Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Form S-1 Amendment Number 1 107 579K
2: EX-3.1 Restated Certificate of Incorporation 25 111K
3: EX-3.2 Amended and Restated By-Laws 18 82K
4: EX-4.1 Specimen Common Stock Certificate 2 12K
5: EX-4.2 Warrant Agreement Dtd September 4, 1998 33 94K
6: EX-4.3 Common Stock Warrant Dtd 02/19/1999 8 37K
7: EX-4.4 Common Stock Warrant Dtd 02/19/1999 8 37K
8: EX-4.5 Stockholders Agreement Dated 02/19/1999 28 142K
9: EX-10.1 Investment Agreement Dated 04/22/1998 2 19K
16: EX-10.10 Assignment and Assumption Dtd 10/02/1998 3 18K
17: EX-10.12 Employment Agreement Dtd 6/29/1998 15 53K
18: EX-10.13 Agreement for Cooperative Use Dtd 11/5/1996 37 112K
19: EX-10.14 Letter of Agreement Dtd 2/28/1997 2 15K
20: EX-10.15 Letter of Agreement Option Dtd 4/4/1997 2± 14K
21: EX-10.16 Letter Amendement Agreement Dtd 8/1/1997 3 17K
22: EX-10.17 Letter Amendement Agreement Dtd 10/21/1997 2± 14K
23: EX-10.18 Application Transfer Dtd 01/06/1999 2± 15K
24: EX-10.19 Assignment of Ussn and Pct Dtd 01/06/1999 2 16K
25: EX-10.20 Letter Amendment Agreement Dtd 01/26/1999 2 20K
26: EX-10.21 Assignmt of 50% of Certain Patent Prop Dtd 3 24K
01/26/1999
27: EX-10.22 Assignmt of Certain Trademarks Dtd 02/09/1999 2 15K
28: EX-10.23 Internet Services Agreement Dtd 10/24/1997 6 37K
29: EX-10.24 Collaboration Agreement Dtd 02/18/1998 2 17K
30: EX-10.25 Cais Iport License Agreement Dtd 09/10/1998 19 70K
31: EX-10.26 Marketing Assoc. Solution Agreement Dtd 11/11/1998 10 50K
32: EX-10.27 Master License Agreement Dtd 12/23/1998 51 175K
33: EX-10.28 Agreement for High Speed Net Access Serv Dtd 26 93K
02/19/1999
34: EX-10.29 Deed of Lease Dtd July 28, 1997 13 44K
10: EX-10.3 Series A Stock Dtd 02/19/1999 43 177K
35: EX-10.30 Deed of Lease Dtd May 28, 1998 12 41K
36: EX-10.31 Office Building Lease Dtd 11/21/1998 71± 279K
37: EX-10.32 Settle Agreement Dtd 01/24/1999 17 48K
38: EX-10.33 Amended and Restated Equity Dtd 02/12/1999 9 46K
11: EX-10.4 Exchange Agreement Dtd 10/02/1998 5 22K
12: EX-10.5 Agreement of Merger Dtd 10/02/1998 5 25K
13: EX-10.6 Amended and Restated Employment Agreement Dtd 9 43K
06/03/1997
14: EX-10.7 Assignment and Assumption Dtd 10/02/1998 3 17K
15: EX-10.9 Amended Employment Agreement Dtd 9/8/1997 11 49K
EX-3.1 — Restated Certificate of Incorporation
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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CGX COMMUNICATIONS, INC.
CGX Communications, Inc. (the "Corporation"), a corporation organized and
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existing under the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. The name of the corporation is CGX Communications, Inc. The original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on December 4, 1997.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware (the "Corporation Law"), this Amended and Restated Certificate
---------------
of Incorporation (this "Restated Certificate") (it being understood that any
--------------------
references to this Restated Certificate shall include any duly authorized
certificate of designation) amends and restates the existing Certificate of
Incorporation of the Corporation in its entirety.
______________________________________________________________________________
ARTICLE I
The name of this Corporation is CAIS Internet, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 15 East North Street, City of Dover, County of Kent, Delaware 19901. The
name of the Corporation's registered agent at such address is HIQ Corporate
Services, Inc.
ARTICLE III
The nature of the business or purposes to be conducted by this Corporation
is to engage in any lawful act or activity for which a corporation may be
organized under the General Corporation Law of the State of Delaware.
ARTICLE IV
A. Classes of Stock. The Corporation is authorized to issue two
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classes of capital stock to be designated respectively "Common Stock" and
------------
"Preferred Stock." The total number of shares of Common Stock the Corporation
----------------
shall have authority to issue is 100,000,000 with par value of $.01 per share.
The total number of shares of Preferred Stock the Corporation shall have
authority to issue is 25,000,000 with par value of $.01 per share, of which
2,827,168 shares shall be designated
as Series A Preferred Stock (the "Series A Preferred"), and 1,119,679 shares
------------------
shall be designated as Series B Preferred Stock (the "Series B Preferred"). The
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Board of Directors is expressly authorized to provide for the classification and
reclassification of any unissued shares of Preferred Stock and the issuance
thereof in one or more classes or series without the approval of the
stockholders.
B. Rights, Preferences, Privileges and Restrictions of Preferred Stock
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Generally. The Preferred Stock authorized hereby may be issued from time to time
---------
in one or more series ("Series"). Subject to compliance with applicable
------
protective voting rights which may have been or may be granted to the Preferred
Stock or any Series thereof in any certificates of designation or the
Corporation's certificate of incorporation as amended from time to time (the
"Certificate of Incorporation") (collectively, the "Protective Provisions"), but
----------------------------- ---------------------
notwithstanding any other rights of the Preferred Stock or any Series thereof,
the Board of Directors expressly is authorized to provide by resolution and by
filing a certificate of designation pursuant to the Delaware General Corporation
Law, for the issuance from time to time of the shares of Preferred Stock in one
or more Series, to establish from time to time the number of shares to be
included in each such Series, and to fix the designation, powers, preferences
and other rights of the shares of each such Series and to fix the
qualifications, limitations and restrictions thereon, including, but without
limiting the generality of the foregoing, the following: (i) the number of
shares constituting that Series and the distinctive designation of that Series;
(ii) the dividend rate on the shares of that Series, whether dividends shall be
cumulative, and, if so, from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of that Series; (iii)
whether that Series shall have voting rights, in addition to the voting rights
provided by law, and, if so, the terms of such voting rights; (iv) whether that
Series shall have conversion privileges and, if so, the terms and conditions of
such conversion, including provision for adjustment of the conversion rate in
such events as the Board of Directors shall determine; (v) whether or not the
shares of that Series shall be redeemable, and, if so, the terms and conditions
of such redemption, including the dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption, which amount
may vary under different conditions and at different redemption dates; (vi)
whether that Series shall have a sinking fund for the redemption or purchase of
shares of that Series, and, if so, the terms and amount of such sinking fund;
(vii) the rights of the shares of that Series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that Series; and
(viii) any other relative powers, preferences and rights of that series, and
qualifications, limitations or restrictions on that Series. Subject to
compliance with the applicable Protective Provisions, privileges, preferences
and restrictions of any such additional Series of Preferred Stock may be
subordinated to, pari passu with (including, without limitation, with respect to
liquidation and acquisition preferences, redemption and/or approval of matters
by vote or written consent), or senior to any of those of any present or future
Series of Preferred Stock or class of Common Stock. Subject to compliance with
applicable Protective Provisions, the Board of Directors also is authorized to
increase or decrease the number of shares of any Series of Preferred Stock
(other than the Series A Preferred or the Series B Preferred), prior or
subsequent to the issue of that Series, but not below the number of shares of
such Series then outstanding. In case the number of shares of any Series of
Preferred Stock shall be so decreased, the shares constituting such decrease
shall resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such Series. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of Preferred Stock of each Series shall
2
be entitled to receive only such amount or amounts as shall have been fixed by
the Certificate of Incorporation, any applicable certificate of designations or
by the resolution or resolutions of the Board of Directors providing for the
issuance of such Series.
