1
EXHIBIT 3.1(a)
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
OPTEL, INC.
--------------------
Under Section 245 of the
General Corporation Law
--------------------
The undersigned DOES HEREBY CERTIFY as follows:
I. The name of the Corporation is OPTEL, INC. (the
"Corporation").
II. The date of filing of the Corporation's original
Certificate of Incorporation with the Secretary of State of the State of
Delaware was July 1, 1994. A Restated Certificate of Incorporation of the
Corporation (the "Restated Certificate of Incorporation") was filed with the
Secretary of State of the State of Delaware on December 19, 1994.
III. The Restated Certificate of Incorporation, as heretofore
amended, of the Corporation is amended hereby to increase the total number of
authorized shares of the Corporation by increasing (i) the total number of
shares of the Corporation's Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), from 8,000,000 shares to 180,000,000 shares, (ii) the
total number of shares of the Corporation's Class B Common Stock, par value $.01
per share (the "Class B Common Stock"), from 6,000,000 shares to 60,000,000
shares, (iii) the total number of shares of the Corporation's Class C Common
Stock, par value $.01 per share (the "Class C Common Stock"), from 300,000 to
3,000,000, and (iv) the total number of shares of the Corporation's Preferred
Stock, par value $.01 per share, from 1,000,000 shares to 10,000,000 shares, as
set forth in the Amended and Restated Certificate of Incorporation, which is
attached hereto as Exhibit A, along with the Certificates of Designation of
Voting Powers, Designations, Preferences, Limitations, Restrictions and Relative
Rights of the Corporation's 9.75% Series A Preferred Stock, par value $.01 per
2
share, and the Corporation's 8% Series B Preferred Stock, par value $.01 per
share, respectively.
IV. This Amended and Restated Certificate of Incorporation was
duly adopted by the Board of Directors and authorized by written consent of the
Corporation's stockholders pursuant to Sections 228 and 242 of the General
Corporation Law of the State of Delaware and is effective as of __________, 1999
at ___ P.M. Delaware time.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation of the Corporation has been signed, and the statements made herein
affirmed as true under the penalties of perjury, this ___ day of _____, 1999.
ATTEST:
- ---------------------- -----------------------
Michael E. Katzenstein Louis Brunel
Secretary President
2
3
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
OPTEL, INC.
a Delaware corporation
ONE: The name of the Corporation is: OpTel, Inc. (the "Corporation").
TWO: The address of the Corporation's registered office in the State of
Delaware shall be 15 East North Street, in the City of Dover, County of Kent,
State of Delaware 19901. The name of the Corporation's registered agent in the
State of Delaware is United Corporate Services, Inc.
THREE: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the Delaware General Corporation Law (the "DGCL").
FOUR: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two hundred fifty three million
(253,000,000) shares divided into the following classes:
(i) One hundred eighty million (180,000,000) shares of Class A
Common Stock, par value of one cent ($.01) per share (hereinafter referred to as
"Class A Common Stock");
(ii) Sixty million (60,000,000) shares of Class B Common
Stock, par value of one cent ($.01) per share (hereinafter referred to as "Class
B Common Stock");
(iii) Three million (3,000,000) shares of Class C Common
Stock, par value of one cent ($.01) per share (hereinafter referred to as "Class
C Common Stock"); and
(iv) Ten million (10,000,000) shares of Preferred Stock, par
value of one cent ($.01) per share (hereinafter referred to as "Preferred
Stock").
A-1
4
The Corporation's Class A Common Stock, Class B Common
Stock and Class C Common Stock are referred to hereinafter
collectively as the "Common Stock".
A. Powers and Rights of Holders of Class A Common Stock, Class
B Common Stock and Class C Common Stock.
1. Except as stated in Sections 2 and 3 of this Subpart A of
Article FOUR, the Class A Common Stock, Class B Common Stock and Class C Common
Stock shall be identical in all respects and shall have equal powers,
preferences, rights and privileges.
2. Except as may be otherwise required by law, and subject to
the provisions of any series of Preferred Stock at the time outstanding, the
holders of the Class A Common Stock and the Class B Common Stock issued and
outstanding shall have and possess the exclusive right to notice of
stockholders' meetings and the exclusive voting rights and powers, whether at a
meeting of stockholders or in connection with any action taken by written
consent. Except as otherwise may be required by law, the holders of Class C
Common Stock are not entitled to notice of, or to vote at, stockholders'
meetings or in connection with any action taken by written consent.
3. Each holder of the Class A Common Stock issued and
outstanding shall be entitled to one (1) vote for each share of Class A Common
Stock registered in such holder's name on the books of the Corporation, and each
holder of the Class B Common Stock issued and outstanding shall be entitled to
ten (10) votes for each share of Class B Common Stock registered in such
holder's name on the books of the Corporation. Except as may be otherwise
required by law, the holders of the Class A Common Stock and Class B Common
Stock shall vote together as a single class.
4. Any direct or indirect transfer of issued and outstanding
shares of Class B Common Stock other than to a Permitted Transferee (as defined
herein) shall result in the automatic conversion of the shares of Class B Common
Stock being transferred into a like number of shares of Class A Common Stock. No
purported transfer of shares of Class B Common Stock shall be effective unless
and until the transferor has surrendered to the Corporation, at its office or
agency maintained for that purpose, the certificates representing the shares of
Class B Common Stock to be transferred, which certificates shall be duly
endorsed or accompanied by executed stock powers, with the signatures
appropriately guaranteed. All such certificates shall be accompanied by written
notice of the holder's intention to transfer the shares, including a statement
of the number of shares of Class B Common Stock to be transferred and, if
A-2
5
applicable, converted and the name or names and address or addresses in which
the certificate or certificates for shares of Class B Common Stock or Class A
Common issuable upon such conversion Stock, as the case may be, shall be issued
and, if required, funds for the payment of any applicable transfer taxes. The
Corporation, as soon as practicable thereafter, will deliver at said office to
the transferee of converted shares of Class B Common Stock, or to any nominee or
designee of such transferee, a certificate or certificates for the number of
full shares of Class A Common Stock issuable upon such conversion and, in the
event that the transferor is transferring less than the aggregate number of
shares represented by the certificates surrendered, a certificate or
certificates for the number of full shares of Class B Common Stock not being
transferred. Shares of Class B Common Stock shall be deemed to have been
converted as of the date of the surrender of the shares for transfer to a
non-Permitted Transferee and conversion as hereinbefore provided, and the person
or persons in whose name Class A Common Stock is issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such Class
A Common Stock on such date. Shares of Class B Common Stock so converted shall
be returned to the status of authorized and unissued shares of Class B Common
Stock. The Corporation shall at all times reserve for issuance a number of
shares of Class A Common Stock (which may include Class A Common Stock held by
the Corporation as treasury stock) which shall be sufficient for issuance upon
conversion of all of the then outstanding Class B Common Stock pursuant to this
Section 4 or otherwise. The Corporation as a condition to the transfer or the
registration of transfer of shares of Class B Common Stock to a purported
Permitted Transferee, may require the furnishing of such affidavits or other
proof as it reasonably deems necessary to establish that such transferee is a
Permitted Transferee. For purposes hereof (1) "Permitted Transferee" shall mean
a Person who acquires shares of Class B Common Stock otherwise than in a
transaction (a) on a securities exchange or public quotation system, whether or
not registered as such under the Securities and Exchange Act of 1934, as amended
(or any successor statute (the "Exchange Act"), (b) effected to or through a
Person acting as a broker or dealer (whether or not registered as such under the
Exchange Act or any foreign system of registration or regulation), (c) pursuant
to a registration statement under the Securities Act of 1933, as amended (or any
successor or similar rule) (the "Securities Act"), or (e) that is (or if it
occurred in the United States, would be) required to be registered under the
Securities Act; (2) "Affiliate " shall mean, with respect to any Person, another
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person, provided, however, that no employee
of the Corporation or any of its subsidiaries shall be deemed to be an Affiliate
solely by reason of his or her capacity as an employee, or by reason of any
employment agreement; and (3)
A-3
6
"Person" shall mean and include an individual, a partnership, a limited
liability company, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof. All
certificates evidencing shares of Class B Common Stock shall be endorsed with a
legend making appropriate reference to the foregoing provisions regarding
automatic conversion.
