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Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
SERIES G PREFERRED STOCK
OF
FIBERNET TELECOM GROUP, INC.
(a Delaware corporation)
The undersigned natural persons of age at least 18 years of age,
Michael S. Liss and Roy (Trey) D. Farmer III, being the President and Secretary,
respectively, of FiberNet Telecom Group, Inc., a corporation organized and
existing under the laws of the State of Delaware, on behalf of said corporation,
hereby certify as follows:
FIRST: The name of the corporation (hereinafter the "Corporation") is
FiberNet Telecom Group, Inc.
SECOND: The Certificate of Designations of the Series G Preferred
Stock, $.001 par value, of the Corporation attached hereto as Exhibit A
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("Certificate of Designation") was duly adopted in accordance with Sections
141(f) and 151 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, we have executed this Certificate of Designation
this 30/th/ day of June, 2000.
/s/______________________________________
Michael S. Liss
President
/s/______________________________________
Roy (Trey) D. Farmer III
Secretary
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Exhibit A
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SERIES G PREFERRED STOCK
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1. Authorized Shares.
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2,000,000 shares of Series G Preferred Stock, $.001 par value ("Series
G Preferred Stock") of the Corporation have been authorized by the Corporation
for issuance.
2. Dividends.
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(a) The holders of Series G Preferred Stock shall be entitled to
receive (i) dividends at the rate of 8% per annum (payable semi-annually) of the
Base Amount (as adjusted from time to time as provided below) for each 12-month
period (or portion thereof) ending December 31, calculated on the basis of a
year of 360 days comprised of twelve 30-day months; and (ii) if a dividend
(other than a dividend payable in shares of Common Stock) is declared during
such semi-annual period on the Common Stock, (or any class thereof), subject to
the approval or consent of the holders of the Series G Preferred Stock as
provided in Section 4 hereof, an amount per share equal to the aggregate amount
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of dividends declared with respect to that number of shares of the Common Stock
into which the Series G Preferred Stock then outstanding shall then be
convertible pursuant to Section 5 hereof, divided by the number of shares of the
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Series G Preferred Stock then outstanding (together with the rate contained in
Section 2(a)(i), the "Dividend Rate") The "Base Amount" shall initially be
$10.00 per share of the Series G Preferred Stock, in respect of which the
dividend is being calculated. Such dividends shall be payable at the option of
the Corporation in cash or in lieu of such cash payment by issuance of shares of
Series G Preferred Stock to holders of Series G Preferred Stock; provided,
however, that all accrued but unpaid dividends on the Series G Preferred Stock
must be paid, in arrears, in cash, before payment of any cash dividends on any
other series or class of capital stock of the Corporation.
(b) Dividends on a share of Series G Preferred Stock shall
accrue and be cumulative from and after the Original Issuance Date up to the
first to occur of (i) a Liquidation or (ii) the conversion of such share of
Series G Preferred Stock into Common Stock. Dividends shall be payable semi-
annually when, as and if declared by the Board of Directors of the Corporation,
on June 30 and December 31 of each year (each, a "Dividend Reference Date"),
commencing on .December 31, 2000. In the event that the full amount of a
dividend in respect of any share of Series G Preferred Stock is not paid during
any such six-month period or portion thereof, the Base Amount shall be increased
by the amount of the dividend not paid, effective as of the immediately
succeeding July 1 or January 1, as applicable. To the extent not paid on any
such Dividend Reference Date, all dividends which have accrued on each share of
Series G Preferred Stock outstanding during the six-month period (or other
period in the case of the initial Dividend Reference Date) ending upon such
Reference Date shall be accumulated and shall remain accumulated dividends with
respect to such share of Series G Preferred Stock until paid to the holder
thereof. If any Dividend Reference Date occurs on a day other than a Business
Day, any dividends otherwise payable on such Dividend Reference Date shall be
paid on the next Business Day. Dividends shall be paid to the holders of record
of the Series G Preferred Stock as
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their names shall appear on the share register of the Corporation on the record
date for such dividend.
(c) If the Corporation pays less than the total amount of
dividends then accrued on the Total Preferred Stock, such cash payment or
issuance of shares of Total Preferred Stock shall be made on a pari passu basis
pro rata among the holders of the Total Preferred Stock based upon the aggregate
accrued but unpaid dividends on the shares of the Total Preferred Stock held by
each such holder. If and when any shares of Total Preferred Stock are issued
under this Section 1(c) for payment of accrued dividends, such shares of Total
Preferred Stock shall be deemed to be validly issued and outstanding and fully
paid and nonassessable. After payment of all dividends owing to the holders of
Total Preferred Stock, such holders shall share ratably (on an as if converted
basis) in any dividends thereafter paid on the Common Stock.