C. Rights, Preferences, Privileges and Restrictions of Series A
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Preferred, Series B Preferred and Common Stock. The rights, preferences,
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privileges and restrictions granted to and imposed upon the Series A Preferred,
the Series B Preferred and the Common Stock are as set forth below in this
Division C.
1. Dividend Rights. The holders of Series A Preferred and the Series B
---------------
Preferred each shall be entitled to receive, when, as and if declared by the
Corporation's Board of Directors, out of assets of the Corporation that are by
law available for such payment, for all distributions of funds and assets of the
Corporation, dividends at the same time and on the same basis as the holders of
Common Stock (each holder of shares of Series A Preferred and Series B Preferred
to be entitled to the same amount of dividends as would have been declared or
paid thereon had such shares been converted into Common Stock as of the record
date fixed for determining the holders of Common Stock entitled to receive such
dividends).
2. Liquidation Rights.
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(a) (i) In the event of any liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary, the holders of Series A
Preferred shall be entitled to receive, prior and in preference to any
distribution of any assets of the Corporation to the holders of the Series B
Preferred or the Common Stock by reason of their ownership thereof, an amount
(the "Series A Preferred Preferential Amount") equal to the sum of (A) $4.07 per
--------------------------------------
share as appropriately adjusted for any stock dividends, combinations, splits or
the like with respect to such shares (the "Original Series A Issue Price"), (B)
-----------------------------
annual interest thereon from the date of issuance of the Series A Preferred to
the date of the payment of the liquidating distribution at a rate equal to eight
percent per annum and (C) an amount equal to all declared but unpaid dividends
on such shares. If in the event of any liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary, the assets and funds thus
distributed among the holders of the Series A Preferred shall be insufficient to
permit the payment to such holders of the full aforesaid Series A Preferred
Preferential Amount, then the entire assets and funds of the Corporation legally
available for distribution shall be distributed among the holders of the Series
A Preferred in proportion to the aggregate Series A Preferred Preferential
Amount of all shares of Series A Preferred then held by them bears to the
aggregate Series A Preferential Amount of all shares of Series A Preferred
outstanding as of the date of the liquidating distribution upon the occurrence
of such event.
(b) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, and after payment has been made to
the holders of the Series A Preferred of the full Series A Preferential Amount,
the holders of Series B Preferred shall be entitled to receive, prior and in
preference to any distribution of assets of the Corporation to the holders of
the Common Stock by reason of their ownership thereof, an amount (the "Series B
--------
Preferred Preferential Amount") equal to the sum of (i) $4.07 per share as
-----------------------------
appropriately adjusted for any stock dividends, combinations, splits or the like
with respect to such shares (the
3
"Original Series B Issue Price"), (ii) annual interest thereon from the date of
-----------------------------
issuance of the Series B Preferred at a rate equal to eight percent per annum
and (iii) an amount equal to all declared but unpaid dividends on such shares.
If in the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the assets and funds thus
distributed among the holders of the Series B Preferred shall be insufficient to
permit the payment to such holders of the full aforesaid Series B Preferred
Preferential Amount, then the entire assets and funds of the Corporation legally
available for distribution (after payment of the full Series A Preferential
Amount) shall be distributed among the holders of the Series B Preferred in
proportion to the aggregate Series B Preferred Preferential Amount of all shares
of Series B Preferred then held by them bears to the aggregate Series B
Preferential Amount of all shares of Series B Preferred outstanding as of the
date of the liquidating distribution upon the occurrence of such event.
(c) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment has been made to
the holders of the Series A Preferred and Series B Preferred of the full amounts
to which they shall be entitled as aforesaid, the holders of the Series A
Preferred (assuming for such purposes the conversion thereof into Common Stock)
and the Common Stock shall be entitled to share ratably in the entire remaining
assets and funds of the Corporation legally available for distribution, based on
the number of shares of Common Stock held.
(d) Notwithstanding the foregoing paragraphs (a) through (c), in the
event of any liquidation, dissolution or winding up of the Corporation, either
voluntary or involuntary, if the total value of the assets that would be
available for distribution after payment of the full Series B Preferential
Amount (but prior to the payment of the Series A Preferential Amount) to the
holders of the Common Stock (assuming for purposes of such calculation the
conversion of all securities convertible into Common Stock), is equal to or
greater than $8.14 per share (as adjusted appropriately for stock dividends,
combinations, splits or the like), then all such assets shall be distributed (i)
first, to the holders of the Series B Preferred in payment of the full Series B
Preferential Amount, pro rata based upon the number of shares of Series B
Preferred owned by each stockholder and no more, and (ii) second, to the holders
of the Series A Preferred and the Common Stock pro rata based upon the number
of shares of Common Stock owned by each stockholder (assuming for such purposes
the conversion of all Series A Preferred into Common Stock).
(e) (i) At the affirmative election (by vote or written consent, as
provided by law) of the holders of a majority in the aggregate of the then
outstanding shares of Series A Preferred, for purposes of this Section 2, a
liquidation, dissolution or winding up of the Corporation shall be deemed to be
occasioned by, and to include, the following: (A) the acquisition of a majority
of the voting power of the Corporation by another entity or person or group of
entities or persons by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation, but excluding any merger effected exclusively for the purpose of
changing the domicile of the Corporation); (B) the sale of all or substantially
all of the assets of the Corporation; (unless in either case specified in clause
(A) or (B) the Corporation's stockholders of record as constituted immediately
prior to such acquisition or sale will, immediately
4
after such acquisition or sale (by virtue of securities issued as consideration
for the Corporation's acquisition or sale or otherwise) hold at least 50% of the
voting power of the surviving or acquiring entity); and (C) a Triggering Event
(as hereinafter defined). Any such transaction contemplated by clause (A) or (B)
of this subsection IV.C.2(e)(i) shall be hereinafter referred to as a "Corporate
---------
Transaction." The term "Triggering Event" shall mean any of the following
------------ ----------------
events:
(A) the signing by an authorized officer of the Corporation
of a petition for relief under Title 11, United States Code, as currently in
effect or amended;
(B) the commencement of any involuntary bankruptcy case or
other proceeding against the Corporation under Title 11, United States Code, as
currently in effect or amended (provided that if such case or proceeding is
dismissed within 60 days after the date of such commencement, then a Triggering
Event arising solely pursuant to this clause (B) as a result of such case or
proceeding shall be dismissed) or the appointment of a trustee, receiver,
liquidator, custodian or sequestrator (or other similar official) for the
Corporation or any substantial part of its property;
(C) the making by the Corporation of an assignment for the
benefit of creditors generally; or
(D) the failure or inability of the Corporation to pay its
debts generally as they become due.
