Exhibit 4.3
ITC/\DELTACOM, INC.
and
MELLON INVESTOR SERVICES LLC
as
WARRANT AGENT
------------------------------------------
WARRANT AGREEMENT
Dated as of October 29, 2002
TABLE OF CONTENTS
Page
----
SECTION 1. APPOINTMENT OF WARRANT AGENT. ........................................... 1
SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES. ............................. 2
2.1 Form and Dating. ........................................................ 2
2.2 Execution. .............................................................. 3
2.3 Warrant Registrar. ...................................................... 3
2.4 Holder Lists. ........................................................... 4
SECTION 3. TERMS OF WARRANTS; EXERCISE OF WARRANTS. ................................ 4
SECTION 4. PAYMENT OF TAXES. ....................................................... 7
SECTION 5. RESERVATION OF WARRANT SHARES. .......................................... 8
SECTION 6. OBTAINING STOCK EXCHANGE LISTINGS. ...................................... 8
SECTION 7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE. ..... 8
SECTION 8. FRACTIONAL INTERESTS. ................................................... 19
SECTION 9. WARRANT AGENT. .......................................................... 19
9.1 Duties and Obligations; Limitations of Liability ........................ 19
9.2 Merger, Consolidation or Change of Name of Warrant Agent. ............... 25
9.3 Change of Warrant Agent. ................................................ 26
SECTION 10. TRANSFER; REPLACEMENT; CANCELLATION. .................................... 27
10.1 Transfer. ............................................................... 27
10.2 Replacement Warrants. ................................................... 32
10.3 Temporary Warrants. ..................................................... 32
10.4 Cancellation. ........................................................... 33
SECTION 11. NOTICES TO COMPANY AND WARRANT AGENT. ................................... 33
SECTION 12. SUPPLEMENTS AND AMENDMENTS. ............................................. 35
SECTION 13. SUCCESSORS. ............................................................. 36
SECTION 14. TERMINATION. ............................................................ 36
SECTION 15. CERTAIN DEFINITIONS. .................................................... 36
SECTION 16. WARRANT HOLDER NOT DEEMED A STOCKHOLDER ................................. 42
SECTION 17. GOVERNING LAW. .......................................................... 42
SECTION 18. BENEFITS OF THIS AGREEMENT. ............................................. 42
SECTION 19. COUNTERPARTS. ................................................. 42
EXHIBIT A
FORM OF WARRANT CERTIFICATE ............................................... A-1
Form of Election to Purchase .............................................. A-8
Schedule of Exchanges of Interests in Global Warrant ...................... A-9
EXHIBIT B
FORM OF INVESTMENT LETTER FOR EXERCISE .................................... B-1
EXHIBIT C
FORM OF INVESTMENT LETTER FOR TRANSFER .................................... C-1
ii
WARRANT AGREEMENT
This Warrant Agreement, dated as of October 29, 2002 (this "Warrant
Agreement" or "Agreement"), is between ITC/\DeltaCom, Inc., a Delaware
corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey
limited liability company, as warrant agent (the "Warrant Agent"). Unless
elsewhere defined herein, capitalized terms used herein shall have the meaning
given to them in Section 15.
W I T N E S S E T H:
WHEREAS, in connection with and under a plan of reorganization confirmed
pursuant to chapter 11 of title 11 of the United States Code, as amended, the
Company proposes to issue and deliver shares of the 8% Series A Convertible
Redeemable Preferred Stock, par value $.01 per share, of the Company (the
"Series A Preferred Stock") and 1,020,000 warrants (each, a "Warrant") to
purchase an equal number of shares, subject to adjustment in accordance with
Section 7 (the "Warrant Shares"), of the Common Stock, par value $.01 per share,
of the Company (the "Common Stock"); and
WHEREAS, the Company wishes the Warrant Agent to act as Warrant Agent on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance of the Warrants and the other matters provided herein;
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Appointment of Warrant Agent.
The Company hereby appoints the Warrant Agent to act as agent for the
Company in accordance with the express terms and conditions set forth
hereinafter in this Agreement, and the Warrant Agent hereby accepts such
appointment.
SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
2.1 Form and Dating.
(a) The Warrants shall be represented by certificates substantially
in the form of Exhibit A hereto (the "Warrant Certificates"). The Warrant
Certificates may have notations, legends or endorsements required by law, stock
market or stock exchange rule or usage (none of which shall affect the rights,
duties or obligations of the Warrant Agent as set forth in this Agreement). Each
Warrant Certificate shall be dated the date of the countersignature by the
Warrant Agent. The terms and provisions contained in the Warrant Certificates
shall constitute, and are hereby expressly made, a part of this Warrant
Agreement. The Company and the Warrant Agent, by their execution and delivery of
this Warrant Agreement, expressly agree to such terms and provisions and to be
bound thereby. However, to the extent any provision of any Warrant Certificate
conflicts with the express provisions of this Warrant Agreement, the provisions
of this Warrant Agreement shall govern and be controlling.
(b) Warrants may be issued in global form and shall include the
Global Warrant Legend set forth in Exhibit A hereto and the "Schedule of
Exchanges of Interests in Global Warrant" attached thereto. Warrants may also be
issued in definitive form but without the Global Warrant Legend and without the
"Schedule of Exchanges of Interests in Global Warrant" (the "Definitive
Warrants")." Each Global Warrant shall represent such of the outstanding
Warrants as shall be specified therein and each Global Warrant shall provide
that it shall represent the number of outstanding Warrants from time to time
endorsed thereon and that the number of outstanding Warrants represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions or other adjustments pursuant to Section 7. Any
endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the number of outstanding Warrants represented thereby shall be made
by the
2
Warrant Agent (upon specific written instruction from the Company) in accordance
with instructions given by the Holder thereof as required by Section 10.
2.2 Execution.
An Officer of the Company shall sign each Warrant Certificate on
behalf of the Company by manual or facsimile signature. If the Officer of the
Company whose signature is on a Warrant no longer holds that office at the time
a Warrant Certificate is countersigned, such Warrant shall nevertheless be
valid. A Warrant shall not be valid until countersigned by the manual or
facsimile signature of the Warrant Agent. The signature of the Warrant Agent
shall be conclusive evidence that the Warrant has been properly issued under
this Warrant Agreement. Upon its receipt of (i) a written order of the Company
containing specific instructions signed by an Officer (a "Warrant
Countersignature Order"), (ii) a shareholder list (if necessary) and (iii) all
other relevant information which the Warrant Agent may request, the Warrant
Agent shall countersign Warrant Certificates for original issue up to the number
of Warrants stated in the preamble hereto. The Warrant Agent may appoint an
agent acceptable to the Company to countersign Warrants. Such an agent may
countersign Warrants whenever the Warrant Agent may do so. Each reference in
this Warrant Agreement to a countersignature by the Warrant Agent includes a
countersignature by such agent. Such an agent has the same rights as the Warrant
Agent to deal with the Company or an Affiliate of the Company.
2.3 Warrant Registrar.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange (the "Warrant
Registrar"). The Warrant Registrar shall keep a register of the Warrants and of
their transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The
Company may change any Warrant Registrar without notice to any
3
Holder. The Company shall notify the Warrant Agent in writing of the name and
address of any agent (including any Warrant Registrar) that is not a party to
this Warrant Agreement. If the Company fails to appoint or maintain another
entity as the Warrant Registrar, the Warrant Agent shall act as the Warrant
Registrar. The Company or any of its subsidiaries may act as Warrant Registrar.
The Company initially appoints the Warrant Agent to act as the Warrant Registrar
with respect to the Global Warrants and The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Warrants.
2.4 Holder Lists.
The Warrant Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders. The Company shall promptly furnish to the Warrant
Agent, at such times as the Warrant Agent may request in writing, a list, in
such form and as of such date as the Warrant Agent may reasonably require, of
the names and addresses of the Holders.
SECTION 3. TERMS OF WARRANTS; EXERCISE OF WARRANTS.