(d) In the event the Corporation shall fail to pay in full all
accrued dividends on all shares of the Total Preferred Stock, then the
Corporation shall not thereafter declare or pay or set apart for payment any
dividend or other distribution upon, or purchase, redeem, or acquire for
consideration, any shares of Common Stock or any other stock ranking on a parity
with or junior to the Total Preferred Stock as to dividends.
(e) Notwithstanding anything to the contrary in this Certificate
of Designation, in the event any conversion (including into Common Stock),
redemption or liquidation occurs as of a date other than a Dividend Reference
Date, the holder of Series G Preferred Stock shall be paid a pro rata dividend
equal to the dividend payable for that six month period ending upon the Dividend
Reference Date multiplied by a fraction, the numerator of which is the number of
days that have elapsed since the last payment on a Dividend Reference Date and
the denominator of which is the number of days contained between the applicable
Dividend Reference Dates.
(f) The amount of any dividends accrued on any share of the
Series G Preferred Stock on any Dividend Reference Date shall be deemed to be
the amount of any unpaid dividends accumulated thereon to and including such
Dividend Reference Date, whether or not earned or declared. The amount of
dividends accrued on any share of the Series G Preferred Stock on any date other
than a Dividend Reference Date shall be deemed to be the sum of (i) the amount
of any unpaid dividends accumulated thereon to and including the last preceding
Dividend Reference Date, whether or not earned or declared, and (ii) an amount
determined by multiplying (x) the greater of the Dividend Rates by (y) a
fraction, the numerator of which shall be the number of days from the last
preceding Dividend Reference Date to and including the date on which such
calculation is made and the denominator of which shall be the number of days
contained between the applicable Dividend Reference Dates.
(g) Immediately prior to authorizing or making any distribution
in redemption or liquidation with respect to the Series G Preferred Stock (other
than a purchase or acquisition of Series G Preferred Stock pursuant to a
purchase or exchange offer made on the same terms to holders of all Total
Preferred Stock), the Board of Directors of the Corporation shall, to the extent
of any funds legally available therefor, declare a dividend in cash on the
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Series G Preferred Stock payable on the distribution date in an amount equal to
any accrued and unpaid dividends on the Series G Preferred Stock as of such
date.
3. Liquidation.
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(a) Upon a Liquidation, after payment or provision for payment
of the debts and other liabilities of the Corporation, the holders of Series G
Preferred Stock shall be entitled to receive, pro rata on a pari passu basis
with holders of the Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock, out of the remaining assets of the
Corporation available for distribution to its stockholders, with respect to each
share of the Series G Preferred Stock, an amount equal to the Liquidation Amount
for each such share of Series G Preferred Stock before any distribution shall be
made to the holders of the Common Stock or any other class of capital stock of
the Corporation ranking junior to the Total Preferred Stock. If upon any
Liquidation the assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay the holders of Total Preferred Stock
the full Liquidation Amount for each such series of Total Preferred Stock to
which they shall be entitled, the holders of each such series of Total Preferred
Stock shall share in any distribution of assets in accordance with such full
Liquidation Amount (pro rata on a pari passu basis in accordance with the total
Liquidation Amount for each such series of Total Preferred Stock that each such
holder would have received had there been such sufficient assets). After the
payment of the full Liquidation Amount for each such series of Preferred Stock
to the holders of Preferred Stock, such holders of Preferred Stock shall share
ratably (on an as if converted basis as adjusted for stock splits, stock
dividends, combinations, recapitalizations and other events) with the holders of
Common Stock in all remaining assets of the Corporation available for
distribution to its stockholders; provided, that in no event will the holders of
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Preferred Stock receive upon a Liquidation more than the greater of the
Liquidation Amount per share or the amount per share such holders would have
been entitled to receive if such shares of Preferred Stock had been converted
into Common Stock immediately prior to the Liquidation.
(b) Except with respect to holders that elect to convert their
shares of Series G Preferred Stock into Common Stock, for purposes of this
Section 3, the holders of a majority of the Series G Preferred Stock may elect
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to treat a Sale of the Corporation as a Liquidation.