5. Each holder of Class B Common Stock issued and outstanding
shall be entitled, at such holder's option, to convert shares of Class B Common
Stock registered on the books of the Corporation in such holder's name into a
like number of shares of Class A Common Stock. If VPC Corporation ("VPC") and
its Affiliates shall at any time elect to convert all of the shares of Class B
Common Stock then issued and outstanding and held by them into shares of Class A
Common Stock, whether by transfer pursuant to Section 4 or by conversion
pursuant to this Section 5, all of the other shares of Class B Common Stock
issued and outstanding as of the date of such conversion shall be automatically
converted into shares of Class A Common Stock on a share for share basis and
shall otherwise cease to be outstanding, effective as of the date of such
transfer and/or conversion by VPC and its Affiliates. All Persons registered as
holders of shares of Class B Common Stock on the date of such conversion shall
be treated for all purposes as the record holders of an equal number of shares
of Class A Common Stock on such date. The Corporation, as soon as practicable
thereafter, will deliver to each of the holders of the shares of Class B Common
Stock converted into shares of Class A Common Stock a certificate or
certificates for the Class A Common Stock against receipt from such holder of
the certificate theretofore representing an equal number of shares of Class B
Common Stock. Shares of Class B Common Stock so converted shall be returned to
the status of authorized and unissued shares of Class B Common Stock. Pending
delivery of certificates for shares of Class A Common Stock after such
conversion, certificates for shares of Class B Common Stock so converted shall
be deemed to be certificates for an equal number of shares of Class A Stock.
6. Upon any sale of Common Stock of the Corporation pursuant
to a registration statement under the Securities Act, or any registration of
Common Stock of the Corporation pursuant to the Exchange Act, the shares of
Class C Common Stock automatically will be converted into an equal number of
shares of Class A Common Stock or such other class of common equity securities
of the Corporation that is registered with the Securities and Exchange
Commission or is listed on a national securities exchange or otherwise subject
to registration under the Exchange Act (the "Conversion Shares"), provided the
terms thereof are no less favorable to holders thereof than were the terms of
the shares of Class C Common Stock. The Corporation
A-4
7
shall at all times reserve for issuance sufficient shares of Class A Common
Stock (which may include Class A Common Stock held by the Corporation as
treasury stock) or such other common equity securities, for issuance upon
conversion of the Class C Common Stock. The Corporation, as soon as practicable
thereafter, will deliver to the holder of the Class C Common Stock converted
into the Conversion Shares a certificate or certificates for the Conversion
Shares against receipt from such holder of the certificate theretofore
representing an equal number of shares of Class C Common Stock. Shares of Class
C Common Stock so converted shall be returned to the status of authorized and
unissued shares of Class C Common Stock.
7. Dividends may be paid to the holders of the Class A Common
Stock, Class B Common Stock and Class C Common Stock, as and when declared by
the Board of Directors, out of any funds of the Corporation legally available
for the payment of such dividends. If and when dividends on the Class A Common
Stock, Class B Common Stock and Class C Common Stock are declared from time to
time by the Board of Directors, whether payable in cash, in property or in
shares of stock of the Corporation, the holders of the Class A Common Stock,
Class B Common Stock and Class C Common Stock shall be entitled to share
equally, on a per share basis, in such dividends. If shares of Class B Common
Stock are paid on Class B Common Stock and shares of Class A Common Stock are
paid on Class A Common Stock and shares of Class C Common Stock are paid on
Class C Common Stock, in an equal amount per share of Class B Common Stock and
Class A Common Stock and Class C Common Stock in proportionate amounts, such
payment will be deemed to be a like dividend or other distribution.
8. Subject to the provisions of any series of Preferred Stock
at the time outstanding, upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the net assets of the Corporation
shall be distributed to the holders of the Class A Common Stock, Class B Common
Stock and Class C Common Stock, on a pro rata basis, based on the number of
shares held by each such holder, without regard to class.
9. If the Corporation shall in any manner split, subdivide,
combine or reclassify any outstanding shares of a class of Common Stock, the
outstanding shares of the other classes of Common Stock shall be proportionately
split, subdivided, combined or reclassified in the same manner and on the same
basis as the outstanding shares of the class of Common Stock that have been
split, subdivided, combined or reclassified, unless a different basis has been
consented to by the holders of a majority of the outstanding shares of the Class
A Common Stock or Class B Common Stock, as applicable, or two-thirds of the
A-5
8
outstanding shares of Class C Common Stock, to the extent any such class would
be adversely affected by such action.
Subject to the conversion rights of holders of Class C Common
Stock, in the event of any corporate merger, consolidation, purchase or
acquisition of property or stock or other reorganization in which any
consideration is to be received by the holders of Class B Common Stock or the
holders of Class A Common Stock, the holders of Class C Common Stock will
receive the same consideration on a per share basis, except that, if such
consideration shall consist in any part of voting securities (or of options or
warrants to purchase voting securities, or of securities convertible into or
exchangeable for voting securities), (i) the holders of Class B Common Stock may
receive, on a per share basis, voting securities with ten times the number of
votes per share as those voting securities to be received by the holders of
Class A Common Stock (or options or warrants to purchase, or securities
convertible into or exchangeable for voting securities with ten times the number
of votes per share as those voting securities issuable upon the exercise of the
options or warrants, or into which the convertible or exchangeable securities
may be converted or exchanged, received by the holders of Class A Common Stock)
and (ii) the holders of the Class C Common Stock may receive, on a per share
basis, non-voting securities (or options or warrants to purchase non-voting
securities or securities convertible into or exchangeable for non-voting
securities).