(a) Subject to the terms of this Agreement, each Holder shall have
the right, which may be exercised at any time and from time to time during the
period commencing on the date of issuance of the Warrants and ending immediately
prior to 5:00 p.m., New York City time, on October 29, 2007 (the "Exercise
Period"), to receive from the Company the number of fully paid and
non-assessable Warrant Shares which the Holder may at the time be entitled to
receive upon exercise of such Warrants upon payment of $5.114 per share of
Common Stock, as adjusted from time to time in accordance with Section 7 (the
"Exercise Price"), in cash, by wire transfer or by certified or official bank
check payable to the order of the Company; provided that Holders holding
Warrants shall be able to exercise their Warrants only in accordance with the
procedures set forth in this Agreement and the Warrant Certificate and only if
(i) a registration
4
statement relating to the exercise of the Warrants and issuance of the Warrant
Shares upon such exercise is then effective under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) the exercise of such Warrants and the
issuance of the Warrant Shares upon such exercise is exempt from the
registration requirements of the Securities Act and such Warrant Shares are
qualified for sale or exempt from registration or qualification under the
applicable securities laws of the states in which the various Holders of the
Warrants or other Persons to whom it is proposed that such Warrant Shares be
issued upon exercise of the Warrants reside. Each Warrant not exercised prior to
5:00 p.m., New York City time, on October 29, 2007 (the "Expiration Date") shall
become void and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of such time. No adjustments as to dividends shall
be made upon exercise of the Warrants.
(b) In order to exercise all or any of the Warrants, the Holder
thereof must deliver to the Warrant Agent at its office set forth in Section 11
(i) the Warrant Certificate (in the case of Definitive Warrants), (ii) the form
of election to purchase on the reverse thereof duly and properly filled in and
signed, which signature shall be guaranteed by a bank or trust company having an
office or correspondent in the United States or a broker or dealer which is a
member of a registered securities exchange or the National Association of
Securities Dealers, Inc., and (iii) payment to the Warrant Agent for the account
of the Company of the Exercise Price for the number of Warrant Shares in respect
of which such Warrants are then exercised, as provided in Section 3(a).
(c) If, at the time of the surrender of a beneficial interest in
any Restricted Global Warrant or a Restricted Definitive Warrant in connection
with any exercise of such Warrant, such exercise and the issuance of the Warrant
Shares issuable upon such exercise shall
5
not be registered under the Securities Act, it shall be a condition to such
exercise and the issuance of such Warrant Shares that (i) the Holder of such
Warrant furnish to the Company an investment letter substantially in the form of
Exhibit B hereto and (ii) the Holder or each other Person to whom it is proposed
that such Warrant Shares be issued qualify as an "accredited investor" as
defined in Rule 501(a) of Regulation D under the Securities Act. The Company may
waive compliance with such condition, in whole or in part, in its sole
discretion.
(d) Subject to the provisions of Section 10, upon specific written
instruction from the Company, the Warrant Agent shall deliver or cause to be
delivered with all reasonable dispatch, in such name or names as the Holder may
designate in writing, a certificate or certificates for the number of whole
Warrant Shares issuable upon exercise of the Warrants delivered by the Holder
for exercise. Such certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Exercise Price.
(e) The Warrants shall be exercisable, at the election of the
Holders thereof, either in full or from time to time in part, provided that
Warrants may not be exercised by any Holder for an amount less than 100 Warrant
Shares unless such Holder only owns, in the aggregate, such lesser amount. If
fewer than all the Warrants represented by a Warrant Certificate are exercised,
such Warrant Certificate shall be surrendered and a new Warrant Certificate of
the same tenor and for the number of Warrants which were not exercised shall be
executed by the Company and delivered to the Warrant Agent and, upon written
notice thereof from the Company, the Warrant Agent shall countersign the new
Warrant Certificate, registered in such name or names as may be directed in
writing by the Holder, and shall deliver the new
6
Warrant Certificate to the Person or Persons entitled to receive such new
Warrant Certificate (as specified in writing by the Company).
(f) All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be disposed of by the Warrant Agent in its customary manner. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.
(g) The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Holders
during normal business hours at its office. The Company shall supply the Warrant
Agent from time to time with such numbers of copies of this Agreement as the
Warrant Agent may reasonably request.
SECTION 4. PAYMENT OF TAXES.
The Company shall pay any and all taxes and governmental charges
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided that the Company shall not be required to pay any tax or
charge which may be payable in respect of any transfer involved in the issue of
any Warrant Certificates or any certificates for Warrant Shares in a name other
than that of the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company and the Warrant Agent shall not be
required to issue or deliver such Warrant Certificates unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or charge or shall have established to the satisfaction
of the Company and the Warrant Agent that such tax or charge has been paid.
7
SECTION 5. RESERVATION OF WARRANT SHARES.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock and/or its
authorized and issued Common Stock held in its treasury, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon exercise of
Warrants, the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
SECTION 6. OBTAINING STOCK EXCHANGE LISTINGS.
For so long as the Warrant Shares are outstanding, the Company shall
use reasonable efforts to have the Warrant Shares quoted on the National Market
System of NASDAQ (the "NMS"), or listed on a national securities exchange or
quoted on a national automated quotation system other than the NMS, on which the
Common Stock is then quoted or listed.
SECTION 7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
During the Exercise Period, the Exercise Price and the number of the
Warrant Shares shall be subject to adjustment from time to time as provided in
this Section 7. In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price shall be
rounded up to the nearest whole cent.
(a) Except as otherwise provided in Section 7(c), if and whenever
during the period beginning on the Issue Date and ending at the close of
business on the second anniversary of the Issue Date the Company issues or
sells, or in accordance with Section 7(b) is deemed to have issued or sold, any
shares of Common Stock for no consideration or for a consideration per share
(calculated as set forth in Section 7(b)) less than the Exercise Price in effect
on the date of issuance or sale (or deemed issuance or sale) of such Common
Stock (a "Dilutive Issuance"),
8
then immediately upon such Dilutive Issuance, the Exercise Price shall be
reduced to a price determined by multiplying the Exercise Price in effect
immediately prior to such Dilutive Issuance by a fraction, (i) the numerator of
which is an amount equal to the sum of (x) the total number of shares of Common
Stock Deemed Outstanding immediately prior to such Dilutive Issuance, plus (y)
the quotient of the aggregate consideration, calculated as set forth in Section
7(b), received or receivable by the Company upon such Dilutive Issuance divided
by the then applicable Exercise Price in effect immediately prior to such
Dilutive Issuance, and (ii) the denominator of which is the total number of
shares of Common Stock Deemed Outstanding immediately after such Dilutive
Issuance.
(b) For purposes of determining the adjusted Exercise Price
pursuant to Section 7(a), the following provisions shall be applicable:
(i) If the Company in any manner issues or grants any warrants,
rights or options, whether or not immediately exercisable, to subscribe
for or to purchase Common Stock, or other securities convertible into or
exchangeable for Common Stock ("Convertible Securities") (such warrants,
rights and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "Options"), and the price per share for which
Common Stock is issuable upon the exercise of such Options is less than
the 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 Company for such
price per share. For purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon the exercise of such
Options" is determined by dividing
9
(x) the total amount, if any, received or receivable by the Company as
consideration for the issuance or grant of all such Options, plus the
minimum aggregate amount of additional consideration, if any, payable to
the Company upon the exercise of all such Options, plus, in the case of
Convertible Securities issuable upon the exercise of such Options, the
minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities
first become convertible or exchangeable, by (y) the maximum total number
of shares of Common Stock issuable upon the exercise of all such Options
(assuming full conversion of Convertible Securities, if applicable). No
further adjustment to the Exercise Price shall be made upon the actual
issuance of such Common Stock upon the exercise of such Options or upon
the conversion or exchange of Convertible Securities issuable upon
exercise of such Options.
(ii) If the Company in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where such
Convertible Securities are issuable upon the exercise of Options for
which an adjustment of the applicable Exercise Price is made pursuant to
Section 7(b)(i)) and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the 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 Company for such price per share. For the purposes of the
preceding sentence, the "price per share for which Common Stock is
issuable upon such
10
conversion or exchange" is determined by dividing (x) the total amount,
if any, received or receivable by the Company as consideration for the
issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof at the time such
Convertible Securities first become convertible or exchangeable, by (y)
the maximum total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No further
adjustment of the Exercise Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible
Securities, and if any such issuance or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of
the Exercise Price had been or are to be made pursuant to other
provisions of this Section 7(b), no further adjustment of the Exercise
Price shall be made by reason of such issuance or sale.
