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Exhibit 3.1
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INFLOW, INC.,
a Delaware Corporation
ARTICLE I
The name of this Corporation is InFlow, Inc.
ARTICLE II
The address of the registered office of the Corporation in the State
of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle. The
name of the registered agent at that address is Corporation Service Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
A. Classes of Stock. The Corporation is authorized to issue two
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classes of shares to be designated respectively Preferred Stock ("Preferred
Stock") and Common Stock ("Common Stock"). The total number of shares of capital
stock that the Corporation is authorized to issue is Sixty Million (60,000,000).
The total number of shares of Preferred Stock that the Corporation shall have
authority to issue is Seventeen Million Nine Hundred Twenty Thousand
(17,920,000), of which Three Million Three Hundred Ten Thousand (3,310,000)
shares shall be designated Series A Preferred Stock (the "Series A Preferred
Stock"), Seven Million (7,000,000) shares shall be designated Series B Preferred
Stock (the "Series B Preferred Stock") and Seven Million Six Hundred Ten
Thousand (7,610,000) shares shall be designated Series C Preferred Stock (the
"Series C Preferred Stock"). The total number of shares of Common Stock that the
Corporation shall have authority to issue is Forty-Two Million Eighty Thousand
(42,080,000). The Preferred Stock shall have a par value of $0.001 per share and
the Common Stock shall have a par value of $0.001 per share.
B. Rights, Preferences and Restrictions of Preferred Stock.
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Except as expressly set forth in this Article IV, (i) the Series C Preferred
Stock shall rank senior in right of payment to
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the Series A Preferred Stock, Series B Preferred, Common Stock and any other
series of Preferred Stock established hereafter by the Board of Directors with
respect to dividend, liquidation and redemption rights and (ii) the Series A
Preferred Stock and Series B Preferred Stock shall rank (x) pari passu with each
other and (y) senior in right of payment to the Common Stock and any other
series of Preferred Stock (other than the Series C Preferred Stock) established
hereafter by the Board of Directors, with respect to dividend, liquidation and
redemption rights. The relative rights, preferences, restrictions and other
matters relating to the Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock (collectively, the "Convertible Preferred Stock") are
as follows:
1. Dividend Provisions.
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(a) The Convertible Preferred Stock shall with respect to dividend
rights rank senior to the Common Stock of the Corporation, and any other series
of Preferred Stock established hereafter by the Board of Directors (all of such
series of Preferred Stock to which the Convertible Preferred Stock ranks senior,
the "Junior Securities"). The Series C Preferred Stock shall with respect to
dividend rights also rank senior to the Series A Preferred Stock and Series B
Preferred Stock.
(b) The holders of shares of Convertible Preferred Stock shall be
entitled to receive dividends, out of any assets legally available therefor,
prior and in preference to any declaration or payment of any dividend (other
than dividends payable in Common Stock or other securities entitling the holder
thereof to receive, directly or indirectly, additional shares of Common Stock
for which an anti-dilution adjustment is provided by Section 4(d)(iii) below) on
Common Stock or other Junior Securities of the Corporation, payable only when,
as and if declared by the Board of Directors.
(c) Dividends on each share of the Series C Preferred Stock shall
accrue daily at a rate of 8% per annum (compounded annually) of the sum of (x)
the Original Series C Issue Price (as hereafter defined) and (y) all accumulated
and unpaid dividends thereon from June 30, 2000 to and including the date on
which (i) a Liquidation Event occurs, (ii) such share is converted into Common
Stock or (iii) such share is redeemed, payable, in each case, out of assets
legally available therefor. Such dividends shall be payable only when, as and if
declared by the Board of Directors. To the extent not paid, accrued dividends on
the Series C Preferred Stock shall accumulate as of June 30 of each year,
beginning June 30, 2001.
(d) No dividend or other distribution shall be paid on or declared
and set apart for any share of Common Stock, Junior Securities or any other
securities of the Corporation entitled generally to participate in the earnings
or assets of the Corporation (collectively, the "Common Equity"), other than the
Convertible Preferred Stock, for any period unless at the same time an equal
dividend or distribution for the same period shall be paid on or declared and
set apart for each share of Convertible Preferred Stock based on the number of
shares of Common Stock into which each share is then convertible (the
"Conversion Shares"). No dividend or other distribution shall be paid on or
declared and set apart for any Series of Convertible Preferred Stock unless at
the same time an equal dividend or distribution (determined on an as-converted
basis) shall be paid on or declared and set apart for each other Series of
Convertible Preferred
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Stock, provided that no dividends shall be paid on or declared and set apart for
the shares of Series A Preferred Stock or Series B Preferred Stock or any Junior
Securities until all accumulated and unpaid dividends with respect to the shares
of Series C Preferred Stock shall have been paid on or declared and set aside
for the shares of Series C Preferred Stock.
2. Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary (including without limitation upon
any bankruptcy), the holders of Convertible Preferred Stock shall be entitled to
receive in exchange for and in redemption of each share of Convertible Preferred
Stock, prior and in preference to any distribution to the holders of Common
Stock and Junior Securities by reason of their ownership thereof, from the
funds, proceeds or assets of the Corporation legally available for distribution
to stockholders, an amount equal to the greater of (i) the sum of (A) in the
case of Series A Preferred Stock, an amount equal to $3.50 per share, as
appropriately adjusted for subsequent stock dividends, stock splits and similar
transactions affecting the outstanding Series A Preferred Stock (the "Original
Series A Issue Price") or, in the case of Series B Preferred Stock, an amount
equal to $8.70 per share, as appropriately adjusted for subsequent stock
dividends, stock splits and similar transactions affecting the outstanding
Series B Preferred Stock (the "Original Series B Issue Price") or, in the case
of Series C Preferred Stock, an amount equal to $20.50 per share, as
appropriately adjusted for subsequent stock dividends, stock splits and similar
transactions affecting the outstanding Series C Preferred Stock (the "Original
Series C Issue Price"), plus (B)(1) in the case of Series A Preferred Stock or
Series B Preferred Stock, an amount per share determined by dividing (x) $.28
per annum, compounded annually, measured from April 5, 1999 to the date of such
liquidation, dissolution or winding up, multiplied by the number of outstanding
shares of Series A Preferred Stock, by (y) the total number of outstanding
shares of Series A Preferred Stock and Series B Preferred Stock or (2) in the
case of Series C Preferred Stock, all accrued or declared but unpaid dividends
on such Series C Preferred Stock; or (ii) in each case, the amount per share
that would be distributed among the holders of the Convertible Preferred Stock
and Common Stock pro rata based on the number of shares of Common Stock held by
each holder assuming conversion of all Convertible Preferred Stock (including
but not limited to, if applicable, giving effect for a Reduced Liquidation Event
(as defined below) to any adjustment in the Conversion Price of Series C
Preferred Stock pursuant to the last sentence of Section 4(d)(i)(A)). If upon
the occurrence of such event, the assets, proceeds and funds thus distributed
among the holders of the Convertible Preferred Stock shall be insufficient to
permit the payment to such holders of their full preferential amounts, then the
entire assets, proceeds and funds of the Corporation legally available for
distribution shall first be distributed ratably to the holders of Series C
Preferred Stock in accordance with the amount such holders of Series C Preferred
Stock are entitled to receive under the provisions of this Section 2 and then
shall be distributed ratably among the holders of the Series A Preferred Stock
and Series B Preferred Stock in proportion to the respective amounts such
holders are entitled to receive under the provisions of this Section 2.
(b) Upon the completion of the distribution required by subparagraph
(a) of this Section 2, if assets remain in the Corporation, the holders of the
Common Stock of the Corporation shall receive all of the remaining assets of the
Corporation.
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(c) (i) For purposes of this Section 2, unless otherwise agreed in
writing by the holders of not less than 75% of the outstanding shares of
Convertible Preferred Stock (voting together as a single class) (or if such vote
pertains to a Reduced Liquidation Event, the holders of greater than 50% of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock
(voting together as a single class) and greater than 50% of the outstanding
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shares of Series C Preferred Stock)) (such required holders collectively, the
"Required Holders"), a liquidation, dissolution or winding up of the Corporation
shall be deemed to be occasioned by, or to include, (A) the acquisition of the
Corporation by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation) that results in the Corporation's stockholders immediately prior
to such transaction not holding (by virtue of such shares or securities issued
solely with respect thereto) at least 50% of the voting power of the surviving
or continuing entity, or (B) a sale, conveyance or disposition of all or
substantially all of the assets of the Corporation unless the Corporation's
stockholders immediately prior to such transaction will, as a result of such
sale, conveyance or disposition hold (by virtue of securities issued as
consideration for such sale, conveyance or disposition) at least 50% of the
voting power of the purchasing entity, or (C) the effectuation by the
Corporation or its stockholders of a transaction or series of related
transactions that results in the Corporation's stockholders immediately prior to
such transaction not holding (by virtue of such shares or securities issued
solely with respect thereto) at least 50% of the voting power of the Corporation
(each, a "Liquidation Event"). In the event of a liquidation, dissolution or
winding up described in the immediately preceding sentence involving the sale of
shares by stockholders of the Corporation, the funds, proceeds or assets legally
available for distribution to stockholders shall be deemed to be the aggregate
compensation to be paid to all selling stockholders in exchange for all or part
of any capital stock of the Corporation divided by a fraction, the numerator of
which is the total number of shares of Common Stock deemed to be sold pursuant
to such liquidation and the denominator of which is the sum of the total number
of shares of Common Stock outstanding and the total number of shares of Common
Stock issuable with respect to Common Stock Equivalents (as defined below)
immediately prior to such liquidation.
