SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. )*
Under the Securities Exchange Act of 1934
ITC^DeltaCom, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
-------------------------------------------------------------------------------
(Title of Class of Securities)
45031T 10 4
(CUSIP Number)
H. T. Arthur, Senior Vice President and
General Counsel
SCANA Corporation
1426 Main Street
Columbia, SC 29218
(803)217-8547
-------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
October 29, 2002
-------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format should include a signed original and five
copies of the Schedule, including all exhibits. See 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 45031T 10 4
1) Names of Reporting Persons
SCANA Corporation
S.S. or I.R.S. Identification Nos. of Above Persons
57-0784499
2) Check the Appropriate Box if a Member of a Group (See
Instructions) (a) / /
(b) / /
3) SEC Use Only_______________________________________________
4) Source of Funds (See Instructions)
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) / /
6) Citizenship or Place of Organization
Number of (7) Sole Voting Power -0-
Shares Bene-
ficially
Owned by (8) Shared Voting Power 3,681,712
Each Report-
ing Person (9) Sole Dispositive Power -0-
With
(10) Shared Dispositive Power 3,681,712
11) Aggregate Amount Beneficially Owned by Each Reporting Person
3,681,712 shares
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) / /
13) Percent of Class Represented by Amount in Row (11): 7.7%
14) Type of Reporting Person (See Instructions)
CO, HC
CUSIP No. 45031T 10 4
1) Names of Reporting Persons
SCANA Communications, Inc.
S.S. or I.R.S. Identification Nos. of Above Persons
57-0784501
2) Check the Appropriate Box if a Member of a Group (See
Instructions) (a) / /
(b) / /
3) SEC Use Only_______________________________________________
4) Source of Funds (See Instructions)
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) / /
6) Citizenship or Place of Organization
Number of (7) Sole Voting Power -0-
Shares Bene-
ficially
Owned by (8) Shared Voting Power 3,681,712
Each Report-
ing Person (9) Sole Dispositive Power -0-
With
(10) Shared Dispositive Power 3,681,712
11) Aggregate Amount Beneficially Owned by Each Reporting Person
3,681,712 shares
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) / /
13) Percent of Class Represented by Amount in Row (11): 7.7%
14) Type of Reporting Person (See Instructions)
CO, HC
CUSIP No. 45031T 10 4
1) Names of Reporting Persons
SCANA Communications Holdings, Inc.
S.S. or I.R.S. Identification Nos. of Above Persons
51-0394908
2) Check the Appropriate Box if a Member of a Group (See
Instructions) (a) / /
(b) / /
3) SEC Use Only_______________________________________________
4) Source of Funds (See Instructions)
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) / /
6) Citizenship or Place of Organization
Number of (7) Sole Voting Power -0-
Shares Bene-
ficially
Owned by (8) Shared Voting Power 3,681,712
Each Report-
ing Person (9) Sole Dispositive Power -0-
With
(10) Shared Dispositive Power 3,681,712
11) Aggregate Amount Beneficially Owned by Each Reporting Person
3,681,712 shares
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) / /
13) Percent of Class Represented by Amount in Row (11): 7.7%
14) Type of Reporting Person (See Instructions)
CO
SCHEDULE 13D
Item 1. SECURITY AND ISSUER.
-------------------
This statement relates to the Common Stock, $.01 par value (the "Common
Stock"), of ITC^DeltaCom, Inc., a Delaware corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 1791 O.G. Skinner
Drive, West Point,
Georgia 31833.
Item 2. IDENTITY AND BACKGROUND.
-----------------------
The undersigned hereby file this statement on Schedule 13D on behalf of
SCANA Corporation, a South Carolina corporation ("SCANA"), SCANA Communications,
Inc., a South Carolina corporation ("SCH"), and SCANA Communications Holdings,
Inc., a Delaware corporation ("SCHI") (collectively, the "Reporting Persons").
The Reporting Persons are making this single, joint filing because they may be
deemed to constitute a "group" within the meaning of Section 13(d)(3) of the
Act. The agreement among the Reporting Persons to file as a group (the "Group
Agreement") is attached hereto as Exhibit A.
SCANA is a registered holding company under the Public Utility Holding
Company Act of 1936, as amended, and its principal business address is 1426 Main
Street, Columbia, South Carolina 29201. Each of SCH and SCHI is a holding
company whose principal business is to hold investments in telecommunications
companies. SCH's principal business address is 1426 Main Street, Columbia, South
Carolina 29201, and SCHI's principal business address is 300 Delaware Avenue,
Suite 510, Wilmington, DE 19801.
The current executive officers of SCANA are William B. Timmerman,
Chairman of the Board, President and Chief Executive Officer; Kevin B. Marsh,
Senior Vice President and Chief Financial Officer; H. Thomas Arthur, Senior Vice
President, General Counsel and Assistant Secretary; Sarena D. Burch, Deputy
General Counsel and Assistant Secretary; James E. Swan, IV, Controller; Mark R.
Cannon, Risk Management Officer; Jimmy E. Addison, Vice President-Finance;
George J. Bullwinkel, Jr., President-South Carolina Pipeline Corporation and
President-SCANA Communications, Inc.; Neville O. Lorick, President-South
Carolina Electric & Gas Company; Stephen A. Byrne, Senior Vice President-Nuclear
Operations-South Carolina Electric and Gas Company and Senior Vice
President-Nuclear Operations-SCANA Services, Inc.; Charles B. McFadden, Vice
President-Governmental Affairs and Economic Development-SCANA Services, Inc.;
and Duane C. Harris, Senior Vice President-Human Resources-SCANA Services, Inc.
The principal occupations of the aforementioned officers are to act as such
officers and as officers of certain of the subsidiaries of SCANA.
The current executive officers of SCH are Mr. Timmerman, Chairman of
the Board and Chief Executive Officer, George J. Bullwinkel, President and Chief
Operating Officer, Mr. Marsh, Senior Vice President and Chief Financial Officer,
Mr. Arthur, Senior Vice President, General Counsel and Assistant Secretary, and
Mr. Swan, Controller. The directors of SCH are the same persons as the directors
of SCANA.
The current executive officers of SCHI are Mr. Timmerman, Chairman of the
Board and Chief Executive Officer; Mr. Marsh, Senior Vice President and Chief
Financial Officer; Mr. Arthur, General Counsel and Assistant Secretary; and Mr.
Swan, Controller. The directors of SCHI are Mr. Timmerman, Mr. Bennett and Peter
J. Winnington. Mr. Timmerman and Mr. Bennett are also directors of SCANA.
The directors of SCANA, SCH and SCHI, in addition to Mr. Timmerman, who
is listed above as an executive officer, are listed below along with their
business addresses and principal occupations (Mr. Winnington is a director only
of SCHI):
Name and Business or
Residence Address Principal Occupation
Bill L. Amick Chief Executive Officer,
PO Box 2309 Amick Farms, Inc., PO Box
Batesburg-Leesville, SC 29070 2309, Batesburg-Leesville, SC
29070 (vertically integrated
broiler operations)
James A. Bennett Banker, First Citizens
1225 Main St. Bank, 1230 Main St.,
Columbia, SC 29201 Columbia, SC 29201 (South
Carolina state-chartered bank)
William B. Bookhart, Jr. Partner, Bookhart Farms, Box
Box 140180 Sunset Dr. Box 140180 Sunset Dr.,
Elloree, SC 29047 Elloree, SC 29047 (general
farming business)
William C. Burkhardt Retired
3100 NE 48 St. Apt. 109
Lighthouse Point, FL 33064
Elaine T. Freeman Executive Director, ETV
401 E. Kennedy St., Ste. B-1 Endowment of South Carolina,
Spartanburg, SC 29302 Inc., 401 E. Kennedy St.,
Ste. B-1,
Spartanburg, SC 29302
(nonprofit organization)
D. Maybank Hagood President and Chief Executive
PO Box 20040 Officer, William M. Bird and
Charleston, SC 29413 Company, Inc., PO Box 20040,
Charleston, SC 29413 (wholesale
distributor of floor covering
materials)
W. Hayne Hipp Chief Executive Officer,
PO Box 502 The Liberty Corporation, 135
Greenville, SC 29602 S. Main St., Greenville, SC
29601 (broadcasting holding
company)
Lynne M. Miller Chief Executive Officer,
19111 Freedom Dr. Environmental Strategies
Reston, VA 20190 Corporation, 19111 Freedom
Dr., Reston, VA 20190
(environmental consulting and
engineering firm)
Maceo K. Sloan Chairman and Chief Executive
103 W. Main St. Officer, Sloan Financial Group,
Durham, NC 27701 Inc., 103 W. Main St.,
Durham, NC 27701 (financial
services holding company)
Harold C. Stowe President, Canal Holdings,
PO Box 260001 LLC, PO Box 260001, Conway, SC
Conway, SC 29528 29528 (forest products industry
company)
G. Smedes York President, York Properties,
PO Box 10007 Inc., PO Box 10007, Raleigh,
Raleigh, NC 27605 NC 27605 (commercial and
residential real estate
company)
Peter J. Winnington Director of Corporate Services;
PO Box 2105 Belfint Lyons & Shuman, PO Box
Wilmington, DE 19899 2105, Wilmington, DE 19899
(certified public accountants)
During the last five years, none of the Reporting Persons and, to the
knowledge of the Reporting Persons, none of the executive officers or directors
named in this Item 2 has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
All of the executive officers and directors of SCANA, SCH and SCHI are
citizens of the United States.
Item 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION.
--------------------------------------------------
On October 17, 2002 the United States Bankruptcy Court for the District
of Delaware entered an order confirming the Issuer's First Amended Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, as further revised (the
"Plan and Order"). The Plan and Order is incorporated herein as Exhibit B hereto
by reference to Exhibit 1 to the Amendment No. 2 to Form 8-A filed by the Issuer
with the Securities and Exchange Commission on October 29, 2002, and any
description thereof is qualified in its entirety by reference thereto. The Plan
and Order became effective on October 29, 2002 (the "Effective Date"). Pursuant
to the Plan and Order, (i) the Issuer's then-outstanding Common Stock was
canceled on the Effective Date and each of the holders thereof received its
proportionate share of 355,500 shares of Common Stock issued by the Issuer on
the Effective Date and (ii) the Issuer's then-outstanding preferred stock was
canceled on the Effective Date and each of the holders thereof received its
proportionate share of 144,500 shares of Common Stock issued by the Issuer on
the Effective Date.
In addition, pursuant to a stock purchase agreement (the "Purchase
Agreement") that was entered into by SCANA and the Issuer as an integral part of
the Plan and Order and subsequently amended and assigned from SCANA to SCHI, on
the Effective Date SCHI purchased, for an aggregate purchase price of
$14,907,700, 149,077 shares of the Issuer's 8% Series A Convertible Redeemable
Preferred Stock (the "Shares") and 506,861 warrants to purchase shares of Common
Stock at an initial exercise price of $5.114 per share (the "Warrants"). In
addition, SCHI received 500,000 shares of Common Stock in consideration for its
commitment to purchase the Shares and the Warrants. The Purchase Agreement is
incorporated herein as Exhibit C by reference to the "Purchase Agreement - SCANA
Corporation" section of Exhibit 3 to Exhibit 99.1 to the Current Report on Form
8-K filed by the Issuer on August 28, 2002, and the amendment to the Purchase
Agreement is attached hereto as Exhibit D. The warrants are subject to the terms
of a warrant agreement that is attached hereto as Exhibit E. The funds used by
SCHI to purchase the Shares and the Warrants were contributed to SCHI from
SCANA's funds available for investment.
Item 4. PURPOSE OF TRANSACTION.
----------------------
As described in Item 3 above, the shares of Common Stock beneficially
owned by the Reporting Persons were acquired by SCHI on the Effective Date
pursuant to the terms of the Plan and Order or the Purchase Agreement. All of
the shares beneficially owned by the executive officers and directors listed in
Item 2 hereof were received by them on the Effective Date pursuant to the terms
of the Plan and Order on account of their ownership of Common Stock immediately
before the Effective Date.