(iii) If there is a change at any time in (A) the aggregate
amount of additional consideration payable to the Company upon the
exercise of any Options; (B) the aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange of any Convertible Securities; or (C) the rate at which any
Options or any Convertible Securities are exercisable for or convertible
into or exchangeable for Common Stock (other than under or by reason of
provisions in such Options or Convertible Securities designed to protect
against dilution), the Exercise Price in effect at the time of such
change shall be readjusted to the Exercise Price which would have been in
effect at such time if such Options or Convertible Securities still
outstanding had provided for such changed additional consideration or
changed rate, as the case may
11
be, at the time such Options or Convertible Securities were initially
granted, issued or sold.
(iv) If, in any case, the total number of shares of Common Stock
issuable upon exercise of any Option or upon conversion or exchange of
any Convertible Securities is not, in fact, issued and the rights to
exercise such Option or to convert or exchange such Convertible
Securities shall have expired or terminated, the Exercise Price then in
effect shall be readjusted to the Exercise Price which would have been in
effect at the time of such expiration or termination if such Option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination (other than in respect of the actual
number of shares of Common Stock issued upon exercise, conversion or
exchange thereof), had never been issued.
(v) If any Common Stock, Options or Convertible Securities are
issued, granted or sold for cash, the consideration received therefor for
purposes of this Section 7(b) shall be the amount received by the Company
therefor before deduction of commissions, underwriting discounts or
allowances or other expenses paid or incurred by the Company in
connection with such issuance, grant or sale. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration
part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company shall be the fair
value of such consideration. If any Common Stock, Options or Convertible
Securities are issued in connection with any acquisition, merger or
consolidation in which the Company is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair value of
such portion of the net assets and business of the non-surviving entity
which is attributable to such Common
12
Stock, Options or Convertible Securities, as the case may be. The fair
value of any consideration other than cash shall be determined in good
faith by the Board of Directors whose determination, in the absence of
manifest error, shall be final and binding upon the Company, the Warrant
Agent and the Holders of the Warrants.
(c) No adjustment of the Exercise Price shall be made pursuant to
Section 7(a) or 7(b) upon the issuance, sale, grant, exercise, conversion,
exchange, reclassification, redemption or other retirement of any of the
following securities on or after the Issue Date:
(i) the Reorganization Common Stock;
(ii) the Series A Preferred Stock, including any Series A
Preferred Stock issued as payment of dividends on outstanding Series A
Preferred Stock, or any shares of Common Stock or other securities
issuable or payable upon conversion of the Series A Preferred Stock;
(iii) any shares of Common Stock, Options or Convertible
Securities issued as a dividend or distribution on the Series A Preferred
Stock, or any shares of Common Stock or other securities issuable or
payable upon exercise of any such Options or upon conversion or exchange
of any such Convertible Securities;
(iv) the Warrants or any shares of Common Stock or other
securities issuable or payable upon exercise of the Warrants;
(v) any shares of Common Stock, Options or Convertible
Securities issued or issuable under (A) the Existing Benefit Plan as in
effect on the Issue Date or (B) the Existing Benefit Plan as amended
after the Issue Date and any Benefit Plan which becomes effective after
the Issue Date, provided that any such amendment to the Existing Benefit
Plan or the effectiveness of any such Benefit Plan is approved by the
Board of
13
Directors or by the compensation committee or comparable committee of the
Board of Directors (in either case with the affirmative vote or consent
of the Series A Directors, if any, whether or not serving on any such
committee), or any shares of Common Stock issuable or payable upon
exercise of any such Options or upon conversion or exchange of any such
Convertible Securities;
(vi) any shares of Common Stock issued or deemed to have been
issued in a transaction for which an adjustment of the Exercise Price is
required pursuant to Section 7(d); or
(vii) any transaction referred to in Section 7(e); or
(viii) any shares of Common Stock, Options or Convertible
Securities issued in connection with the acquisition of all or part of
another business or company, whether by merger, consolidation or
otherwise, which is approved by the Board of Directors or by an
authorized committee of the Board of Directors (in either case with the
affirmative vote or consent of the Series A Directors, if any, whether or
not serving on any such committee), or any shares of Common Stock
issuable or payable upon exercise of any such Options or upon conversion
or exchange of any such Convertible Securities.
(d) If the Company:
(i) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
14
(iv) makes a distribution on its Common Stock in shares of its
Capital Stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any shares of
its Capital Stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant exercised after such
action shall receive the aggregate number and kind of shares of Capital Stock of
the Company which such Holder would have been entitled to receive immediately
following such action if such Warrant had been exercised immediately prior to
such action. Such adjustment shall become effective immediately after the record
date for the applicable action in the case of a dividend or distribution
referred to in clause (i) or (iv) above and immediately after the effective date
of the applicable action in the case of a subdivision, combination or
reclassification referred to in clause (ii), (iii) or (v) above. If, after any
such adjustment, the Holder of any Warrant upon exercise thereof shall be
entitled to receive shares of two or more classes of Capital Stock of the
Company, the Company shall determine the allocation of the adjusted Exercise
Price among such classes of Capital Stock and shall give written notice thereof
to the Warrant Agent. After such allocation, the exercise privilege and the
Exercise Price of the Warrants with respect to each such class of Capital Stock
shall thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Section 7. An adjustment required pursuant to
this Section 7(d) shall be made successively whenever any action listed above
shall occur.
(e) If the Company at any time pays a dividend in property (other than
cash) or securities to all holders of the Common Stock, other than in a
transaction referred to in Section 7(d), then, after the date of record for
determining stockholders entitled to such dividend, each
15
Holder of Warrants shall be entitled, upon exercise thereof for the purchase of
any or all of the Warrant Shares subject thereto, to receive the amount of such
property (other than cash) or securities which would have been payable to such
Holder if such Holder had been the Holder, on the record date for the
determination of stockholders entitled to such dividend, of such Warrant Shares
purchased upon such exercise.
(f) If an adjustment of the Exercise Price pursuant to Section
7(a), 7(b) or 7(d) shall become effective after the record date for the
applicable Exercise Price Adjustment Event, the Company may elect to defer,
until after the occurrence of such Exercise Price Adjustment Event, (i) issuance
to the Holder of any Warrants exercised after such record date and before the
occurrence of such Exercise Price Adjustment Event the additional shares of
Common Stock issuable upon such exercise in excess of the number of shares
issuable on the basis of the Exercise Price in effect immediately prior to such
record date and (ii) payment to such Holder of any amount in cash in lieu of a
fractional share of Common Stock. The Company shall give written notice of any
such election to the Warrant Agent.
(g) After the occurrence of any Exercise Price Adjustment Event
requiring adjustment of the Exercise Price, the Company shall give prompt
written notice thereof to the Holders of the Warrants and to the Warrant Agent.
Such notice shall state the Exercise Price and any change in the number of
Warrant Shares issuable upon exercise of the Warrants resulting from such
Exercise Price Adjustment Event and shall set forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. Such
calculation shall be certified by an Officer of the Company. Notice of any
Exercise Price Adjustment Event resulting in an adjustment of the Exercise Price
shall be deemed given to the Holders of Warrants (but not to the Warrant Agent)
(i) by the Company's inclusion of the information set forth above
16
in the Company's next quarterly or annual report filed with the Securities and
Exchange Commission, provided, that if such Exercise Price Adjustment Event
occurs within 20 Business Days before the date on which such report must be
timely filed by the Company, such information may be included in the next
quarterly or annual report required to be so filed by the Company after such
report, or (ii) at the option of the Company, by the Company's mailing to such
Holders of a written notice containing such information set forth above not
later than 30 Business Days following such Exercise Price Adjustment Event.
(h) Anything in this Section 7 to the contrary notwithstanding, the
Company shall not be required to give effect to any adjustment of the Exercise
Price unless and until the net effect of one or more adjustments required
hereunder (each of which shall be carried forward until counted toward
adjustment), determined as provided therein, shall have resulted in a change of
the Exercise Price by at least 1%, and when the cumulative net effect of more
than one adjustment so determined shall be to change the Exercise Price by at
least 1%, such change of the Exercise Price shall thereupon be given effect.
