE 144
UNDER THE ACT AND (B) EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
HEREIN AND SET FORTH IN THE INVESTMENT AGREEMENT. A COPY OF THE INVESTMENT
AGREEMENT IS AVAILABLE UPON REQUEST TO THE SECRETARY OF THE CORPORATION FOR
INSPECTION AT THE OFFICES OF THE CORPORATION.
THIS WARRANT WAS INITIALLY ISSUED AS PART OF AN ISSUANCE OF SHARES OF
SERIES B-1 CUMULATIVE CONVERTIBLE PREFERRED STOCK, PAR VALUE $.01 PER SHARE
(THE "SERIES B PREFERRED STOCK"), OF THE CORPORATION. UNTIL JUNE 20, 2002,
THIS WARRANT MAY NOT BE TRANSFERRED SEPARATELY FROM, BUT MAY BE TRANSFERRED
ONLY TOGETHER WITH, SUCH SERIES B PREFERRED STOCK.
ITC/\DELTACOM, INC.
COMMON STOCK PURCHASE WARRANT
No. W-3 June 20, 2001
THIS CERTIFIES THAT, for value received, HBK Master Fund L.P., a Cayman
Islands limited partnership, or its permitted assigns, is entitled to purchase
from ITC/\DeltaCom, Inc., a Delaware corporation (the "Corporation"), at any
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time or from time to time as prescribed herein during the period specified in
Section 2, 263,157.90 fully paid and non-assessable shares of the Common
Stock, par value $.01 per share, of the Corporation (the "Common Stock"), at an
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exercise price of $5.70 per share (the "Exercise Price"). The term "Warrant
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Shares" as used herein refers to the shares of Common Stock purchasable
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hereunder. The Exercise Price and the number of Warrant Shares are subject to
adjustment as provided in Section 4. The term "Warrants" as used herein means
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this Warrant and the other warrants issued pursuant to the Investment Agreement,
dated as of February 27, 2001, between the Corporation and ITC Holding Company,
Inc., as amended as of May 29, 2001 (as amended from time to time, the
"Investment Agreement").
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This Warrant is subject to the following terms, provisions and conditions.
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
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Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole of in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
--------
Agreement"), to the Corporation during normal business hours on any Business Day
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at the Corporation's principal executive offices (or such other office or agency
of the Corporation as it may designate by notice to the holder hereof), and upon
(i) payment to the Corporation, in cash, by certified or official bank check or
by wire transfer for the account of the Corporation, of the Exercise Price for
the Warrant Shares specified in the Exercise Agreement or (ii) delivery to the
Corporation of a written notice of an election to effect a "Cashless Exercise"
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(as defined in Section 12(c)) for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares (or an election to effect a
Cashless Exercise has been made) as set forth above. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding 10 Business Days, after this Warrant
shall have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Corporation shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.
2. Period of Exercise; Limitation on Exercise.
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(a) Subject to the terms and conditions herein, this Warrant is
exercisable at any time or from time to time on or after the Issue Date and
before 5:00 p.m., New York City time, on June 20, 2011 (the "Exercise Period").
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(b) Notwithstanding Section 2(a) and any other provision of this
Warrant, this Warrant shall be exercisable by any holder hereof from time to
time, and such holder shall be entitled to exercise this Warrant in whole or in
part, only to the extent that such exercise would not result in a Change of
Control Event, as determined by the Board of Directors in good faith in
accordance with the Investment Agreement. The operation of the preceding
sentence shall not limit any adjustment of the Exercise Price and the number of
Warrant Shares pursuant to Section 4.
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3. Certain Agreements of the Corporation. The Corporation hereby
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covenants and agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares shall, upon issuance
-----------------------
in accordance with the terms of this Warrant, be duly and validly issued, fully
paid and non-assessable and not subject to the preemptive or other similar
rights of the stockholders of the Corporation.