(ii) If the consideration received by the Corporation in any
Corporate Transaction is other than cash, for purposes of determining the value
of any assets of the Corporation which are to be distributed to the stockholders
of the Corporation in any liquidation, winding up or dissolution, its value will
be deemed to be its fair market value, as determined below:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by subsection
IV.C.2(e)(ii)(B) below:
(1) if traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or market over the 30-day
period ending three days prior to the closing;
(2) if actively traded over-the-counter other than
through the Nasdaq National Market, the value shall be deemed to be the average
of the closing bid or sale prices (whichever is applicable) over the 30-day
period ending three days prior to the closing; and
(3) if there is no active public market, the value
shall be the fair market value thereof, as mutually determined by the
Corporation and the holders of a majority of the voting power of all then
outstanding shares of Preferred Stock, with holders of a majority of the shares
of Series A Preferred voting in favor thereof.
(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
5
stockholder's status as an affiliate or former affiliate) shall be to make an
appropriate discount from the market value determined as above in subsection
IV.C.2(e)(ii)(A)(1), (2) or (3) to reflect the approximate fair market value
thereof, as mutually determined by the Corporation and the holders of a majority
of the voting power of all then outstanding shares of Preferred Stock, with
holders of a majority of the shares of Series A Preferred voting in favor
thereof.
(C) The value of assets other than securities will be
their fair market value as mutually determined by the Corporation and the
holders of a majority of the voting power of all then outstanding shares of
Preferred Stock, with holders of a majority of the shares of Series A Preferred
voting in favor thereof.
(D) If the Corporation and holders of Preferred Stock are
unable mutually to determine the value of any securities or other assets as
provided above, then the fair market value of such securities or other assets
shall be determined as follows:
(1) The Corporation and a representative (the
"Representative") of the holders of a majority of the voting power of all then
--------------
outstanding shares of Preferred Stock shall negotiate in good faith to determine
the fair market value of such securities or assets. Such Representative shall be
selected by holders of a majority of the voting power of all the outstanding
shares of Preferred Stock, with the holders of a majority of the shares of
Series A Preferred voting in favor thereof. If the Corporation and the
Representative so agree, the fair market value shall be the amount so agreed
upon.
(2) If no such agreement is reached within 30 days
after negotiations commence, the Corporation, subject to the approval of the
Representative (which approval shall not be unreasonably withheld, conditioned
or delayed), shall within 15 business days thereafter select an investment
banker to value such securities or assets. Such investment banker shall be of
national standing and shall be independent of parties to the dispute. The
Corporation shall give the representatives of the investment banker full access
to all information that they may reasonably request concerning the Corporation.
Within 30 days of its selection, such investment banker shall determine the fair
market value for such securities or assets, which determination shall be final
and binding. The costs of the investment banker shall be paid solely by the
Corporation.
(3) The investment banker appointed for purposes of
determining the fair market value of such securities or assets may apply such
factors and discounts as are customarily utilized.
(iii) The Corporation shall give each holder of record of
Preferred Stock written notice of such impending Corporate Transaction not later
than 20 days prior to the stockholders' meeting called to approve such Corporate
Transaction, or 20 days prior to the closing of such Corporate Transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such Corporate Transaction. The first of such notices shall describe
the material terms and conditions of the impending Corporate Transaction and the
provisions of this Section 2, and the Corporation shall thereafter give such
holders prompt notice of any material changes. The Corporate Transaction shall
in no event take place sooner than 20 days after the Corporation has
6
given the first notice provided for herein or sooner than ten 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 holders of Preferred Stock that are entitled to such notice rights or
similar notice rights and that represent at least a majority of the voting power
of all then outstanding shares of Preferred Stock then outstanding.
3. Conversion. The holders of the Series A Preferred and Series B
----------
Preferred shall have conversion rights as follows (the "Conversion Rights"):
-----------------
(a) Each share of Series A Preferred shall be convertible, at the
option of the holder and without payment of additional consideration, at any
time after the date of issuance of such share, 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 by dividing the Original
Series A Issue Price by the Series A Conversion Price, determined as hereafter
provided, in effect on the date the certificate is surrendered for conversion.
The initial price at which shares of Common Stock shall be deliverable upon
conversion of shares of each series of Series A Preferred (the "Series A
--------
Conversion Price") shall be the Original Series A Issue Price; provided,
----------------
however, that the Series A Conversion Price shall be subject to adjustment as
hereinafter provided.
(b) (i) Each share of Series A Preferred shall automatically be
converted into fully paid and nonassessable shares of Common Stock upon the
occurrence of the earliest of any one of the following events (the "Series A
--------
Mandatory Conversion Events"):
---------------------------
(A) Upon the affirmative vote of the holders of at least 75
percent of the outstanding Series A Preferred voting separately as a class to
cause all outstanding shares of Series A Preferred to be converted.
(B) Upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering the offer
--------------
and sale of Common Stock for the account of the Corporation to the public at (1)
a per share public offering price (prior to underwriter commissions and offering
expenses) of not less than $8.14 (appropriately adjusted for any stock splits,
stock dividends, recapitalizations and similar transactions) and (2) an
aggregate price (prior to underwriter's commissions and offering expenses) of
not less than $35,000,000 (such offering a "Qualified IPO"). In the event of the
-------------
automatic conversion of the Series A Preferred upon the closing of a Qualified
IPO as aforesaid, the person(s) entitled to receive the Common Stock issuable
upon such conversion of the Series A Preferred shall not be deemed to have
converted such Series A Preferred until immediately prior to such closing.
(C) Following the closing of a public offering pursuant to
an effective registration statement under the Securities Act covering the offer
and sale of Common Stock to the public which is not a Qualified IPO (a
"Nonqualified IPO"), upon the twentieth consecutive business day upon which the
----------------
Common Stock has closed at a price of not less than $16.28 per share on each
such day (appropriately adjusted for any stock splits, stock dividends,
recapitalizations and similar transactions). In the event of the automatic
conversion of the Series A
7
Preferred following a Nonqualified IPO as aforesaid, the person(s) entitled to
receive the Common Stock upon such conversion of the Series A Preferred shall
not be deemed to have converted such Series A Preferred until immediately
following the close of business on the business day on which the applicable
requirements of this subsection IV.C.3(b)(i)(C) are satisfied.
The number of shares of Common Stock into which each share of Series A Preferred
shall be converted pursuant to this subsection IV.C.3(b)(i) shall be determined
by dividing the Original Series A Issue Price by the Series A Conversion Price,
determined as hereafter provided, in effect on the date of the applicable Series
A Mandatory Conversion Event.
(ii) Each share of Series B Preferred shall automatically be
converted into shares of fully paid and nonassessable Common Stock upon the
occurrence of the earlier of any one of the following events (the "Series B
--------
Mandatory Conversion Events"):
---------------------------
(A) Upon the closing of a Qualified IPO (but
subsequent to the related partial redemption of Series B Preferred required
pursuant to subsection IV.C.4(b) below) (provided that in no event (including
the absence of legally available funds to redeem such shares) shall the 737,100
shares of Series B Preferred referred to in subsection IV.C.4(b)(i) below be
converted into Common Stock).
(B) Upon the mandatory conversion of the Series A
Preferred pursuant to subsection IV.C.3(b)(i)(C) following the closing of a
Nonqualified IPO
The number of shares of Common Stock into which each share of Series B Preferred
shall be converted pursuant to this subsection IV.C.3(b)(ii) shall be determined
by dividing the Original Series B Issue Price by the price at which the Common
Stock is sold by the Company in the Qualified IPO or the Nonqualified IPO, as
applicable, giving rise to such conversion.