(i) Upon the occurrence of a Fundamental Change, there shall be no
adjustment of the Exercise Price and each Warrant then outstanding, without the
consent of any Holder of Warrants, shall become exercisable only into the kind
and amount of shares of Capital Stock or other securities (of the Company or
another issuer), cash or other property receivable upon such Fundamental Change
by a holder of the number of shares of Common Stock into which such Warrants
could have been exercised immediately prior to the effective date of such
Fundamental Change, assuming such holder of Common Stock failed to exercise the
holder's rights of election, if any, as to the kind of amount of Capital Stock
or other securities, cash or other property receivable upon such Fundamental
Change, provided that, if such Fundamental
17
Change solely provides for cash payments to holders of Common Stock at a price
that is not greater than the current Exercise Price, a Holder of Warrants shall
not have any right to receive such consideration and its Warrants shall be
automatically cancelled upon consummation thereof. The provisions of this
Section 7(i) similarly shall apply to successive Fundamental Changes and shall
be the sole right of Holders of Warrants in connection with any Fundamental
Change. The Company shall notify the Warrant Agent in writing of the occurrence
of any Fundamental Change.
(j) All Warrants originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of Warrant Shares for which
such Warrants are exercisable after giving effect to any adjustment thereto
pursuant to Section 7(k) in connection with such adjustment of the Exercise
Price, all subject to further adjustment as provided herein.
(k) Upon each Exercise Price Adjustment Event, each Warrant
outstanding immediately prior to such Exercise Price Adjustment Event shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares of Common Stock (calculated to the nearest one-one hundredth of
a share) obtained by (i) multiplying (x) the number of Warrant Shares covered by
such Warrant immediately prior to such adjustment of the Exercise Price by (y)
the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise Price
in effect immediately after such adjustment of the Exercise Price.
(l) Irrespective of any adjustments of the Exercise Price or in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore and thereafter
18
issued may continue to express the Exercise Price per share and the number of
shares which were expressed upon the initial Warrant Certificates issued
hereunder.
(m) The Company shall calculate or determine any adjustments with
respect to the Exercise Price and the kind or amount of shares or other
securities or any property receivable by Holders upon the exercise of Warrants
required from time to time under this Section 7 in accordance with its
provisions and shall give written notice of each such calculation or
determination to the Warrant Agent as provided herein, as required by the
Warrant Agent to perform its duties expressly set forth herein, or as otherwise
requested by the Warrant Agent.
SECTION 8. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares
upon the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same Holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable upon exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 8, be issuable upon the exercise of any Warrants
(or specified portion thereof), the Company may, in its sole discretion, (i)
round such fractional Warrant Share up to the nearest whole number or (ii) pay
an amount in cash equal to the Closing Price per Warrant Share, as determined on
the Business Day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction, rounded up to the nearest whole cent.
SECTION 9. WARRANT AGENT.
9.1 Duties and Obligations; Limitations of Liability
The Warrant Agent undertakes only the duties and obligations
expressly imposed by this Agreement (and no implied duties or obligations) upon
the following terms and
19
conditions, by all of which the Company and the Holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The Warrant Agent shall not, by countersigning Warrant
Certificates or by any other act hereunder, be deemed to make any
representations as to validity or authorization of, and shall incur no liability
as a result of, (i) the Warrants or the Warrant Certificates (except as to its
countersignature thereon), (ii) any shares or other securities or any property
delivered upon exercise of any Warrant, (iii) the accuracy of the computation of
the number or kind or amount of shares or other securities or any property
deliverable upon exercise of any Warrant or (iv) the correctness of any of the
representations of the Company made in any such Warrant Certificate. The Warrant
Agent shall not at any time have any duty to calculate or determine whether any
facts exist that may require any adjustments pursuant to Section 7 with respect
to the Exercise Price or the kind and amount of shares or other securities or
any property receivable by Holders upon the exercise of Warrants required from
time to time. The Warrant Agent shall have no duty or responsibility to
determine or verify, and shall incur no liability as a result of any failure to
determine or verify, the accuracy or correctness of any such calculation or
determination or with respect to the methods employed in making such calculation
or determination. The Warrant Agent shall not be accountable with respect to,
and shall incur no liability as a result of, the validity or value (or the kind
or amount) of any Warrant Shares or of other securities or any property which
may at any time be issued or delivered upon the exercise of any Warrant or upon
any adjustment pursuant to Section 7, and it makes no representation with
respect thereto. The Warrant Agent shall not be liable or responsible for any
failure of the Company to make any cash payment or to issue, transfer or deliver
any Warrant Shares or stock
20
certificates or other securities or property upon the surrender of any Warrant
Certificate for the purpose of exercise or upon any adjustment pursuant to
Section 7.
(b) The Warrant Agent shall not (i) be liable for any recital or
statement of fact contained herein or in the Warrant Certificates or for any
action taken, suffered or omitted by it on the belief that any Warrant
Certificate or any other documents or any signatures are genuine or properly
authorized, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates or (iii) be liable for any act or omission in
connection with this Agreement except for its own gross negligence or willful
misconduct (which gross negligence or willful misconduct must be determined by a
final, nonappealable order, judgment, decree or ruling of a court of competent
jurisdiction). Anything in this Agreement to the contrary notwithstanding, in no
event shall the Warrant Agent be liable for special, punitive, indirect,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited, to lost profits), even if the Warrant Agent has been advised of
the possibility of such loss or damage. Any and all liability of the Warrant
Agent under this Agreement shall be limited to the higher of (i) the amount of
fees paid by the Company to the Warrant Agent pursuant to this Agreement or (ii)
$50,000.
(c) The Warrant Agent is hereby authorized to accept and is
protected in accepting advice or instructions with respect to the performance of
its duties hereunder by order, instruction or other written notice given by the
Company or by one or more Holders in accordance with the provisions hereof and
to apply to any Officer of the Company named in any such order, instruction or
written notice for advice or instructions (which instructions shall be given in
writing when requested), and the Warrant Agent shall not be liable for any
action taken, suffered or omitted to be taken by it in accordance with the
advice or instructions in any such
21
order, instruction or written notice. The Warrant Agent shall be fully protected
and authorized in relying upon the most recent instructions received by any such
Officer of the Company. The Warrant Agent shall not be deemed to have knowledge
of any event of which it was supposed to receive notice thereof or an order or
instruction in regard to hereunder, and the Warrant Agent shall be fully
protected and shall incur no liability for failing to take any action in
connection therewith unless and until it has received such order, instruction or
notice.
(d) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking, omitting or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any Officer of the Company and
delivered to the Warrant Agent, and such certificate shall be full and complete
authorization and protection to the Warrant Agent and the Warrant Agent shall
incur no liability for or in respect of any action taken, omitted or suffered by
it under the provisions of this Agreement in reliance upon such certificate.
(e) In the event the Warrant Agent has any questions or
uncertainty as to what action it should take under this Agreement, the Warrant
Agent is hereby authorized and directed to accept advice and instructions with
respect to the performance of its duties hereunder from any Officer of the
Company, and to apply to any such Officer for advice or instructions in
connection with its duties. Such advice and instructions of any Officer of the
Company shall be full authorization and protection to the Warrant Agent, and the
Warrant Agent shall not be liable for any action taken, omitted or suffered by
it in accordance with advice or instructions, for any
22
delay in acting while waiting for such advice or instructions, or in refraining
from taking any action prior to receiving such advice or instructions.
(f) The Warrant Agent may execute and exercise any of the rights
and powers hereby vested in it or perform any duty hereunder either itself
(through its officers, directors and employees) or by or through its attorneys
or agents, and the Warrant Agent shall not be liable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, default, neglect
or misconduct in the absence of gross negligence or willful misconduct of the
Warrant Agent in the selection and in the continued employment of any such
attorney or agent (which gross negligence or willful misconduct must be
determined by a final, nonappealable order, judgment, decree or ruling of a
court of competent jurisdiction).