Except as set forth in this Item 4, none of the Reporting Persons and,
to the knowledge of the Reporting Persons, none of the persons listed in Item 2
hereof, has any current plans or proposals which relate to or would result in
any of the actions specified in clauses (a) through (j) of Item 4 of Schedule
13D. However, the Reporting Persons and the persons listed in Item 2 hereof may
at any time change their present intention with respect to any or all of the
matters referred to in this Item 4, and the Reporting Persons and the persons
listed in Item 2 hereof intend to regularly review their investment in the
Issuer. Based on such review, as well as other factors (including, among other
things, their evaluation of the Issuer's business, prospects and financial
condition, the market price for the Issuer's securities, other opportunities
available to them and general market, industry and economic conditions), the
Reporting Persons and the persons listed in Item 2 hereof, and/or other persons
affiliated with them, may acquire additional securities of the Issuer, or sell
some or all of their securities of the Issuer, on the open market or in
privately negotiated transactions. In addition, based on such review and/or
discussions with management of the Issuer and/or the Issuer's Board of Directors
and/or other persons, the Reporting Persons or the persons listed in Item 2
hereof may formulate plans or proposals, and may from time to time explore, or
make formal proposals relating to, a possible acquisition or restructuring of,
or a business combination involving, the Issuer. The Reporting Persons or the
persons listed in Item 2 hereof may also formulate plans or proposals for, and
may from time to time explore, or make formal proposals relating to, other
transactions or actions which relate to or would result in any of the matters
specified in clauses (a) through (j) of Schedule 13D.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
(a) Each of the Reporting Persons beneficially owns 3,681,713 shares of
Common Stock, or 7.7% of the class (based on a total of 44,750,000 shares of
Common Stock issued and outstanding as of the Effective Date), consisting of (i)
27,606 shares received on the Effective Date pursuant to the Plan and Order on
account of the Reporting Persons' ownership of Common Stock immediately before
the Effective Date, (ii) 38,404 shares of Common Stock received on the Effective
Date pursuant to the Plan and Order on account of the Reporting Persons'
ownership of the Issuer's preferred stock immediately before the Effective Date,
(iii) 2,608,841 shares issuable upon conversion of the Shares, (iv) 500,000
shares issued to SCHI in consideration for its commitment to purchase the Shares
and the Warrants and (v) 506,862 shares issuable upon exercise of the Warrants.
SCHI is the record owner of all of the foregoing shares and the Warrants, and
SCH and SCANA's beneficial ownership is attributed to them by virtue of SCH's
being the sole shareholder of SCHI and SCANA's being the sole shareholder of
SCH.
The following table presents the number of shares of Common
Stock and the percentage of class beneficially owned by each of the Reporting
Persons and each of the directors and executive officers of the Reporting
Persons.
Percent of
Name Number Class(1)
---- ------ -----------
SCANA Corporation 3,681,713 7.7%
SCANA Communications, Inc. 3,681,713 7.7%
SCANA Communications Holdings, Inc. 3,681,713 7.7%
Bill L. Amick 0 0.0%
James A. Bennett 5 *
William B. Bookhart, Jr. 0 0.0%
William C. Burkhardt 0 0.0%
Elaine T. Freeman 1 *
D. Maybank Hagood 0 0.0%
W. Hayne Hipp 0 0.0%
Lynne M. Miller 0 0.0%
Maceo K. Sloan 0 0.0%
Harold C. Stowe 14 *
G. Smedes York 0 0.0%
William B. Timmerman 11 *
Kevin B. Marsh 11 *
H. Thomas Arthur 0 0.0%
Sarena D. Burch 0 0.0%
Charles B. McFadden 20 *
James E. Swan, IV 0 0.0%
Mark R. Cannon 0 0.0%
Jimmy E. Addison 5 *
George J. Bullwinkel, Jr. 22 *
Neville O. Lorick 0 0.0%
Stephen A. Byrne 0 0.0%
Duane C. Harris 0 0.0%
Peter J. Winnington 0 0.0%
-------------------------
(1)Assumes the conversion of the Shares and the exercise of the Warrants.
*Less than one percent.
The following table presents the beneficial ownership of the shares of
Common Stock beneficially owned by the Reporting Persons and the directors and
executive officers of the Reporting Persons on the basis of whether such persons
have sole or shared power to vote and dispose of such shares:
Sole Power to Vote Shared Power to
Vote and Dispose Vote and Dispose
SCANA Corporation 0 3,681,713
SCANA Communications, Inc. 0 3,681,713
SCANA Communications Holdings, Inc. 0 3,681,713
James A. Bennett 5 0
Elaine T. Freeman 1 0
Harold C. Stowe 14 0
William B. Timmerman 11 0
Kevin B. Marsh 11 0
Charles B. McFadden 20 0
Jimmy E. Addison 5 0
George J. Bullwinkel, Jr. 22 0
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
----------------------------------------------------------------------
The Issuer, SCHI, and the other persons who purchased shares of the
Issuer's 8% Series A Convertible Redeemable Preferred Stock ("Series A
Preferred") on the Effective Date entered into a registration rights agreement
on the Effective Date which gives the holders of Series A Preferred certain
demand, piggy-back, and shelf registration rights. The registration rights
agreement is attached hereto as Exhibit F.
The Issuer's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation")gives the holders of the Issuer's 8% Series A
Convertible Redeemable Preferred Stock ("Series A Preferred") certain rights to
elect up to two directors of the Issuer. The Certificate of Incorporation is
incorporated herein as Exhibit G hereto by reference to Exhibit 2 to the
Amendment No. 2 to Form 8-A filed by the Issuer with the Securities and Exchange
Commission on October 29, 2002, and any description thereof is qualified in its
entirety by reference thereto. In connection with SCHI's purchase of the Shares,
the Issuer has undertaken, for so long as (1) SCANA or any of its subsidiaries
is a holder of Series A Preferred and (2) the holders of Series A Preferred are
entitled to elect at least one director to serve on the Issuer's board of
directors pursuant to Section 7.2(a) of the certificate of designation for the
Series A Preferred, to give SCHI, in connection with any annual meeting at which
the Issuer's stockholders will be entitled to vote for the election of
directors, with at least 30 days notice prior to the last date on which holders
of Series A Preferred would be entitled to nominate an individual for election
to the Issuer's board of directors at such annual meeting in accordance with the
Issuer's bylaws. The Issuer's undertaking is attached hereto as Exhibit H.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit A - Group Agreement (filed herewith)
Exhibit B - Findings of Fact, Conclusions of Law and Order Confirming
the Plan of Reorganization of ITC^DeltaCom, Inc., dated October 17, 2002
(including ITC^DeltaCom, Inc. First Amended Plan of Reorganization under
Chapter 11 of the Bankruptcy Code, As Further Revised, dated October 15,
2002) (incorporated by reference to Exhibit 1 to the Amendment No. 2 to
Form 8-A filed by the Issuer with the Securities and Exchange Commission on
October 29, 2002)
Exhibit C - Purchase Agreement dated as of August 22, 2002 by and
between ITC^DeltaCom, Inc. and SCANA Corporation (incorporated by reference
to the "Purchase Agreement - SCANA Corporation" section of Exhibit 3 to
Exhibit 99.1 to the Current Report on Form 8-K filed by the Issuer on
August 28, 2002)
Exhibit D - Amendment No. 1 to Purchase Agreement, dated as of October
29, 2002 by and among ITC^DeltaCom, Inc., SCANA Corporation, and SCANA
Communications Holdings, Inc. (filed herewith)
Exhibit E - Warrant Agreement (filed herewith)
Exhibit F - Registration Rights Agreement (filed herewith)
Exhibit G - Issuer's Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 2 to the Amendment No. 2 to Form 8-A
filed by the Issuer with the Securities and Exchange Commission on October
29, 2002)
Exhibit H - Letter Agreement re Notice of Shareholder Meetings (filed
herewith)
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 8, 2002
SCANA CORPORATION
By: s/James E. Swan, IV
----------------------------------------------------
James E. Swan, IV
-----------------------------------------------------
Its: Controller
-----------------------------------------------------
SCANA COMMUNICATIONS, INC.
By: s/George J. Bullwinkel
----------------------------------------------------------
George J. Bullwinkel
Its: President
SCANA COMMUNICATIONS HOLDINGS, INC.
By: s/Peter Winnington
-----------------------------------------------------
Peter Winnington
Its: Assistant Secretary and Assistant Treasurer
Exhibit A
AGREEMENT REQUIRED BY
RULE 13d-1(f)
Each of the undersigned agrees that this Schedule 13D is being filed on
behalf of each of them.
SCANA CORPORATION
By:
--------------------------------------------------------
James E. Swan, IV
-----------------------------------------------------
Its: Controller
--------------------------------------------------------
Date: November 8, 2002
SCANA COMMUNICATIONS, INC.
By:
------------------------------------------------------------------
George J. Bullwinkel
Its: President
------------------------------------------------------------------
Date: November 8, 2002
SCANA COMMUNICATIONS HOLDINGS, INC.
By:
-------------------------------------------------------------------
Peter Winnington
Its: Assistant Secretary and Assistant Treasurer
Date: November 8, 2002
EXHIBIT D
AMENDMENT NO. 1
TO
PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO PURCHASE AGREEMENT, dated as of October 29, 2002
(this "Amendment"), is made by and among ITC^DeltaCom, Inc., a Delaware
corporation (the "Company"), SCANA Corporation, a South Carolina corporation
(the "SCANA Corporation"), and SCANA Communications Holdings, Inc., a Delaware
corporation ("SCANA Communications").
WHEREAS, the parties to this Amendment wish to amend the Purchase
Agreement, dated as of August 22, 2002, between the Company and the Purchaser
(the "Agreement") upon the terms and subject to the conditions set forth in this
Amendment; and
WHEREAS, SCANA Corporation wishes to assign, and SCANA Communications
wishes to assume, all of SCANA Corporation's rights, obligations and liabilities
under the Agreement pursuant to, and in accordance with, Section 7.6 thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Amendment, the parties hereto agree as follows:
1. Defined Terms; Definitions. Capitalized terms that are used
but not defined in this Amendment shall have the meanings ascribed to such terms
in the Agreement.
2. Effective Time of Amendment. This Amendment and the terms
and provisions hereof shall become effective immediately preceding the Closing.
3. Assignment by SCANA Corporation. (a) Pursuant to, and in
accordance with, Section 7.6 of the Agreement: (i) SCANA Corporation hereby
assigns, and SCANA Communications hereby assumes, all of SCANA Corporation's
rights, obligations and liabilities under the Agreement, as amended by this
Amendment; (ii) such assignment shall not relieve SCANA Corporation of its
obligations and liabilities under the Agreement, as amended this Amendment;
(iii) SCANA Communications is hereby deemed to have made all of the
representations and warranties of the Purchaser set forth in the Agreement,
other than the representation and warranty set forth in Section 3.8(b) thereof;
and (iv) from and after the effective date of this Amendment, all references to
the Purchaser in the Agreement, as amended by this Amendment, shall be to SCANA
Communications, unless the context otherwise requires.
(b) SCANA Corporation and SCANA Communications hereby
represent and warrant to the Company that: (i)
SCANA Communications is a direct or indirect wholly owned subsidiary of SCANA
Corporation; and (ii) the consummation of the purchase of the Securities under
the Agreement, as amended by this Amendment, shall not subject the Company to
more extensive or burdensome regulation under PUHCA than the consummation of the
purchase of the Securities by SCANA Corporation.
4. Amendment to Section 1.1(d). Section 1.1(d) of the
Agreement is hereby amended by deleting the text thereof in its entirety and
substituting in lieu thereof the following:
The Preferred Shares and Warrants shall be issued at
the Closing in the ratio of one share of Series A
Preferred Stock to 3.40 Warrants.
5. Amendment of Section 3.5. Section 3.5 of the
greement is hereby amended by deleting the last sentence thereof.
------------------------
6. Amendment of Section 7.5. Section 7.5 of the
Agreement is hereby amended by deleting paragraph (c) thereof.
------------------------
7. Amendment of Table of Defined Terms. The Table of Defined
Terms is hereby amended by deleting therefrom the reference to "Separation
Date."
8. Binding Effect. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors and permitted assigns. The Agreement, as amended by
this Amendment, shall remain in full force and effect following the
effectiveness of this Amendment in accordance with Section 2 hereof.