(c) No fractional shares of Common Stock shall be issued upon
conversion of the Series A Preferred or Series B Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Series A Conversion Price, Series B Conversion Price or fair market
value of the Common Stock, as applicable. Before any holder of Series A
Preferred shall be entitled to convert the same into full shares of Common Stock
pursuant to subsection IV.C.3(a) above, or in the event that any Series A
Preferred or Series B Preferred is automatically converted into Common Stock
pursuant to subsection (b) above, the holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred or Series B Preferred, as applicable,
and shall give written notice to the Corporation at such office that such holder
elects to convert the same; provided, however, that in the event of an automatic
conversion pursuant to subsection IV.C.3(b) above, the outstanding shares of
Series A Preferred and Series B Preferred subject to conversion shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent, and provided further that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates evidencing
such shares of Series A Preferred or Series B Preferred,
8
as applicable, are either delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall,
as soon as practicable after such delivery, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at such
office to such holder of Series A Preferred or Series B Preferred, as
applicable, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid and a check payable to
the holder in the amount of any cash amounts payable as the result of a
conversion into fractional shares of Common Stock. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series A Preferred or Series B Preferred, as
applicable, to be converted, or in the case of automatic conversion on the date
of occurrence of the applicable Series A Mandatory Conversion Event or Series B
Mandatory Conversion Event (and subject to the further provisions of subsection
IV.C.3(b)), and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
(d) (i) (A) Subject to subsection IV.C.3(d)(i)(B), if the
Corporation shall issue, after the time this Restated Certificate becomes
effective (the "Effective Time"), any Additional Stock (as defined below)
--------------
without consideration or for a consideration per share less than the Series A
Conversion Price in effect immediately prior to the issuance of such Additional
Stock, the Series A Conversion Price in effect immediately prior to each such
issuance shall forthwith (except as otherwise provided in this clause (i)) be
adjusted to a price determined by multiplying such Series A Conversion Price by
a fraction, the numerator of which shall be the number of shares of Common Stock
which would be outstanding immediately prior to such issuance assuming the
conversion of all outstanding shares of Series A Preferred into Common Stock
(not including shares excluded from the definition of Additional Stock by
subsection IV.C.3(d)(ii)) 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 which would be outstanding immediately prior to
such issuance assuming the conversion of all outstanding shares of Series A
Preferred into Common Stock (not including shares excluded from the definition
of Additional Stock by subsection IV.C.3(d)(ii)) plus the number of shares of
such Additional Stock.
(B) No adjustment of the Series A Conversion Price 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 taken into account in any subsequent adjustment. Except to
the limited extent provided for in subsections IV.C.(d)(E)(3) and (4) below, no
adjustment of such Series A Conversion Price pursuant to this subsection
IV.C.3(d)(i) shall have the effect of increasing the Conversion Price above the
Series A 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
9
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 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 Corporation's Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on or
after the Effective Time) 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 subsection IV.C.3(d)(i) and subsection IV.C.3(d)(ii):
(1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (assuming the satisfaction of any conditions to
exercisability, including without limitation, the passage of time, but without
taking into account potential antidilution adjustments) 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 subsections
IV.C.3(d)(i)(C) and (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 (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange (assuming the satisfaction
of any conditions to convertibility or exchangeability, including, without
limitation, the passage of time, but without taking into account potential
antidilution adjustments) 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 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 (without taking into account potential
antidilution adjustments) 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 subsections IV.C.3(d)(i)(C) and (D)).
(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
the antidilution provisions thereof, the Series A 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, but no further
adjustment shall be made for the actual issuance of Common Stock or any payment
of such consideration upon the exercise of any such options or rights or the
conversion or exchange of such securities.
10
(4) Upon the expiration of any such options or rights,
the termination of any such rights to covert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Series A 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 based 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 subsections
IV.C.3(d)(i)(E)(l) and (2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either subsection
IV.C.3(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common Stock
----------------
issued (or deemed to have been issued pursuant to subsection IV.C.3(d)(i)(E)) by
the Corporation after the Effective Time other than the following:
(A) shares of Common Stock issued pursuant to a transaction
described in subsection IV.C.3(d)(iii), (e) or (f) hereof;
(B) shares of Common Stock issued or deemed issued to
employees, consultants, directors or vendors (if in transactions with primarily
nonfinancing purposes) of the Corporation directly or pursuant to a stock option
plan, restricted stock plan or other compensatory plan or arrangement approved
by the Board of Directors of the Corporation at any time when the total number
of shares of Common Stock so issuable or issued (and not repurchased at cost by
the Corporation in connection with the termination of employment) does not
exceed 1,500,000 (as appropriately adjusted for any stock dividends,
combinations, splits or the like with respect to shares of Common Stock) plus
such additional number of shares of Common Stock issued or deemed issued for
like purposes as shall be approved by holders of at least 75 percent of the then
outstanding shares of Series A Preferred;
(C) shares of Common Stock issued or deemed issued pursuant
to warrants issued by the Corporation pursuant to either (1) the Warrant
Agreement dated as of September 4, 1998 among the Corporation, Cleartel
Communications, Inc., CAIS, Inc. and ING (U.S.) Capital Corporation, Inc. (the
"ING Warrant Agreement") at any time when the total number of shares of Common
---------------------
Stock so issuable or issued does not exceed 390,000 (as appropriately adjusted
for any stock dividends, combinations, splits or the like with respect to shares
of Common Stock), (2) the Series A Preferred Stock and Warrant Purchase
Agreement dated as of February 19, 1999 among the Corporation and the several
purchasers set forth therein, (3) pursuant to the conversion of the Series B
Preferred or (4) options to purchase up to 2,033,926 shares of Common Stock
presently held by two management employees of the Corporation;
(D) up to 500,000 shares of Common Stock (as appropriately
adjusted for any stock dividends, combinations, splits or the like with respect
to shares of Common
11
Stock) issued or deemed issued to a corporation, partnership or other entity
with which the Corporation is seeking to establish a partnership, joint venture
or other business relationship plus such additional number of shares of Common
Stock issued or deemed issued for like purposes as are approved by the holders
of at least 75 percent of the then outstanding Series A Preferred;
(E) shares of Common Stock issued or deemed issued in
connection with any high-yield debt financing undertaken by the Corporation (but
excluding for purposes of this subsection IV.C.3(d)(ii)(E) any conversion into
senior secured notes of the term loan extended to the Corporation pursuant to
the Credit Agreement dated as of September 4, 1998 among the Corporation,
certain affiliates thereof and ING (U.S.) Capital Corporation in accordance with
the terms thereof);
(F) shares of Common Stock issued or deemed issued
pursuant to that certain Settlement Agreement dated January 24, 1999 between
CAIS, Inc. and Terk Technologies Corp. as in effect on the date hereof; and
(G) shares of Common Stock issued or deemed issued in
connection with the acquisition by the Corporation of the stock or assets of
another corporation, partnership or other entity.
(iii) In the event the Corporation should at any time or from
time to time after the Effective Time 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 (hereinafter referred to as
"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 Series A
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share of Series A Preferred shall
be increased in proportion to such increase of the aggregate of shares of Common
Stock outstanding and those issuable with respect to the aggregate number of
shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents with the number of shares issuable with respect to
Common Stock Equivalents determined from time to time in the manner provided for
deemed issuances in subsection IV.C.3(d)(i)(E).
(iv) If the number of shares of Common Stock outstanding at any
time after the Effective Time is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Series A Conversion Price shall be appropriately increased so that the number of
shares of Common Stock issuable on conversion of such shares of Series A
Preferred shall be decreased in proportion to such decrease in outstanding
shares of Common Stock.