B. Preferred Stock. The Board of Directors is authorized,
subject to any limitations prescribed by law, to provide for the issuance of the
shares of Preferred Stock in one or more series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, 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 rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the approval of a
majority of the votes entitled to be cast by the holders of the Common Stock,
without a vote of the holders of the Preferred Stock, or of any series thereof,
unless a vote of any such holders is required pursuant to the certificate or
certificates establishing the series of Preferred Stock.
FIVE: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A-6
9
A. The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors. In addition to
the powers and authority expressly conferred upon them by the DGCL or by this
Amended and Restated Certificate of Incorporation or the Bylaws of the
Corporation, the directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the Corporation.
B. The Board of Directors may adopt, amend or repeal
the Bylaws of the Corporation.
C. Election of directors need not be by written
ballot.
SIX: The officers of the Corporation shall be chosen in such a manner,
shall hold their offices for such terms and shall carry out such duties as are
determined solely by the Board of Directors, subject to the right of the Board
of Directors to remove any officer or officers at any time with or without
cause.
SEVEN: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (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) pursuant to Section 174 of the
DGCL or (iv) for any transaction from which such director derived an improper
personal benefit. This Article SEVEN is also contained in Article VIII, Section
1 of the Corporation's Bylaws. No amendment to or repeal of this Article SEVEN
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If the DGCL is amended
hereafter to further eliminate or limit the personal liability of directors, the
liability of a director of the Corporation shall be limited or eliminated to the
fullest extent permitted by the DGCL, as amended.
EIGHT: A. Right to Indemnification. Each person who was or is made a
party to or is threatened to be made a party to or is involuntarily involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he or she is or was a
director or officer of the Corporation, or is or was serving (during his or her
tenure as director and/or officer) at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture,
A-7
10
trust or other enterprise, whether the basis of such Proceeding is an alleged
action or inaction in an official capacity as a director or officer or in any
other capacity while serving as a director or officer, shall be indemnified and
held harmless by the Corporation to the fullest extent authorized by the DGCL
(or other applicable law), as the same exists or may hereafter be amended,
against all expense, liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection with
such Proceeding. Such director or officer shall have the right to be paid by the
Corporation for expenses incurred in defending any such Proceeding in advance of
its final disposition; provided, however, if the DGCL (or other applicable law)
requires, the payment of such expenses in advance of the final disposition of
any such Proceeding shall be made only upon receipt by the Corporation of an
undertaking by or on behalf of such director or officer to repay all amounts so
advanced if it should be determined ultimately that he or she is not entitled to
be indemnified under this Article EIGHT or otherwise.
B. Right of Claimant to Bring Suit. If a claim under
paragraph A of this Article EIGHT is not paid in full by the Corporation within
ninety (90) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, together with interest thereon, and, if
successful in whole or in part, the claimant shall also be entitled to be paid
the expense of prosecuting such claim, including reasonable attorneys' fees
incurred in connection therewith. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any Proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the DGCL (or other applicable law) for the Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (or of its full Board of
Directors, its directors who are not parties to the Proceeding with respect to
which indemnification is claimed, its stockholders, or independent legal
counsel) to have made a determination prior to the commencement of such action
that indemnification of the claimant is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the DGCL (or
other applicable law), nor an actual determination by any such person or persons
that such claimant has not met such applicable standard of conduct, shall be a
defense to such action or create a presumption that the claimant has not met the
applicable standard of conduct.
A-8
11
C. Non-Exclusivity of Rights. The rights conferred by
this Article EIGHT shall not be exclusive of any other right which any director,
officer, representative, employee or other agent may have or hereafter acquire
under the DGCL or any other statute, or any provision contained in the
Corporation's Amended and Restated Certificate of Incorporation or Bylaws, or
any agreement, or pursuant to a vote of stockholders or disinterested directors,
or otherwise.
D. Insurance and Trust Fund. In furtherance and not
in limitation of the powers conferred by statute:
(1) the Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify him or her against such liability under the
provisions of law; and
(2) the Corporation may create a trust fund,
grant a security interest and/or use other means (including, without limitation,
letters of credit, surety bonds and/or other similar arrangements), as well as
enter into contracts providing indemnification to the fullest extent permitted
by law and including as part thereof provisions with respect to any or all of
the foregoing, to ensure the payment of such amount as may become necessary to
effect indemnification as provided therein, or elsewhere.
E. Indemnification of Employees and Agents of the
Corporation. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification, including the right to
be paid by the Corporation the expenses incurred in defending any Proceeding in
advance of its final disposition, to any employee or agent of the Corporation to
the fullest extent of the provisions of this Article or otherwise with respect
to the indemnification and advancement of expenses of directors and officers of
the Corporation.
F. Amendment. This Article EIGHT is also contained in
Article VIII, Sections 2 through 7, of the Corporation's Bylaws. Any repeal or
modification of this Article EIGHT shall not change the rights of any officer or
director to indemnification with respect to any action or omission occurring
prior to such repeal or modification.
A-9
12
NINE: The Corporation reserves the right to alter, amend, rescind or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.
A-10
13
CERTIFICATE OF DESIGNATION OF VOTING POWERS,
DESIGNATIONS, PREFERENCES, LIMITATIONS,
RESTRICTIONS
AND RELATIVE RIGHTS
OF
9.75% SERIES A PREFERRED STOCK
OF
OPTEL, INC.
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
OpTel, Inc., a Delaware corporation (the "Company"), certifies
that pursuant to the authority contained in Article Four of its Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware ("DGCL"), the Board of Directors of the Company
(the "Board of Directors"), by Unanimous Written Consent made as of March 1,
1998, duly approved and adopted the following resolution:
RESOLVED, that pursuant to the authority vested in the Board
of Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series of
non-voting preferred stock, to be known as the "Series A Preferred Stock", out
of the authorized shares of preferred stock, par value $.01 per share, of the
Corporation, the shares of such series to have a liquidation preference of
$20,000 per share (the "Liquidation Preference"), consisting of 10,000 shares
(which number may be increased or decreased by resolution of the Board of
Directors, provided that no decrease shall reduce the number of shares of Series
A Preferred Stock below 150% of the number of shares of Series A Preferred Stock
at such time outstanding) to be entitled to dividends payable initially in
additional shares of such series at the annual rate of 9.75% of the liquidation
preference, to be convertible at the option of the holders of shares of such
series into shares of Class B Common Stock of the Corporation (the "Class B
Common Stock") at the Conversion Price, and, specifically, having voting powers,
designations, preferences, limitations, restrictions, and relative rights as
follows:
A-11
14
1. Ranking. The Series A Preferred Stock shall rank, with
respect to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company, (a) senior to
all classes of common stock of the Company and to all shares of Series
B Preferred Stock of the Company and senior to all shares of each other
class of capital stock or series of preferred stock established after
the Preferred Stock Issue Date by the Board of Directors the terms of
which do not expressly provide that it ranks senior to or on a parity
with the Series A Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the
Company (collectively with the common stock and Series B Preferred
Stock referred to as "Junior Securities"); (b) on a parity with any
additional shares of preferred stock issued by the Company and any
other class of capital stock or series of preferred stock issued by the
Company established after the Series B Preferred Stock Issue Date by
the Board of Directors, the terms of which expressly provide that such
class or series will rank on a parity with the Series A Preferred Stock
as to dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to as
"Parity Securities"); and (c) junior to each class of capital stock or
series of preferred stock issued by the Company established after the
Preferred Stock Issue Date by the Board of Directors the terms of which
expressly provide that such class or series will rank senior to the
Series A Preferred Stock as to dividend distributions and distributions
upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Securities").