(g) The Warrant Agent shall not be under any obligation or duty to
institute, appear in or defend any action, suit or legal proceeding in respect
hereof, unless first indemnified to its satisfaction, but this provision shall
not affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without such indemnity. The Warrant
Agent shall promptly notify the Company in writing of any claim made or action,
suit or proceeding instituted against it arising out of or in connection with
this Agreement.
(h) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Warrant
Agent in order to enable it to carry out or perform its duties and obligations
under this Agreement.
(i) The Warrant Agent shall act solely as agent of the Company
hereunder and does not assume any obligation or relationship of agency or trust
for or with any of the
23
Holders or any beneficial owners of Warrants. The Warrant Agent shall not be
liable except for the failure to perform such duties as are specifically set
forth herein or specifically set forth in the Warrant Certificates, and no
implied covenants or obligations shall be read into this Agreement against the
Warrant Agent, whose duties and obligations shall be determined solely by the
express provisions hereof or the express provisions of the Warrant Certificates.
(j) The Company agrees promptly to pay the Warrant Agent from time
to time, on demand of the Warrant Agent, compensation for its services hereunder
as the Company and the Warrant Agent may agree from time to time, and to
reimburse the Warrant Agent for the reasonable costs, expenses and
disbursements, including reasonable counsel fees and expenses incurred in
connection with the preparation, delivery, amendment, execution and
administration of this Agreement and the exercise and performance of its duties
hereunder. The Company agrees to indemnify the Warrant Agent for and save it
harmless against any losses, liabilities, settlements, costs, damages, fines,
judgments, penalties, demands, claims and expenses arising out of or in
connection with the acceptance and administration of this Agreement, including
reasonable costs, legal fees and expenses of investigating or defending any
claim of such liability, except that the Company shall have no liability
hereunder to the extent that any of the foregoing results from the Warrant
Agent's own gross negligence or willful misconduct (which gross negligence or
willful misconduct must be determined by a final, nonappealable order, judgment,
decree or ruling of a court of competent jurisdiction). The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company.
(k) The Warrant Agent may at any time consult with legal counsel
satisfactory to it (who may be internal legal counsel for the Company), and the
advice or opinion of such counsel shall be full and complete authorization and
protection to the Warrant Agent and the
24
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder for any action taken, suffered or omitted by it in accordance with
the opinion or advice of such counsel.
(l) The provisions of this Section 9.1 shall survive the
termination of this Agreement, the termination, exercise or expiration of the
Warrants, and the resignation or removal of the Warrant Agent.
9.2 Merger, Consolidation or Change of Name of Warrant Agent.
(a) Any Person into which the Warrant Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any Person
succeeding to all or substantially all of the business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
warrant agent under the provisions of Section 9.3. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
(b) In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been changed
may adopt the countersignature under its prior
25
name, and in case at that time any of the Warrant Certificates shall not have
been countersigned, the Warrant Agent may countersign such Warrant Certificates
either in its prior name or in its changed name, and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.
9.3 Change of Warrant Agent.
The Warrant Agent may resign its duties and be discharged from all
further duties and liability hereunder after giving 30 days' prior written
notice to the Company. If the Warrant Agent shall resign pursuant to the
preceding sentence or if the Warrant Agent shall become incapable of acting as
Warrant Agent, the Company shall appoint a successor to such Warrant Agent. If
the Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such incapacity or resignation by the Warrant
Agent or by the registered holder of a Warrant Certificate, then the Warrant
Agent or any registered holder of any Warrant Certificate may apply at the
expense of the Company to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. The Holders of
a majority of the then outstanding Warrants shall be entitled at any time to
remove the Warrant Agent and appoint a successor to such Warrant Agent. Any
successor to the Warrant Agent need not be approved by the Company or the former
Warrant Agent. After appointment, the successor to the Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if such
successor had been originally named as Warrant Agent without further act or
deed; provided that the former Warrant Agent upon payment of all amounts owed to
it shall deliver and transfer to the successor to the Warrant Agent any property
at the time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to give
26
any notice provided for in this Section 9.3, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
SECTION 10. TRANSFER; REPLACEMENT; CANCELLATION.
10.1 Transfer.
(a) The transfer of beneficial interests in the Global Warrants
shall be effected through the Depositary, in accordance with the provisions of
this Warrant Agreement and the Applicable Procedures.
(b) A sale, pledge, transfer, assignment or other disposition
(each, a "Transfer") of a beneficial interest in any Restricted Global Warrant
or the Transfer of a Restricted Definitive Warrant by a Holder may be made to a
Person if:
(i) such Transfer is made pursuant to an effective
registration statement under the Securities Act; or
(ii) such Holder delivers to the Company (A) at the Company's
request, an opinion of counsel to such Holder, which shall be in a form,
substance and scope customary for opinions in comparable transactions, as
reasonably determined by the Company, to the effect that such Warrant or
the Warrant Shares or other securities issuable upon exercise thereof may
be Transferred without registration under the Securities Act and (B) an
investment letter, substantially in the form of Exhibit C hereto, signed
by the proposed transferee.
(c) The following legends (or legends substantially similar thereto)
shall appear on the face of the Warrants issued under this Warrant Agreement or
the certificates representing the Restricted Warrant Shares issuable upon
exercise thereof, as indicated below, unless specifically stated otherwise in
the applicable provisions of this Warrant Agreement.
27
(i) Private Placement Legend. Each Restricted Global Warrant and
each Restrictive Definitive Warrant shall bear a legend in substantially the
following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE
SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS
OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION
OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS. THE COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO
REQUIRE AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES
SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE FOREGOING
RESTRICTIONS."
(ii) Global Warrant Legend. Each Global Warrant shall bear a
legend in substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
WARRANT AGREEMENT GOVERNING THIS
28
WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED BY THE DEPOSITARY IN
ORDER FOR IT TO ACCEPT THE WARRANTS FOR ITS BOOK-ENTRY SETTLEMENT
SYSTEM, (II) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT
AGENT FOR CANCELLATION PURSUANT TO SECTION 10.4 OF THE WARRANT
AGREEMENT AND (III) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY ONLY WITH THE PRIOR WRITTEN CONSENT OF
ITC/\DELTACOM, INC."
(iii) Restricted Warrant Shares Legend. Each certificate
representing Restricted Warrant Shares shall bear a legend in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS,
AND ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES
ACT AND SUCH LAWS. THE SECURITIES MAY NOT BE SOLD, PLEDGED,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION
29
OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE
SECURITIES LAWS. THE COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH
TRANSACTION TO REQUIRE AN OPINION OF COUNSEL TO THE HOLDER OF THE
SECURITIES SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE
FOREGOING RESTRICTIONS."
(d) At such time as all beneficial interests in a particular
Global Warrant have been exercised or exchanged for Definitive Warrants or a
particular Global Warrant has been exercised, redeemed, repurchased or cancelled
in whole and not in part, each such Global Warrant shall be returned to or
retained and canceled by the Warrant Agent in accordance with Section 10.4. At
any time prior to such cancellation, if any beneficial interest in a Global
Warrant is exercised or exchanged for or transferred to a Person who shall take
delivery thereof in the form of a beneficial interest in another Global Warrant
or for Definitive Warrants, the amount of Warrants represented by such Global
Warrant shall be reduced accordingly and, upon receipt by the Warrant Agent of
specific written instruction from the Company, an endorsement shall be made on
such Global Warrant by the Warrant Agent or by the Depositary at the direction
of the Warrant Agent to reflect such reduction; and if the beneficial interest
is being exchanged for or transferred to a Person who shall take delivery
thereof in the form of a beneficial interest in another Global Warrant, such
other Global Warrant shall be increased accordingly and, upon receipt by the
Warrant Agent of specific written instruction from the Company, an endorsement
shall be made on such Global Warrant by the Warrant Agent or by the Depositary
at the direction of the Warrant Agent to reflect such increase.
30
(e) The following additional provisions shall apply to transfers and
exchanges of Warrants hereunder:
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Warrant Agent shall countersign Global
Warrants and Definitive Warrants upon the Company's written order
containing specific instruction or at the Warrant Registrar's written
request containing specific instruction.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Warrant or to a Holder of a Definitive Warrant for
any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith.