(ii) In any of such events, if the consideration received by the
Corporation is other than cash, its value will be deemed its fair market value.
Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other similar
restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through NASDAQ-
NMS, the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the thirty-day period ending three (3) days
prior to the closing;
(2) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty-day period ending three (3) days prior to the
closing; and
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(3) If there is no active public market, the value shall be
the fair market value thereof, as determined by the Board of Directors of the
Corporation and approved by the Required Holders.
(B) The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to make an appropriate discount from the market value
determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as determined by the Board of Directors of the Corporation
and approved by the Required Holders.
(iii) In the event the requirements of this Section 2(c) are not
complied with, the Corporation shall forthwith either:
(A) cause such closing to be postponed until such time as the
requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Convertible Preferred Stock
shall revert to and be the same as such rights, preferences and privileges
existing immediately prior to the date of the first notice referred to in
Section 2(c)(iv) hereof.
(iv) The Corporation shall give each holder of record of
Convertible Preferred Stock written notice of such impending transaction not
later than twenty (20) days prior to the stockholders' meeting called to approve
such transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the Corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the Corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the Required Holders.
3. Redemption. Within ninety (90) days following the receipt by the
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Corporation of a written redemption demand delivered at any time after August 1,
2006 (i) if such redemption demand is with respect to Series A Preferred Stock
or Series B Preferred Stock, from the holders of at least 75% of the outstanding
shares of Series A Preferred Stock and Series B Preferred Stock (voting together
as a single class) and the holders of at least 70% of the outstanding Series C
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Preferred Stock, the Corporation shall redeem all but not less than all the
Convertible Preferred Stock, and the holders of the Convertible Preferred Stock
shall sell all but not less than all of the Convertible Preferred to the
Corporation, for a per share purchase price (the "Redemption Price") equal to
the sum of (A) in the case of the Series A Preferred Stock, the Original Series
A Issue Price or, in the case of the Series B Preferred Stock, the Original
Series B Issue Price or, in the case of the Series C Preferred Stock, the
Original Series C Issue Price, plus (B)(1) in the case of Series A Preferred
Stock or Series B Preferred Stock, an amount per share determined by
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dividing (x) $.28 per annum, compounded annually, measured from April 5, 1999 to
the date of such redemption, multiplied by the number of outstanding shares of
Series A Preferred Stock, by (y) the total number of outstanding shares of
Series A Preferred Stock and Series B Preferred Stock or (2) in the case of
Series C Preferred Stock, all accrued or declared but unpaid dividends on such
Series C Preferred Stock; or (ii) if such redemption demand is with respect to
Series C Preferred Stock only, from the holders of at least 70% of the
outstanding Series C Preferred Stock (the "Series C Supermajority Holders"), the
Corporation shall redeem all but not less than all the outstanding Series C
Preferred Stock, and the holders of the Series C Preferred Stock shall sell all
but not less than all of the Series C Preferred Stock to the Corporation, for a
per share Redemption Price equal to the sum of (A) the Original Series C Issue
Price plus (B) all accrued or declared but unpaid dividends on such Series C
Preferred Stock. The closing of such purchase and sale shall occur at the
offices of the Corporation on such business day reasonably selected by the
Corporation during such 90 day period upon not less than ten days prior written
notice to the holders of Convertible Preferred Stock (the "Redemption Date"). At
such closing, the Corporation shall pay the applicable Redemption Price in
immediately available funds against delivery of the stock certificates
representing the applicable shares of Convertible Preferred Stock (or, in lieu
of delivery of lost, stolen or destroyed certificates, an agreement to indemnify
the Corporation from any loss incurred by it in connection with such
certificates). Nothing in this Section 3 shall restrict the right of a holder of
Convertible Preferred Stock to convert such shares into Common Stock in
accordance with the provisions of Section 4 at any time up to and including the
Redemption Date. From and after the Redemption Date, the rights of the holders
of redeemed Convertible Preferred Stock as stockholders of the Corporation shall
cease and the certificates representing the redeemed Convertible Preferred Stock
shall thereafter represent only the right to receive the applicable Redemption
Price upon surrender of such certificates to the Corporation. If the Corporation
is prevented from redeeming or making full payment for the Convertible Preferred
Stock as required pursuant to this Section 3 by any legal restriction or
otherwise, the Corporation shall first redeem the maximum number of shares of
the Series C Preferred Stock and then redeem the maximum number of shares of
Series A Preferred Stock and Series B Preferred Stock that it can without
violation of such legal restriction or other impediment, which redemption shall
be effected first pro rata among the holders of Series C Preferred Stock in
accordance with the amount such holders of Series C Preferred Stock are entitled
to receive under the provisions of this Section 3 and then among the holders of
Series A Preferred Stock and Series B Preferred Stock pro rata on the basis of
the respective amounts to which such holders would be entitled upon a full
redemption of the Convertible Preferred Stock, and the Corporation shall have a
continuing obligation to such holders of Convertible Preferred Stock to purchase
the remaining shares as soon as possible and shall use its best efforts to
obtain any waiver or consent or to take any other action to authorize or permit
the redemption required pursuant to this Section 3.