(c) The Corporation shall provide written notice to each holder
of Series G Preferred Stock at least 20 days prior to any event of Liquidation
or Sale of the Corporation. By giving written notice to the Corporation prior to
any Liquidation or Sale of the Corporation, the holders of Series G Preferred
Stock may, at their option, elect to forego their preference for Liquidation and
have their shares of Series G Preferred Stock converted into Common Stock
immediately prior to the event of Liquidation or Sale of the Corporation.
4. Voting Rights.
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(a) Prior to the conversion of Series G Preferred Stock, the
Series G Preferred Stock shall not be entitled to any vote and the holders
thereof shall not be entitled to vote as stockholders of the Corporation, except
as set forth in paragraph (b) of this Section 4.
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(b) So long as at least twenty-five percent (25%) of the shares
of Series G Preferred Stock are outstanding, the Corporation shall not, without
first obtaining the approval (by vote or written consent) of the holders of at
least a majority of the shares of Series G Preferred Stock then outstanding,
voting as a separate class, take any action to:
(i) be merged with or into any other corporation or
entity;
(ii) sell all or substantially all of its assets to any
third party;
(iii) authorize, designate or issue any shares of a new
class or series of equity securities senior to the Series G Preferred Stock as
to liquidation preference, redemption or dividends;
(iv) repurchase, redeem or retire any shares of Series G
Preferred Stock or other stock ranking as to redemption, conversion, payment of
dividends or distribution of assets on a parity with the Series G Preferred
Stock ("Parity Stock"), except pursuant to any provision of this Certificate of
Designation;
(v) repurchase, redeem or retire any shares of Common
Stock or any other shares of stock of any class of the Corporation, whether or
not presently authorized, ranking as to redemption, conversion, payment of
dividends or distribution of assets junior to the Series G Preferred Stock
("Junior Stock");
(vi) amend the Certificate of Incorporation of the
Corporation or this Certificate of Designation in any manner adverse to the
holders of the Series G Preferred Stock (it being understood and agreed that the
amendment of the Certificate of Incorporation for the purpose of authorizing or
issuing securities with rights and preferences junior or pari passu with the
rights and preferences of the Preferred Stock shall not be deemed to be adverse
to the Purchaser);
(vii) increase or decrease the authorized number of shares
of Series G Preferred Stock or any other series of preferred stock; or
(viii) authorize or pay any dividend or other distribution
(other than dividends payable to the holders of Series G Preferred Stock as
contemplated by Section 2) with respect to the Preferred Stock or the Common
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Stock.
5. Conversion.
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(a) Upon the terms set forth in this Section 5, each holder of
each share of Series G Preferred Stock shall have the right, at such holder's
option, at any time and from time to time, to convert such share into the number
of fully paid and nonassessable shares of Common Stock equal to the quotient
obtained by dividing (A) the Liquidation Amount for the Series G Preferred Stock
by (B) the Conversion Price (as defined below) for the Series G Preferred Stock,
as last adjusted for stock splits, stock dividends, combinations,
recapitalizations and other events, and then in effect, by surrender of the
certificate representing such share. The conversion price per share at which
shares of Common Stock shall be issuable upon conversion of shares of Series
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G Preferred Stock shall be $10.00 for the Series G Preferred Stock, as adjusted
pursuant to Section 5(f) below (the "Conversion Price"). The holder of any
shares of Series G Preferred Stock may exercise the conversion right pursuant to
this Section 5(a) by delivering to the Corporation the certificate for the
shares to be converted, duly endorsed or assigned in blank or to the Corporation
(if required by it), accompanied by written notice stating that the holder
elects to convert such shares and stating the name or names (with address) in
which the certificate or certificates for the shares of Common Stock are to be
issued. Conversion shall be deemed to have been effected on the date when such
delivery is made or upon the consummation of a Qualified Public Offering as
provided below, if applicable (in each such case, the "Conversion Date"). The
Corporation shall give holders of Series G Preferred Stock reasonable prior
notice of a Sale of the Corporation, including the price and material terms and
conditions thereof, in other to provide such holders a reasonable opportunity to
consider whether to convert the Series G Preferred Stock into Common Stock at or
prior to such Sale of the Corporation.