(b) Reservation of Shares. During the Exercise Period, the
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Corporation at all times shall have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.
(c) Listing. The Corporation shall promptly secure the listing of the
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shares of Common Stock issuable upon exercise of the Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant, if applicable) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Common Stock from time to time issuable upon the exercise of this Warrant; and
the Corporation shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Corporation issuable upon the exercise of
this Warrant if and so long as any shares of the same class shall be listed on
such national securities exchange or automated quotation system.
(d) Successors and Assigns. This Warrant shall be binding upon any
----------------------
entity succeeding to the Corporation by merger, consolidation, or acquisition of
all or substantially all of the Corporation's assets.
4. Antidilution Provisions. During the Exercise Period, the Exercise
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Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 4. 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 cent.
(a) Adjustment of Exercise Price and Number of Shares Upon Issuance of
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Common Stock. Except as otherwise provided in Sections 4(c), 4(d) and 4(e), if
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and whenever on or after the Issue Date the Corporation issues or sells, or in
accordance with Section 4(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 4(b)) less than the then applicable 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 the Dilutive
-----------------
Issuance, the Exercise Price shall be reduced to a price determined by
multiplying the Exercise Price in
3
effect immediately prior to the 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 the Dilutive
Issuance, plus (y) the quotient of the aggregate consideration, calculated as
set forth in Section 4(b), received or receivable by the Corporation upon such
Dilutive Issuance divided by the then applicable Exercise Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator of which is
the total number of shares of Common Stock Deemed Outstanding immediately after
the Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
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determining the adjusted Exercise Price under Section 4(a), the following
provisions shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
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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
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Common Stock or Convertible Securities are hereinafter referred to as
"Options"), and the price per share for which Common Stock is issuable upon
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the exercise of such Options is less than the then applicable 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 Corporation 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 Corporation as consideration for the
issuance or granting of all such Options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation 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.
(ii) Issuance of Convertible Securities. If the Corporation in
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any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where such Convertible Securities are
4
issuable upon the exercise of Options for which an adjustment of the
applicable Exercise Price is made pursuant to Section 4(b)(i)) and the
price per share for which Common Stock is issuable upon such conversion or
exchange is less than the then applicable 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 Corporation 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
Corporation 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 Corporation 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 4(b), no further adjustment of the
Exercise Price shall be made by reason of such issuance or sale.
(iii) Change in Option Price or Conversion Rate. If there is a
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change at any time in (A) the amount of additional consideration payable to
the Corporation upon the exercise of any Options; (B) the amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of any Convertible Securities; or (C) the rate at
which any Convertible Securities are convertible into or exchangeable for
Common Stock (other than under or by reason of provisions 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 conversion rate, as the case may be, at the time initially granted,
issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible
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Securities. If, in any case, the total number of shares of Common Stock
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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
5
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 or conversion thereof), had never been issued.
(v) Calculation of Consideration Received. If any Common Stock,
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Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Section 4(b) shall be
the amount received by the Corporation therefor before deduction of
commissions, underwriting discounts or allowances or other expenses paid or
incurred by the Corporation 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
Corporation 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 Corporation 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. Except as set forth below, the
fair value of any consideration other than cash shall be determined in good
faith by the mutual agreement of the Board of Directors and the Requisite
Warrant Holders (as defined in Section 12(a)). If the Board of Directors
and the Requisite Warrant Holders are unable to reach such agreement within
a reasonable period, the fair value of such consideration shall be
determined by an independent investment bank or a "Big Five" independent
public accounting firm, in either case of nationally recognized standing in
the valuation of businesses similar to the business of the Corporation,
which shall be mutually acceptable to the Corporation and such holders. The
determination of such investment bank or public accounting firm shall be
final and binding upon the Corporation and the holders of the Warrants.