2. Dividends.
(a) The holders of shares of the Series A Preferred Stock shall be
entitled to receive, when, as and if dividends are declared by the Board of
Directors, cumulative preferential dividends (in the form described below) from
the Preferred Stock Issue Date accruing at the rate per annum of 9.75% of the
Liquidation Preference per share, payable annually in arrears on the last day of
August, commencing on August 31, 1998 (each a "Dividend Payment Date"). If any
such date is not a Business Day, such payment shall be made on the next
succeeding Business Day, to the holders of record as of the next preceding
August 15 (each, a "Record Date"). Dividends on Series A Preferred Stock shall
be payable initially only in additional shares of Series A Preferred Stock
(including fractional shares) having an aggregate Liquidation Preference equal
to the amount of such dividends; provided, however, that dividends payable after
the expiration of the Conversion Period shall be payable only in cash. The
issuance of such additional shares of Series A Preferred Stock
A-12
15
shall constitute "payment" of the related dividend for all purposes of this
Certificate of Designation. The accrual of dividends payable on the Series A
Preferred Stock will be computed on the basis of a 360-day year consisting of
twelve 30- day months, and dividends will be deemed to accrue on a daily basis.
(b) Dividends on the Series A Preferred Stock shall accumulate whether
or not the Company has earnings or profits, whether or not there are funds
legally available for the payment of such dividends and whether or not dividends
are declared. Dividends will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate. The Company shall
take all actions required or permitted under the DGCL to permit the payment of
dividends on the Series A Preferred Stock.
(c) No dividend whatsoever shall be declared or paid upon any
outstanding share of the Series A Preferred Stock with respect to any dividend
period unless all dividends for all preceding dividend periods have been
declared and paid upon all outstanding shares of Series A Preferred Stock.
Unless full cumulative dividends on all outstanding shares of Series A Preferred
Stock for all past dividend periods shall have been declared and paid, then: (i)
no dividend (other than a dividend payable solely in shares of any Junior
Securities) shall be declared or paid upon, or any sum set apart for the payment
of dividends upon, any shares of Junior Securities; (ii) no other distribution
shall be declared or made upon, or any sum set apart for the payment of
dividends upon, any shares of Junior Securities, other than a distribution
consisting solely of Junior Securities; (iii) no shares of Junior Securities
shall be purchased, redeemed or otherwise acquired or retired for value
(excluding an exchange for shares of other Junior Securities) by the Company or
any of its Subsidiaries; and (iv) no monies shall be paid into or set apart or
made available for a sinking or other like fund for the purchase, redemption or
other acquisition or retirement for value of any shares of Junior Securities by
the Company or any of its Subsidiaries. Holders of the Series A Preferred Stock
will not be entitled to any dividends in excess of the full cumulative dividends
as herein described.
(d) To the extent permitted by law, additional cumulative dividends
shall accrue with respect to the outstanding shares of Series A Preferred Stock
so long as any dividends on the Series A Preferred Stock shall remain accrued
and unpaid after the respective Dividend Payment Dates therefor (whether or not
such accrued and unpaid dividends shall have been declared). Such additional
dividends shall accrue at the rate per annum of 9.75% of the Liquidation
Preference of all shares of Series A Preferred Stock issuable with respect to
such accrued but unpaid dividends
A-13
16
from their respective Dividend Payment Dates for so long as such accrued but
unpaid dividends and additional dividends accrued with respect thereto shall
remain unpaid.
3. Conversion.
(a) During the Conversion Period, at the option of a holder of Series A
Preferred Stock, any outstanding shares of Series A Preferred Stock may be
converted by the holder into Class B Common Stock at the Conversion Price. The
number of shares of Class B Common Stock issuable for each share of Series A
Preferred Stock upon conversion shall be determined by dividing the Liquidation
Preference plus all accrued and unpaid dividends on such shares of Series A
Preferred Stock by the Conversion Price. Immediately following such conversion,
the rights of the holders of converted shares of Series A Preferred Stock shall
cease and the Persons entitled to receive the Class B Common Stock upon the
conversion of Series A Preferred Stock shall be treated for all purposes as
having become the owners of such Class B Common Stock.
(b) In order for a holder to exercise its rights to convert Series A
Preferred Stock a holder must (i) surrender the certificate or certificates
evidencing the shares of Series A Preferred Stock to be converted, duly endorsed
in a form reasonably satisfactory to the Company, at the office of the Company
or transfer agent for the Series A Preferred Stock, (ii) notify the Company at
such office that such holder elects to convert Series A Preferred Stock and the
number of shares to be converted, (iii) state in writing the name or names in
which the holder wishes the certificate or certificates for shares of Class B
Common Stock to be issued, and (iv) pay any transfer or similar tax if required
pursuant to Section 15. The date on which the holder satisfies all such
requirements shall be the "Conversion Date." As soon as practical, the Company
shall deliver a certificate or certificates for the number of shares of Class B
Common Stock issuable upon the conversion. The Person in whose name the Class B
Common Stock certificate is registered shall be treated as the stockholder of
record on and after the Conversion Date.
(c) The Company has reserved and shall continue to reserve out of its
authorized but unissued Class B Common Stock a sufficient number of shares of
Class B Common Stock to permit the conversion of the Series A Preferred Stock in
full. All shares of Class B Common Stock that may be issued upon conversion of
Series A Preferred Stock shall be fully paid and nonassessable. The Company
shall comply with all securities laws regulating the offer and delivery of
shares of Class B Common Stock upon conversion of Series A Preferred Stock and
shall list such shares on each national securities exchange or automated
quotation system on which the Class B Common Stock is listed.
A-14
17
(d) At any time after the consummation of an underwritten public
offering as described in Section 3, in the case of any consolidation or
reorganization of the Company or the merger of the Company with or into any
other entity or the sale or transfer of all or substantially all the assets of
the Company pursuant to which the Company's Class B Common Stock is converted
into other securities, cash or assets (any of the foregoing, a "Consolidation"),
upon consummation of such Consolidation, each holder of Series A Preferred Stock
shall be entitled to elect to have each share of Series A Preferred Stock held
by such holder to thereafter be convertible into the kind and amount of
securities, cash or other assets receivable upon the consolidation, merger, sale
or transfer by a holder of the number of shares of Class B Common Stock into
which such share of Series A Preferred Stock might have been converted
immediately prior to such consolidation, merger, transfer or sale. Appropriate
adjustment (as determined by the Board of Directors) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of Series A Preferred Stock, to the end that
the provisions set forth herein (including provisions with respect to changes in
and other adjustment of the Conversion Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the conversion of Series A
Preferred Stock.