(b) Upon the consummation of a Qualified Public Offering, each
share of Series G Preferred Stock shall automatically be converted to that
number of fully paid and nonassessable shares of Common Stock equal to the
quotient obtained by dividing (A) the Liquidation Amount for the Series G
Preferred Stock for the share being converted by (B) the applicable Conversion
Price, as last adjusted for stock splits, stock dividends, combinations,
recapitalizations and other events, and then in effect.
(c) As promptly as practicable after the conversion of any
shares of Preferred Stock into Common Stock under Section 5(a), 5(b) or 5(c)
above, the Corporation shall issue and deliver upon the written order of such
holder, to the place designated by such holder, a certificate or certificates
for the number of full shares of Common Stock to which such holder is entitled,
and a cash amount in respect of any fractional interest in a share of Common
Stock as provided in Section 5(e) below. The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a stockholder of record on the Conversion Date unless the transfer
books of the Corporation are closed on that date, in which event such person
shall be deemed to have become a stockholder of record on the next succeeding
date on which the transfer books are open, but the Conversion Price shall be
that in effect on the Conversion Date, and the rights of the holder of the
shares of Preferred Stock so converted shall cease on the Conversion Date. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Preferred Stock surrendered for conversion, the
Corporation shall issue and deliver, upon the written order of the holder of the
certificate so surrendered for conversion, to the place designated by such
holder, at the expense of the Corporation, a new certificate covering the number
of shares of Preferred Stock representing the unconverted portion of the
certificate so surrendered.
(d) Upon conversion, the Corporation will not be obligated to
issue fractional shares of its Common Stock and shall distribute cash in lieu of
such fractional shares. The number of full shares of Common Stock issuable upon
conversion of each such the Series G Preferred Stock shall be computed on the
basis of the aggregate number of shares of the Series G Preferred Stock to be
converted. If fractional shares of Common Stock which would otherwise be
issuable upon conversion of any such share are not issued, the Corporation shall
pay a cash adjustment in respect of such fractional interest in an amount equal
to the product of (i) the price of one share of Common Stock as determined in
good faith by the Board and (ii) such fractional
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interest. The holders of fractional interests shall not be entitled to any
rights as stockholders of the Corporation in respect of such fractional
interests.
(e) The Conversion Price for each share of Series G Preferred
Stock shall be subject to adjustment from time to time as follows:
(i) If the Corporation shall, at any time or from time
to time after the Original Issuance Date issue any shares of Common Stock
(or be deemed to have issued shares of Common Stock as provided herein),
other than Excluded Stock, without consideration or for a consideration per
share less than the applicable Conversion Price, then (x) with respect to
any such issuance prior to completion of a Qualified Public Offering
(including any shares issued in such Qualified Public Offering), the
applicable Conversion Price as in effect immediately prior to each such
issuance shall forthwith be lowered to a price equal to the issuance,
conversion, exchange or exercise price, as applicable, of any such
securities so issued and (y) with respect to any issuance after the
completion of a Qualified Public Offering, the applicable Conversion Price,
as in effect immediately prior to each such issuance, shall forthwith be
lowered in accordance with Section 5(e)(ii) below.
(ii) If the Corporation shall, at any time or from time
to time after the Original Issuance Date, issue any shares of Common Stock
(or be deemed to have issued shares of Common Stock as provided herein),
other than Excluded Stock, without consideration or for a consideration per
share less than the applicable Conversion Price, and in accordance with the
provisions in Section 5(e)(i) above, then the applicable Conversion Price
of each such series of Preferred Stock, as in effect immediately prior to
each such issuance, shall forthwith be lowered to a price equal to the
quotient obtained by dividing:
(A) an amount equal to the sum of (x) the total
number of shares of Common Stock outstanding on a fully-diluted basis
immediately prior to such issuance, multiplied by the applicable Conversion
Price in effect immediately prior to such issuance, and (y) the
consideration received by the Corporation upon such issuance; by
(B) the total number of shares of Common Stock
outstanding on a fully-diluted basis immediately after the issuance of such
Common Stock.
(iii) For the purposes of any adjustment of the
applicable Conversion Price pursuant to clauses (i) and (ii) above, the
following provisions shall be applicable:
(A) In the case of the issuance of Common Stock
for cash in a public offering or private placement, the consideration shall
be deemed to be the amount of cash paid therefor after deducting therefrom
any discounts, commissions or placement fees payable by the Corporation to
any underwriter or placement agent in connection with the issuance and sale
thereof.
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(B) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the Fair Value Per Share thereof
notwithstanding any accounting treatment.