Notwithstanding the foregoing, from and after the date on which ITC Holding
Company, Inc. has ceased to be the "beneficial owner" (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
Warrants representing a majority of the aggregate value of then outstanding
Warrants (as computed for purposes of the definition of "Requisite Warrant
Holders" set forth in Section 12(a)), in lieu of obtaining the agreement by
the holders of the Requisite Warrant Holders to the fair value of any
consideration other than cash as aforesaid, the Corporation may elect to
have the fair value of such consideration determined by an independent
investment bank or a "Big Five" independent public accounting firm, in
either case of nationally recognized standing in the valuation of
businesses similar to the business of the Corporation. The determination of
such investment
6
bank or public accounting firm shall be final and binding upon the
Corporation and the holders of the Warrants.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment
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to the Exercise Price shall be made (i) upon the issuance, sale, grant,
conversion or exercise of any Options or Convertible Securities issued and
outstanding, or committed to be issued, as of the Issue Date, or issuable
pursuant to the Investment Agreement (including, without limitation, the
Series A Preferred Stock, the Series B Preferred Stock, the Warrants and
the Convertible Notes and any Options or Convertible Securities issued and
outstanding, or committed to be issued, as of the Issue Date under the
Benefit Plans or otherwise); (ii) upon the issuance, sale, grant,
conversion or exercise of any Capital Stock, Options or Convertible
Securities which may be issued or granted after the Issue Date under any
stock option, stock incentive or other employee benefit plan of the
Corporation or any subsidiary thereof in effect as of the Issue Date
(including, without limitation, the Benefit Plans) or which becomes
effective after the Issue Date, so long as such stock option, stock
incentive or other employee benefit plan is approved by the Board of
Directors (including the director designees, if any, of the holders of the
Series B Preferred Stock); (iii) upon the issuance, sale or exercise of the
Warrants; (iv) upon the issuance, sale, conversion or redemption of shares
of Series B Preferred Stock in accordance with the Series B Certificates of
Designation; or (v) upon any dividend or distribution on the Series B
Preferred Stock in accordance with the Series B Certificates of
Designation.
(c) Distribution of Assets. If the Corporation shall declare or make
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any distribution of its assets (including cash) to holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise, then,
after the date of record for determining stockholders entitled to such
distribution, the holder of this Warrant shall be entitled, upon exercise of
this Warrant for the purchase of any or all of the shares of Common Stock
subject hereto, to receive the amount of such assets which would have been
payable to the holder if such holder had been the holder of such shares of
Common Stock on the record date for the determination of stockholders entitled
to such distribution.
(d) Subdivision or Combination of Common Stock. If the Corporation at
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any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision shall be proportionately reduced. If the Corporation
at any time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a smaller number of shares, then, after the date of record
7
for effecting such combination, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased.
(e) Consolidation, Merger or Sale. In case of any consolidation of
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the Corporation with, or merger of the Corporation into any other corporation,
or in case of any sale or conveyance of all or substantially all of the assets
of the Corporation other than in connection with a plan of complete liquidation
of the Corporation, then as a condition of such consolidation, merger, sale or
conveyance, adequate provision shall be made whereby the holder of this Warrant
shall have the right to acquire and receive upon exercise of this Warrant in
lieu of or in addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable upon the exercise of this Warrant, such
shares of capital stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant if such
consolidation, merger, sale or conveyance had not taken place. In any such
case, the Corporation shall make appropriate provision to insure that the
provisions of this Section 4 shall thereafter be applicable as nearly as may be
in relation to any shares of capital stock or securities thereafter deliverable
upon the exercise of this Warrant.
(f) Adjustment in Number of Shares. Upon each change of the Exercise
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Price pursuant to the provisions of this Section 4, the number of shares of
Common Stock issuable upon exercise of this Warrant shall be adjusted by
multiplying such number of shares of Common Stock issuable upon exercise of this
Warrant immediately prior to such change by a fraction, the numerator of which
is the Exercise Price immediately before such change and the denominator of
which is the Exercise Price immediately after such change.