4. Liquidation Rights. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company or reduction or
decrease in its capital stock resulting in a distribution of assets to
the holders of any class or series of the Company's capital stock, each
holder of shares of the Series A Preferred Stock will be entitled to
payment out of the assets of the Company available for distribution of
an amount equal to the Liquidation Preference per share of Series A
Preferred Stock held by such holder, plus accrued and unpaid dividends,
to the date fixed for liquidation, dissolution, winding-up or reduction
or decrease in capital stock, before any distribution is made on any
Junior Securities, including, without limitation, Common Stock of the
Company. After payment in full of the Liquidation Preference and all
accrued dividends, to which holders of Series A Preferred Stock are
entitled, such holders will not be entitled to any further
participation in any distribution of assets of the Company. If, upon
any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, the amounts payable with respect to the Series A Preferred
Stock and all other Parity Securities are not paid in full, the holders
of the Series A Preferred Stock and the Parity Securities will share
equally and ratably in any distribution of assets of the Company in
proportion to the full liquidation preference and accumulated and
unpaid
A-15
18
dividends, to which each is entitled. However, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Company nor the consolidation or merger of
the Company with or into one or more Persons will be deemed to be a
voluntary or involuntary liquidation, dissolution or winding-up of the
Company or reduction or decrease in capital stock, unless such sale,
conveyance, exchange or transfer shall be in connection with a
liquidation, dissolution or winding-up of the business of the Company.
5. Redemption by the Company.
a. At all times after the expiration of the
Conversion Period, the Company shall have the option to
redeem, in whole or in part, (subject to the legal
availability of funds therefor) all outstanding shares
of Series A Preferred Stock at a price (the "Redemption
Price") in cash equal to the Liquidation Preference
thereof, plus accrued and unpaid dividends (including
an amount in cash equal to a prorated dividend for any
partial dividend period) to the date of redemption.
The Company shall not be required to make sinking fund
payments with respect to the Series A Preferred Stock.
b. In case of redemption of less than all of the shares
of Series A Preferred Stock at the time outstanding, the
shares to be redeemed shall be selected pro rata or by lot as
determined by the Company in its sole discretion.
c. Notice of any redemption shall be sent by or on
behalf of the Company not less than 30 nor more than 60 days
prior to the date specified for redemption in such notice (the
"Redemption Date"), by first class mail, postage prepaid, to
all holders of record of the Series A Preferred Stock at their
last addresses as they shall appear on the books of the
Company; provided, however, that no failure to give such
notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for the redemption of
any shares of Series A Preferred Stock except as to the holder
to whom the Company has failed to give notice or except as to
the holder to whom notice was defective. In addition to any
information required by law or by the applicable rules of any
exchange upon which the Series A Preferred Stock may be listed
or admitted to trading, such notice shall state: (i) the
Redemption Date; (ii) the Redemption Price; (iii) the number
of
A-16
19
shares of Series A Preferred Stock to be redeemed and, if less
than all shares held by such holder are to be redeemed, the
number of such shares to be redeemed; (iv) the place or places
where certificates for such shares are to be surrendered for
payment of the Redemption Price, including any procedures
applicable to redemptions to be accomplished through
book-entry transfers; and (v) that dividends on the shares to
be redeemed will cease to accumulate on the Redemption Date.
Upon the mailing of any such notice of redemption, the Company
shall become obligated to redeem at the time of redemption
specified thereon all shares called for redemption.
d. If notice has been mailed in accordance with
Section 5(c) above and provided that on or before the
Redemption Date specified in such notice, all funds necessary
for such redemption shall have been set aside by the Company,
separate and apart from its other funds in trust for the pro
rata benefit of the holders of the shares so called for
redemption, so as to be, and to continue to be available
therefor, then, from and after the Redemption Date, dividends
on the shares of the Series A Preferred Stock so called for
redemption shall cease to accumulate, and said shares shall no
longer be deemed to be outstanding and shall not have the
status of shares of Series A Preferred Stock, and all rights
of the holders thereof as stockholders of the Company (except
the right to receive from the Company the Redemption Price)
shall cease. Upon surrender, in accordance with said notice,
of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Company shall so
require and the notice shall so state), such shares shall be
redeemed by the Company at the Redemption Price. In case fewer
than all the shares represented by any such certificate are
redeemed, a new certificate or certificates shall be issued
representing the unredeemed shares without cost to the holder
thereof.
e. Any funds deposited with a bank or trust company
for the purpose of redeeming Series A Preferred Stock shall be
irrevocable except that:
i. the Company shall be entitled to receive from such
bank or trust company the interest or other earnings,
if any, earned on any money so deposited in trust,
and the holders of any shares redeemed shall have no
claim to such interest or other earnings; and
A-17
20
ii. any balance of monies so deposited by the
Company and unclaimed by the holders of the Series
A Preferred Stock entitled thereto at the
expiration of two years from the applicable
Redemption Date shall be repaid, together with any
interest or other earnings earned thereon, to the
Company, and after any such repayment, the holders
of the shares entitled to the funds so repaid to
the Company shall look only to the Company for
payment without interest or other earnings.
f. No Series A Preferred Stock may be redeemed except
with funds legally available for the purpose. The Company
shall take all actions required or permitted under the DGCL to
permit any such redemption.
g. Notwithstanding the foregoing provisions of this
Section 5, unless the full cumulative dividends on all
outstanding shares of Series A Preferred Stock shall have been
paid or contemporaneously are declared and paid for all past
dividend periods, none of the shares of Series A Preferred
Stock shall be redeemed.
h. All shares of Series A Preferred Stock redeemed
pursuant to this Section 5 shall be restored to the status of
authorized and unissued shares of preferred stock, without
designation as to series or class, and may thereafter be
reissued as shares of any series or class of preferred stock
other than shares of Series A Preferred Stock.
6. Voting Rights.
The holders of record of shares of the Series A Preferred Stock shall
have no voting rights, except as required by law and as hereinafter provided in
this Section 6.
(a) The Company shall not, without the affirmative vote or consent of
the holders of at least a majority of the shares of Series A Preferred Stock
then outstanding (with shares held by the Company or any of its affiliates not
being considered to be outstanding for this purpose) voting or consenting as the
case may be, as one class:
(i) amend or otherwise alter this Certificate of Designation
(including the provisions of paragraph 6 hereof) in any manner that
adversely affects the specified rights, preferences, privileges or
voting rights of holders of Series A Preferred Stock;
A-18
21
(ii) waive compliance with any provision of this Certificate
of Designation; or
(iii) create or issue Senior Securities or Parity Securities.