(C) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock, or options to purchase
or rights to subscribe for such convertible or exchangeable securities
except for options to acquire Excluded Stock:
(1) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of such options to purchase
or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner
provided in Sections 5(e)(iii) (A) and 5(e)(iii)(B) above), if any,
received by the Corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options or
rights for the Common Stock covered thereby;
(2) the aggregate maximum number of shares
of Common Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange thereof
shall be deemed to have been issued at the time such securities,
options, or rights were issued and for a consideration equal to the
consideration received by the Corporation for any such securities and
related options or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be
determined in the manner provided in Sections 5(e)(iii)(A) and
5(e)(iii)(B) above);
(3) on any change in the number of shares or
exercise price of Common Stock deliverable upon exercise of any such
options or rights or conversions of or exchanges for such securities,
other than a change resulting from the antidilution provisions
thereof, the Conversion Price shall forthwith be readjusted to the
Conversion Price as would have been obtained had the adjustment made
upon the issuance of such options, rights or securities not converted
prior to such change or options or rights related to such securities
not converted prior to such change been made upon the basis of such
change; and
(4) on the expiration of any such options or
rights, the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price shall forthwith be
readjusted to the Conversion Price as would
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have been obtained had the adjustment made upon the issuance of such
options, rights, securities or options or rights relaxed to such
securities been made upon the basis of the issuance of only the number
of shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities,
or upon the exercise of the options or rights related to such
securities and subsequent conversion or exchange thereof.
(iv) If, at any time after the Original Issuance Date, the
number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock, then, following the record date for the
determination of holders of Common Stock entitled to receive such stock
dividend, subdivision or split-up, the Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of Preferred Stock shall be increased
in proportion to such increase in outstanding shares.
(v) If, at any time after the Original Issuance Date, the
number of shares of Common Stock outstanding is decreased by a combination
of the outstanding shares of Common Stock, then, following the record date
for such combination, the Conversion Price shall be appropriately increased
so that the number of shares of Common Stock issuable on conversion of each
share of Preferred Stock shall be decreased in proportion to such decrease
in outstanding shares.
(vi) In the event of any capital reorganization of the
Corporation, any reclassification of the stock of the Corporation (other
than a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or any consolidation or merger of the
Corporation, each share of Series G Preferred Stock shall after such
reorganization, reclassification, consolidation, or merger be convertible
into the kind and number of shares of stock or other securities or property
of the Corporation or of the corporation resulting from such consolidation
or surviving such merger to which the holder of the number of shares of
Common Stock deliverable (immediately prior to the time of such
reorganization, reclassification, consolidation or merger) upon conversion
of such share of Series G Preferred Stock would have been entitled upon
such reorganization, reclassification, consolidation or merger. The
provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations or mergers.
(vii) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of at
least .1% in such Conversion Price; provided, that any adjustments not
required to be made by virtue of this sentence shall be carried forward and
taken into account in any subsequent adjustments. All calculations under
Sections 5(e)(i) through 5(e)(vi) above shall be made to the nearest one
hundredth (1/100) of a cent or the nearest one tenth (1/10) of a share, as
the case may be.
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(viii) In any case in which the provisions of this Section
5(e) shall require that an adjustment shall become effective immediately
after a record date of an event, the Corporation may defer until the
occurrence of such event (A) issuing to the holder of any share of Series G
Preferred Stock converted after such record date and before the occurrence
of such event the shares of capital stock issuable upon such conversion by
reason of the adjustment required by such event in addition to the shares
of capital stock issuable upon such conversion before giving effect to such
adjustments, and (B) if applicable, paying to such holder any amount in
cash in lieu of a fractional share of capital stock pursuant to Section
5(d) above; provided, however, that the Corporation shall deliver to such
holder an appropriate instrument evidencing such holder's right to receive
such additional shares and such cash.
(ix) Whenever the Conversion Price shall be adjusted as
provided in Sections 5(e)(i) and 5(e)(ii), the Corporation shall make
available for inspection during regular business hours, at its principal
executive offices or at such other place as may be designated by the
Corporation, a statement, signed by its chief executive officer, showing in
detail the facts requiring such adjustment and the Conversion Price that
shall be in effect after such adjustment. The Corporation shall also file
such statements with its transfer agent or agents for its Preferred Stock
and Common Stock. The Corporation shall also cause a copy of such statement
to be sent by first class certified mail, return receipt requested and
postage prepaid, to each holder of Preferred Stock affected by the
adjustment at such holder's address appearing on the Corporation's records.