9. Restatement of Agreement. The terms and provisions of this
Amendment may be incorporated into an amended and restated version of the
Agreement that restates, but does not further amend, the Agreement as amended by
this Amendment.
10. Counterparts. This Amendment may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all of such counterparts taken
together shall constitute one and the same Amendment.
11. Governing Law. This Amendment shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware applicable to contracts executed and to be performed wholly
within such state.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Amendment as of the date first written above.
ITC^DELTACOM, INC.
By: s/
--------------------------------------------------
Name:
------------------------------------------------
Title:
--------------------------------------
SCANA CORPORATION
By: s/
------------------------------------------
Name:
-----------------------------------------
Title:
--------------------------------------
SCANA COMMUNICATIONS HOLDINGS, INC.
By: s/
--------------------------------------------------
Name:
------------------------------------------------
Title:
--------------------------------------
EXHIBIT E
ITC/\DELTACOM, INC.
and
MELLON INVESTOR SERVICES LLC
as
WARRANT AGENT
------------------------------------------
WARRANT AGREEMENT
Dated as of October 29, 2002
TABLE OF CONTENTS
Page
----
W I T N E S S E T H: ..................................................... 1
SECTION 1. APPOINTMENT OF WARRANT AGENT ............................... 1
SECTION 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES .................. 2
2.1 Form and Dating ............................................. 2
2.2 Execution ................................................... 3
2.3 Warrant Registrar ........................................... 3
2.4 Holder Lists ................................................ 4
SECTION 3. TERMS OF WARRANTS; EXERCISE OF WARRANTS ..................... 4
SECTION 4. PAYMENT OF TAXES ............................................ 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 ................................................ 43
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-I
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.
1791 O.G. Skinner Drive
West Point, Georgia 31833
Facsimile No.: (256) 382-3936
Attention: General Counsel
If to the Warrant Agent:
33
Mellon Investor Services LLC
200 Galleria Parkway, Suite 1900
Atlanta, Georgia 30339
Attention: Client Services Manager
Fax: 770-933-8336
Attention: Relationship Manager
With a copy to:
Mellon Investor Services LLC
85 Challenger Road
Ridgefield Park, New Jersey 07660-2108
Facsimile No.: (201) 296-4004
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:
Title:
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 OWNERSHEREOF, 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 __________, 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
_________, 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 $__________ 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 __________, 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
___________, 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 _________, 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 __________, 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.
1791 O.G. Skinner Drive
West Point, GA 31833
Ladies and Gentlemen:
The undersigned (the "Purchaser") refers hereby to the Warrant
Agreement, dated as of ______________, 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.
1791 O.G. Skinner Drive
West Point, GA 31833
Ladies and Gentlemen:
The undersigned (the "Transferee") refers hereby to the Warrant
Agreement, dated as of ______________, 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
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
___________, 2002, is made among ITC^DeltaCom, Inc., a Delaware corporation (the
"Company"), SCANA Corporation, a South Carolina corporation ("SCANA"), Campbell
B. Lanier, III ("Lanier") and the other Persons listed on the signature pages
hereof.
W I T N E S S E T H:
WHEREAS, in connection with the Company's Plan of
Reorganization under Chapter 11 of the Bankruptcy Code (the "Plan"), 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)), the Company has agreed to issue and sell to the Holders (as defined
herein) (i) shares of the Series A convertible redeemable preferred stock, par
value $0.01 per share, of the Company (the "Series A Preferred Stock") and (ii)
warrants to purchase 1,013,723.6 shares of the common stock, par value $0.01 per
share, of the Company (the "Common Stock"); and
WHEREAS, in connection with and pursuant to the Plan and the
Purchase Agreements (as defined herein), the Company has agreed to grant to the
Holders the registration rights described in this Agreement with respect to the
Registrable Securities (as defined herein).
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
"Adverse Offering Effect" has the meaning specified in Section
4(h).
"Affiliate" has the meaning specified in Rule 12b-2 under the
Exchange Act.
"Amendment" has the meaning specified in Section 17.
"Blackout Period" has the meaning specified in Section 7(a).
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in The
City of New York or the State of Georgia are authorized or obligated by law or
other governmental actions to close.
"Closing Date" means the date on which the Series A Preferred
Stock and the Warrants are issued and sold by the Company pursuant to the
Purchase Agreements.
"Commitment Fee Shares" means the shares of Common Stock
issued to Lanier, SCANA and other Holders on the Closing Date pursuant to the
Purchase Agreements.
"Common Stock" has the meaning specified in the recitals to
this Agreement.
"Common Stock Registration Rights Agreement" means the
Registration Rights Agreement, dated as of the date hereof, among the Company
and the other Persons listed on the signature pages thereof.
"Company" has the meaning specified in the first paragraph of
this Agreement.
"Company Shelf Response" has the meaning specified in Section
3(b).
"Conversion Shares" means, collectively, (i) the shares of
Common Stock issued or issuable upon conversion of the Preferred Shares and (ii)
any securities paid, issued or distributed in respect of any shares of Common
Stock referred to in clause (i) by way of stock dividend or distribution or
stock split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise.
"Cutback Notice" has the meaning specified in Section 4(h).
"Demand Holders" means, (i) with respect to a registration
requested pursuant to Section 4(a), the SCANA Demand Holders and the Remaining
SCANA Holders, (ii) with respect to a registration requested pursuant to Section
4(b), the Other Demand Holders and the Remaining Other Demand Holders and (iii)
with respect to a registration requested pursuant to Section 4(c), the Shelf
Demand Holders and the Remaining Shelf Holders.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, as the same shall be in effect from
time to time. Reference to a particular section of the Securities Exchange Act
of 1934, as amended, shall include reference to the comparable section, if any,
of any such successor federal statute.
-2-
"Excluded Registration" means a registration of Common Stock
under the Securities Act pursuant to a registration statement filed (i) on Form
S-4 or Form S-8 or any successor registration forms that may be adopted by the
SEC or (ii) in connection with an exchange offer or an offering of securities
solely to existing stockholders of the Company or employees of the Company or
its subsidiaries.
"Holders" means, collectively, the holders of Registrable
Securities that have executed this Agreement as of the date hereof and, subject
to Section 15, each other Person to whom any such holder has transferred
Registrable Securities and who has agreed to become bound by the provisions of
this Agreement in accordance with Section 15, but only so long as such other
Person holds Registrable Securities.
"Initiating Securityholder" has the meaning specified in
Section 5(a).
"Lanier" has the meaning specified in the first paragraph of
this Agreement.
"Losses" has the meaning specified in Section 11(a).
"Majority of the Registrable Securities" means, as of any date
of determination with respect to the designated Holders, a majority of the
shares of Common Stock held by such Holders on an as-converted, as-exercised
basis, with the Holders of Preferred Shares and Warrants deemed to be the
Holders of the number of shares of Common Stock into which the Preferred Shares
are or would be convertible or for which the Warrants are or would be
exercisable as of such date of determination.
"NASD" means the National Association of Securities
Dealers, Inc.
"Other Demand Holders" has the meaning specified in Section
4(b).
"Other Holders" means, collectively, (i) the Persons other
than SCANA listed on the signature pages hereof on the date hereof and (ii)
subject to Section 15, each other Person to whom any of the Persons described in
clause (i) has transferred Registrable Securities and who has agreed to become
bound by the provisions of this Agreement in accordance with Section 15, but
only so long as such other Person holds Registrable Securities.
"Person" means any individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
-3-
including a government or a political subdivision or an agency or
instrumentality thereof.
"PIK Dividend Shares" means any shares of the Series A
Preferred Stock that have been issued as dividends on shares of the Series A
Preferred Stock.
"Plan" has the meaning specified in the recitals to this
Agreement.
"Plan of Distribution" has the meaning specified in Section
3(c).
"Preferred Shares" means (i) the shares of Series A Preferred
Stock issued and sold by the Company on the Closing Date pursuant to the
Purchase Agreements and (ii) any other shares of Series A Preferred Stock issued
as a dividend or other distribution with respect to, or in exchange for, or in
replacement of, the shares of Series A Preferred Stock described in clause (i)
above, including PIK Dividend Shares.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Registration Statement, and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Purchase Agreements" means, collectively, (i) the Purchase
Agreement, dated as of the date hereof, among the Company, Lanier and the other
persons listed on the signature pages thereof and (ii) the Purchase Agreement,
dated as of the date hereof, between the Company and SCANA.
"Registrable Securities" means, collectively, (i) the
Preferred Shares, (ii) the Warrants, (iii) the Conversion Shares, (iv) the
Warrant Shares and (v) the Commitment Fee Shares. Securities shall cease to be
Registrable Securities in accordance with Section 2.
"Registration Expenses" means any and all out-of-pocket
expenses incident to the Company's performance of its registration obligations
under this Agreement, including, without limitation, (i) all SEC registration
and filing fees and expenses incurred in connection with the preparation,
printing and distribution of the Registration Statement and Prospectus and any
other document or amendment thereto and the mailing and delivery of copies
thereof to the Holders and any dealers or underwriters, (ii) fees and
disbursements of the Company, including, without limitation, fees and
disbursements of counsel for the Company and of independent public accountants
and other experts of the Company, (iii) fees and expenses
-4-
in connection with the qualification of Registrable Securities for offering and
sale under state securities laws (including fees and expenses incurred in
connection with blue sky qualifications of the Registrable Securities and
including all reasonable fees and disbursements of counsel in connection with
any survey of state securities or blue sky laws and the preparation of any
memorandum thereon), (iv) fees and expenses incident to any filing with the NASD
or to securing any required review by NASD of the terms of the sale of
Registrable Securities, (v) all fees and expenses incurred in connection with
the listing of Registrable Securities on each securities exchange or automated
quotation system on which the Common Stock is then listed, (vi) the internal
expenses of the Company (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties and
expenses incurred by the Company in connection with any "road show" or marketing
presentation), (vii) with respect to each registration, up to $15,000 of the
reasonable fees and disbursements of a single counsel selected by the Holders of
a Majority of the Registrable Securities being registered incurred in connection
with the preparation and review of the Registration Statement relating to such
registration, and (viii) with respect to each registration, the reasonable fees
and disbursements of all independent public accountants (including the expenses
of any audit and/or "cold comfort" letter) and the reasonable fees and expenses
of other persons, including special experts, retained by the Company, but
excluding (x) any underwriting discounts and fees, brokerage and sales
commissions, and transfer and documentary stamp taxes, if any, relating to the
sale or disposition of the Registrable Securities and (y) any fees or
disbursements of counsel for the Holders or any Holder, other than the fees and
disbursements referred to in clause (vii) above.
"Registration Rights Period" means the period commencing on
the date of this Agreement and ending on the sixth anniversary thereof.
"Registration Statement" means any registration statement of
the Company referred to in Section 3, 4 or 5, including any Prospectus,
amendments and supplements to any such registration statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in any such registration statement.
"Remaining Other Holders" has the meaning specified in Section
4(b).
"Remaining SCANA Holders" has the meaning specified in Section
4(a).
"Remaining Shelf Holders" has the meaning specified in Section
4(c).
-5-
"Requesting Holder" has the meaning specified in Section 5(a).
"Rule 144" means Rule 144 (or any similar provisions then in
effect) promulgated by the SEC under the Securities Act.
"SCANA" has the meaning specified in the first paragraph of
this Agreement.
"SCANA Demand Holders" has the meaning set forth in Section
4(a).
"SCANA Holders" means, collectively, SCANA and, subject to
Section 15, each other Person to whom SCANA has transferred Registrable
Securities and who has agreed to become bound by the provisions of this
Agreement in accordance with Section 15, but only so long as such other Person
holds Registrable Securities.
"SEC" means the Securities and Exchange Commission.
"Section 8(e) Period" has the meaning specified in Section
8(e).
"Section 8(k) Period" has the meaning specified in Section
8(k).
"Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, as the same shall be in effect from time to
time. Reference to a particular section of the Securities Act of 1933, as
amended, shall include reference to the comparable section, if any, of any such
successor federal statute.
"Senior Common Stockholder" has the meaning specified in
Section 5(b).