4. Conversion. The holders of the Convertible Preferred Stock shall
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have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Convertible Preferred Stock
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shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share and on or prior to the applicable Redemption
Date, at the office of the Corporation or any transfer agent for such stock,
into such number of fully paid and nonassessable shares of Common Stock as is
determined (x) in the case of Series A Preferred Stock, by dividing the Original
Series A Issue
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Price by the Series A Conversion Price in effect on the date the certificate is
surrendered for conversion, or (y) in the case of Series B Preferred Stock, by
dividing the Original Series B Issue Price by the Series B Conversion Price in
effect on the date the certificate is surrendered for conversion, or (z) in the
case of Series C Preferred Stock, by dividing the Original Series C Issue Price
by the Series C Conversion Price in effect on the date the certificate is
surrendered for conversion. The initial Series A Conversion Price, Series B
Conversion Price, and Series C Conversion Price shall be the Original Series A
Issue Price, the Original Series B Issue Price and the Original Series C Issue
Price, respectively; provided, however, that the Conversion Prices shall be
subject to adjustment as set forth in Section 4(d).
(b) Automatic Conversion. Each share of Convertible Preferred Stock
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shall automatically be converted into shares of Common Stock at the applicable
Conversion Price then in effect immediately upon the earlier of (i) the
consummation of a firm commitment underwritten public offering of Common Stock
registered under the Securities Act of 1933, as amended, (x) at a public
offering price of (A) with respect to the Series A Preferred Stock and Series B
Preferred Stock, not less than $26.00 per share (adjusted to reflect subsequent
stock dividends, stock splits or similar transactions affecting the outstanding
Common Stock), resulting in gross proceeds to the Corporation of not less than
$50,000,000 and (B) with respect to the Series C Preferred Stock, not less than
$35.00 per share (or such lesser amount as may be agreed to in writing by the
holders of greater than 50% of the outstanding Series C Preferred Stock)
(adjusted to reflect subsequent stock dividends, stock splits or similar
transactions affecting the outstanding Common Stock), resulting in proceeds to
the Corporation (net of all underwriting discounts and selling commissions) of
at least $100,000,000, and (y) after which the Common Stock is either listed on
a national securities exchange or traded in the NASDAQ National Market System,
or (ii) the date specified by written consent or agreement of (A) at least
seventy-five percent (75%) of the outstanding shares of Series A Preferred Stock
and Series B Preferred Stock (voting together as a single class) with respect to
the conversion of the Series A Preferred Stock and Series B Preferred Stock and
(B) greater than 50% of the outstanding shares of Series C Preferred Stock with
respect to the conversion of the Series C Preferred Stock; provided, however, in
the event that Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") is a
lead underwriter, co-lead underwriter or otherwise receives in excess of 15% of
all compensation payable to the underwriters in a Reduced Offering (as defined
herein), any shares of Series C Preferred Stock held by DLJ shall be deemed to
be not outstanding for purposes of this provision and shall not vote or be
included in any way in the conversion determination set forth in this sentence.
Such conversion shall be automatic, without need for any further action by the
holders of shares of the applicable Convertible Preferred Stock and regardless
of whether the certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided, however, that the Corporation shall
not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless certificates evidencing such shares of
Convertible Preferred Stock so converted are surrendered to the Corporation or
the holder of record of such shares notifies the Corporation that such
certificates have been lost, stolen or destroyed and executes an agreement to
indemnify the Corporation from any loss incurred by it in connection with such
certificates, in each case in accordance with the procedures described in
Section 4(c) below. Upon the conversion of any Convertible Preferred Stock
pursuant to this Section 4(b), the Corporation shall promptly send written
notice thereof, by registered or certified mail, return receipt requested and
postage prepaid, by hand delivery or by overnight delivery, to each holder of
record of the applicable Convertible Preferred Stock at such holder's address
then
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shown on the records of the Corporation, which notice shall state that
certificates evidencing shares of such Convertible Preferred Stock must be
surrendered at the office of the Corporation (or of its transfer agent for the
Common Stock, if applicable) in the manner described in Section 4(c) below.
(c) Mechanics of Conversion. Before any holder of Convertible
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Preferred Stock shall be entitled to receive certificates representing shares of
Common Stock into which shares of Convertible Preferred Stock are converted
pursuant to this Section 4, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Convertible Preferred Stock, and shall give written
notice to the Corporation at such office of the name or names in which the
certificate or certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable and in no event later than ten (10)
days after the delivery of said certificates, issue and deliver at such office
to such holder of Convertible Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. The person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
pursuant to this Section 4 shall be treated for all purposes as the record
holder or holders of such shares of Common Stock as of the effective date of
such conversion. If the conversion is in connection with an underwritten
offering of securities registered pursuant to the Securities Act of 1933, as
amended, the conversion may, at the option of any holder tendering Convertible
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock upon conversion of the
Convertible Preferred Stock shall not be deemed to have converted such
Convertible Preferred Stock until immediately prior to the closing of such sale
of securities.