(b) Without the consent of each holder affected, an amendment or waiver
of the Company's Certificate of Incorporation or of this Certificate of
Designation may not (with respect to any shares of Series A Preferred Stock held
by a non-consenting holder):
(i) alter the voting rights with respect to the Series A
Preferred Stock or reduce the number of shares of Series A Preferred
Stock whose holders must consent to an amendment, supplement or waiver;
(ii) reduce the Liquidation Preference of the Series A
Preferred Stock;
(iii) reduce the rate of or change the time for payment of
dividends on any share of Series A Preferred Stock;
(iv) waive the consequences of any failure to pay dividends on
the Series A Preferred Stock;
(v) make any share of Series A Preferred Stock payable in any
form other than that stated in this Certificate of Designation;
(vi) make any change in the provisions of this Certificate of
Designation relating to waivers of the rights of holders of Series A
Preferred Stock to receive the Liquidation Preference and dividends on
the Series A Preferred Stock; or
(vii) make any change in the foregoing amendment and waiver
provisions.
(c) The Company in its sole discretion may without the vote or consent
of any holders of the Series A Preferred Stock amend or supplement this
Certificate of Designation:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Series A Preferred Stock in
addition to or in place of certificated Series A Preferred Stock; or
A-19
22
(iii) to make any change that would provide any additional
rights or benefits to the holders of the Series A Preferred Stock or
that does not adversely affect the legal rights under this Certificate
of Designation of any such holder.
Except as set forth above, (A) the creation, authorization or issuance of any
shares of Junior Securities, Parity Securities or Senior Securities or (B) the
increase or decrease in the amount of authorized capital stock of any class,
including any preferred stock, shall not require the consent of the holders of
the Series A Preferred Stock and shall not be deemed to affect adversely the
rights, preferences, privileges, special rights or voting rights of holders of
shares of Series A Preferred Stock.
7. Financial Reports. The Company shall furnish without cost to
VPC Corporation, as the agent for each holder of the outstanding Series
A Preferred Stock, all financial reports that the Company is required
to deliver pursuant to Section 13 or 15(d) of the Exchange Act. VPC
Corporation shall deliver copies of the financial reports to the
respective holders.
8. Amendment. Subject to Section 6 hereof, this
Certificate of Designation shall not be amended, either directly or
indirectly, or through merger or consolidation with another entity, in
any manner that would alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority or
more of the outstanding Series A Preferred Stock, voting separately as
a class.
9. Exclusion of Other Rights. Except as may otherwise be required
by law, the shares of Series A Preferred Stock shall not have any
voting powers, preferences and relative, participating, optional or
other special rights, other than those specifically set forth in this
Certificate of Designation (as it may be amended from time to time) and
in the Certificate of Incorporation.
10. Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not
affect the interpretation of any of the provisions hereof.
A-20
23
11. Severability of Provisions. If any voting powers, preferences
and relative, participating, optional and other special rights of the
Series A Preferred Stock and qualifications, limitations and
restrictions thereof set forth in this Certificate of Designation (as
it may be amended from time to time) is invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all
other voting powers, preferences and relative, participating, optional
and other special rights of Series A Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
Certificate of Designation (as so amended) which can be given effect
without the invalid, unlawful or unenforceable voting powers,
preferences and relative, participating, optional and other special
rights of Series A Preferred Stock and qualifications, limitations and
restrictions thereof shall, nevertheless, remain in full force and
effect, and no voting powers, preferences and relative, participating,
optional or other special rights of Series A Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth
shall be deemed dependent upon any other such voting powers,
preferences and relative, participating, optional or other special
rights of Series A Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
12. Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged or converted, shall
(upon compliance with any applicable provisions of the laws of
Delaware) have the status of authorized but unissued shares of
preferred stock of the Company undesignated as to series and may be
designated or redesignated and issued or reissued, as the case may be,
as part of any series or class of preferred stock of the Company other
than shares of Series A Preferred Stock.
13. Mutilated or Missing Series A Preferred Stock Certificates. If
any of the Series A Preferred Stock certificates shall be mutilated,
lost, stolen or destroyed, the Company shall issue, in exchange and in
substitution for and upon cancellation of the mutilated Series A
Preferred Stock certificate, or in lieu of and substitution for the
Series A Preferred Stock certificate lost, stolen or destroyed, a new
Series A Preferred Stock certificate of like tenor and representing an
equivalent amount of shares of Series A Preferred Stock, but only upon
receipt of evidence of such loss, theft or destruction of such Series A
Preferred Stock certificate and indemnity, if requested,
A-21
24
satisfactory to the Company and the transfer agent (if other than the
Company).
14. Notices. In case at any time or from time to time there shall
be a Consolidation or any event described in the first sentence of
Section 4, then the Corporation shall mail to each holder of shares of
Series A Preferred Stock at such holder's address as it appears on the
transfer books of the Corporation, as promptly as possible but in any
event at least 10 days prior to the applicable date hereinafter
specified, a notice stating (a) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights or
warrants or, if a record is not to be taken, the date as of which the
holder of the Class B Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined, or (b) the date
on which such Consolidation is expected to become effective. Such
notice also shall specify the date as of which it is expected that
holders of Class B Common Stock of record shall be entitled to exchange
their Class B Common Stock for shares of stock or other securities or
property or cash deliverable upon such Consolidation.
15. Transfer Taxes. The issuance or delivery of certificates for
Class B Common Stock upon the conversion of shares of Series A
Preferred Stock shall be made without charge to the converting holder
of shares of Series A Preferred Stock for such certificates or for any
tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued
or delivered in the respective names of, or (subject to compliance with
the applicable provisions of federal and state securities laws) in such
names as may be directed by, the holders of the shares of Series A
Preferred Stock converted; provided, however, that the Corporation
shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such
certificate in a name other than that of the holder of the shares of
Series A Preferred Stock converted, and the Corporation shall not be
required to issue or deliver such certificate unless or until the
Person or Persons requesting the issuance or delivery thereof shall
have paid to the Corporation the amount of such tax or shall have
established to the reasonable satisfaction of the Corporation that such
tax has been paid.
16. Certain Remedies. Any registered holder of Series A Preferred
Stock shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Certificate of Designations and to
enforce specifically the terms and provisions of this Certificate of
Designations in
A-22
25
any court of the United States, or any state thereof having
jurisdiction, this being in addition to any remedy to which such holder
may be entitled at law or in equity.
17. Certain Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when
used in the plural and vice versa), unless the context otherwise
requires:
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
"Class B Common Stock" means the Class B Common Stock, par value $.01
per share, of the Company.
"Class C Common Stock" means the Class C Common Stock, par value $.01
per share, of the Company.
"Common Stock" means Class A Common Stock, Class B Common Stock, Class
C Common Stock or other common stock of the Company.
"Conversion Period" means (i) if the Conversion Period has not
previously commenced or the Series A Shares have not previously been converted,
the 180-day period commencing on the IPO Date or (ii), if such 180-day period
has not previously commenced and expired or the Series A Shares have not
previously been converted, the 90-day period commencing on April 30, 1999 (with
the effect that if the Conversion Period has previously commenced by reason of
the occurrence of the IPO Date but has not yet expired on April 30, 1999, the
Conversion Period shall continue for 90 days after April 30, 1999 and the total
Conversion Period may be more or less than 180 days but shall expire in any
event on August 29, 1999).
