EXHIBIT 10.3
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 (AS
AMENDED FROM TIME TO TIME, THE "INVESTMENT AGREEMENT"),
BETWEEN THE CORPORATION AND ITC HOLDING COMPANY, INC., 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 SUCH LAWS 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 OR SUCH LAWS AND (B) 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- CUMULATIVE CONVERTIBLE
PREFERRED STOCK, PAR VALUE $.01 PER SHARE (THE "SERIES B
PREFERRED STOCK"), OF ITC/\DELTACOM, INC. AND WARRANTS
INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE
SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF ITC/\DELTACOM, INC. PRIOR TO THE CLOSE OF BUSINESS ON
. 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
THIS CERTIFIES THAT, for value received, , a
corporation, or its permitted assigns, is entitled to purchase from
ITC/\DeltaCom, Inc., a Delaware corporation (the "Corporation"), at any time or
from time to time as prescribed herein during the period specified in Section
2, ( ) fully paid and non-assessable
shares of the Common Stock, par value $.01 per share, of the Corporation (the
"Common Stock"), at an exercise price of $ per share (the
"Exercise Price"). The term "Warrant Shares" as used herein refers to the
shares of Common Stock purchasable hereunder. The Warrant Shares and the
Exercise Price are subject to adjustment as provided in Section 4. The term
"Warrants" as used herein means 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 from time to time,
the "Investment Agreement").
This Warrant is subject to the following terms, provisions and conditions.
1. Manner of Exercise; Issuance of Certificates; Payment for Shares. 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 at the Corporation's principal executive offices
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(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" (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.
(a) Subject to the terms and conditions herein, this Warrant is
exercisable at any time or from time to time on or after the date on which
this Warrant is issued and delivered pursuant to the Investment Agreement and
before 5:00 p.m., New York City time, on the tenth (10th) anniversary of such
date (the "Exercise Period").
(b) Notwithstanding Section 2(a) and any other provision of this Warrant,
this Warrant shall be exercisable by any holder thereof 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 pursuant to Section 4.
3. Certain Agreements of the Corporation. The Corporation hereby 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 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
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 the Corporation's assets.
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4. Antidilution Provisions. During the Exercise Period, the Exercise 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
Common Stock. Except as otherwise provided in Sections 4(c), 4(d) and 4(e), if
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 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
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 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 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 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 adjustment to 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
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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 to 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 Conversion 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 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
Securities. 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 or conversion thereof), had never been
issued.
(v) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant 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. If 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. 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.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment to the
Exercise Price shall be made (i) upon the grant or 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
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committed to be issued, as of the Issue Date under the Benefit Plans or
otherwise); (ii) upon the grant or 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 and
exercise of the Warrants; (iv) upon the issuance, 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. In case the Corporation shall declare or make
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 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 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 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 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.
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(h) Minimum Adjustment of Exercise Price. No adjustment of the 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.
(i) No Fractional Shares. No fractional shares of Common Stock shall 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:
(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
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 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 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
Shares.
(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
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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 , 2001, by and among the Corporation and the
Holders party thereto (as amended from time to time, the "Registration Rights
Agreement").
(b) Warrant Exchangeable for Different Denominations. This Warrant is
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.
(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 executive
offices (or such other office or agency of the Corporation as it may designated
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
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.
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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 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
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, requires,
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.
"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
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any reorganization, reclassification, consolidation, merger, or sale 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 , 200 . [the date of issuance and sale of
this Warrant].
"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 identified as having been reported late to such system, or (ii) if the
Common Stock is so traded, but not so quoted, 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, as amended from time to time, 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.
"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.
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
9
matter that relates exclusively to the rights of this Warrant and that does not
directly or indirectly affect the rights of other 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
paragraphs 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.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be signed by
its duly authorized officer.
ITC/\DELTACOM, INC.
By:
---------------------------------
Name:
Title:
Dated as of , 200
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FORM OF EXERCISE AGREEMENT
Dated: , 200
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 and pay any cash for any fractional share to:
Name: _______________________________
Address: ____________________________
-------------------------------
-------------------------------
Signature: __________________________
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
and, if such number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant shall be issued in the name
of such undersigned covering the balance of the shares purchasable thereunder.
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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 said Warrant on the books of the within-named corporation, with
full power of substitution in the premises.
Dated: , 200
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.
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