(d) Conversion Price Adjustments for Certain Dilutive Issuances,
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Splits, Combinations and Other Events. The Conversion Prices of the Convertible
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Preferred Stock shall be subject to adjustment from time to time as follows:
(i) (A) If the Corporation shall issue, after the date upon
which any shares of any Series of Convertible Preferred Stock were first issued
(the "Purchase Date" with respect to such Series), any Additional Stock (as
defined below) without consideration or for a consideration per share less than
the Conversion Price for such Series in effect immediately prior to the issuance
of such Additional Stock, the Conversion Price for such Series in effect
immediately prior to each such issuance shall forthwith (except as otherwise
provided in this Section 4(d)(i)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock that the aggregate
consideration received by the Corporation for such issuance would purchase at
such Conversion Price; and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of such Additional Stock. With respect to the Series C
Preferred Stock only, in the event that the Corporation (x) consummates a
Reduced Offering (as defined in Section 6(b)(v)) or (y) consummates a
Liquidation Event resulting in consideration (where the non-cash consideration
received is valued in accordance with the provisions set forth in Section 2(c))
to the Series C Preferred Stock of less than $35.00 per share (as adjusted for
stock dividends, stock splits and similar transactions) (such Liquidation Event
being a "Reduced Liquidation Event"), then, contemporaneously with the
consummation of the first to occur of a Reduced Offering or a Reduced
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Liquidation Event, the Conversion Price of the Series C Preferred Stock shall be
adjusted to equal the lesser of (x) the amount determined pursuant to the
antidilution adjustment provision set forth above or (y) $17.43 (as
appropriately adjusted for subsequent stock dividends, stock splits and similar
transactions affecting the outstanding Series C Preferred Stock).
(B) No adjustment of the Conversion Price for any Series of
Convertible Preferred Stock shall be made in an amount less than one cent per
share, provided that any adjustments which are not required to be made by reason
of this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to three (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
Sections 4(d)(i)(E)(3) and (E)(4), no adjustment of any Conversion Price
pursuant to this Section 4(d) shall have the effect of increasing such
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(C) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(D) In the case of the issuance of the 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 thereof as determined in good faith by
the Board of Directors and the Required Holders irrespective of any accounting
treatment.
(E) In the case of the issuance (whether before, on or after the
applicable Purchase Date) 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, the following provisions shall apply for all
purposes of this Section 4(d)(i) and Section 4(d)(ii):
(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
4(d)(i)(C) and (d)(i)(D)), if any, received by the Corporation upon
the issuance of such options or rights plus the minimum exercise 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 were issued or such options or
rights were issued and for a consideration
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equal to the consideration, if any, 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 minimum 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 4(d)(i)(C)
and (d)(i)(D)). The issuance of options to purchase or rights to
subscribe for Common Stock, securities convertible into or
exchangeable for Common Stock or options to purchase or rights to
subscribe for such convertible or exchangeable securities together
with other securities of the Corporation in an integrated transaction
in which no specific consideration is allocated to such options,
rights or convertible or exchangeable securities shall be deemed to be
issuance of shares of Common Stock at a per share consideration of
$0.01.
(3) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the
Corporation upon exercise of such options or rights or upon conversion
of or in exchange for such convertible or exchangeable securities
(including but not limited to a change resulting from the antidilution
provisions thereof), each Conversion Price, to the extent in any way
affected by or computed using such options, rights or securities,
shall be recomputed to reflect such change.
(4) Upon 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, each Conversion Price, to the extent in any
way affected by or computed using such options, rights or securities
or options or rights related to such securities, shall be recomputed
to reflect the issuance of only the number of shares of Common Stock
(and convertible or exchangeable securities which remain in effect)
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.
(5) The number of shares of Common Stock deemed issued and
the consideration deemed paid therefor pursuant to Sections
4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either
Sections 4(d)(i)(E)(3) or (4). In the event of any adjustment to a
Conversion Price as a result of the issuance of options, rights or
convertible or exchangeable securities pursuant to this Section 4(d),
no further adjustment to such Conversion Price shall be made for the
actual issuance of Common Stock upon the exercise of any such options
or rights or the conversion or exchange of such securities.