"Conversion Price" means, as of the date of commencement of the
Conversion Period, (i) if such date is on or after the IPO Date, the price per
share which is the highest of (x) $82.18, (y) the price per share at which
Common Stock is first sold to the public in a public offering pursuant to an
effective registration statement under the Securities Act, and (z) the quotient
of $225 million divided by the number of shares of Common Stock outstanding, on
a fully diluted basis (excluding shares sold in
A-23
26
or after such public offering, the 225,000 shares of Class C Common Stock
outstanding on the Preferred Stock Issue Date and shares issued or issuable upon
conversion of such Class C shares or conversion of any other securities
convertible into Common Stock that may be issued to VPC Corporation after the
Preferred Stock Issue Date), or (ii) if such date is prior to the IPO Date, the
price per share which is the higher of (x) $82.18 and (y) the quotient of $225
million divided by the number of shares of Common Stock outstanding (excluding
the 225,000 shares of Class C Common Stock outstanding on the Preferred Stock
Issue Date and shares issued or issuable upon conversion of such Class C shares
or conversion of any other securities convertible into Common Stock that may be
issued to VPC Corporation after the Preferred Stock Issue Date).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"IPO Date" means the date on which the Company receives the net
proceeds of an underwritten initial public offering for its account of any of
its equity securities pursuant to an effective registration statement under the
Securities Act.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock Issue Date" means the date on which a share of Series
A Preferred Stock is first issued by the Company.
"Securities Act" means the Securities Act of 1933, as amended.
A-24
27
CERTIFICATE OF DESIGNATION OF VOTING POWERS,
DESIGNATIONS, PREFERENCES, LIMITATIONS,
RESTRICTIONS
AND RELATIVE RIGHTS
OF
8% SERIES B PREFERRED STOCK
OF
OPTEL, INC.
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
OpTel, Inc., a Delaware corporation (the "Company") certifies
that pursuant to the authority contained in Article Four of its Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware ("DGCL"), the Board of Directors of the Company
(the "Board of Directors") at a special meeting duly called and held on February
26, 1998, duly approved and adopted the following resolution which resolution
remains in full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board
of Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series of
nonvoting Series B Preferred Stock, to be known as the "Series B Preferred
Stock", out of the authorized shares of Series B Preferred Stock, par value $.01
per share, of the Company, the shares of such series to have a liquidation
preference of $60,000 per share (the "Liquidation Preference"), consisting of
1,000 shares (which number may be increased or decreased by resolution of the
Board of Directors, provided that no decrease shall reduce the number of shares
of Series B Preferred Stock below 150% of the number of shares of Series B
Preferred Stock at such time outstanding) to be entitled to dividends payable in
shares of such series at the annual rate of 8% (or, under certain circumstances,
13%) of the Liquidation Preference, to be convertible at the option of the
Company or the holders of shares of such series into shares of Class A Common
Stock of the Company (the "Class A Common Stock") at a conversion price equal to
the price at which shares of Class A Common Stock of the Company are first
offered to the public in an initial underwritten public offering by the Company,
having such voting
A-25
28
powers, designations, preferences, limitations, restrictions, and relative
rights as follows:
1. Ranking. The Series B Preferred Stock shall rank, with respect to
dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Company, (a) senior to all classes of
common stock of the Company and to each other class of capital stock or
series of preferred stock established after the Series B Preferred
Stock Issue Date by the Board of Directors the terms of which do not
expressly provide that it ranks senior to or on a parity with the
Series B Preferred Stock as to dividend distributions and distributions
upon the liquidation, winding-up and dissolution of the Company
(collectively referred to with the common stock of the Company as
"Junior Securities"); (b) on a parity with any additional shares of
preferred stock issued by the Company in the future and any other class
of capital stock or series of preferred stock issued by the Company
established after the Series B Preferred Stock Issue Date by the Board
of Directors, the terms of which expressly provide that such class or
series will rank on a parity with the Series B Preferred Stock as to
dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to as
"Parity Securities"); and (c) junior to each class of capital stock or
series of preferred stock issued by the Company established after the
Series B Preferred Stock Issue Date by the Board of Directors the terms
of which expressly provide that such class or series will rank senior
to the Series B Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution of the
Company (collectively referred to as "Senior Securities").
No dividend whatsoever shall be declared or paid upon any outstanding
share of the Series B Preferred Stock with respect to any dividend
period unless all dividends for all preceding dividend periods have
been declared and paid, or declared and a sufficient sum set apart for
the payment of such dividend, upon all outstanding shares of Senior
Securities.
2. Dividends.
(a) The holders of shares of the Series B Preferred Stock shall be
entitled to receive, when, as and if dividends are declared by the
Board of Directors, cumulative preferential dividends (in the form
described below) from the Series B Preferred Stock Issue Date accruing
at the rate per annum, subject to the following sentence, of 8% of the
Liquidation Preference per share (the "Dividend Rate"), payable
A-26
29
quarterly in arrears on each of the last days of November, February,
May and August, commencing on August 31, 1998 (each a "Dividend Payment
Date"). Notwithstanding the aforesaid, if a registration statement
under the Securities Act covering shares of Common Stock of the Company
has not been declared effective (an "Effective Registration") on or
prior to the 180th day after the later of (a) the fourth anniversary of
the Series B Preferred Stock Issue Date and (b) the date on which the
holders of the Series B Preferred Stock exercise registration rights
under Section 2.1 of the Registration Rights Agreement (the "Demand
Date"), the Dividend Rate shall be reset to an annual rate equal to 13%
of the Liquidation Preference per share from and after the fourth
anniversary of the Series B Preferred Stock Issue Date, payable in the
same form and manner as the aforesaid, provided, that the Dividend Rate
shall be reset to 8% from and after the date of Effective Registration.
If any such date is not a Business Day, such payment shall be made on
the next succeeding Business Day, to the holders of record as of the
next preceding November 15, February 15, May 15 and August 15 (each, a
"Record Date"). Dividends shall be payable by the issuance of
additional shares of Series B Preferred Stock (including fractional
shares) having an aggregate Liquidation Preference equal to the amount
of such dividends. The issuance of such additional shares of Series B
Preferred Stock shall constitute "payment" of the related dividend for
all purposes of this Certificate of Designation. Dividends payable on
the Series B Preferred Stock will be computed on the basis of a 360-day
year consisting of twelve 30-day months and will be deemed to accrue on
a daily basis.
(b) Dividends on the Series B Preferred Stock shall accumulate whether
or not the Company has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether
or not dividends are declared. Dividends will accumulate to the extent
they are not paid on the Dividend Payment Date for the period to which
they relate. The Company shall take all actions required or permitted
under the DGCL to permit the payment of dividends on the Series B
Preferred Stock.