12
(e) 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 subsection IV.C.3(d)(iii), then, in each such case for
the purpose of this subsection IV.C.3(e), the holders of the Series A Preferred
and Series B Preferred, respectively, shall be entitled to a share of any such
distribution as follows: all distributions shall be made to the holders of the
Series A Preferred, the Series B Preferred and the Common Stock in the same
priorities and order of distribution and in the same proportions as
distributions of funds and assets are to be made in the case of a liquidation,
dissolution or winding-up of the Corporation. All amounts so distributed to the
holders of Series A Preferred and Series B Preferred, respectively, in
accordance therewith shall be credited toward the payment of the Series A
Preferential Amount to be paid to the holders of the Series A Preferred and the
Series B Preferential Amount to be paid to the holders of the Series B
Preferred, as applicable.
(f) If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision, combination or
merger, sale of assets or other transaction provided for elsewhere in this
Section 3 or in Section 2), provision shall be made so that the holders of the
Series A Preferred and Series B Preferred, respectively, shall thereafter be
entitled to receive upon conversion of the Series A Preferred 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 on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 3 with
respect to the rights of the holders of the Series A Preferred and Series B
Preferred, respectively, after the recapitalization to the end that the
provisions of this Section 3 (including adjustment of the Series A Conversion
Price then in effect and the number of shares purchasable upon conversion of the
Series A Preferred) shall be applicable after that event as nearly equivalent as
may be practicable.
(g) The Corporation will not, by amendment of this Restated
Certificate, 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 by the Corporation under this Restated Certificate, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section IV.C.3 and in the taking of all such action as may be necessary
or appropriate in order to protect the respective conversion rights of the
holders of the Series A Preferred and Series B Preferred against impairment.
(h) Upon the occurrence of each adjustment or readjustment of the
Series A Conversion Price pursuant to this Section 3, the Corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms of this Restated Certificate and cause independent public
accountants selected by the Corporation to verify such computation and prepare
and furnish to each holder of Series A Preferred a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A Preferred, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such adjustments
and readjustments, (B) the Series A Conversion Price at the time in effect and
(C) the number of shares
13
of Common Stock and the amount, if any, of other property that at the time would
be received upon the conversion of the Series A Preferred.
(i) 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 of
such securities who are entitled to receive any dividend or other distribution,
whether in cash, property, stock or other securities, or any right to subscribe
for, purchase or 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 Series A Preferred and Series B Preferred at least 20
days prior to the date specified in such notice, a notice specifying the date on
which any such record is to be taken for the purpose of such dividend,
distribution or rights, and the amount and character of such dividend,
distribution or right.
(j) 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 Series A Preferred and the Series
B Preferred, 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 the
Series A Preferred and the Series B Preferred. 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 the Series A Preferred and/or
Series B Preferred, 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
purpose.
(k) Any notice required by the provisions of this Section IV.C.3 to
be given to the holders of shares of Series A Preferred and/or Series B
Preferred shall be deemed given if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at the address appearing on the
books of the Corporation.
(l) In the event any shares of Series A Preferred or Series B
Preferred shall be converted pursuant to this Section V.C.3, the shares so
converted shall be canceled and shall not be reissuable by the Corporation.
4. Redemption.
----------
(a) (i) At any time after February 1, 2004, upon the written request
of the holders of at least a majority of the then issued and outstanding Series
A Preferred, the Corporation shall redeem the Series A Preferred specified in
such request, up to the maximum amount the Corporation may lawfully redeem out
of funds legally available therefor, by paying in cash therefor a sum per share
equal to the greater of (A) the sum of (1) the Original Series A Issue Price,
(2) annual interest thereon from the date of issuance of the Series A Preferred
at a rate equal to eight percent per annum and (3) an amount equal to all
declared and unpaid dividends on such shares as of the date called for
redemption, and (B) the fair market value of the Series A Preferred as of the
date of the receipt by the Corporation of such written request for redemption of
the Series A Preferred. For purposes of this subsection IV.C.4(a), the fair
market value of the Series A Preferred
14
will be the fair market value as mutually determined by the Corporation and the
holders of a majority of the voting power of the Series A Preferred to be
redeemed.
(ii) If the Corporation and the holders of a majority of the
voting power of the Series A Preferred to be redeemed are unable mutually to
determine the fair market value of the Series A Preferred, then such fair market
value shall be determined in accordance with the following procedures:
(A) The Corporation and a representative (the
"Representative") of the holders of a majority of the voting power of the
--------------
holders of the Series A Preferred that have requested redemption pursuant to
subsection IV.C.4(a) (i) shall negotiate in good faith to determine the fair
market value of such securities or assets. Such Representative shall be selected
by holders of a majority of the voting power of the holders of the Series A
Preferred that have requested redemption pursuant to subsection IV.C.4(a)(i). If
the Corporation and the Representative so agree, the fair market value shall be
the amount so agreed upon.
(B) If no such agreement is reached within 30 days
after negotiations commence, the Corporation, subject to the approval of the
Representative (which approval shall not be unreasonably withheld, conditioned
or delayed), shall within 15 business days thereafter each select an investment
banker to value such securities or assets. Such investment banker shall be of
national standing and shall be independent of the parties to the dispute. The
Corporation shall give the representatives of such investment banker full access
to all information that they may reasonably request concerning the Corporation.
Within 30 days of its selection, such investment banker shall determine the fair
market value for such securities or assets, which determination shall be
conclusive and binding. The cost of the investment banker shall be paid solely
by the Corporation.
(C) The investment banker appointed for purposes of
determining the fair market value of the Series A Preferred may apply such
factors and discounts as are customarily utilized.
(iii) In the event of any redemption of only a part of the
Series A Preferred requested to be redeemed pursuant to subsection IV.C.4(a)(i),
the Corporation shall effect such redemption pro rata according to the number of
shares held by each holder entitled to redemption of such holder's Series A
Preferred.
(b) (i) Upon the closing of a Qualified IPO the Corporation
shall redeem 737,100 shares of Series B Preferred, up to the maximum amount the
Corporation may lawfully redeem out of funds legally available therefor, by
paying in cash therefor an amount per share equal to the sum of (A) the Original
Series B Issue Price, (B) annual interest thereon from the date of issuance of
the Series B Preferred at a rate equal to eight percent per annum and (C) an
amount equal to all declared and unpaid dividends on such shares as of the date
called for redemption.
(ii) Upon the Closing of a Corporate Transaction, the
Corporation shall redeem all of the outstanding Series B Preferred, up to the
maximum amount the Corporation may
15
lawfully redeem out of funds legally available therefor, by paying in cash
therefor an amount equal to the sum of (A) the Original Series B Issue Price,
(B) annual interest thereon from the date of issuance of the Series A Preferred
at a rate equal to eight percent per annum and (C) an amount per share equal to
all declared and unpaid dividends on such shares as of the date called for
redemption.
(iii) In the event of any redemption of only a part of the
Series B Preferred pursuant to subsection IV.C.4(b)(i) or (ii), the Corporation
shall effect such redemption pro rata according to the number of shares held by
each holder entitled to redemption of such holder's Series B Preferred (or as
otherwise unanimously directed by such holders).