(ii) "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to Section 4(d)(i)(E)) by the
Corporation after the Purchase Date other than:
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(A) Common Stock issued pursuant to a transaction described in
Section 4(d)(iii) hereof;
(B) shares of Common Stock issuable or issued to employees
consultants or directors (if in transactions with primarily non-financing
purposes) of the Corporation directly or pursuant to a stock option plan or
restricted stock plan approved by the Board of Directors of the Corporation
and in accordance with Section 6(a)(i), in each case with vesting and
repurchase restrictions approved by the Board (the "Management Equity
Pool");
(C) shares of Common Stock issued or issuable in a public
offering before or in connection with which all outstanding shares of
Convertible Preferred Stock will be converted to Common Stock in accordance
with the terms hereof or upon exercise of warrants or rights granted to
underwriters in connection with such a public offering;
(D) shares of Common Stock issued upon exercise or conversion of
any option, warrant or other convertible security outstanding as of the
applicable Purchase Date;
(E) Securities issued pursuant to the acquisition of another
business entity or business segment of any such entity by the Corporation
by merger, purchase of substantially all the assets or other reorganization
whereby the Corporation will own not less than fifty-one percent (51%) of
the voting power of such business entity or business segment of any such
entity; provided that to the extent such securities are issued at a price
below the Original Series C Issue Price, all such securities issued below
such price do not exceed in the aggregate 10% of the total number of shares
of Common Stock then outstanding, calculated on a fully diluted, as-
converted basis and including all shares of Common Stock issuable upon the
exercise, conversion or exchange of any Common Stock Equivalents then
outstanding;
(F) shares of Common Stock issued in connection with (i) any
borrowings, direct or indirect, from financial institutions or other
persons by the Corporation, whether or not presently authorized, including
any type of loan or payment evidenced by any type of debt instrument, if
such borrowing, loan or debt instrument is approved by the Board of
Directors, (ii) any transaction with vendors or customers or to other
persons in similar commercial situations with the Corporation if such
issuance is approved by the Board of Directors, or (iii) obtaining lease
financing, whether issued to a lessor, guarantor or other person if such
issuance is approved by the Board of Directors; provided that the aggregate
number of shares of Common Stock deemed issued pursuant to (i), (ii) and
(iii) above does not exceed 5% of the aggregate number of shares of Common
Stock then outstanding, calculated on a fully diluted, as-converted basis
and including all shares of Common Stock issuable upon the exercise,
conversion or exchange of any Common Stock Equivalents then outstanding; or
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(G) additional shares of Common Stock issued to holders of
Series C Preferred Stock in connection with a mandatory conversion of
Series C Preferred Stock due to a Reduced Offering or a Reduced Liquidation
Event.
(iii) In the event the Corporation should at any time or from time to
time after the applicable Purchase Date fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock ("Common Stock Equivalents")
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Prices of the Convertible Preferred
Stock shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents.
(iv) If the number of shares of Common Stock outstanding at any time
after the applicable Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Prices for the Convertible Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
(e) Other Distributions. In the event the Corporation shall declare a
-------------------
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding cash dividends) or
options or rights not referred to in Section 4(d)(iii), then, in each such case
for the purpose of this Section 4(e), the holders of the Convertible Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of the
Corporation into which their shares of Convertible Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there shall be
-----------------
a recapitalization of the Common Stock (other than a subdivision, combination or
a reorganization, merger or consolidation transaction provided for elsewhere in
this Section 4), provision shall be made so that the holders of the Convertible
Preferred Stock shall thereafter be entitled to receive upon conversion of the
Convertible Preferred Stock the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled in connection with such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of the Convertible Preferred Stock after the recapitalization to the
end that the provisions of this Section 4 (including adjustment of the
Conversion Prices then in effect and the number of shares issuable upon
conversion of the Convertible Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable.
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(g) Reorganizations, Mergers or Consolidations. If at any time or from
------------------------------------------
time to time the Common Stock is converted into other securities or property,
whether pursuant to a reorganization, merger, consolidation or otherwise (other
than a subdivision, combination or recapitalization provided for elsewhere in
this Section 4 or a transaction constituting a deemed liquidation of the
Corporation pursuant to Section 2), provision shall be made so that the holders
of the Convertible Preferred Stock shall thereafter be entitled to receive upon
conversion of the Convertible Preferred Stock the number of shares of stock or
other securities or property of the Corporation or otherwise, to which a holder
of Common Stock deliverable upon conversion would have been entitled in
connection with such transaction. The Corporation shall not be a party to any
reorganization, merger or consolidation in which the Corporation is not the
surviving entity unless the entity surviving such transaction assumes, by
written instrument satisfactory to the Required Holders, all of the
Corporation's obligations hereunder.
(h) No Impairment. The Corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
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 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Convertible Preferred Stock against impairment.
(i) No Fractional Shares and Certificate as to Adjustments.