(iii) All Global Warrants and Definitive Warrants issued upon any
registration of transfer or exchange of Global Warrants or Definitive
Warrants shall be the duly authorized, executed and issued warrants for
Common Stock of the Company, not subject to any preemptive rights, and
entitled to the same benefits under this Warrant Agreement, as the Global
Warrants or Definitive Warrants surrendered upon such registration of
transfer or exchange.
(iv) Prior to due presentment for the registration of a transfer
of any Warrant, the Warrant Agent and the Company may deem and treat the
Person in whose name any Warrant is registered as the absolute owner of
such Warrant for all purposes and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
(v) The Warrant Agent shall countersign Global Warrants and
Definitive Warrants in accordance with the provisions of Section 2.2.
31
(f) All certifications, certificates and opinions of counsel
required to be submitted to the Warrant Registrar pursuant to this Section 10 to
effect a registration of transfer or exchange may be submitted by facsimile.
10.2 Replacement Warrants.
If any mutilated Warrant Certificate is surrendered to the Warrant
Agent or the Company and the Warrant Agent receives evidence to its satisfaction
of the destruction, loss or theft of any Warrant Certificate, the Company shall
issue and the Warrant Agent, upon receipt of a Warrant Countersignature Order,
shall countersign a replacement Warrant Certificate if the Warrant Agent's
requirements are met. If required by the Warrant Agent or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Warrant Agent and the Company to protect the Company, the Warrant Agent
and any agent thereof for purposes of the countersignature from any loss that
any of them may suffer if a Warrant Certificate is replaced. The Company may
charge for its expenses in replacing a Warrant Certificate.
Every replacement Warrant is an additional warrant of the Company
and shall be entitled to all of the benefits of this Warrant Agreement equally
and proportionately with all other Warrants duly issued hereunder.
10.3 Temporary Warrants.
Until certificates representing Warrants are ready for delivery,
the Company may prepare and the Warrant Agent, upon receipt of a Warrant
Countersignature Order, shall issue temporary Warrant Certificates. Temporary
Warrants shall be substantially in the form of certificated Warrants but may
have variations that the Company considers appropriate for temporary Warrants
and as shall be reasonably acceptable to the Warrant Agent (but which shall not
affect the rights, duties or obligations of the Warrant Agent as set forth in
this Agreement).
32
Without unreasonable delay, the Company shall prepare and the Warrant Agent
shall countersign definitive Warrant Certificates in exchange for temporary
Warrant Certificates.
Holders of temporary Warrants shall be entitled to all of the
benefits of this Warrant Agreement.
10.4 Cancellation.
The Company at any time may deliver Warrants to the Warrant Agent
for cancellation. The Warrant Registrar shall forward to the Warrant Agent any
Warrants surrendered to them for registration of transfer, exchange or exercise.
The Warrant Agent and no one else shall cancel all Warrants surrendered for
registration of transfer, exchange, exercise, replacement or cancellation and
shall dispose of such canceled Warrants in its customary manner. The Warrant
Registrar shall provide the Company with a list of all Warrants that have been
cancelled. The Company may not issue new Warrants to replace Warrants that have
been exercised or that have been delivered to the Warrant Agent for
cancellation.
SECTION 11. NOTICES TO COMPANY AND WARRANT AGENT.
Any notice or communication authorized by this Agreement to be
given or made by the Warrant Agent or by the Holder of any Warrant or by the
Company to the Company or the Warrant Agent, as the case may be, shall be
sufficiently given or made if in writing and delivered in person, mailed by
first-class mail or sent by facsimile transmission addressed as follows:
If to the Company:
ITC/\DeltaCom, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to the Warrant Agent:
33
Mellon Investor Services LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Client Services Manager
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Relationship Manager
With a copy to:
Mellon Investor Services LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
In case the Company shall fail to maintain such office or agency
or shall fail to give such notice of the location or of any change in the
location thereof, presentations may be made and notices and demands may be
served at the principal office of the Warrant Agent.
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed to
such Holder at its address as it appears on the Warrant Register by first-class
mail and shall be sufficiently given to such Holder if so mailed within the time
prescribed. Copies of any such communication or notice to a Holder shall also be
mailed to the Warrant Agent at the same time.
Failure to transmit a notice or communication to a Holder as
provided herein or any defect in any such notice shall not affect its
sufficiency with respect to other Holders. Except for a notice to the Warrant
Agent, which is deemed given only when received, and except as otherwise
provided in this Agreement, if a notice or communication is mailed in the manner
provided in this Section 11, it is duly given, whether or not the addressee
receives it.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event,
34
and such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Warrant Agent, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Warrant Agent
shall constitute a sufficient notification for every purpose hereunder.
SECTION 12. SUPPLEMENTS AND AMENDMENTS.
The Warrant Agent may, without the consent or concurrence of the
Holders of the Warrants, by supplemental agreement or otherwise, join with the
Company in making any changes or corrections in this Agreement that (i) are
required to cure any ambiguity or to correct any defect or inconsistent
provision or clerical omission or mistake or manifest error herein contained,
provided that such changes or corrections do not and will not adversely affect,
alter or change the rights of the Holders of Warrants, (ii) add to the covenants
and agreements of the Company in this Agreement further covenants and agreements
of the Company thereafter to be observed, or surrender any rights or power
reserved to or conferred upon the Company in this Agreement, provided that such
changes or corrections do not and will not adversely affect, alter or change the
rights of the Holders of Warrants, or (iii) will not, in the good faith opinion
of the Board of Directors, as evidenced by a resolution thereof, adversely
affect, alter or change the rights of the Holders of Warrants in any material
respect. Amendments or supplements that do not meet the requirements of the
preceding sentence shall require the written consent of the Holders of a
majority of the then outstanding Warrants; provided, however, that the consent
of each Holder is required for any amendment or supplement pursuant to which the
Exercise Price
35
would be increased or the number of shares of Common Stock purchasable upon
exercise of Warrants would be decreased (other than pursuant to adjustments as
provided in Section 7).
SECTION 13. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 14. TERMINATION.
This Agreement shall terminate at 5:00 p.m., New York City time, on
the Expiration Date. Notwithstanding the foregoing, this Agreement shall
terminate on any earlier date if all Warrants have been exercised. The
provisions of Section 10 shall survive such termination.
SECTION 15. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control," when used with respect
to any Person, means the power to direct the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Warrant, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Board of Directors" means the Board of Directors of the Company.
36
"Benefit Plan" means any stock option, restricted stock, stock
incentive, deferred compensation, profit sharing, defined benefit or other
benefit plan of the Company or any of its subsidiaries.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in New Jersey or Georgia are authorized by
law, regulation or executive order to remain closed.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock or
partnership or membership interests, whether common or preferred.
"Closing Price" means, with respect to the Common Stock, on any
date, (i) the last sales price on the NASDAQ or the principal securities
exchange or other securities exchange or other securities market on which the
Common Stock is then traded, or (ii) if the Common Stock is so traded, but not
so reported, the average of the last bid and ask prices, as those prices are
reported on the NASDAQ or the principal securities exchange or other securities
exchange or other securities market on which the Common Stock is then traded, or
(iii) if the Common Stock is not listed or authorized for trading on the NASDAQ
or any securities exchange or comparable securities market, the average of the
closing bid and ask prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by the Board
of Directors for that purpose. If the Common Stock is not listed and traded in
any manner that the quotations referred to above are available for the period
required hereunder, the Closing Price per share shall be deemed to be the fair
value per share of such Common Stock as determined by the Board of Directors.
"Common Stock" has the meaning specified in the preamble hereto.
37
"Common Stock Deemed Outstanding" means, on any date of
determination, the number of shares of Common Stock actually outstanding, plus
the maximum total number of shares of Common Stock issuable as of the date of
such determination upon the exercise of any then outstanding Options (including,
without limitation, the Warrants and any Options outstanding under the Existing
Benefit Plan or any other Benefit Plan) or issuable as of such date of
determination upon conversion or exchange of any then outstanding Convertible
Securities (including, without limitation, the Series A Preferred Stock),
whether or not such Options or Convertible Securities are actually exercisable,
convertible or exchangeable at such time, without duplication.