(c) At least 20 but no more than 60 days prior to the date fixed by
the Corporation to redeem any shares of Series A Preferred or Series B Preferred
pursuant to subsections IV.C.4(a) or IV.C.4(b) above, as applicable, (the
"Redemption Date"), the Corporation shall mail written notice (the "Redemption
--------------- ----------
Notice"), first class postage prepaid, to each holder of record (at the close of
------
business on the business day preceding the day on which notice is given) of the
Preferred Stock to be redeemed, at the address last shown on the records of the
Corporation for such holder or given by the holder to the Corporation for the
purpose of notice or if no such address appears or is given at the place where
the principal executive office of the Corporation is located, notifying such
holder of the redemption to be effected, specifying the number of shares to be
redeemed from such holder, the Redemption Date, the price per share to be paid
(the "Redemption Price"), the place at which payment may be obtained and the
----------------
date on which such holder's rights as a holder of such shares terminate and
calling upon such holder to surrender to the Corporation, in the manner and at
the place designated, such holder's certificate or certificates representing the
shares to be redeemed. Except as provided in subsection IV.C.4(d), on or after
the Redemption Date, each holder of Preferred Stock to be redeemed shall
surrender to the Corporation the certificate or certificates representing such
shares, in the manner and at the place designated in the Redemption Notice, and
thereupon the Redemption Price of such shares shall be payable to the order of
the person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be canceled. In the event less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(d) From and after the applicable Redemption Date, unless there shall
have been a default in payment of the Redemption Price, all rights of the
holders of such shares as holders of Series A Preferred or Series B Preferred,
as applicable (except the right to receive the Redemption Price without interest
subsequent to the Redemption Date upon surrender of their certificate or
certificates) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Corporation legally
available for redemption of the Series A Preferred or Series B Preferred, as
applicable, on any Redemption Date are insufficient to redeem the total number
of shares of such Preferred Stock to be redeemed on such date, those funds which
are legally available will be used to redeem the maximum possible number of such
shares ratably among the holders of such shares to be redeemed. The shares of
Preferred Stock not redeemed shall remain outstanding and entitled to all the
powers, preferences and rights provided herein. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
shares of Preferred Stock, such funds will immediately be used to redeem the
balance of the shares which the
16
Corporation has become obligated to redeem on any Redemption Date but which it
has not redeemed.
(e) On or prior to the Redemption Date, the Corporation shall deposit
the Redemption Price of all shares of the Preferred Stock designated for
redemption in the Redemption Notice, and not yet redeemed or converted, with a
bank or trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of the respective holders of the
shares designated for redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust corporation to pay the
Redemption Price for such shares to their respective holders on or after the
Redemption date, upon receipt of notification from the Corporation that such
holder has surrendered his, her or its share certificate to the Corporation
pursuant to subsection IV.C.4(c) above. From and after the date of the deposit
the shares so called for redemption shall be redeemed, and as of the date of
such deposit (but only after the Redemption Date), the deposit shall constitute
full payment of the shares to their holders, and the shares shall be deemed to
be no 1onger outstanding, and the holders thereof shall cease to be stockholders
with respect to such shares and shall have no rights with respect thereto except
the rights to receive from the bank or trust corporation payment of the
Redemption Price of the shares, without interest, upon surrender of their
certificates therefore. Such instructions shall also provide that any moneys
deposited by the Corporation pursuant to this subsection IV.C.4(e) for the
redemption of shares thereafter converted into shares of the Common Stock
pursuant to Section IV.C.3 prior to the Redemption Date shall be returned to the
Corporation forthwith upon such conversion. The balance of any moneys deposited
by the Corporation pursuant to this subsection IV.C.4(e) remaining unclaimed at
the expiration of two years following the Redemption Date shall thereafter be
returned to this Corporation upon its request expressed in a resolution of its
Board of Directors.
(f) Any Series A Preferred and Series B Preferred Stock redeemed
pursuant to this subsection IV.C.4 shall not be reissued.
5. Voting Rights. The holders of shares of Series A Preferred, Series B
-------------
Preferred and Common Stock shall have the following voting rights:
(a) Except as required by law or as otherwise provided herein or in
any agreement between the Corporation and its stockholders, the holders of
shares of the Series A Preferred, the Series B Preferred and the Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation, including the election of directors, and shall
have no special voting rights.
(b) Each holder of shares of Series A Preferred shall be entitled to
the number of votes equal to the number of shares of Common Stock, rounded to
the nearest whole number, into which such shares of Series A Preferred could be
converted on the record date for the determination of the stockholders entitled
to vote (pursuant to subsection IV.C.3(a)). Fractional votes by the holders of
the Series A Preferred shall not, however, be permitted and any fractional
voting rights shall be rounded to the nearest whole number.
17
(c) Each holder of shares of Series B Preferred shall be entitled to
one vote per share (as appropriately adjusted for any stock dividends,
combinations, splits or the like with respect to such shares or the Common
Stock). Fractional votes by the holders of the Series B Preferred shall not,
however, be permitted and any fractional voting rights shall be rounded to the
nearest whole number.
(d) Each holder of Common Stock shall be entitled to one vote per
share on all matters coming before the holders of the Common Stock for a vote.
Fractional votes by the holders of the Common Stock shall not, however, be
permitted and any fractional voting rights shall be rounded to the nearest whole
number.
6. Protective Provisions.
---------------------
(a) So long as any shares of Series A Preferred are outstanding,
without first obtaining the approval (by vote or written consent, as provided by
law) of the holders of at least 75 percent in the aggregate of the then
outstanding shares of Series A Preferred (voting on an as-converted basis) the
Corporation shall not take (and shall not permit any of its subsidiaries to
take) any of the following actions:
(i) amend the Certificate of Incorporation or the By-Laws of
the Corporation to alter or change the rights, preferences, privileges or powers
of the Series A Preferred or the holders thereof, or increase or decrease the
number of authorized shares of Series A Preferred;
(ii) authorize or create any new class or series of capital
stock or any instrument convertible into or exchangeable for such capital stock,
or authorize any increase in the authorized number of shares of any existing
class or series of capital stock that has any preference or priority over, or is
on a parity with, the Series A Preferred with respect to voting, dividends or
upon liquidation;
(iii) declare or pay any dividends in cash, stock or other
property;
(iv) commence the redemption, repurchase or other acquisition
of any Common Stock, or of any other Series of Preferred Stock ranking on a
parity with or junior to the Series A Preferred with respect to dividends or
upon liquidation; provided, however, that the foregoing prohibition shall not
apply to any repurchase of Common Stock from any director, officer, employee or
agent of the Corporation or any of its subsidiaries if such repurchase is
approved by a majority of the directors of the Corporation who have no personal
interest in such redemption;
(v) approve or enter into any agreement to which any director,
officer, employee or stockholder of the Corporation is directly or indirectly a
party or beneficiary (including any employee benefit, bonus or stock plan if
such will provide more benefits than are then provided to any such person);
provided, however, that the foregoing prohibition shall not apply to any such
agreement if such agreement is approved by a majority of the directors of the
Corporation who have no personal interest in such agreement;
18
(vi) approve or enter into any Corporate Transaction (including
as such, for purposes of this clause only, transactions excluded from the
definition of Corporate Transaction by the parenthetical following clause (B) of
the definition thereof);
(vii) approve or enter into any agreement or other financial
commitment in excess of $250,000; provided, however, that the foregoing
limitation shall not apply to the making of capital expenditures;
(viii) terminate or approve the hiring or termination of the
employment of the Chief Financial Officer of the Corporation, or of any other
officer of the Corporation of equivalent or senior status;
(ix) approve the annual budget of the Corporation;
(x) make or commit to make any acquisition or capital
expenditure, or incur indebtedness or commit to incur indebtedness for money
borrowed or for the deferred purchase price of property (excluding the
incurrence of accounts payable incurred in the ordinary course of business) or
otherwise represented by a promissory note or similar instrument or in respect
to any guaranty, that is in excess of the amounts allocated thereto in the
annual budget of the Corporation;
(xi) incur indebtedness, unless the major terms thereof are set
forth in the annual budget of the Corporation (the major terms of indebtedness
shall mean interest rate, rights to equity in connection with such indebtedness,
and other terms determined by the Board of Directors of the Corporation to be of
material importance; provided, however, that nothing in this clause (xi) shall
prevent the incurrence of indebtedness where the major terms are more favorable
to the Corporation than those set forth in the annual budget);
(xii) grant or permit to exist any lien on any real or personal
property of the Corporation other than (A) liens in existence prior to the date
of the first issuance of shares of the Series A Preferred and (B) liens incurred
in the ordinary course of business and consistent with the prior practices of
the Corporation;
(xiii) liquidate or dissolve the Corporation; or
(xiv) take any action described in subsections IV.C.2(e)(i)(A)
or IV.C.2(e)(i)(C) above.