"Series A Preferred Stock" has the meaning specified in the
recitals to this Agreement.
"Shelf Demand Holders" has the meaning specified in Section
4(c).
"Shelf Registration" means the registration of Registrable
Securities effected pursuant to Section 3.
"Shelf Registration Statement" means a shelf registration
statement of the Company filed pursuant to Section 3 which covers Registrable
Securities on an appropriate form under Rule 415 of the Securities Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained
-6-
therein, all exhibits thereto and all material incorporated by reference
therein.
"Shelf Resale Notice" has the meaning specified in Section
3(b).
"Similar Securities" means, in connection with any
registration of securities of the Company under the Securities Act, all
securities of the Company which are (i) the same as or similar to the securities
being registered, (ii) convertible into or exchangeable or exercisable for the
securities being registered or (iii) the same as or similar to the securities
into or for which the securities being registered are convertible or
exchangeable or exercisable.
"Suspension Period" means any period during which the offering
of Registrable Securities by any Holder under the Shelf Registration Statement
shall be suspended as a result of the occurrence of a Blackout Period, a Section
8(e) Period or a Section 8(k) Period.
"Suspension Period Notice" means a notice provided by the
Company pursuant to Section 3(b) in which the Company states that, as of the
date of such notice, there exists a Blackout Period, a Section 8(e) Period or a
Section 8(k) Period.
"Underwritten Offering" means an underwritten offering in
which securities are sold to an underwriter or underwriters, on a firm
commitment basis, for reoffering to the public.
"Warrant Shares" means, collectively, (i) the shares of Common
Stock issued or issuable upon exercise of the Warrants and (ii) any securities
paid, issued or distributed in respect of any such shares of Common Stock
referred to in clause (i) by way of stock dividend or distribution or stock
split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise.
"Warrants" means the warrants to purchase shares of the Common
Stock issued and sold pursuant to the Purchase Agreements and any warrants
issued in exchange, substitution or replacement thereof.
2. Securities Subject to this Agreement. The Registrable Securities are
the sole securities entitled to the benefits of this Agreement. For the purposes
of this Agreement, Registrable Securities held by any Holder shall cease to be
Registrable Securities (and such Holder shall cease to have any registration
rights with respect to such securities under this Agreement) on the date and to
the extent that (i) a Registration Statement covering such Registrable
Securities has been declared effective under the Securities Act and such
Registrable Securities have been disposed of
-7-
pursuant to such effective Registration Statement, (ii) such Registrable
Securities have been sold or transferred in accordance with the requirements of
Rule 144, (iii) such Registrable Securities have been otherwise transferred or
disposed of, certificates therefor not bearing a legend restricting further
transfer or disposition thereof shall have been delivered by the Company and, at
such time, subsequent transfer or disposition of such securities shall not
require registration of such securities under the Securities Act, (iv) all such
Registrable Securities may be sold or transferred by such Holder without holding
period, volume or manner of offering limitations under the Securities Act and
the rules and regulations thereunder, (v) all such Registrable Securities may be
sold or transferred by such Holder within any three-month period in accordance
with the requirements of Rule 144 or (vi) such Registrable Securities have
ceased to be outstanding.
3. Shelf Registration Statement.
(a) Within 30 days after the Closing Date, the Company shall
file with the SEC a Shelf Registration Statement relating to the offer and sale
of the Registrable Securities by the Holders from time to time and shall use its
reasonable best efforts to cause the Shelf Registration Statement to be declared
effective by the SEC as soon as reasonably practicable after filing. The Shelf
Registration Statement may also register the offering of the securities that
have shelf registration rights pursuant to the Common Stock Registration Rights
Agreement. The Company shall notify each Holder of the date on which the Shelf
Registration Statement is declared effective.
(b) If a Holder wishes to sell, transfer or otherwise dispose
of Registrable Securities pursuant to the Shelf Registration Statement, such
Holder shall deliver to the designated representative of the Company a written
notice (a "Shelf Resale Notice") of such Holder's good-faith present intention
to sell, transfer or otherwise dispose of some or all of such Holder's
Registrable Securities, and the number and type of Registrable Securities such
Holder proposes to sell, transfer or otherwise dispose of. Upon receipt of each
Shelf Resale Notice, the Company shall, no later than the second Business Day
after such Shelf Resale Notice has been given, either (i) provide a Suspension
Period Notice or (ii) give written notice (a "Company Shelf Response") to the
Holder who gave such Shelf Resale Notice stating that the prospectus relating to
the Registration Statement is current and that the Registrable Securities
covered by the Shelf Resale Notice may be resold within ten Business Days after
receipt of such Company Shelf Response. If the Company does not respond within
such three Business Days, it shall be deemed to have given a Company Shelf
Response. Any Holder who receives or is deemed to have received a Company Shelf
Response shall then have ten Business Days after receipt of such Company Shelf
Response in which to sell, transfer or otherwise dispose of the shares
-8-
subject to the Shelf Resale Notice. If such Holder does not sell, transfer or
otherwise dispose of such Registrable Securities within such period, the Holder
shall be required to deliver another Shelf Resale Notice and comply again with
the other requirements of this Section 3(b) before selling, transferring or
otherwise disposing of Registrable Securities pursuant to the Shelf Registration
Statement. All notices pursuant to this Section 3(b) shall be provided by
facsimile transmission or electronic mail delivery and confirmed by direct
telephonic communication with the Company's designated representative referred
to in Section 18.
(c) The Shelf Registration Statement shall cover the offering
and sale of the Registrable Securities only in accordance with the methods of
distribution described in Exhibit A attached to this Agreement (the "Plan of
Distribution"), which shall be included in the Prospectus forming part of the
Shelf Registration Statement. Notwithstanding the foregoing, if any Holder
wishes to effect an Underwritten Offering of Registrable Securities pursuant to
the Shelf Registration Statement, such Holder shall be required to exercise a
demand registration right pursuant to, and shall have the rights and obligations
of a Holder under, Section 4.
4. Demand Registration Rights.
(a) During the Registration Rights Period, upon the written
request of SCANA Holders holding at least a Majority of the Registrable
Securities then held by the SCANA Holders (the "SCANA Demand Holders") that the
Company effect the registration under the Securities Act of all or part of such
SCANA Demand Holders' Registrable Securities (which written request shall
specify the aggregate number of Registrable Securities requested to be
registered and the proposed method of distribution thereof), the Company shall
(i) as soon as reasonably practicable, but no later than 30 Business Days, after
its receipt of such request (or, if the Company is legally prohibited from
making such a filing, as soon thereafter as is legally permissible), file with
the SEC a Registration Statement with respect to such requested registration and
(ii) within five Business Days after its receipt of such request, notify in
writing all other SCANA Holders of such request and indicate in such notice the
planned initial filing date of such Registration Statement. Subject to reduction
pursuant to Section 4(h), such Registration Statement shall cover the
Registrable Securities requested by the SCANA Demand Holders to be registered
and such other Registrable Securities as the SCANA Holders other than the SCANA
Demand Holders shall request, by written notice to the Company given no later
than five Business Days prior to such planned initial filing date, to be
registered (such requesting other SCANA Holders collectively, the "Remaining
SCANA Holders").
-9-
(b) During the Registration Rights Period, upon the written
request of Other Holders holding at least a Majority of the Registrable
Securities then held by the Other Holders (the "Other Demand Holders") that the
Company effect the registration under the Securities Act of all or part of such
Other Demand Holders' Registrable Securities (which written request shall
specify the aggregate number of Registrable Securities requested to be
registered and the proposed method of distribution thereof), the Company shall
(i) as soon as reasonably practicable, but no later than 30 Business Days, after
its receipt of such request (or, if the Company is legally prohibited from
making such a filing, as soon thereafter as is legally permissible), file with
the SEC a Registration Statement with respect to such requested registration and
(ii) within five Business Days after its receipt of such request, notify in
writing all other Other Holders of such request and indicate in such notice the
planned initial filing date of such Registration Statement. Subject to reduction
pursuant to Section 4(h), such Registration Statement shall cover the
Registrable Securities requested by the Other Demand Holders to be registered
and such other Registrable Securities as the Other Holders other than the Other
Demand Holders shall request, by written notice to the Company given no later
than five Business Days prior to such planned initial filing date, to be
registered (such requesting other Other Holders collectively, the "Remaining
Other Holders").
(c) Upon the written request of Holders holding a Majority of
the Registrable Securities (the "Shelf Demand Holders") that the Company effect
the registration of all or part of such Shelf Demand Holders' Registrable
Securities for offer and sale in an Underwritten Offering under the Shelf
Registration Statement after it has been declared effective by the SEC (which
written request shall specify the aggregate number of Registrable Securities
requested to be so registered), the Company shall (i) as soon as reasonably
practicable, but no later than 30 Business Days, after its receipt of such
request (or, if the Company is legally prohibited from making such a filing, as
soon thereafter as is legally permissible), prepare and file with the SEC
post-effective amendments to the Shelf Registration Statement and such
amendments and supplements to the Prospectus used in connection therewith as are
reasonably required to effect such Underwritten Offering pursuant to the Shelf
Registration Statement and (ii) within five Business Days after its receipt of
such request, notify in writing all other Holders of such request and indicate
in such notice the planned initial filing date of such amendments or
supplements. Subject to reduction pursuant to Section 4(h), such Registration
Statement shall cover the Registrable Securities requested by the Shelf Demand
Holders to be registered and such other Registrable Securities as the Holders
other than the Shelf Demand Holders shall request, by written notice to the
Company given no later than five Business Days prior to such planned initial
filing date, to be registered (such requesting other Holders, collectively, the
"Remaining Shelf Holders").
-10-
(d) Notwithstanding the provisions of Section 4(a), Section
4(b) and Section 4(c), the Company shall not be required to take any
action pursuant to this Section 4:
(i) if at the date of such request (other than a request for
an Underwritten Offering made in accordance with this Section 4) the
Company shall have effective a Shelf Registration pursuant to which the
Demand Holders could effect the disposition of their Registrable
Securities according to their proposed method of distribution;
(ii) if prior to the date of a request pursuant to Section
4(a), the Company shall have effected one registration pursuant to
Section 4(a);
(iii) if prior to the date of a request pursuant to Section
4(b), the Company shall have effected one registration pursuant to
Section 4(b);
(iv) if prior to the date of a request pursuant to Section
4(c), the Company shall have effected one registration pursuant to
Section 4(c);
(v) if the Company shall have effected a registration pursuant
to this Section 4 within the 120-day period immediately preceding the
date of such request which permitted Holders to register Registrable
Securities;
(vi) if the Registrable Securities which the Company shall
have been requested to register shall have an aggregate offering price
of less than $5,000,000, unless such registration request is for all
remaining Registrable Securities held by the Holders; or
(vii) during the pendency of any Blackout Period;
provided, however, that the Company shall be permitted to satisfy its
obligations under Section 4(a) and Section 4(b) by amending (to the extent
permitted by applicable law) within 30 Business Days after a written request for
registration, any Registration Statement previously filed by the Company under
the Securities Act so that such Registration Statement (as amended) shall permit
the disposition (in accordance with the intended methods of disposition,
including, without limitation, an Underwritten Offering, specified by the
Holders as aforesaid) of all of the Registrable Securities for which a demand
for registration has been made under Section 4(a) or Section 4(b). If the
Company shall so amend a previously filed Registration Statement, it shall be
deemed to have effected a registration for purposes of this Section 4.
-11-
(e) Subject to the requirement that a request pursuant to
Section 4(c) shall only be made for an Underwritten Offering pursuant to the
Shelf Registration Statement, the Demand Holders delivering a request pursuant
to Section 4(a), Section 4(b) or Section 4(c) may distribute the Registrable
Securities covered by such demand by means of an Underwritten Offering or any
other method of distribution, as determined by the Demand Holders holding a
majority of the Demand Holders' Registrable Securities so requested to be
registered, provided, however, that, in connection with any Underwritten
Offering, the Company shall have the right to select a lead managing underwriter
or underwriters to administer such offering, which lead managing underwriter or
underwriters shall be reasonably satisfactory to the Demand Holders holding a
majority of the Demand Holders' Registrable Securities to be included in such
Registration Statement; provided, further, that the Demand Holders holding a
majority of the Demand Holders' Registrable Securities to be included in such
Registration Statement shall have the right to select a co-managing underwriter
or underwriters for such offering, which co-managing underwriter or underwriters
shall be reasonably satisfactory to the Company.