"Company" has the meaning specified in the first paragraph hereof.
"Convertible Securities" has the meaning specified in Section 7(b).
"Definitive Warrants" has the meaning specified in Section 2.1(b).
"Depositary" means, with respect to the Warrants issuable or issued
in whole or in part in global form, the Person specified in Section 2.3 as the
Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder.
"Dilutive Issuance" has the meaning specified in Section 7(a).
"DTC" has the meaning specified in Section 2.3.
"Exercise Period" has the meaning specified in Section 3(a).
"Exercise Price" has the meaning specified in Section 3(a).
"Exercise Price Adjustment Event" means any of those events
specified in Section 7 resulting in an adjustment of the Exercise Price.
"Existing Benefit Plan" means the ITC/\DeltaCom, Inc. Stock
Incentive Plan.
"Expiration Date" has the meaning specified in Section 3(a).
38
"Fundamental Change" means any transaction or event, including,
without limitation, any merger, consolidation, sale of assets, tender or
exchange offer, reclassification, compulsory share exchange or liquidation, in
which all or substantially all outstanding shares of the Common Stock, or all or
substantially all of the assets or the property of the Company, are converted
into or exchanged for Capital Stock or other securities, cash or other property.
"Global Warrants" means, individually and collectively, each of the
Restricted Global Warrants and the Unrestricted Global Warrants, substantially
in the form of Exhibit A hereto, issued in accordance with Sections 2.1(b) and
10.
"Global Warrant Legend" means the legend set forth in Section
10(c)(ii), which is required to be placed on all Global Warrants issued under
this Warrant Agreement.
"Holder" means a Person who is listed as the record owner of (i)
Warrants, (ii) the Warrant Shares or (iii) any other securities issued or
issuable with respect to the Warrants or Warrant Shares by way of stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise.
"Issue Date" means October 29, 2002.
"New Equity Investors" has the meaning set forth in the Plan.
"NASDAQ" means The NASDAQ Stock Market, Inc. and shall refer to the
NASDAQ National Market or the NASDAQ SmallCap Market, as the case may be.
"NMS" has the meaning specified in Section 6.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
39
"Options" has the meaning specified in Section 7(b)(i).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business.
"Plan" means the Company's plan of reorganization confirmed by order
of the United States Bankruptcy Court for the District of Delaware entered on
October 17, 2002 in In re ITC/\DeltaCom, Inc. (Case No. 02-11848 (MFW)).
"Private Placement Legend" means the legend set forth in Section
10(c)(i) to be placed on all Warrants issued under this Warrant Agreement,
except where otherwise permitted by the provisions of this Warrant Agreement.
"Reorganization Common Stock" means the Common Stock issued by the
Company under or in connection with the Plan, including, without limitation, the
Common Stock issued by the Company to the New Equity Investors on the effective
date of the Plan.
"Restricted Definitive Warrant" means a Definitive Warrant bearing
the Private Placement Legend.
"Restricted Global Warrant" means a Global Warrant bearing the
Private Placement Legend.
"Restricted Warrant" means a Restricted Global Warrant or a
Restricted Definitive Warrant, as the case may be.
"Restricted Warrant Shares" means Warrant Shares issued or issuable
upon exercise of a Restricted Warrant.
40
"Securities Act" has the meaning specified in Section 3(a).
"Series A Certificate of Designation" means the certificate of
designation of the Series A Preferred Stock.
"Series A Directors" means the directors of the Company that are
initially designated by the New Equity Investors for the Board of Directors
under the Plan or thereafter are elected to the Board of Directors pursuant to
the Series A Certificate of Designation by the holders of the Series A Preferred
Stock voting as a separate class.
"Series A Preferred Stock" has the meaning specified in the preamble
hereto.
"Transfer" has the meaning specified in Section 10(b).
"Unrestricted Global Warrant" means a Global Warrant, substantially
in the form of Exhibit A attached hereto, that bears the Global Warrant Legend
and that has the "Schedule of Exchanges of Interests in Global Warrant" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Warrants that do not bear the
Private Placement Legend.
"Warrant" has the meaning specified in the preamble hereto.
"Warrant Agent" (i) has the meaning specified in the first paragraph
hereof and (ii) means any successor or replacement to Mellon Investor Services
LLC as provided in Section 9.
"Warrant Certificate" has the meaning specified in Section 2.1(a).
"Warrant Countersignature Order" has the meaning specified in
Section 2.2.
"Warrant Registrar" has the meaning specified in Section 2.3.
"Warrants" has the meaning specified in the preamble hereto.
"Warrant Shares" has the meaning specified in the preamble hereto.
41
SECTION 16. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.
Prior to the exercise of the Warrants, no Holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to consent to any
action of the stockholders, to receive dividends or other distributions, to
exercise any preemptive right or to receive any notice of meetings of
stockholders.
SECTION 17. GOVERNING LAW.
This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of New York and for
all purposes shall be construed in accordance with the internal laws of the
State of New York, without giving effect to principles of conflict of laws to
the extent the application of the laws of another jurisdiction would be required
thereby.
SECTION 18. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement is intended or shall be construed to give
to any Person other than the Company and the Warrant Agent and their respective
successors and assigns and the registered holders of Warrants any legal or
equitable right, remedy or claim under this Agreement. This Agreement shall be
for the sole and exclusive benefit of the Company and the Warrant Agent and
their respective successors and assigns and the registered holders of Warrants.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
ITC/\DELTACOM, INC.
By: /s/
---------------------------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President-Legal and Regulatory
MELLON INVESTOR SERVICES LLC
as Warrant Agent
By: /s/
---------------------------------------------------
Name:
Title:
43
EXHIBIT A
[Form of Warrant Certificate]
[Face]
[THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO RESTRICTIONS ON
TRANSFER UNDER THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES MAY NOT BE SOLD,
PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER THE PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
A TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE
SECURITIES LAWS. THE COMPANY RESERVES THE RIGHT PRIOR TO ANY SUCH TRANSACTION TO
REQUIRE AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES SATISFACTORY TO IT
WITH RESPECT TO COMPLIANCE WITH THE FOREGOING RESTRICTIONS]/1/
[THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED BY THE DEPOSITARY IN ORDER FOR IT TO ACCEPT
THE WARRANTS
------------------
/1/ This paragraph is to be included on Restricted Global Warrants and
Restricted Definitive Warrants.
A-1
FOR ITS BOOK-ENTRY SETTLEMENT SYSTEM, (II) THIS GLOBAL WARRANT MAY BE DELIVERED
TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 10.4 OF THE WARRANT
AGREEMENT AND (III) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY ONLY WITH THE PRIOR WRITTEN CONSENT OF ITC/\DELTACOM, INC.]/2/
No. ___________ ___Warrants
Warrant Certificate
ITC/\DELTACOM, INC.
This Warrant Certificate certifies that ____________, or its registered
assigns, is the registered holder of Warrants expiring October 29, 2007 (the
"Warrants") to purchase Common Stock, par value $.01 per share (the "Common
Stock"), of ITC/\DeltaCom, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"). Each Warrant entitles the registered holder
upon exercise at any time from the date of issuance of such Warrant (the
"Exercise Date") until immediately prior to 5:00 p.m., New York City time, on
October 29, 2007, to receive from the Company one fully paid and non-assessable
share of Common Stock (collectively, the "Warrant Shares") at the initial
exercise price (the "Exercise Price") of $5.114 per share of Common Stock
payable upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office or agency of the Warrant Agent, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
---------------------
/2/ This paragraph is to be included only if the Warrant is in global form.
A-2
No Warrant may be exercised on or after 5:00 p.m., New York City time,
on October 29, 2007, and to the extent not exercised by such time such Warrant
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
A-3
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed below.
Dated:____________ ___, 2002
ITC/\DELTACOM, INC.