Where appropriate, such copy may be given in advance and may be included as
part of any notice required to be mailed under the provisions of Section
5(e)(x) below.
(x) If the Corporation shall propose to take any action
of the types described in clauses (iv), (v) or (vi) of this Section 5(e),
the Corporation shall give notice to each holder of shares of Preferred
Stock, which notice shall specify the record date, if any, with respect to
any such action and the date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or
property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon conversion of shares of Preferred Stock. In
the case of any action which would require the fixing of a record date,
such notice shall be given at least twenty (20) days prior to the date so
fixed, and in case of all other action, such notice shall be given at least
thirty (30) days prior to the taking of such proposed action. Failure to
give such notice, or any defect therein, shall not affect the legality or
validity of any such action.
(xi) The Corporation shall at all times keep reserved,
free from preemptive rights, out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the
Series G Preferred Stock, sufficient shares of Common Stock to provide for
the conversion of all outstanding shares of Series G Preferred Stock.
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(xii) Without duplication of any other adjustment provided
for in this Section 5(e), at any time the Corporation makes or fixes a
record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in securities of the
Corporation other than shares of Common Stock, provision shall be made so
that each holder of Series G Preferred Stock shall receive upon conversion
thereof, in addition to the shares of Common Stock receivable thereupon,
the number of securities of the Corporation which it would have received
had its shares of Series G Preferred Stock been converted into shares of
Common Stock on the date of such event and had such holder thereafter,
during the period from the date of such event to and including the date of
conversion, retained such securities receivable by it pursuant to this
paragraph during such period, subject to the sum of all other adjustments
called for during such period under this Section 5 with respect to the
rights of such holder of Series G Preferred Stock.
(xiii) The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Corporation, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 5(e) and in the taking of all
such action as may be necessary or appropriate in order to protect the
exercise rights of the holders of Series G Preferred Stock against
impairment.
(xiv) The computations of all amounts under this Section
5(e) shall be made assuming all other anti-dilution or similar adjustments
to be made to the terms of all other securities resulting from the
transaction causing an adjustment pursuant to this Section 5(e) have
previously been made so as to maintain the relative economic interest of
the Series G Preferred Stock vis a vis other securities issued by the
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Corporation.
(xv) The Corporation shall take or cause to be taken such
steps as shall be necessary to ensure that the par value per share of
Common Stock is at all times less than or equal to the Conversion Price.
The Corporation shall pay all issue taxes, if any, incurred in connection
with the issuance of its Common Stock or other securities or properties on
conversion of any shares of the Series G Preferred Stock, but the
Corporation shall not pay any transfer or other taxes incurred by reason of
the issuance of such Common Stock or other securities or properties in
names other than those in which the share or shares of the Series G
Preferred Stock surrendered for conversion may stand.
6. Redemption.
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(a) The Corporation shall be obligated to redeem and shall
promptly redeem all of the shares of Series G Preferred Stock, upon written
request by the holders of a majority of the issued and outstanding shares of
Series G Preferred Stock after the occurrence of a Triggering Event, for an
amount per share equal to (i) the Liquidation Amount, plus (ii) on a per share
basis, an amount equal to all dividends, if any, accumulated and unpaid, whether
or not
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declared or earned (including any dividends thereon calculated through the date
of redemption) (the "Mandatory Redemption Obligation").
(b) If and so long as the Mandatory Redemption Obligation with
respect to the Series G Preferred Stock shall not fully be discharged, the
Corporation shall not, directly or indirectly, declare or pay any dividend or
make any distributions on , or purchase, redeem or retire, or satisfy any
mandatory or optional redemption, sinking fund or other similar obligation in
respect of, any Parity Stock or Junior Stock or warrants, rights or options
exercisable for any such Parity Stock or Junior Stock (other than dividends or
distributions payable in a particular class or series of such Parity Stock or
Junior Stock, as the case may be, to holders thereof).
7. Definitions.
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As used herein, the following terms shall have the following meanings:
(a) "Affiliate" shall mean, with respect to any Person, (i) a
director or officer of such Person, (ii) a spouse, parent, sibling or descendant
of such Person (or a spouse, parent, sibling or descendant of any director or
executive officer of such Person), and (iii) any other Person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person.
(b) "Board" shall mean the Board of Directors of the
Corporation.