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(i) No fractional shares shall be issued upon the conversion of any
share or shares of the Convertible Preferred Stock, and the number of shares of
Common Stock to be issued shall be rounded to the nearest whole share (with 1/2
being rounded upward) and shall be determined on the basis of the total number
of shares of Convertible Preferred Stock the holder is at the time converting
into Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of the
Conversion Prices of the Convertible Preferred Stock pursuant to this Section 4,
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Convertible Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Convertible Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Conversion Prices for the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock at the
time in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of a share of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock.
(j) Notices of Record Date. In the event of any taking by the Corporation
----------------------
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any right to subscribe for, purchase or
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otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall mail to each
holder of Convertible Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
(k) Reservation of Stock Issuable Upon Conversion. The Corporation shall
---------------------------------------------
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Convertible Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Convertible Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of Convertible Preferred
Stock, in addition to such other remedies as shall be available to the holder of
Convertible Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes, including, without limitation, engaging in best efforts to
obtain the requisite stockholder approval of any necessary amendment to this
certificate
(l) Notices. Any notice required by the provisions of this Section 4 to be
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given to the holders of shares of Convertible Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the books of the Corporation.
5. Voting Rights. Except as provided by the General Corporation Law of
-------------
the State of Delaware or as otherwise expressly provided herein with respect to
special class voting arrangements, the holder of each share of Convertible
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such share of Convertible Preferred Stock could then be converted,
and with respect to such vote, such holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the bylaws of the Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as-converted basis (after aggregating all fractional
shares into which shares of Convertible Preferred Stock held by each holder
could be converted) shall be rounded to the nearest whole number (with one-half
being rounded upward).
Notwithstanding any provision herein to the contrary, in connection with
any acquisition of Convertible Preferred Stock (and/or any other voting
securities of the Corporation) as to which the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), would, but for this
paragraph, be applicable, any person or entity (as defined under the HSR Act)
acquiring such Convertible Preferred Stock (and/or other voting securities of
the Corporation) shall have no right to vote such Convertible Preferred Stock or
voting securities until such person or entity has complied with the filing and
waiting period requirements of the HSR Act.
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6. Protective Provisions.
---------------------
(a) So long as any shares of Convertible Preferred Stock are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of seventy-five percent (75%) of
the outstanding Convertible Preferred Stock (voting together as a single class
on an as converted basis):
(i) increase the Management Equity Pool to cover more than
2,685,000 shares of Common Stock (as adjusted for stock dividends, stock splits
and similar transactions), including for such purpose all shares covered by
employee stock options outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any of its capital stock or other
equity securities issued pursuant to the Management Equity Pool; provided,
however, that this restriction shall not apply to the repurchase of shares of
Common Stock from employees, officers, directors, consultants or other persons
performing services for the Corporation or any of its subsidiaries pursuant to
agreements under which the Corporation has the option to repurchase such shares
at cost or at cost upon the occurrence of certain events, such as the
termination of employment;
(iii) acquire (by merger, purchase of stock or assets or other
business combination transaction) any other business entity or business segment
of any such entity representing in excess of 10% of the Corporation's
consolidated assets on a pro forma basis or issue, or obligate itself to issue,
in any such transaction Common Equity securities representing in excess of 10%
of the fully-diluted Common Stock;
(iv) engage in any business operations other than the provision
of colocation, applications hosting and related services (including without
limitation data backbone services) for clients in the communications industry
and activities reasonably incidental thereto;
(v) engage in any transaction with an affiliate, executive
officer or director of the Corporation that is not approved by a majority of the
disinterested members of the Corporation's Board of Directors;
(vi) increase or decrease (other than by redemption or
conversion) the total number of outstanding shares of Convertible Preferred
Stock;
(vii) authorize or issue, or obligate itself to issue, any equity
security (including any security convertible into or exercisable for any such
equity security) having a preference over, or being on a parity with, the Series
A Preferred Stock or Series B Preferred Stock with respect to voting, dividends
or upon liquidation;
(viii) change the authorized number of directors of the
Corporation; or
(ix) voluntarily agree to a Liquidation Event (other than a
Reduced Liquidation Event).
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(b) So long as any shares of Convertible Preferred Stock are
outstanding, the Corporation shall not without first obtaining the approval (by
vote or written consent, as provided by law) of the Required Holders:
(i) authorize or issue additional shares of Series C Preferred
Stock;
(ii) authorize or issue, or obligate itself to issue, any equity
security (including any security convertible into or exercisable for any such
equity security) having a preference over, or being on a parity with, the Series
C Preferred Stock with respect to voting, dividends or upon liquidation;
(iii) amend the Corporation's Certificate of Incorporation or
bylaws;
(iv) voluntarily agree to a Reduced Liquidation Event;
(v) consummate an underwritten public offering of Common Stock
that does not result in (x) an offering price equal to at least $35.00 per share
(as adjusted for stock dividends, stock splits and similar transactions), (y)
proceeds to the Corporation (net of all underwriting discounts and selling
commissions) of at least $100.0 million, and (z) the Common Stock being listed
on a national securities exchange or traded in the NASDAQ National Market
System) (a "Reduced Offering"); provided further, in the event DLJ is a lead
underwriter, co-lead underwriter or otherwise receives in excess of 15% of all
compensation payable to the underwriters in a Reduced Offering, any shares of
Series C Preferred Stock held by DLJ shall be deemed to be not outstanding for
purposes of this provision and shall not vote or be included in any way in the
required approval of a potential Reduced Offering by the Corporation; or
(vi) alter or change the rights, preferences or privileges of the
shares of Convertible Preferred Stock so as to affect adversely the rights of
holders of such shares.