(g) Notice of Adjustment. Within 20 Business Days after the
--------------------
occurrence of any event which requires any adjustment of the Exercise Price, the
Corporation shall give written notice thereof to the holder of this Warrant.
Such notice shall state the Exercise Price resulting from such adjustment and
the increase or decrease in the number of Warrant Shares purchasable at such
price upon exercise, and shall set forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the chief financial officer of the
Corporation.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
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Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
8
(i) No Fractional Shares. No fractional shares of Common Stock shall
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be issued upon the exercise of this Warrant. If the exercise of this Warrant
would result in a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares of Common Stock issuable upon exercise
of this Warrant shall be rounded up to the next higher number of whole shares.
(j) Other Notices. In case at any time:
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(i) the Corporation shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other
distribution (including dividends or distributions payable in cash out of
retained earnings) to the holders of the Common Stock;
(ii) the Corporation shall offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any class
or other rights;
(iii) there shall be any capital reorganization of the
Corporation, or reclassification of the Common Stock, or consolidation or
merger of the Corporation with or into, or sale of all or substantially all
of the Corporation's assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in each such case, the Corporation shall give to the holder of this
Warrant notice of the date on which the books of the Corporation shall close or
a record shall be taken for determining the holders of Common Stock entitled to
receive any such dividend, distribution or subscription rights or for
determining the holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, merger, sale, dissolution, liquidation or
winding-up. Such notice shall also specify the date on which the holders of
Common Stock shall be entitled to receive such dividend, distribution or
subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, as the case
may be. Such notice shall be given at least 20 calendar days prior to the
record date or the date on which the Corporation's books are closed in respect
thereto. Failure to give any such notice or any defect therein shall not affect
the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv)
above.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the
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exercise of this Warrant shall be made without charge to the holder of this
Warrant or such Warrant Shares for any issuance tax or other costs in respect
thereof, provided that the Corporation shall not be required to pay any tax
which may be
9
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Stockholder. This Warrant shall not
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entitle the holder hereof to any voting rights or other rights as a stockholder
of the Corporation. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Corporation, whether such liability is asserted by the Corporation or by
creditors of the Corporation.
7. Transfer, Exchange, and Replacement of Warrant; Issuance of Warrant
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Shares.
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(a) Restriction on Transfer. This Warrant and the rights granted to
-----------------------
the holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Corporation referred to in Section 7(e),
provided, however, that any transfer or assignment shall be subject to the
conditions set forth in Sections 7(f) and 7(g), to the restrictions on transfer
set forth in Article V and Section 3.5 of the Investment Agreement, and to the
other applicable provisions of the Investment Agreement. Until due presentment
for registration of transfer on the books of the Corporation, the Corporation
may treat the registered holder hereof as the owner and holder hereof for all
purposes, and the Corporation shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 are assignable only in accordance
with the provisions of the Registration Rights Agreement, dated as of June 20,
2001, by and among the Corporation and the Holders party thereto (as amended
from time to time, the "Registration Rights Agreement").
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(b) Warrant Exchangeable for Different Denominations. This Warrant is
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exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Corporation referred to in Section 7(e), for new Warrants of like
tenor representing in the aggregate the right to purchase the number of shares
of Common Stock which may be purchased hereunder. Each such new Warrant shall
represent the right to purchase such number of shares of Common Stock as shall
be designated by the holder hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
----------------------
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Corporation, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Corporation, at its expense, shall execute and
deliver, in lieu thereof, a new Warrant of like tenor.
10
(d) Cancellation; Payment of Expenses. Upon the surrender of this
---------------------------------
Warrant in connection with any transfer, exchange or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Corporation. The
Corporation shall pay all taxes (other than securities transfer taxes) and all
other expenses (other than legal expenses, if any, incurred by the holder or
transferees) and charges payable in connection with the preparation, execution
and delivery of Warrants pursuant to this Section 7.