(c) "Change of Control of the Corporation" shall mean any
transaction or any event as a result of which (i) any one or more Persons
acquires or for the first time controls or is able to vote (directly or through
nominees or beneficial ownership) after the Original Issuance Date 51% or more
of any class of stock of the Corporation outstanding at the time having power
ordinarily to vote for directors of the Corporation or (ii) the control of more
than 51% of the number of shares of Common Stock held by Persons on the Original
Issuance Date has been transferred (excluding transfers by and among such
Persons) since the Original Issuance Date in the aggregate. For purpose of this
paragraph (c), "Common Stock" shall include shares of Common Stock issuable upon
exercise of warrants, options and other rights to acquire Common Stock
outstanding on the Original Issuance Date, whether or not at the time exercised
or exercisable.
(d) "Common Stock" shall mean the Common Stock, par value $.001,
of the Corporation.
(e) "Common Stock Equivalent" shall mean all shares of Common
Stock outstanding and all shares of Common Stock issuable (without regard to any
present restrictions on such issuance) upon the conversion, exchange or exercise
of all securities of the Corporation that are convertible, exchangeable or
exercisable for Common Stock and all Common Stock appreciation rights, phantom
Common Stock rights and other rights to acquire, or to receive or to be paid
amounts of, the Common Stock.
(f) "Excluded Stock" shall mean (A) up to 10,000,000 shares (as
adjusted equitably for stock dividends, stock splits, combinations, etc.) of
Common Stock issuable upon
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exercise of stock options granted to officers, employees, consultants, vendors
or directors of the Corporation or its subsidiaries, (B) shares of Common Stock
issued upon conversion of shares of Total Preferred Stock, (C) shares of Common
Stock issued upon exercise of any existing warrants, notes or other instruments
convertible or exercisable for Common Stock as of the date hereof; and (D)
Common Stock or other equity securities ("Strategic Issuances") issued as part
of a strategic arrangement or alliance by the Corporation or its Subsidiaries to
building licensors, landlords, carriers, joint venture partners, vendors (other
than equipment vendors and software vendors), consultants, lessors or lenders,
and securities or instruments issued in connection with acquisitions, as each
such transaction is approved by the Board of the Corporation, provided, that,
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such Strategic Issuances do not, in the aggregate, involve the issuance of
securities accounting for in excess of five percent (5%) of the fully diluted
outstanding Common Stock of the Company, including in the case of (A), (B), (C),
and (D), any additional shares of Common Stock as may be issued by virtue of
antidilution provisions, if any, applicable to such options, warrants or shares,
as the case may be.
(g) "Fair Value Per Share" shall mean the fair value of each
share of Stock, as determined in good faith by the Board.
(h) "Liquidation" shall mean any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation
(including without limitation a liquidation or reorganization under Chapter 11
of the United States Bankruptcy Code, as amended and as may hereinafter be
amended), other than any dissolution, liquidation or winding up in connection
with any reincorporation of the Corporation in Delaware.
(i) "Liquidation Amount" shall mean the Original Issuance Price
as to each share of Preferred Stock plus any accrued but unpaid dividends.
(j) "Original Issuance Date" means the date of original issuance
of the first share of the Series G Preferred Stock.
(k) "Original Issuance Price" Shall mean $15.00 per share for
the Series D Preferred Stock, $15.00 per share for the Series E Preferred Stock,
$30.00 per share for the Series F Preferred Stock and $10.00 per share for the
Series G Preferred Stock.
(l) "Preferred Stock" shall mean the Series D Preferred Stock,
the Series E Preferred Stock, the Series F Preferred Stock and the Series G
Preferred Stock.
(m) "Qualified Public Offering" shall mean fully underwritten
public offering (underwritten by a reputable underwriter of national reputation)
of shares of Common Stock registered pursuant to the Securities Act with
proceeds to the Company of at least $75,000,000 (net of underwriting discounts
and expenses).
(n) "Sale of the Corporation" shall mean (1) the sale of all or
substantially all of the Corporation's assets to a Person who is not an
Affiliate of the Corporation, (ii) the sale or transfer of the outstanding
capital stock of the Corporation to one or more Persons who are not Affiliates
of the Corporation, or (iii) the merger or consolidation of the Corporation with
or into another Person who is not an Affiliate of the Corporation, in each case
in clauses (ii) and (iii) above under circumstances in which the holders of a
majority in voting power of the outstanding
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