(b) So long as any shares of Series B Preferred are outstanding,
without first obtaining the approval (by vote or written consent, as provided by
law) of the holders of at least 75 percent in the aggregate of the then
outstanding shares of Series B Preferred (voting on an as- converted basis) the
Corporation shall not take any of the following actions:
19
(i) amend the Certificate of Incorporation to alter or change
the rights, preferences or privileges of the Series B Preferred or increase or
decrease the number of authorized shares of Series B Preferred;
(ii) declare or pay any dividends in cash, stock or other
property;
(iii) commence the redemption of any Common Stock, or of any
other Series of Preferred Stock ranking on a parity with or junior to the Series
B Preferred with respect to dividends or upon liquidation, but excluding the
Series A Preferred; provided, however, that the foregoing prohibition shall not
apply to any repurchase of Common Stock from any director, officer, employee or
agent of the Corporation or any of its subsidiaries if such repurchase is
approved by a majority of the directors of the Corporation who have no personal
interest in such redemption;
(iv) liquidate or dissolve the Corporation; or
(v) take any action described in subsections IV.C.2(e)(i)(A) or
IV.C.2(e)(i)(C) above.
7. Preemptive Rights.
------------------
(a) Prior to the occurrence of a Series A Mandatory Conversion Event,
the holders of outstanding shares of Series A Preferred shall have the right to
subscribe to any or all (i) issuances of shares of capital stock of the
Corporation, (ii) issuances of securities convertible into or exchangeable for
shares of capital stock of the Corporation or (iii) grants of options or other
rights to purchase shares of capital stock of the Corporation, on the same terms
of such offerings to the extent equal to the proportion which the number of
shares of Series A Preferred (on an as converted basis) and Common Stock issued
on conversion thereof held by such holders bears to the Corporation's fully-
diluted capitalization (on an as-converted and as-exercised basis). Such right
shall be exercisable within 30 days after the receipt of written notice relating
to such issuances by the holders of the Series A Preferred. Such right shall
extend for each holder of the Series A Preferred to the same proportion of the
new issue of shares, convertible securities or options as such holder's
proportion of the outstanding shares. The right of holders of the Series A
Preferred to purchase new issues of shares or convertible securities or options
does not extend to (i) shares of Common Stock that do not constitute Additional
Stock or (ii) any securities issued pursuant to an underwritten public
offering.
(b) In addition to the right to purchase his, her or its pro rata
proportion of the new issue of shares, convertible securities or options, each
holder of the Series A Preferred who has subscribed for the entire number of
shares or units initially allocable to such holder shall have the additional
right to subscribe to his, her or its proportionate part of any shares or units
which have not been subscribed or by other holders of the Series A Preferred.
In case the total number of shares or units desired to be purchased by holders
of the Series A Preferred exercising this right of oversubscription exceeds the
total number of shares or other units which have not been initially subscribed
for by other holders of the Series A Preferred and are thus available for
purchase, each holder of the Series A Preferred exercising this right of
oversubscription shall be entitled to purchase
20
a number of the shares or units not initially subscribed proportionate to the
number of shares already held by such holder. This procedure shall be repeated,
if necessary, until all of the shares or units not initially subscribed have
been allocated. The preemptive rights held by the holders of the Series A
Preferred pursuant to this Section IV.C.7 shall terminate on the earlier (i) the
date immediately prior to the closing date of a Qualified IPO and (ii) the date
of occurrence of any other Mandatory Conversion Event.
8. Status of Redeemed and Converted Stock. In the event any shares of
---------------------------------------
Preferred Stock shall be converted or redeemed pursuant to Section IV.C.3 or
IV.C.4 hereof, the shares so redeemed or converted shall be canceled and shall
not be issuable by the Corporation. The Restated Certificate shall be
appropriately amended to effect the corresponding reduction in the Corporation's
authorized capital stock.
D. Rights, Preferences, Privileges and Restrictions of Common Stock.
-----------------------------------------------------------------
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of capital stock of the Corporation at the time outstanding having prior
rights as to dividends, the holders of the Common Stock shall be entitled to
receive, when and as 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 subsection IV.C.2.
3. Redemption. The Common Stock is not redeemable.
----------
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by the
Corporation Law, the Board of Directors of the Corporation is expressly
authorized to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation by the affirmative vote of a majority of the total numbers of,
directors then in office. Any alteration or repeal of the By-Laws of the
Corporation by the stockholders of the Corporation shall require the affirmative
vote of at least a majority of the voting power of the then outstanding shares
of capital stock of the Corporation entitled to vote on such alteration or
repeal, subject to Article XI hereof and Article VIII of the Corporation's By-
Laws.
ARTICLE VII
A. Stockholder Action. Election of directors need not be by written
------------------
ballot unless the By-Laws of the Corporation so provide. Subject to any rights
of holders of any series of Preferred Stock, from and after the date on which
the Common Stock is registered pursuant to the Securities
21
Exchange Act of 1934, as amended (the "Exchange Act"), (i) any action required
------------
or permitted to be taken by the stockholders of the Corporation must be effected
at an annual or special meeting of stockholders of the Corporation and may not
be effected in lieu thereof by consent in writing by such stockholders, (ii)
special meetings of stockholders of the Corporation may be called only by either
the Board of Directors pursuant to a resolution adopted by the affirmative vote
of the majority of the total number of directors then in office or by the chief
executive officer of the Corporation and (iii) advance notice of stockholder
nominations of persons for election to the Board of Directors of the Corporation
and of business to be brought before any annual meeting of the stockholders by
the stockholders of the Corporation shall be given in the manner provided in the
By-Laws of the Corporation.