(e) Register. The Corporation shall maintain, at its principal
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executive offices (or such other office or agency of the Corporation or of any
other Person as it may designate by notice to the holder hereof), a register for
this Warrant, in which the Corporation shall record the name and address of the
person in whose name this Warrant has been issued, as well as the name and
address of each transferee and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the
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surrender of this Warrant in connection with any exercise, transfer or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder) shall not be registered under the Securities Act of
1933, as amended (the "Securities Act"), and under applicable state securities
--------------
or blue sky laws, the Corporation may require, as a condition of allowing such
exercise, transfer or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Corporation a written opinion of
counsel, which opinion and counsel are reasonably acceptable to the Corporation,
to the effect that such exercise, transfer or exchange may be made without
registration under the Securities Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the
Corporation an investment letter in form and substance acceptable to the
Corporation and (iii) that the transferee be an "accredited investor" as defined
in Rule 501(a) promulgated under the Securities Act; provided that no such
opinion, letter or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act. The
holder of this Warrant, by taking and holding this Warrant, represents to the
Corporation that such holder is acquiring this Warrant for investment and not
with a present view to the distribution thereof (it being understood that except
as otherwise provided in this Warrant, such holder does not agree to hold the
Warrant for any minimum or other specific term and reserves the right to dispose
of the Warrant at any time in accordance with the Securities Act and state
securities laws applicable to such disposition).
(g) Restrictive Legend. The certificates representing the Warrant
------------------
Shares shall bear such restrictive legends as are provided for in the Investment
Agreement.
8. Registration Rights. The initial holder of this Warrant and certain
-------------------
transferees of such holder are entitled to the benefits of such registration
rights in
11
respect of this Warrant and the Warrant Shares as are set forth in the
Registration Rights Agreement.
9. Notices. All notices, requests and other communications required or
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permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Corporation, or at such other address as shall have been furnished to the
Corporation by notice from such holder. All notices, requests and other
communications required or permitted to be given or delivered hereunder to the
Corporation shall be in writing, and shall be personally delivered, or shall be
sent by certified or registered mail or by recognized overnight mail courier,
postage prepaid and addressed, to the office of the Corporation at
ITC/\DeltaCom, Inc., 0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, XX 00000,
Attention: General Counsel, or at such other address as shall have been
furnished to the holder of this Warrant by notice from the Corporation. Any such
notice, request or other communication may be sent by facsimile, but shall in
such case be subsequently confirmed by a writing personally delivered or sent by
certified or registered mail or by recognized overnight mail courier as provided
above. All notices, requests and other communications shall be deemed to have
been given either at the time of the receipt thereof by the person entitled to
receive such notice at the address of such person for purposes of this Section
9, or, if mailed by registered or certified mail or with a recognized overnight
mail courier, upon deposit with the United States Post Office or such overnight
mail courier, if postage is prepaid and the mailing is properly addressed, as
the case may be.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF DELAWARE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS).
11. Definitions. Unless the context otherwise requires, when used herein
-----------
the following terms shall have the meaning indicated.
"Benefit Plans" means the ITC/\DeltaCom, Inc. 1997 Stock Option Plan,
-------------
the ITC/\DeltaCom, Inc. Director Stock Option Plan, the ITC Holding Company,
Inc. Amended and Restated Stock Option Plan, the ITC Holding Company, Inc.
NonEmployee Director Stock Option Plan and the ITC/\DeltaCom, Inc. Employee
Profit Sharing & 401(k) Plan.
"Board of Directors" means the Board of Directors of the Corporation.
------------------
12
"Business Day" means any day except Saturday, Sunday and any legal
------------
holiday or a day on which banking institutions in New York City, New York or the
State of Georgia generally are authorized or required by law or other
governmental actions to close.