(f) Subject to Section 4(g), a registration requested pursuant
to this Section 4 shall not be deemed to be effected for purposes of this
Section 4: (i) if the Registration Statement for such registration has not been
declared effective by the SEC or become effective in accordance with the
Securities Act and the rules and regulations thereunder; (ii) in the case of a
Registration Statement which does not contemplate an Underwritten Offering, if
such Registration Statement does not remain effective for at least 120 days (or
such shorter period that will terminate when all Registrable Securities covered
by such Registration Statement have been sold or withdrawn); or (iii) in the
case of a Registration Statement which contemplates an Underwritten Offering, if
(A) such Registration Statement does not remain effective for at least 120 days
plus such longer period (not to exceed 90 days after the 120th day) as, in the
opinion of counsel for the underwriter or underwriters, is required by law for
the delivery of a Prospectus in connection with the sale of Registrable
Securities by an underwriter or dealer, or (B) the conditions to closing
specified in the applicable underwriting agreement are not satisfied by reason
of a violation or breach of such underwriting agreement or this Agreement by the
Company.
(g) Demand Holders holding a Majority of the Registrable
Securities held by Demand Holders to be included in a Registration Statement to
be filed pursuant to Section 4(a), Section 4(b) or Section 4(c) may, at any time
prior to the effective date of the Registration Statement relating to such
registration, revoke such request by providing a written notice to the Company
revoking such request. The Company shall be deemed
-12-
to have effected a registration pursuant to Section 4(a) in the case of any such
revocation, other than the first such revocation, of an offering initiated by
the SCANA Demand Holders, the Company shall be deemed to have effected a
registration pursuant to Section 4(b) in the case of any such revocation, other
than the first such revocation, of an offering initiated by the Other Demand
Holders and the Company shall be deemed to have effected a registration pursuant
to Section 4(c) in the case of any such revocation, other than the first such
revocation, of an offering initiated by the Shelf Demand Holders, unless the
revocation is based on a reasonable determination, made by Demand Holders
holding a Majority of the Registrable Securities held by Demand Holders to be
included in such Registration Statement, that there has been, since the date of
the applicable request pursuant to Section 4(a), Section 4(b) or Section 4(c), a
material adverse change in the business, financial condition, results of
operations or prospects of the Company, in general market conditions or in
market conditions for businesses in its industry generally. If any request for
registration is so revoked and the Company shall be deemed not to have effected
a registration pursuant to this Section 4, the Demand Holders and other Holders
requesting that Registrable Securities be included in such registration shall
reimburse the Company for all of its out-of-pocket expenses incurred in the
preparation, filing and processing of the related Registration Statement.
(h) In connection with any offering covered by a Registration
Statement filed pursuant to this Section 4 or any Underwritten Offering pursuant
to the Shelf Registration Statement that is initiated by the Holders, if the
lead managing underwriter (if the offering shall be an Underwritten Offering) or
Demand Holders holding a Majority of the Registrable Securities held by Demand
Holders (if the offering shall not be an Underwritten Offering) give written
notice to all Holders who have requested to include Registrable Securities in
such offering (a "Cutback Notice") that, in its or their reasonable and good
faith opinion, the Registrable Securities requested to be included in such
offering exceed the number which can be sold in such offering without being
likely to have a significant adverse effect on the offering price, timing or
distribution of the class of securities offered or the market for the securities
offered or for the Common Stock (an "Adverse Offering Effect"), then the Company
shall include in such offering only the number of Registrable Securities which,
in the good faith opinion of such underwriter or the Demand Holders holding a
Majority of the Registrable Securities held by Demand Holders, as the case may
be, can be included without having an Adverse Offering Effect. In such event,
such offering shall include, before any Company securities proposed to be
included therein by the Company or by any other holder thereof (other than the
Holders) may be included in such offering: (i) first, the Registrable Securities
that the Demand Holders propose to sell (with any reduction in such number being
allocated among the Demand Holders pro-rata on an as-converted, as-
-13-
exercised basis based on the as-converted, as-exercised number of Registrable
Securities requested by each Demand Holder to be included in such offering as of
the date of delivery of the first Cutback Notice delivered to such Demand Holder
in connection with such offering), and (ii) second, the number, if any, of
Registrable Securities requested by Holders other than Demand Holders to be
included in such offering that, in the reasonable and good faith opinion of such
lead managing underwriter or the Demand Holders holding a Majority of the
Registrable Securities held by Demand Holders, as applicable, can be sold
without having an Adverse Offering Effect or adversely affecting the success of
the offering of all the Registrable Securities that each Demand Holder desires
to sell for its own account, with such Registrable Securities allocated among
such other Holders pro-rata on an as-converted, as-exercised basis based on the
as-converted, as-exercised number of Registrable Securities requested by each
such other Holder to be included in such offering as of the date of delivery of
the first Cutback Notice delivered to such other Holder in connection with such
offering).
(i) If the Company wishes, or any holder of securities (other
than a Holder) has the right, to include shares of Common Stock or other
securities in any offering covered by a Registration Statement filed pursuant to
this Section 4 or any Underwritten Offering under the Shelf Registration
initiated by the Holders in accordance with this Agreement, there shall be
included in such offering only that number of shares of Common Stock and other
securities, if any, that the lead managing underwriter (if such offering is an
Underwritten Offering) or the Demand Holders holding a Majority of the
Registrable Securities held by Demand Holders (if such offering is not an
Underwritten Offering) shall reasonably and in good faith believe will not
adversely affect the offering price, timing or distribution of all of the
Registrable Securities that the Holders desire to sell for their own account or
otherwise have an Adverse Offering Effect. In such event, the shares of Common
Stock and other securities to be included in such offering shall consist of (i)
first, all of the Registrable Securities that the Holders propose to sell, (ii)
second, the number, if any, of shares of Common Stock or other securities the
Company proposes to sell for its own account and the number of shares of Common
Stock that the Senior Common Stockholders propose to sell pursuant to the Common
Stock Registration Rights Agreement that, in the reasonable and good faith
opinion of such lead managing underwriter or the Demand Holders holding a
Majority of the Registrable Securities held by Demand Holders, as applicable,
can be sold without having an Adverse Offering Effect or adversely affecting the
success of the offering of all the Registrable Securities that each Holder
desires to sell for its own account, such number to be allocated among the
Company and such Senior Common Stockholders in accordance with the provisions of
the Common Stock Registration Rights Agreement, and (iii) third, the number, if
any, of other shares of Common Stock and other securities requested to be
included in
-14-
such offering that, in the reasonable and good faith opinion of such lead
managing underwriter or the Demand Holders holding a Majority of the Registrable
Securities held by Demand Holders, as applicable, can be sold without having an
Adverse Offering Effect or adversely affecting the success of the offering of
all the Registrable Securities and other securities that each Holder or the
Company and the Senior Common Stockholders, as the case may be, desire to sell
for their own accounts, such other shares of Common Stock and other securities
to be allocated among the holders thereof who have requested that their shares
and other securities be so included in accordance with the provisions of their
registration rights agreements with the Company.
5. Piggy-Back Registration Rights.
(a) If, during the Registration Rights Period, the Company
shall propose to file a Registration Statement under the Securities Act relating
to the public offering of (i) Common Stock (other than in connection with an
Excluded Registration) for the Company's own account or for the account of any
holder or holders of Common Stock (including, without limitation, any Holder)
pursuant to the exercise of demand registration rights or (ii) Preferred Shares
and Warrants that constitute Registrable Securities for the account of any
Holder pursuant to Section 4(a) or Section 4(b) (each such holder referred to in
the foregoing clauses (i) and (ii), an "Initiating Securityholder"), in each
case, on a registration form and in a manner that would permit the registration
of Registrable Securities for sale to the public under the Securities Act, the
Company shall (x) give written notice at least 15 Business Days prior to the
filing thereof to each Holder, specifying the approximate date on which the
Company proposes to file such Registration Statement and advising such Holder of
its right to have any or all of the Registrable Securities of such Holder
included among the securities to be covered thereby, and (y) at the written
request of any such Holder given to the Company within 15 Business Days after
written notice from the Company has been given to the Holder, include among the
securities covered by such Registration Statement the number of Registrable
Securities which such Holder (a "Requesting Holder") shall have requested be so
included (subject, however, to reduction, in the case of a registration pursuant
to Section 4(a), Section 4(b) or Section 4(c), in accordance with Section 4(h)
and Section 4(i) or to reduction, in the case of any such other registration
described in this Section 5(a), in accordance with Section 5(b)).
(b) Each Holder wishing to include Registrable Securities
pursuant to Section 5(a) in any offering covered by a Registration Statement
filed by the Company, other than an offering covered by a Registration Statement
filed pursuant to Section 4(a) or Section 4(b) or an Underwritten Offering
pursuant to Section 4(c), shall have the right to include such
-15-
Registrable Securities in any such offering only to the extent that the
inclusion of such Registrable Securities shall not reduce the number of shares
of Common Stock or other securities to be offered and sold therein by the
Company, any Initiating Securityholder or any holder of shares of Common Stock
subject to registration rights under the Common Stock Registration Rights
Agreement that are requested to be included in such Registration Statement (each
such holder of shares of Common Stock under the Common Stock Registration Rights
Agreement, a "Senior Common Stockholder"). In connection with the inclusion of
Registrable Securities pursuant to Section 5(a) in any such offering, if the
lead managing underwriter in an Underwritten Offering delivers a Cutback Notice
to the Holders, then the Company shall include in such offering, in addition to
the securities the Company, any Initiating Securityholders or any Senior Common
Stockholder proposes to sell, only the Registrable Securities that, in the
reasonable and good faith opinion of such lead managing underwriter, can be
included without adversely affecting the offering of all of the securities that
the Company, any Initiating Securityholders or any Senior Common Stockholder
wishes to sell for its own account, such number of Registrable Securities to be
allocated on a pro rata basis among the Holders who have requested that their
Registrable Securities be so included based on the as-converted, as-exercised
number of Registrable Securities that each Holder thereof has requested to be so
included as of the date of delivery of the Cutback Notice to such Holder. No
other securities shall be included in such offering except to the extent that,
in the reasonable and good faith opinion of such lead managing underwriter, such
securities can be included without adversely affecting the offering of all of
the Registrable Securities that each of the Holders proposes to sell for its own
account in such offering.
(c) Nothing in this Section 5 shall create any liability on
the part of the Company to any Holder of Registrable Securities if for any
reason the Company shall decide not to file, or to delay the filing of, a
Registration Statement proposed to be filed under Section 5(a) or to withdraw
such Registration Statement subsequent to its filing, regardless of any action
whatsoever that a Holder may have taken, whether as a result of the issuance by
the Company of any notice hereunder or otherwise, provided, however, that the
Company shall not be relieved of its obligation hereunder to pay the
Registration Expenses in connection with any such filing or proposed filing.
(d) Any Holder participating in an Underwritten Offering by
the Company for its own account may, at its option, require that any or all of
the representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of the underwriters of such Underwritten
Offering shall also be made to and for the benefit of such Holder and that any
or all of the conditions precedent to the obligations of such underwriters
-16-
under the underwriting agreement for such Underwritten Offering shall also be
conditions precedent to the obligations of such Holder, in each case to the
extent that such agreements and conditions precedent shall reasonably be
applicable to selling stockholders in addition to such underwriters.
6. Selection of Underwriters. In connection with any Underwritten
Offering subject to registration rights hereunder, the Company shall have the
right to select a lead managing underwriter or underwriters to administer such
offering, which lead managing underwriter or underwriters shall be reasonably
satisfactory to the Holders holding a Majority of the Registrable Securities to
be included in such Registration Statement; provided, however, that the Holders
holding a Majority of the Registrable Securities to be included in such
Registration Statement shall have the right to select a co-managing underwriter
or underwriters for such offering, which co-managing underwriter or underwriters
shall be reasonably satisfactory to the Company.