B. Number of Directors and Term of Office. Subject to any rights of
--------------------------------------
holders of any series of Preferred Stock to elect additional directors under
specified circumstances, the number of directors which shall constitute the
Board of Directors of the Corporation shall be fixed from time to time in the
manner set forth in the By-Laws of the Corporation. From and after the date on
which the Common Stock is registered pursuant to the Exchange Act, the directors
of the Corporation shall be divided into three classes: Class I, Class II and
Class III. Membership in each such class shall be as nearly equal in number as
possible. The term of office of the initial Class I directors shall expire at
the annual election of directors by the stockholders of the Corporation in 2000;
the term of office of the initial Class II directors shall expire at the annual
election of directors by the stockholders of the Corporation in 2001; and the
term of office of the initial Class III directors shall expire at the annual
election of directors by the stockholders of the Corporation in 2002; or in each
case thereafter when their respective successors in each case are elected by the
stockholders and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office for cause. At each
succeeding annual election of directors by the stockholders of the Corporation
beginning in 2000, the directors chosen to succeed those whose terms then expire
shall be identified as being of the same class as the directors they succeed and
shall be elected for a term expiring at the third succeeding annual election of
directors by the stockholders of the Corporation, or thereafter when their
respective successors in each case are elected by the stockholders and
qualified. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case shall a decrease in the number of directors shorten the
term of any incumbent director.
C. Removal and Resignation. From and after the date on which the Common
-----------------------
Stock is registered pursuant to the Exchange Act, no director may be removed
from office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors voting
together as a single class; provided, however, that if the holders of any class
or series of capital stock are entitled by the provisions of this Restated
Certificate to elect one or more directors, such director or directors so
elected may be removed without cause only by the vote of the holders of a
majority of the outstanding shares of that class or series entitled to vote. Any
director may resign at any time upon written notice to the Corporation.
22
D. Vacancies and Newly Created Directorships. Subject to any rights of
-----------------------------------------
holders of any series of Preferred Stock to fill such newly created
directorships or vacancies, any newly created directorships resulting from any
increase in the authorized number of directors and any vacancies in the Board of
Directors resulting from death, resignation, disqualification or removal from
office for cause shall, unless otherwise provided by law or by resolution
approved by the affirmative vote of a majority of the total number of directors
then in office, be filled only by resolution approved by the affirmative vote of
a majority of the total number of directors then in office. Any director so
chosen shall hold office until the next election of the class for which such
director shall have been chosen, and until his successor shall have been duly
elected and qualified, unless he shall resign, die, become disqualified or be
removed for cause.
ARTICLE VIII
A. Dividends. The Board of Directors shall have authority from time to
---------
time to set apart out of any assets of the Corporation otherwise available from
dividends a reserve or reserves as working capital or for any other purpose or
purposes, and to abolish or add to any such reserve or reserves from time to
time as said Board may deem to be in the interest of the Corporation; and the
Board of Directors shall likewise have power to determine in its discretion,
except as herein otherwise provided, what part of the assets of the Corporation
available for dividends in excess of such reserve or reserves shall be declared
in dividends and paid to the stockholders of the Corporation.
B. Issuance of Stock. The shares of all classes of capital stock of the
-----------------
Corporation may be issued by the Corporation from time to time for such
consideration as from time to time may be fixed by the Board of Directors of the
Corporation, provided that shares of capital stock having a par value shall not
be issued for a consideration determined by the Board of Directors to be less
than such par value. The Board of Directors shall have authority, as provided by
law, to determine that only a part of the consideration which shall be received
by the Corporation for the shares of its capital stock which it shall issue from
time to time, shall be capital; provided, however, that, if all the shares
issued shall be shares having a par value, the amount of the part of such
consideration so determined to be capital shall be equal to the aggregate par
value of such shares. The excess, if any, at any time, of the total net assets
of the Corporation over the amount so determined to be capital, as aforesaid,
shall be surplus. All classes of capital stock of the Corporation shall be and
remain at all times nonassessable.
C. Options, etc. Subject to the Protective Provisions, the Board of
-------------
Directors is hereby expressly authorized in its discretion, in connection with
the issuance of any obligations or stock of the Corporation (but without
intending hereby to limit its general power so to do in other cases), to grant
rights or options to purchase capital stock of the Corporation of any class upon
such terms and during such period as the Board of Directors shall determine, and
to cause such rights to be evidenced by such warrants or other instruments as it
may deem advisable.
D. Inspection of Books and Records. The Board of Directors shall have
-------------------------------
power from time to time to determine to what extent and at what times and places
and under what conditions and regulations the accounts and books of the
Corporation, or any of them, shall be open to the
23
inspection of the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the Corporation (except as conferred
by the Corporation Law, a resolution of the Board of Directors or a contract
between the Corporation and any stockholder), unless and until authorized so to
do by resolution of the Board of Directors or of the stockholders of the
Corporation.
E. Location of Meetings, Books and Records. Except as otherwise provided
---------------------------------------
in the By-Laws, the stockholders of the Corporation and the Board of Directors
may hold their meetings and have an office or offices outside of the State of
Delaware and, subject to the provisions of the Corporation Law, may keep the
books of the Corporation outside of the State of Delaware at such places as may,
from time to time, be designated by the Board of Directors.
ARTICLE IX
To the fullest extent permitted by Corporation Law, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exception from liability or limitation thereof is not
permitted under the Corporation Law as the same exists or may hereafter be
amended. Neither any amendment nor repeal of this Article IX shall eliminate or
reduce the effect of this Article IX in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article IX, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE X
A. Indemnification of Directors and Officers. To the fullest extent
-----------------------------------------
permitted by law, the Corporation shall fully indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding.
B. Indemnification of Employees and Agents. To the fullest extent
---------------------------------------
permitted by law, the Corporation may fully indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person is or was an employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as an employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgment, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding.
C. Advancement of Expenses. The Corporation shall advance expenses
-----------------------
(including attorneys' fees) incurred by a director or officer in advance of the
final disposition of such action, suit or proceeding upon the receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that such director or officer is not entitled
to
24
indemnification. The Corporation may advance expenses (including attorneys'
fees) incurred by an employee or agent in advance of the final disposition of
such action, suit or proceeding upon such terms and conditions, if any, as the
Board of Directors deems appropriate.
ARTICLE XI
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate in the manner nor or
hereinafter prescribed herein and by the Corporation Law, and all rights
conferred upon stockholders herein are granted subject to this reservation.
Notwithstanding anything contained in this Restated Certificate to the contrary,
Division A of Article IV, Article VII, Article X and Article XI of this Restated
Certificate shall not be altered, amended or repealed and no provision
inconsistent therewith shall be adopted without the affirmative vote of the
holders of at least two-thirds of the voting power of the then outstanding
shares of capital stock of the Corporation entitled to vote on such alteration,
amendment or repeal, voting together as a single class (other than any
alteration or amendment to Part A of Article IV that increases the authorized
number of shares of Preferred Stock or Common Stock, which shall be subject to
amendment by the affirmative vote of the holders of a majority of the voting
power of the then outstanding shares of capital stock entitled to vote on such
amendment voting together as a single class).
ARTICLE XII
The Corporation expressly elects to be governed by Section 203 of the
Delaware General Corporation Law.
ARTICLE XIII
In the event that any provision of this Certificate of Incorporation
(including any provision within a single section, paragraph or sentence) is held
by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, the remaining provisions are severable and shall remain
enforceable to the full extent permitted by law.
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
has been executed as of February 19, 1999.
CGX Communications, Inc
By: /s/ Ulysses G. Auger, II
--------------------------
Ulysses G. Auger, II
Chief Executive Officer
Attest:
/s/ Michael G. Plantamura
--------------------------
Michael G. Plantamura
Secretary
25
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 2/1/04 | | 14 | | | | | None on these Dates |
| Filed on: | | 3/16/99 |
| | 2/19/99 | | 11 | | 25 |
| | 1/24/99 | | 12 |
| | 9/4/98 | | 11 | | 12 |
| | 12/4/97 | | 1 |
| List all Filings |
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