"Change of Control Event" means any of the following events: (i) the
-----------------------
event specified in clause (i)(b) of the definition of "Change of Control"
contained in the Indenture, dated as of June 3, 1997, as amended from time to
time, between the Corporation and United States Trust Company of New York, as
Trustee; (ii) the event specified in clause (i) of the definition of "Change of
Control" contained in the Indenture, dated as of March 3, 1998, as amended from
time to time, between the Corporation and United States Trust Company of New
York, as Trustee; (iii) the event specified in clause (i) of the definition of
"Change of Control" contained in the Indenture, dated as of November 5, 1998, as
amended from time to time, between the Corporation and United States Trust
Company of New York, as Trustee; and (iv) the event specified in clause (a) of
the definition of "Change of Control" contained in the Senior Credit Agreement.
"Common Stock" means the Common Stock and any additional class of
------------
stock of the Corporation having no preference as to dividends or distributions
on liquidation, provided that the shares purchasable pursuant to this Warrant
shall include only shares of Common Stock in respect of which this Warrant is
exercisable, or shares resulting from any subdivision or combination of such
Common Sock, or in the case of any consolidation, merger, sale or conveyance of
the character referred to in Section 4(e), the stock or other securities or
property provided for in Section 4(e).
"Common Stock Deemed Outstanding" means the number of shares of Common
-------------------------------
Stock actually outstanding, plus the maximum total number of shares of Common
Stock issuable upon the exercise of any then outstanding Warrants or issuable
upon conversion of any then outstanding Series A Preferred Stock or Series B
Preferred Stock, whether or not such Warrants, Series A Preferred Stock or
Series B Preferred Stock are actually exercisable, convertible or exchangeable
at such time, without duplication.
"Convertible Notes" means the 4 1/2% Convertible Subordinated Notes
-----------------
due 2006 of the Corporation.
"Current Market Price" means the average of the daily Market Prices of
--------------------
the Common Stock for the 20 consecutive trading days immediately preceding the
date for which such value is to be computed.
"Issue Date" means June 20, 2001.
----------
"Market Price" means, with respect to the Common Stock, on any given
------------
day, (i) the price of the last trade, as reported on the Nasdaq National Market,
not
13
identified as having been reported late to such system, or (ii) if the Common
Stock is so traded, but not so reported, the average of the last bid and ask
prices, as those prices are reported on the Nasdaq National Market, or (iii) if
the Common Stock is not listed or authorized for trading on the Nasdaq National
Market or any comparable system, 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 in good faith by the Board of Directors for that
purpose. If the Common Stock is not listed and traded in a manner that the
quotations referred to above are available for the period required hereunder,
the Market Price per share of Common Stock shall be deemed to be the fair value
per share of such security as determined in good faith by the Board of
Directors.
"Person" means any corporation, limited liability company,
------
partnership, trust, organization, association, other entity or individual.
"Senior Credit Agreement" means the Credit Agreement, dated as of
-----------------------
April 5, 2000, among the Corporation, as Parent, Interstate FiberNet, Inc., as
Borrower, the Subsidiary Guarantors named therein, the Initial Lenders named
therein, Xxxxxx Xxxxxxx Senior Funding, Inc., as Administrative Agent, Xxxxxx
Xxxxxxx & Co. Incorporated, as Collateral Agent, Bank of America, N.A., as
Syndication Agent, and Xxxxxxx Sachs Credit Partners L.P., as Documentation
Agent, as amended as of June 1, 2001, as amended from time to time.
"Series A Preferred Stock" means the Series A Convertible Preferred
------------------------
Stock, par value $.01 per share, of the Corporation.
"Series B Certificates of Designation" means, collectively, the
------------------------------------
certificates of designation with respect to the various series of the Series B
Preferred Stock.
"Series B Preferred Stock" means, collectively, each series of
------------------------
preferred stock, par value $.01 per share, of the Corporation designated by the
Board of Directors as "Series B-__ Cumulative Convertible Preferred Stock" which
is issued pursuant to the Investment Agreement and the certificate of
designation for each such series of preferred stock.