7. Blackout Periods; Holdback.
(a) If the Company determines that the registration and
distribution of Registrable Securities (i) would materially impede, delay,
interfere with or otherwise adversely affect any pending financing, registration
of securities by the Company in a primary offering for its own account,
acquisition, corporate reorganization or other significant transaction involving
the Company or (ii) would require disclosure of non-public material information
that the Company has a bona fide business purpose for preserving as
confidential, as determined by the Company's Board of Directors in good faith,
the Company shall be entitled to defer the filing or effectiveness of a
Registration Statement, or to suspend the use of an effective Registration
Statement, for the shortest period of time reasonably required (each such
period, a "Blackout Period"); provided that the Company shall not be entitled to
obtain deferrals or suspensions under this Section 7(a) for more than an
aggregate of 90 days in any 12-month period or under clause (ii) of this Section
7(a) for more than 30 days on any one occasion, on more than two occasions in
any 12-month period or for more than an aggregate of 60 days in any 12-month
period. The Company shall notify each Holder of the expiration or earlier
termination of a Blackout Period and, as soon as reasonably practicable after
such expiration or termination, shall amend or supplement any effective
Registration Statement to the extent necessary to permit the Holders to resume
use thereof in connection with the offer and sale of their Registrable
Securities in accordance with applicable law.
(b) In the case of an Underwritten Offering of securities of
the Company, each Holder agrees, if requested by the lead managing
-17-
underwriter of such Underwritten Offering, that it shall not, and shall use
commercially reasonable efforts to ensure that its Affiliates do not, directly
or indirectly, sell, offer, pledge, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
warrant or right to purchase, or otherwise dispose of or transfer, or enter into
any swap or other agreement or any arrangement that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership in, any
Registrable Securities or Similar Securities held by such Holder or such
Holder's Affiliates during the period beginning seven days before, and ending 90
days (or such shorter period as may be permitted by such lead managing
underwriter) after, the effective date of the Registration Statement filed in
connection with such registration, except for Registrable Securities included in
such registration; provided, however, that the foregoing shall not prohibit any
Holder at any time from distributing Registrable Securities to any of its
Affiliates, members, partners or other equity holders. If requested by such
managing underwriter, each Holder shall enter, and shall use commercially
reasonable best efforts to ensure that all Affiliates of such Holder holding
Registrable Securities or Similar Securities enter, into a lock-up agreement
with the applicable underwriters that is consistent with the agreement in the
preceding sentence.
(c) Notwithstanding any provision of Section 7(a) or 7(b) to
the contrary, the cumulative period of any Blackout Periods pursuant to Section
7(a) and of any holdbacks pursuant to Section 7(b) shall not exceed, in the
aggregate, 97 days in any 12-month period.
(d) In the case of any Underwritten Offering of Registrable
Securities initiated by a Holder pursuant to Section 4, the Company agrees, if
requested by the lead managing underwriter of such Underwritten Offering, not to
effect (or register for sale) any public sale or distribution of any securities
which are Similar Securities for the Company's own account during the period
beginning seven days before, and ending 90 days (or such lesser period as may be
permitted by such lead managing underwriter) after, the effective date of the
Registration Statement filed in connection with such registration, except for
securities of the Company to be offered for the Company's account in such
Underwritten Offering. Notwithstanding the foregoing, the Company may effect a
public sale or distribution of Common Stock and other securities which are
Similar Securities for the Company's own account during the period described
above (A) pursuant to registrations on Forms S-4 or S-8 or any successor
registration forms or (B) as part of any registration of securities for offering
and sale to employees, directors or consultants of the Company pursuant to any
stock plan or other benefit plan arrangement. The Company agrees to use
commercially reasonable best efforts to obtain from each director or executive
officer of the Company who holds Similar Securities an agreement not to effect
any public sale or
-18-
distribution of such Similar Securities (other than any sale under Rule 144) for
the account of such director or executive officer during any period referred to
in this Section 7(d), except as part of any Underwritten Offering contemplated
in this Section 7(d).
(e) Notwithstanding any provision of Section 7(d) to the
contrary, the Company shall not be required to comply with the provisions of
Section 7(d) in connection with more than one Underwritten Offering of
Registrable Securities under the Shelf Registration Statement in any 12-month
period; provided, however, that the limitations in this Section 7(e) shall not
apply to any Underwritten Offering pursuant to a request that is treated as the
exercise of a demand registration under Section 4(a) or Section 4(b).
8. Registration Procedures. In connection with the registration
obligations of the Company under Sections 3, 4 and 5, the Company shall:
(a) prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities on any registration form adopted by
the SEC for which the Company then qualifies or which counsel for the Company
shall deem appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of distribution
thereof, and use reasonable best efforts to cause such Registration Statement to
become and remain effective;
(b) prepare and file with the SEC amendments and
post-effective amendments to such Registration Statement and such amendments and
supplements to the Prospectus used in connection therewith as may be necessary
to maintain the effectiveness of such registration or as may be required by the
rules, regulations or instructions applicable to the registration form utilized
by the Company or by the Securities Act or rules and regulations thereunder
necessary to keep such Registration Statement effective until the earlier of (i)
the date on which the Registrable Securities covered by such Registration
Statement cease to be Registrable Securities or have been sold or withdrawn and
(ii) (x) in the case of the Shelf Registration, until the third anniversary of
the date of initial effectiveness of the Shelf Registration Statement, plus any
Suspension Periods (which shall be added to such three-year period), or (y) in
the case of a Registration Statement filed pursuant to Section 4 which does not
contemplate an Underwritten Offering, for at least 120 days or (z) in the case
of a Registration Statement filed pursuant to Section 4 which contemplates an
Underwritten Offering, for at least 120 days plus such longer period (not to
exceed 90 days after the 120/th/ day) as, in the opinion of counsel for the
underwriter or underwriters of such Underwritten Offering, is required by law
for the delivery of a Prospectus in connection with the sale of Registrable
Securities by an underwriter or dealer, and cause the Prospectus as so amended
and supplemented to be filed
-19-
pursuant to Rule 424 under the Securities Act, and otherwise use reasonable best
efforts to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement until such
time as is specified in clause (i) or (ii) above, as the case may be;
(c) furnish to each Holder of such Registrable Securities such
number of copies of such Registration Statement and of each amendment and
post-effective amendment thereto, any Prospectus or Prospectus supplement and
such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities by such Holder (the
Company hereby consenting to the use (subject to the limitations set forth in
Section 9(b)) of the Prospectus or any amendment or supplement thereto in
connection with such disposition);
(d) use reasonable best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request, and to do any and all other acts and things which may be
reasonably necessary to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder, except that
the Company shall not be required for any such purpose to qualify generally to
do business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 8(d), it would not be obligated to be so qualified,
to subject itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(e) promptly notify each Holder of any such Registrable
Securities covered by such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act within the
applicable period referred to in Section 8(b), that the Company has become aware
that the Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing (the period during
which the Holders are required in such case pursuant to Section 9(b) to refrain
from effecting public sales or distributions of Registrable Securities referred
to herein as a "Section 8(e) Period"), and prepare and furnish to such Holder,
as soon as reasonably practicable, without charge to such Holder, a reasonable
number of copies of an amendment to such Registration Statement or supplement to
such related Prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such Registrable Securities, such Prospectus shall not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing;
-20-
(f) promptly notify each Holder of Registrable Securities
covered by such Registration Statement at any time,
(i) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed and, with respect to the
Registration Statement or any post-effective amendment, when the
Registration Statement or such post-effective amendment has become
effective;
(ii) of the issuance by the SEC of any stop order of
which the Company is aware suspending the effectiveness of the
Registration Statement or any order preventing the use of a related
Prospectus, or the initiation of any proceedings for such purposes; and
(iii) of the receipt of the Company of any written
notification of the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation
of any proceeding for such purpose;
(g) make available to its stockholders, as soon as reasonably
practicable, an earnings statement which shall satisfy the provisions of Section
11(a) of the Securities Act, provided that the Company shall be deemed to have
complied with this Section 8(g) if it has complied with Rule 158 under the
Securities Act;
(h) if the registration involves an Underwritten Offering,
enter into a customary underwriting agreement and in connection therewith:
(i) make such representations and warranties to the
underwriters in form, substance and scope as are customarily made by
issuers to underwriters in comparable Underwritten Offerings;
(ii) use reasonable best efforts to obtain opinions
of counsel to the Company (in form, scope and substance reasonably
satisfactory to the managing underwriters), addressed to the
underwriters, and covering the matters customarily covered in opinions
requested in comparable Underwritten Offerings;
(iii) use reasonable best efforts to obtain "cold
comfort" letters and bring-downs thereof from the Company's independent
certified public accountants addressed to the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters by independent
accountants in connection with Underwritten Offerings; and
-21-
(iv) deliver such documents and certificates as may
be reasonably requested by the managing underwriters to evidence
compliance with any customary conditions contained in the underwriting
agreement;
(i) cooperate with the Holders of Registrable Securities
covered by such Registration Statement and the managing underwriter or
underwriters or agents, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing the
securities to be sold under such Registration Statement, and enable such
securities to be in such denominations and registered in such names as the
managing underwriter or underwriters or agents, if any, or such Holders may
request;
(j) if reasonably requested by the managing underwriter or
underwriters or a Holder of Registrable Securities being sold in connection with
an Underwritten Offering, incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as the
managing underwriters and the Holders of a Majority of the Registrable
Securities being sold agree should be included therein relating to the plan of
distribution with respect to such Registrable Securities, including, without
limitation, information with respect to the principal amount of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and any other terms of the Underwritten Offering
of the Registrable Securities to be sold in such offering and make all required
filings of such Prospectus supplement or post-effective amendment upon being
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(k) in the event of the issuance of any stop order of which
the Company is aware suspending the effectiveness of the Registration Statement,
or of any order suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities included in the
Registration Statement for sale in any jurisdiction, use reasonable best efforts
to obtain at the earliest practicable time the withdrawal of such stop order or
other order (the period between the issuance and withdrawal of any stop order or
other order referred to herein as a "Section 8(k) Period");
(l) use reasonable best efforts to cause all Conversion
Shares, Warrant Shares and Commitment Fee Shares covered by such Registration
Statement to be listed on any securities exchange or automated quotation system
on which the Common Stock is then listed, if such Conversion Shares, Warrant
Shares and Commitment Fee Shares are not
-22-
already so listed and if such listing is then permitted under the rules of such
securities exchange or automated quotation system;
(m) in the case of an Underwritten Offering, cause the senior
executive officers of the Company to participate in the customary "road show"
presentations that may be reasonably requested by the lead managing underwriter
in any such Underwritten Offering and otherwise to cooperate with and
participate in customary selling efforts related thereto;
(n) upon the request of any holder, promptly amend any Shelf
Registration Statement or take such other action as may be necessary to
deregister, remove or withdraw all or a portion of the Holder's Registrable
Securities from a Shelf Registration Statement, as requested by such Holder;
(o) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Registrable Securities
and, unless such Registrable Securities shall be registered in book-entry form,
provide the applicable transfer agent and registrar for such Registrable
Securities with printed certificates for the Registrable Securities which
certificates shall be in a form eligible for deposit with The Depository Trust
Company;
(p) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by the applicable Registration
Statement from and after a date not later than the effective date of such
Registration Statement;
(q) make available upon reasonable notice at reasonable times
and for reasonable periods for inspection by one representative appointed by the
Holders of a Majority of the Registrable Securities covered by the applicable
Registration Statement, by any managing underwriter or underwriters
participating in any Underwritten Offering to be effected pursuant to such
Registration Statement, and by any attorney, accountant or other agent retained
by such Holders or any such managing underwriter, all pertinent financial and
other records, pertinent corporate documents and properties of the Company, and
cause all of the Company's officers, directors and employees and the independent
public accountants who have certified its financial statements to make
themselves available during normal business hours to discuss the business of the
Company and to supply all information reasonably requested by any such Holders
or managing underwriter or agent thereof in connection with such Registration
Statement as shall be necessary to enable such persons to exercise their due
diligence responsibility (subject to the entry by each person referred to in
this Section 8(q) into customary confidentiality agreements in a form reasonably
acceptable to the Company);
-23-
(r) if requested in writing by Holders holding a Majority of
the Registrable Securities included in such Registration Statement, prepare and
file with the SEC amendments and post-effective amendments to such Registration
Statement and amendments and supplements to the Prospectus used in connection
with such Registration Statement as shall be necessary to enable any transferee
of Registrable Securities included in such Registration Statement who becomes a
Holder under this Agreement to resell such Holder's Registrable Securities
pursuant to such Registration Statement, to the extent that such amendments,
post-effective amendments and supplements shall be required for such
transferee-Holders to be named as selling stockholders in such Registration
Statement and Prospectus; and
(s) use reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities contemplated
hereby.