(c) So long as any shares of Series C Preferred Stock are outstanding,
the Corporation shall not without first obtaining the approval (by vote or
written consent, as provided by law) of the Series C Supermajority Holders:
(i) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any Series A Preferred Stock or
Series B Preferred Stock or any of the Corporation's Common Stock or Junior
Securities; provided, however, that this restriction shall not apply to (x) the
repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Corporation or any
subsidiary pursuant to agreements under which the Corporation has the option to
repurchase such shares at cost or at cost upon the occurrence of certain events,
such as the termination of employment or (y) the redemption of shares of
Convertible Preferred Stock in accordance with Section 3.
(ii) make or declare a dividend or other distribution payable
generally to holders of the Corporation's outstanding shares of Common Stock,
Series A Preferred Stock, Series B Preferred Stock or Junior Securities (other
than dividends on the Common Stock payable solely in additional shares of Common
Stock or in options or rights referred to in Section 4(d)(iii)).
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7. Status of Converted or Redeemed Stock. In the event any shares
-------------------------------------
of Convertible Preferred Stock shall be redeemed or converted pursuant to
Section 3 or Section 4 hereof, the shares so converted or redeemed shall be
cancelled and shall not be issuable by the Corporation. The Certificate of
Incorporation of the Corporation shall be appropriately amended to effect the
corresponding reduction in the Corporation's authorized capital stock.
C. Common Stock.
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1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Division (B) of this Article IV.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights. The holder of each share of Common Stock shall
-------------
have the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the bylaws of the Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law. The
holders of Common Stock shall not be entitled to vote as a separate class on any
amendment of this Certificate of Incorporation that increases or decreases the
number of authorized shares of Common Stock.
ARTICLE V
A director of the Corporation shall, to the fullest extent permitted
by the Delaware General Corporation Law as it now exists or as it may hereafter
be amended, not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived any improper personal benefit. If the Delaware
General Corporation Law is amended, after approval by the stockholders of this
Article V, to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any amendment, repeal or modification of this Article V, or the
adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article V by the stockholders of the
Corporation shall not apply to or adversely affect any right
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or protection of a director of the Corporation existing at the time of such
amendment, repeal, modification or adoption.
ARTICLE VI
The Corporation shall indemnify its officers and directors, and shall
provide for advancement of the expenses of such persons, to the fullest extent
provided by Section 145 of the Delaware General Corporation Law. To the fullest
extent permitted by applicable law, the Corporation is authorized to provide
indemnification of (and advancement of expenses to) agents of the Corporation
(and any other persons to which State law permits the Corporation to provide
indemnification) through bylaw provisions, agreements with such agents or other
persons, vote of stockholders or disinterested directors or otherwise, in excess
of the indemnification and advancement otherwise permitted by Section 145 of the
Delaware General Corporation Law, subject only to limits created by applicable
Delaware law (statutory or non-statutory), with respect to actions for breach of
duty to the Corporation, its stockholders, and others.
Any amendment, repeal or modification of the foregoing provision of
this Article VI shall not adversely affect any right or protection of a
director, officer, agent, or other person existing at the time of, or increase
the liability of any director of the Corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to, such amendment,
repeal, modification or adoption.
ARTICLE VII
The Corporation reserves the right to adopt, amend, alter, supplement,
rescind or repeal in any respect any provision contained in this Fifth Amended
and Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by statute or applicable law, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE VIII
Subject to the provisions of Article IV hereof, the Board of Directors
may from time to time adopt, amend, alter, supplement, rescind or repeal any or
all of the bylaws of the Corporation without any action on the part of the
stockholders; provided, however, that the stockholders may adopt, amend or
repeal any bylaw adopted by the Board of Directors, and no amendment or
supplement to the bylaws adopted by the Board of Directors shall vary or
conflict with any amendment or supplement adopted by the stockholders.
ARTICLE IX
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Subject to the provisions of Article IV, the number of directors of
the Corporation shall be set from time to time by resolution of the Board of
Directors.
ARTICLE X
Elections of directors need not be by written ballot unless the bylaws
of the Corporation shall so provide.
ARTICLE XI
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any statutory requirements) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of Directors
or in the bylaws of the Corporation.
ARTICLE XII
The Corporation expressly elects not to be governed by Section 203 of
the Delaware General Corporation Law.
* * * * *
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