By:____________________________________
Name:
Title:
Countersigned:
MELLON INVESTOR SERVICES LLC
as Warrant Agent
By:______________________________________
Authorized Signature
A-4
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m., New York City time, on
October 29, 2007 entitling the holder upon exercise to receive shares of Common
Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as
of October 29, 2002 (the "Warrant Agreement"), duly executed and delivered by
the Company to Mellon Investor Services LLC, as warrant agent (the "Warrant
Agent"), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Warrant Agent, the Company and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants. A copy of
the Warrant Agreement may be obtained by the holder hereof upon written request
to the Company. Capitalized terms herein are used as defined in the Warrant
Agreement unless otherwise indicated. To the extent any provision of this
Warrant Certificate conflicts with the express provisions of the Warrant
Agreement, the provisions of the Warrant Agreement shall govern and be
controlling.
Warrants may be exercised at any time and from time to time during the
period commencing on the date of issuance of the Warrants and ending immediately
prior to 5:00 p.m., New York City time, on October 29, 2007; provided that
either (i) a registration statement relating to the exercise of the Warrants and
issuance of the Warrant Shares upon such exercise is then effective under the
Securities Act of 1933, as amended (the "Securities Act"), or (ii) the exercise
of such Warrants and the issuance of the Warrant Shares upon such exercise is
exempt from the registration requirements of the Securities Act and such Warrant
Shares are qualified for sale or exempt from registration or qualification under
the applicable securities laws of the
A-5
states in which the various holders of the Warrants or other Persons to whom it
is proposed that such Warrant Shares be issued upon exercise of the Warrants
reside. In order to exercise all or any of the Warrants represented by this
Warrant Certificate, the holder must deliver to the Warrant Agent at its office
set forth in Section 11 of the Warrant Agreement (i) this Warrant Certificate,
(ii) the form of election to purchase on the reverse hereof duly and properly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc, and (iii) payment to the Warrant Agent
for the account of the Company of the Exercise Price for the number of Warrant
Shares in respect of which such Warrants are then exercised, as provided in the
Warrant Agreement. No adjustments as to dividends shall be made upon exercise of
this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock shall be issued upon the exercise of any Warrant, but the Company may, in
its sole discretion, (i) round such fractional share up to the nearest whole
share or (ii) pay the cash value thereof determined as provided in the Warrant
Agreement.
The Warrants shall be exercisable, at the election of the holder,
either in full or from time to time in part, provided that Warrants may not be
exercised by the holder for an amount less than 100 Warrant Shares unless such
holder only owns, in the aggregate, such lesser amount. If fewer than all the
Warrants represented by this Warrant Certificate are exercised, this Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for
A-6
the number of Warrants which were not exercised shall be delivered to the person
or persons entitled to receive such new Warrant Certificate.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, or any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants represented by this Warrant Certificate nor this Warrant Certificate
shall entitle any holder hereof to any rights of a stockholder of the Company.
A-7
[Form of Election to Purchase]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____________ shares of
Common Stock and herewith tenders payment for such shares to the order of
ITC/\DELTACOM, INC., in the amount of $__________ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is __________________
and that such shares be delivered to ___________, whose address is
____________________________. If such number of shares is less than all of the
shares of Common Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________________, whose address is
____________________, and that such Warrant Certificate be delivered to
_______________ whose address is ____________________.
__________________________________________
Signature
Date:
_________________________________________
Signature Guaranteed
A-8
SCHEDULE OF EXCHANGES OF INTERESTS IN GLOBAL WARRANT
The following exchanges of a part of this Global Warrant have been made:
Number of
Amount of Amount of warrants in this
decrease in increase in Global Warrant Signature of
Number of Number of following such authorized
Date of warrants in this warrants in this decrease or officer of
Exchange Global Warrant Global Warrant increase Warrant Agent
--------------------------------------------------------------------------------
A-9
EXHIBIT B
[Form of Investment Letter for Exercise]
ITC/\DeltaCom, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned (the "Purchaser") refers hereby to the Warrant
Agreement, dated as of October 29, 2002, between ITC/\DeltaCom, Inc. (the
"Company") and Mellon Investor Services LLC, as Warrant Agent (as amended from
time to time, the "Agreement"). Capitalized terms used in this letter and not
defined herein have the meanings given to such terms in the Agreement.
This letter is being furnished to the Company pursuant to Section 3(c)
of the Agreement.
The Warrant Agent has received from a Holder of Warrants an executed
election form for the purchase of ___________ shares of Common Stock (the
"Warrant Shares") issuable upon the exercise of such Warrants. In connection
with its purchase of the Warrant Shares, the Purchaser confirms that:
1. The Purchaser has received such information as it deems necessary in
order to make its investment decision in connection with its purchase of the
Warrant Shares.
2. The Purchaser understands that the offer and sale of the Warrant
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or applicable state securities laws. The Purchaser
understands that any Transfer of the Warrant Shares is subject to certain
restrictions and conditions set forth in the Warrant Agreement and agrees to be
bound by, and not to Transfer the Warrant Shares except in compliance with, such
restrictions and conditions and the Securities Act.
3. The Purchaser understands that, upon any proposed Transfer of any
Warrant Shares, it will be required to furnish to the Warrant Agent and the
Company such certifications, legal opinions and other information as are
specified in the Warrant Agreement or as the Warrant Agent and the Company may
reasonably require to confirm that the proposed Transfer complies with the
foregoing restrictions and conditions. The Purchaser further understands that
the Warrant Shares purchased by it will bear a legend to the foregoing effect
and that the Company may place a "stop transfer order" with any transfer agent
or registrar with respect to the Warrant Shares.
4. The Purchaser is an "accredited investor" (as defined in Rule 501(a)
of Regulation D under the Securities Act) and has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Warrant
B-1
Shares, and it and any account for which it is acting is each able to bear the
economic risk of such an investment.
5. The Purchaser is acquiring the Warrant Shares purchased by it for
its own account or for one or more accounts (each of which is an "accredited
investor") as to each of which the Purchaser exercises sole investment
discretion.
The Company and the Warrant Agent are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
cc: Mellon Investor Services LLC, as Warrant Agent
B-2
EXHIBIT C
[Form of Investment Letter for Transfer]
ITC/\DeltaCom, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned (the "Transferee") refers hereby to the Warrant
Agreement, dated as of October 29, 2002, between ITC/\DeltaCom, Inc. (the
"Company") and Mellon Investor Services LLC, as Warrant Agent (as amended from
time to time, the "Agreement"). Capitalized terms used in this letter and not
defined herein have the meanings given to such terms in the Agreement.
This letter is being furnished to the Company pursuant to Section 10(b)
of the Agreement.
A Holder of Warrants proposes to Transfer to the Transferee a
beneficial interest in a Restricted Global Warrant or Restricted Definitive
Warrant (collectively, the "Warrants"). In connection with its acquisition of
the Warrants, the Transferee confirms that:
1. The Transferee understands that the Warrants and the shares of
Common Stock or other securities issuable upon exercise thereof (collectively,
the "Warrant Shares") have not been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or applicable state securities laws. The
Transferee understands that any subsequent Transfer of the Warrants or the
Warrant Shares is subject to certain restrictions and conditions set forth in
the Warrant Agreement and agrees to be bound by, and not to Transfer, the
Warrants or the Warrant Shares except in compliance with, such restrictions and
conditions and the Securities Act.
2. The Transferee understands that, upon any proposed Transfer of the
Warrants or the Warrant Shares, it will be required to furnish to the Warrant
Agent and the Company such certifications, legal opinions and other information
as are specified in the Warrant Agreement or as the Warrant Agent and the
Company may reasonably require to confirm that the proposed Transfer complies
with the foregoing restrictions and conditions. The Transferee further
understands that the Warrants and the Warrant Shares will bear a legend to the
foregoing effect and that the Company may place a "stop transfer order" with any
transfer agent or registrar with respect to the Warrants and the Warrant Shares.
3. The Transferee is an "accredited investor" (as defined in Rule 501
(a) of Regulation D under the Securities Act) and has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in the
C-1
Warrants, and it and any account for which it is acting is each able to bear the
economic risk of such an investment.
4. The Transferee is acquiring the Warrants purchased by it for its own
account or for one or more accounts (each of which is an "accredited investor")
as to each of which the Transferee exercises sole investment discretion.
The Company and the Warrant Agent are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
cc: Mellon Investor Services LLC, as Warrant Agent
C-2