9. Agreements of Holders.
(a) As a condition to the Company's obligation under this
Agreement to cause Registrable Securities of any Holder to be included in a
Registration Statement, such Holder shall timely provide the Company with all of
the information required to be provided in the Registration Statement with
respect to such Holder pursuant to Items 507 and 508 of Regulation S-K under the
Securities Act or as otherwise may reasonably be required by the Company in
connection with the Registration Statement.
(b) Each Holder shall comply with the prospectus delivery
requirements of the Securities Act in connection with the offer and sale of
Registrable Securities made by such Holder pursuant to any Registration
Statement. Upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 8(e) or Section 8(k), each Holder of
Registrable Securities shall forthwith discontinue the disposition of
Registrable Securities pursuant to the Prospectus or Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 8(e) or the
withdrawal of any stop order or other order referred to in Section 8(k), and, if
so directed by the Company, shall deliver to the Company all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities at the time of receipt of such notice.
(c) Each Holder shall effect all sales and distributions of
such Holder's Registrable Securities made pursuant to the Shelf Registration
Statement in a manner consistent with the terms of the Plan of Distribution.
-24-
(d) To the extent required by the Securities Act or rules or
regulations thereunder, as reasonably determined by the Company, a Holder shall
consent to disclosure in any Registration Statement to the effect that such
Holder is or may be deemed to be an underwriter for purposes of the Securities
Act in connection with the offering of Registrable Securities of such Holder
included in such Registration Statement.
(e) Each Holder shall comply, and shall use commercially
reasonable efforts to cause its Affiliates to comply, with Regulation M under
the Exchange Act in connection with the offer and sale of Registrable Securities
made by such Holder pursuant to any Registration Statement. Each Holder shall
provide the Company with such information about such Holder's offer and sale of
Registrable Securities pursuant to any Registration Statement as the Company
shall reasonably require to enable the Company and its Affiliates to comply with
Regulation M under the Exchange Act in connection with any such offer and sale.
10. Registration Expenses. The Company shall pay all Registration
Expenses in connection with all registrations pursuant to this Agreement to the
extent provided herein. In connection with all such registrations, each Holder
shall pay all underwriting discounts and fees, brokerage and sales commissions,
and transfer and documentary stamp taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Registration
Statement, and, except as provided in clause (vii) of the definition of
Registration Expenses, all fees and expenses of counsel to such Holder.
11. Indemnification; Contribution.
(a) The Company shall indemnify and hold harmless, to the
fullest extent permitted by law, each Holder in any offering or sale of
Registrable Securities, each Person, if any, who participates as an underwriter
in any offering and sale of Registrable Securities, and each Person, if any, who
controls such Holder or such underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and their respective directors,
trustees, officers, partners, agents, employees and affiliates against all
losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees, disbursements and expenses, as incurred, and any amounts paid
in any settlement effected with the Company's consent, which consent shall not
be unreasonably withheld or delayed) (collectively, "Losses") incurred by such
party pursuant to any actual or threatened action, suit, proceeding or
investigation arising out of or based upon: (i) any untrue or alleged untrue
statement of a material fact contained in, or any omission or alleged omission
of a material fact required to be stated in, the Registration Statement,
Prospectus or preliminary
-25-
Prospectus or any amendment or supplement to any of the foregoing or necessary
to make the statements therein (in the case of a Prospectus or a preliminary
Prospectus, in the light of the circumstances then existing) not misleading,
except in each case insofar as such statements or omissions arise out of or are
based upon (A) any such untrue statement or alleged untrue statement or omission
or alleged omission made in reliance on and in conformity with information with
respect to such Holder furnished in writing to the Company by such Holder or its
counsel expressly for use therein, (B) the use of any Prospectus after such time
as the obligation of the Company to keep effective the Registration Statement of
which such Prospectus forms a part has expired or (C) the use of any Prospectus
after such time as the Company has advised the Holders that the filing of an
amendment or supplement thereto is required, except such Prospectus as so
amended or supplemented; or (ii) any violation by the Company of any other
federal or state securities laws or regulations applicable to the Company and
relating to action required of or inaction by the Company in connection with any
such registration. Notwithstanding the foregoing provisions of this Section
11(a), the Company shall not be liable to any such Holder or underwriter or to
any other indemnified party under the indemnity agreement in this Section 11(a)
for any Losses that arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Prospectus
if either (i) (A) such Holder or underwriter failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written confirmation of the sale
of Registrable Securities by such Holder or underwriter to the Person asserting
the claim from which such Losses arise and (B) the Prospectus would have
corrected such untrue statement or alleged untrue statement or such omission or
alleged omission, or (ii) (x) such untrue statement or alleged untrue statement
or omission or alleged omission is corrected in an amendment or supplement to
the Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented as required
hereunder, such Holder or underwriter thereafter fails to deliver such
Prospectus, as so amended or supplemented, with or prior to the delivery of
written confirmation of the sale of Registrable Securities by such Holder or
underwriter to the Person asserting the claim from which such Losses arise. Such
rights to indemnity and reimbursement of expenses shall survive the transfer of
the Registrable Securities by such indemnified party.
(b) In connection with any Registration Statement filed
pursuant hereto, each Holder of Registrable Securities to be covered thereby
shall, severally and not jointly with any other Holders, indemnify and hold
harmless, to the fullest extent permitted by law, the Company, each Person, if
any, who participates as an underwriter in any offering and sale of Registrable
Securities and each Person, if any, who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act or
-26-
Section 20 of the Exchange Act, and their respective directors, trustees,
officers, partners, agents, employees and affiliates, against all Losses
incurred by such party pursuant to any actual action, suit, proceeding or
investigation arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in, or any omission or alleged omission
of a material fact required to be stated in, the Registration Statement,
Prospectus or preliminary Prospectus or any amendment or supplement to any of
the foregoing or necessary to make the statements therein (in case of a
Prospectus or preliminary Prospectus, in the light of the circumstances then
existing) not misleading, but only to the extent that any such untrue statement
or omission is made in reliance on and in conformity with information with
respect to such Holder furnished in writing to the Company by such Holder or its
counsel specifically for use therein; provided, however, that no Holder shall be
required to indemnify the Company or any other indemnified party under this
Section 11(b) with respect to any amount in excess of the amount of the total
net proceeds received by such Holder from sales of the Registrable Securities of
such Holder under such Registration Statement.
(c) Any Person entitled to indemnification hereunder agrees to
give prompt written notice to the indemnifying party after the receipt by such
indemnified party of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which such
indemnified party may claim indemnification or contribution pursuant to this
Agreement, provided that failure to give such notification shall not affect the
obligations of the indemnifying party pursuant to this Section 11 except to the
extent the indemnifying party shall have been actually and materially prejudiced
as a result of such failure. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation, unless in the
reasonable judgment of any indemnified party, based on the written opinion of
counsel, a conflict of interest is likely to exist between the indemnifying
party and such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall not be liable
for the fees and expenses of (i) more than one counsel for all Holders of
Registrable Securities who are indemnified parties, selected by the Holders of a
Majority
-27-
of the Registrable Securities who are indemnified parties (which selection shall
be reasonably satisfactory to the Company), (ii) more than one counsel for the
underwriters in an Underwritten Offering or (iii) more than one counsel for the
Company, in each case in connection with any one action or separate but similar
or related actions. An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party, based on the written opinion of counsel, a conflict of
interest is likely to exist between an indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such additional
counsel, provided that the indemnifying party shall not be liable for the fees
and expenses of (i) more than one counsel for all Holders of Registrable
Securities who are indemnified parties, selected by the Holders of a Majority of
the Registrable Securities who are indemnified parties (which selection shall be
reasonably satisfactory to the Company), (ii) more than one counsel for the
underwriters in an Underwritten Offering or (iii) more than one counsel for the
Company, in each case in connection with any one action or separate but similar
or related actions. No indemnifying party, in defense of any such action, suit,
proceeding or investigation, shall, except with the consent of each indemnified
party, consent to the entry of any judgment or entry into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such action, suit, proceeding or investigation to the extent such liability
is covered by the indemnity obligations set forth in this Section 11. No
indemnified party shall consent to entry of any judgment or entry into any
settlement without the consent of each indemnifying party.
(d) If the indemnification from the indemnifying party
provided for in this Section 11 is unavailable to an indemnified party hereunder
in respect to any Losses, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations; provided, however, that
no Holder shall be required to contribute any amount in excess of the amount of
the total net proceeds received by such Holder from sales of the Registrable
Securities of the Holder under the applicable Registration Statement. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in question,
including any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a
-28-
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the Losses referred
to above shall be deemed to include, subject to the limitations set forth in
Section 11(c), any legal or other fees and expenses reasonably incurred by such
indemnified party in connection with any investigation or proceeding. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. The parties agree that it would
not be just and equitable if contribution pursuant to this Section 11(d) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the consideration referred to in this Section 11(d). If
indemnification is available under this Section 11, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Section
11(a) or 11(b), as the case may be, without regard to the relative fault of such
indemnifying parties or indemnified party or any other equitable consideration
provided for in this Section 11(d).
(e) The provisions of this Section 11 shall be in addition to
any liability which any indemnifying party may have to any indemnified party and
shall survive the termination of this Agreement.
(f) The indemnification and contribution required by this
Section 11 shall be made by periodic payments of the amount thereof during the
course of any action, suit, proceeding or investigation, as and when invoices
are received or Losses are incurred.
12. Participation in Underwritten Offerings. No Holder of Registrable
Securities may participate in any Underwritten Offering pursuant to this
Agreement unless such Holder (i) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Company, which approval shall not be unreasonably withheld or delayed, and
(ii) completes and executes all questionnaires, powers of attorney, custody
agreements, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
13. Reports Under the Exchange Act. For so long as any Registrable
Securities remain outstanding, the Company shall use best efforts to file with
the SEC in a timely manner all reports required to be filed by the Company
pursuant to Section 13 or 15(d) of the Exchange Act and shall furnish to any
Holder, upon request by such Holder, a written
-29-
statement by the Company as to whether it has complied with the current public
information requirements of Rule 144(c) under the Securities Act.
14. No Inconsistent Agreements. The Company is not currently a party
to, and after the date hereof shall not enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Securities by
this Agreement. The Holders agree for purposes of this Section 14 that the
Common Stock Registration Rights Agreement, if executed in substantially the
form of the draft of such agreement attached hereto as Exhibit B, shall not be
inconsistent with the rights of the Holders hereunder.
15. Assignment of Registration Rights. The right to cause the Company
to register Registrable Securities pursuant to this Agreement may be assigned
(but only with all related obligations hereunder) by any Holder in connection
with a transfer of such Registrable Securities to any transferee who, after such
transfer, holds at least 5% of the then-outstanding Registrable Securities
(calculated on an as-converted, as exercised basis as set forth in the
definition of Majority of the Registrable Securities); provided that, as a
condition to the effectiveness of such assignment, such transferee shall be
required to execute a counterpart of this Agreement. Upon such transferee's
execution of such counterpart, such transferee shall be deemed to be a Holder
for all purposes of this Agreement and shall be entitled to the benefits of, and
shall be subject to the restrictions contained in, this Agreement as a Holder
hereunder to the same extent as if such transferee had originally been included
in the definition of a Holder and had originally been a party hereto.
16. Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, any Holder and any successor,
permitted assign, heir and legal representative thereof; provided, however,
that, except as provided in Section 14, this Agreement and the provisions of
this Agreement that are for the benefit of the Holders shall not be assignable
by any Holder, and any such purported assignment shall be null and void. Except
to the extent provided in Section 11, nothing in this Agreement, expressed or
implied, is intended to confer upon any Person other than the Company, the
Holders and their respective successors, permitted assigns, heirs and legal
representatives any rights, remedies, obligations or liabilities under or by
reason of this Agreement. No purchaser of Common Stock from a Holder shall be
deemed to be a successor or assignee of such Holder merely by reason of such
purchase.
17. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof (each such
amendment, modification, supplement, waiver or consent,
-30-
an "Amendment") may not be given, unless the Company has obtained the written
consent thereto of Holders of a Majority of the Registrable Securities; provided
that if any Amendment would materially and adversely affect any Holder
disproportionately relative to any other Holder or Holders, then such Amendment
shall also require the written consent of Holders holding a Majority of the
Registrable Securities held by all Holders so disproportionately affected.
Notwithstanding the foregoing, an Amendment with respect to a matter that
relates exclusively to the rights of Holders of Registrable Securities whose
securities are being included in a Registration Statement and that does not
directly or indirectly affect the rights of other Holders of Registrable
Securities shall be effective if consented to by Holders of at least a Majority
of the Registrable Securities being included in such Registration Statement;
provided that the provisions of this sentence may not be amended, modified or
supplemented, nor may waivers or departures from the provisions thereof be
given, except in accordance with the provisions of the immediately preceding
sentence. Each Holder of Registrable Securities outstanding at the time of any
such Amendment thereafter shall be bound by any such Amendment effected pursuant
to this Section 17, whether or not any notice, writing or marking indicating
such Amendment appears on the Registrable Securities or is delivered to such
Holder.
18. Notices; Designated Representative. All notices, demands, requests,
consents or other communications to be given or delivered under or by reason of
the provisions of this Agreement shall be in writing and shall be deemed to have
been given when (i) delivered personally to the recipient, (ii) sent by
confirmed facsimile or confirmed electronic mail transmission before 5:00 p.m.
New York City time on a Business Day, and otherwise on the next Business Day, or
(iii) one Business Day after being sent to the recipient by reputable overnight
courier service (charges prepaid). Such notices, demands, requests, consents and
other communications shall be sent (i) if to the Company, to ITC^DeltaCom, Inc.,
1791 O.G. Skinner Drive, West Point, Georgia 31833, Attention: General Counsel,
telecopy no.: (256) 382-3936, or to such other address as the Company shall
designate in writing to the Holders from time to time, and (ii) if to any
Holder, to such Holder at the address of such Holder set forth on the signature
pages hereto, or to such other address of any Holder as such Holder shall
designate in writing to the Company from time to time. The designated
representative of the Company shall initially be its General Counsel or such
other person as the Company shall designate in writing to the Holders from time
to time.
19. Headings. The headings contained in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
-31-
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
21. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS
PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES
WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE UNITED STATES OF AMERICA LOCATED IN THE COUNTY OF NEW YORK FOR ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY ACTION OR PROCEEDING
RELATING THERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY
PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE
ADDRESS SET FORTH IN SECTION 18 SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
ACTION OR PROCEEDING BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING
OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE STATE OF NEW YORK OR THE
UNITED STATES OF AMERICA LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
22. Termination. This Agreement shall terminate with respect to any
Holder upon the earlier to occur of (i) the expiration of the Registration
Rights Period or (ii) the date on which such Holder no longer holds any
Registrable Securities, except for any liabilities or obligations under Sections
10 and 11, which shall remain in effect in accordance with their terms. No
termination of any provision of this Agreement shall relieve any party of any
liability for any breach of such provision occurring prior to such termination.
23. Entire Agreement. This Agreement is intended by the parties to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities. Except as provided in the Plan, the Purchase Agreements and in the
instruments authorizing or evidencing the Preferred Shares and the
-32-
Warrants, there are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein, with respect to the registration
rights granted by the Company with respect to the Registrable Securities. This
Agreement supersedes all prior agreements and undertakings among the parties
with respect to such registration rights. No party hereto shall have any rights,
duties or obligations other than those specifically set forth in this Agreement.
24. Specific Performance. Without limiting the rights of each party
hereto to pursue all other legal and equitable rights available to such party
for any other parties' failure to perform their obligations under this
Agreement, the parties hereto acknowledge and agree that the remedy at law for
any failure to perform their obligations hereunder would be inadequate and that
each of them, respectively, to the extent permitted by applicable law, shall be
entitled to specific performance, injunctive relief or other equitable remedies
in the event of any such failure, without bond or other security being required.
25. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the parties
shall negotiate in good faith with a view to the substitution therefor of a
suitable and equitable solution in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid provision, provided,
however, that the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not
be in any way impaired thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law.
[Signature pages follow]
-33-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the first paragraph hereof.
COMPANY:
ITC/\DELTACOM, INC.
By: s/
--------------------------------
Name:
--------------------------------
Title:
-----------------------------
HOLDERS:
SCANA COMMUNICATIONS HOLDINGS, INC.
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
BRINDLEE CAPITAL LLC
By: s/
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
Address for Notices:
BROWN INVESTMENT
PARTNERS, L.P.
By: s/
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
Address for Notices:
THE BURTON PARTNERSHIP,
LIMITED PARTNERSHIP
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
THE BURTON PARTNERSHIP
(QP), L.P.
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
s/
Ellen L. Collins
Address for Notices:
s/
--------------------------------------------
Henry E. Crosby, Jr.
Address for Notices:
CT COMMUNICATIONS
NORTHEAST, INC.
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
s/
Kelly M. Hawk
Address for Notices:
s/
Carroll Lanier Hodges
Address for Notices:
CAMPBELL B, LANIER, III
CHARITABLE REMAINDER TRUST
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
s/
Campbell B. Lanier, IV
Address for Notices:
1997 TRUST FBO CAMPBELL B. LANIER, IV
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
1999 TRUST FBO CAMPBELL B. LANIER, IV
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
s/
David Gaines Lanier
Address for Notices:
s/
Elizabeth Walker Lanier
Address for Notices:
s/
James Smith Lanier II
Address for Notices:
s/
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
s/
John T. Lanier
Address for Notices:
s/
Elizabeth L. Lester
Address for Notices:
s/
Foster McDonald
Address for Notices:
s/
Wesley L. McDonald
Address for Notices:
NORTH STATE TELEPHONE
COMPANY
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
s/
--------------------------------------------
William H. Scott, III
Address for Notices:
s/
Douglas A. Shumate
Address for Notices:
UBS WARBURG LLC
By: s/
--------------------------------
Name:
---------------------------------------
Title:
-----------------------------
Address for Notices:
PLAN OF DISTRIBUTION
Securities may be sold or distributed from time to time by the selling
stockholders named in this prospectus and, to the extent permitted by their
registration rights agreement with the Company, by their donees or transferees
and their other successors in interest. The selling stockholders may sell their
securities at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices, or at fixed prices, which
may be changed. Each selling stockholder reserves the right to accept or reject,
in whole or in part, any proposed purchase of securities, whether the purchase
is to be made directly or through agents.
The selling stockholders may offer their securities at various times in
one or more of the following transactions:
. in ordinary brokers' transactions and transactions in which
the broker solicits purchasers;
. in transactions involving cross or block trades or otherwise
on the Nasdaq National Market or any national securities exchange on which the
Common Stock is listed;
. in transactions "at the market" to or through market makers
in the common stock or into an existing market for the common stock;
. in other ways not involving market makers or established
trading markets, including direct sales of the securities to purchasers or sales
of the securities effected through agents;
. through transactions in options, swaps or other derivatives
which may or may not be listed on an exchange;
. in privately negotiated transactions; or
. in a combination of any of the foregoing transactions.
The selling stockholders also may sell their securities in
accordance with Rule 144 under the Securities Act.
From time to time, one or more of the selling stockholders may pledge
or grant a security interest in some or all of the securities owned by them. If
the selling stockholders default in performance of their secured obligations,
the pledgees or secured parties may offer and sell the securities from time to
time by
this prospectus. The selling stockholders also may transfer and donate
securities in other circumstances. The amount of securities beneficially owned
by selling stockholders will decrease as and when the selling stockholders
transfer or donate their securities or default in performing obligations secured
by their securities. The plan of distribution for the securities offered and
sold under this prospectus will otherwise remain unchanged, except that the
transferees, donees, pledgees, other secured parties or other successors in
interest will be selling stockholders for purposes of this prospectus.
A selling stockholder may enter into hedging transactions with
broker-dealers. A selling stockholder also may enter into option or other
transactions with broker-dealers that involve the delivery of securities to the
broker-dealers, who may then resell or otherwise transfer such securities. In
addition, a selling stockholder may loan or pledge securities to a
broker-dealer, which may sell the loaned securities or, upon a default by the
selling stockholder of the secured obligation, may sell or otherwise transfer
the pledged securities.
The selling stockholders may use brokers, dealers, underwriters or
agents to sell their securities. The persons acting as agents may receive
compensation in the form of commissions, discounts or concessions. This
compensation may be paid by the selling stockholders or the purchasers of the
securities of whom such persons may act as agent, or to whom they may sell as
principal, or both. The compensation as to a particular person may be less than
or in excess of customary commissions. The selling stockholders and any agents
or broker-dealers that participate with the selling stockholders in the offer
and sale of the securities may be deemed to be "underwriters" within the meaning
of the Securities Act. Any commissions they receive and any profit they realize
on the resale of the securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Neither we nor any selling
stockholders can presently estimate the amount of such compensation.
If a selling stockholder sells securities in an underwritten offering,
the underwriters may acquire the securities for their own account and resell the
securities from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. In such event, we will set forth in a supplement to this
prospectus the names of the underwriters and the terms of the transactions,
including any underwriting discounts, concessions or commissions and other items
constituting compensation of the underwriters and broker-dealers. The
underwriters from time to time may change any public offering price and any
discounts, concessions or commissions allowed or reallowed or paid to
broker-dealers. Unless otherwise set forth in a supplement, the obligations of
the underwriters to purchase the securities will be subject to certain
conditions, and the underwriters will be obligated to purchase all of the
securities specified in the supplement if they purchase any of the securities.
-2-
We have informed the selling stockholders that during such time as they
may be engaged in a distribution of the securities, they are required to comply
with Regulation M under the Securities Exchange Act. With exceptions, Regulation
M prohibits any selling stockholder, any affiliated purchasers and other persons
who participate in such a distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase, any security which is
the subject of the distribution until the entire distribution is complete.
This offering by any selling stockholder will terminate on the date
specified in the selling stockholder's registration rights agreement with the
Company, or, if earlier, on the date on which the selling stockholder has sold
all of such selling stockholder's securities.
-3-
EXHIBIT H
LETTER AGREEMENT RE NOTICE OF SHAREHOLDER MEETINGS
October 29, 2002
BY TELECOPY AND FEDERAL EXPRESS
SCANA Communications Holdings, Inc.
1426 Main Street
Columbia, South Carolina 29201
Attention: General Counsel
Telecopy No.: (803) 217-9336
Re: ITC^DeltaCom, Inc. (the "Company") - Notice of Annual Meetings
Gentlemen:
We refer to Section 7.2(a) of the Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of 8% Series A Convertible Redeemable Preferred Stock and Qualifications,
Limitations and Restrictions Thereof, as filed by the Company with the Secretary
of State of the State of Delaware on the date hereof (the "Series A Certificate
of Designation"). Capitalized terms used but not defined herein have the
meanings ascribed to such terms in the Series A Certificate of Designation.
For so long as (1) SCANA Corporation or any subsidiary of SCANA
Corporation is a Holder of the Series A Preferred Stock and (2) the Holders of
the Series A Preferred Stock are entitled to elect at least one director to
serve on the Board of Directors pursuant to Section 7.2(a) of the Series A
Certificate of Designation, the Company hereby undertakes to provide you, in
connection with any annual meeting at which the Company's stockholders will be
entitled to vote for the election of directors, with at least 30 days notice
prior to the last date on which Holders would be entitled to nominate an
individual for election to the Board of Directors at such annual meeting in
accordance with the Company's bylaws.
Very truly yours,
ITC^DeltaCom, Inc.
s/
J. Thomas Mullis
Senior Vice President-
Legal and Regulatory