12. Miscellaneous.
-------------
(a) Amendments; Waivers. Except as provided in the last sentence of
-------------------
this Section 12(a), the provisions of this Warrant, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Corporation has obtained the written consent of the Requisite Warrant Holders
(as defined below). Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of this Warrant and that does not directly or
indirectly affect the rights of other
14
holders of the Warrants may be given by the holder hereof; provided that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence. Each
holder of the Warrants outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 12(a), whether or not any notice, writing or marking indicating
such amendment, modification, supplement, waiver or consent appears on the
Warrant or is delivered to such holder. "Requisite Warrant Holders" means, as of
the date of determination, the holders of Warrants representing a majority of
the aggregate value of then outstanding Warrants, where the value of each
Warrant shall be equal to the product of the Exercise Price of such Warrant and
the Warrant Shares purchasable under such Warrant as of such date of
determination. The Corporation may amend or supplement this Warrant without the
consent of the holder of this Warrant to (i) cure any ambiguity or to correct
any defective or inconsistent provision or clerical omission or mistake or
manifest error contained in this Warrant or (ii) provide for a financial or
other qualified institution to act as warrant agent on behalf of the Corporation
to register the transfer of Warrants and to assume and discharge such other
duties as shall be customary for warrant agents with respect to warrants
registered under the Securities Act; provided, that any amendment or supplement
referred to in clause (i) or (ii) above does not, and shall not, in the good
faith opinion of the Board of Directors, adversely affect, adversely alter or
adversely change the rights, privileges or immunities of the holders of
Warrants; and provided, further, that the Corporation shall provide each
affected holder of Warrants with written notice of each such amendment or
supplement.
(b) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to the contrary
-----------------
contained in this Warrant, other than the terms of the transfer restrictions set
forth in Section 7, this Warrant may be exercised by presentation and surrender
of this Warrant to the Corporation at its principal executive offices with a
written notice of the holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
-----------------
In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the holder shall surrender this Warrant for that number of shares of
Common Stock determined by multiplying the number of Warrant Shares to which
such Holder would otherwise be entitled by a fraction, the numerator of which
shall be the excess of the then Current Market Price per share of Common Stock
over the Exercise Price, and the denominator of which shall be the then Current
Market Price per share of Common Stock.
15
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
signed by its duly authorized officer, this 20th day of June 2001.
ITC/\DELTACOM, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President-
Chief Financial Officer
16
FORM OF EXERCISE AGREEMENT
Dated: __________________
TO: ITC/\DELTACOM, INC.
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ______________ shares of Common Stock covered
by such Warrant, and makes payment herewith in full therefor at the price per
share provided by such Warrant in cash or by certified or official bank check or
wire transfer in the amount of $__________, or by surrender of securities issued
by the Corporation (including a portion of the Warrant) having a market value
(in the case of a portion of this Warrant, determined in accordance with Section
12(c) of the Warrant) equal to $_________. Please issue a certificate or
certificates for such _______________ shares of Common Stock in the name of the
undersigned and, if such number of shares of Common Stock shall not be all of
the shares purchasable under the within Warrant, issue a new Warrant in the name
of such undersigned covering the balance of the shares purchasable thereunder.
Name:__________________________________
Signature: ____________________________
Address: ____________________________
____________________________
____________________________
Note: The above signature should
correspond exactly with the name
on the face of the within Warrant.
17
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
, and hereby irrevocably constitutes and appoints _____________________________
______________________________________ as agent and attorney-in-fact to transfer
such Warrant on the books of the within-named corporation, with full power of
substitution in the premises.
Dated: __________________
In the presence of:
_________________________
Name:_____________________________________
Signature: _______________________________
Title of Signing Officer or Agent (if any):
_______________________________
Address: _______________________________
_______________________________
_______________________________
Note: The above signature should
correspond exactly with the name
on the face of the within Warrant.