(c) No dividend whatsoever shall be declared or paid upon any
outstanding share of the Series B Preferred Stock with respect to any
dividend period unless all dividends for all preceding dividend periods
have been declared and paid upon all outstanding shares of Series B
Preferred Stock. Unless full cumulative dividends on all outstanding
shares of Series B Preferred Stock for all past dividend periods shall
have been declared and paid, then: (i) no dividend (other than a
dividend payable solely in shares of any Junior
A-27
30
Securities) shall be declared or paid upon, or any sum set apart for
the payment of dividends upon, any shares of Junior Securities; (ii) no
other distribution shall be declared or made upon, or any sum set apart
for the payment of dividends upon, any shares of Junior Securities,
other than a distribution consisting solely of Junior Securities; (iii)
no shares of Junior Securities shall be purchased, redeemed or
otherwise acquired or retired for value (excluding an exchange for
shares of other Junior Securities) by the Company or any of its
Subsidiaries; and (iv) no monies shall be paid into or set apart or
made available for a sinking or other like fund for the purchase,
redemption or other acquisition or retirement for value of any shares
of Junior Securities by the Company or any of its Subsidiaries. Holders
of the Series B Preferred Stock will not be entitled to any dividends
in excess of the full cumulative dividends as herein described.
(d) To the extent permitted by law, all declared but unpaid dividends
shall accrue dividends (payable in the form provided in Section 2(a))
at the rate per annum of 8% (or under certain circumstances 13%) of the
aggregate unpaid amount from their respective Dividend Payment Date
until paid in full.
3. Conversion.
(a) Unless previously redeemed by the Company pursuant to Section 4,
upon the consummation of an initial underwritten public offering
pursuant to an effective registration statement under the Securities
Act covering the offer and sale of Common Stock to the public (an
"IPO"), at the option of either the Company or a holder of Series B
Preferred Stock, all (but not less than all) outstanding shares of
Series B Preferred Stock held by a holder of Series B Preferred Stock
may be converted into Class A Common Stock at the Conversion Price,
provided, that the Company shall only be permitted to convert all
outstanding shares of Series B Preferred Stock. The number of shares of
Class A Common Stock issuable for each share of Series B Preferred
Stock upon conversion shall be determined by dividing the Liquidation
Preference plus all accrued and unpaid dividends on such shares of
Series B Preferred Stock by the Conversion Price. Immediately following
such conversion, the rights of the holders of converted Series B
Preferred Stock shall cease and the Persons entitled to receive the
Class A Common Stock upon the conversion of Series B Preferred Stock
shall be treated for all purposes as having become the owners of such
Class A Common Stock. Additionally, promptly following the occurrence
of such conversion, the Company shall give written notice thereof to
each record holder of converted
A-28
31
Series B Preferred Stock, including instructions to be followed to
obtain a certificate for the shares of Class A Common Stock into which
such holder's Series B Preferred Stock was converted.
(b) In order for the Company to exercise its right to convert Series B
Preferred Stock the Company must send a notice to each holder of Series
B Preferred Stock stating that the Company is exercising its option to
convert all of the outstanding Series B Preferred Stock and requesting
(i) the surrender of all certificates evidencing the holder's shares of
Series B Preferred Stock, duly endorsed in a form satisfactory to the
Company, at the office of the Company or transfer agent for the Series
B Preferred Stock and (ii) the name or names into which the certificate
or certificates for shares of Class A Common Stock are to be issued.
The date of delivery of such notice by first class or registered mail
to a holder's address listed on the Company's stock ledger shall be the
"Company Conversion Date" As soon as practical after receipt of
certificates evidencing a holder's shares of Series B Preferred Stock,
the Company shall deliver a certificate or certificates for the number
of shares of Class A Common Stock issuable upon the conversion. The
Person in whose name the Class A Common Stock certificate is registered
shall be treated as the stockholder of record on and after the Company
Conversion Date.
(c) In order for a holder to exercise its rights to convert Series B
Preferred Stock a holder must (i) surrender the certificate or
certificates evidencing the shares of Series B Preferred Stock to be
converted, duly endorsed in a form reasonably satisfactory to the
Company, at the office of the Company or transfer agent for the Series
B Preferred Stock, (ii) notify the Company at such office that he
elects to convert Series B Preferred Stock and the number of shares to
be converted, (iii) state in writing the name or names in which he
wishes the certificate or certificates for shares of Class A Common
Stock to be issued, and (iv) pay any transfer or similar tax if
required pursuant to Section 15. The date on which the holder satisfies
all such requirements shall be the "Conversion Date." As soon as
practical, the Company shall deliver a certificate or certificates for
the number of shares of Class A Common Stock issuable upon the
conversion. The Person in whose name the Class A Common Stock
certificate is registered shall be treated as the stockholder of record
on and after the Conversion Date.
(d) If the Company elects to convert shares of Series B Preferred
Stock, the Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Class A Common Stock upon
the conversion.
A-29
32
(e) The Company has reserved and shall continue to reserve out of its
authorized but unissued Class A Common Stock or its Class A Common
Stock held in treasury a sufficient number of shares of Class A Common
Stock to permit the conversion of the Series B Preferred Stock in full.
All shares of Class A Common Stock that may be issued upon conversion
of Series B Preferred Stock shall be duly authorized, fully paid and
nonassessable. The Company shall comply with all securities laws
regulating the offer and delivery of shares of Class A Common Stock
upon conversion of Series B Preferred Stock and shall list such shares
on each national securities exchange or automated quotation system on
which the Class A Common Stock is listed.
(f) At any time after the consummation of an IPO, in the case of any
consolidation or reorganization of the Company or the merger of the
Company with or into any other entity or the sale or transfer of all or
substantially all the assets of the Company pursuant to which the
Company's Class A Common Stock is converted into other securities, cash
or assets (any of the foregoing, a "Consolidation"), upon consummation
of such Consolidation, each holder of Series B Preferred Stock shall be
entitled to elect to have each share of Series B Preferred Stock held
by such holder to thereafter be convertible into the kind and amount of
securities, cash or other assets receivable upon the consolidation,
merger, sale or transfer by a holder of the number of shares of Class A
Common Stock into which such share of Series B Preferred Stock might
have been converted immediately prior to such consolidation, merger,
transfer or sale. Appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions herein
set forth with respect to the rights and interests thereafter of the
holders of Series B Preferred Stock, to the end that the provisions set
forth herein (including provisions with respect to changes in and other
adjustment of the Conversion Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or
other securities or property thereafter deliverable upon the conversion
of Series B Preferred Stock in respect of any Consolidation.
4. Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company or reduction or decrease in
its capital stock resulting in a distribution of assets to the holders
of any class or series of the Company's capital stock, each holder of
shares of the Series B Preferred Stock will be entitled to payment out
of the assets of the Company available for distribution of an amount
equal to the Liquidation Preference per share of Series B Preferred
Stock held by such holder, plus accrued
A-30
33
and unpaid dividends, to the date fixed for liquidation, dissolution,
winding-up or reduction or decrease in capital stock, before any
distribution is made on any Junior Securities, including, without
limitation, Common Stock of the Company. After payment in full of the
Liquidation Preference and all accrued and unpaid dividends, to which
holders of Series B Preferred Stock are entitled, such holders will not
be entitled to any further participation in any distribution of assets
of the Company. If, upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, the amounts payable with
respect to the Series B Preferred Stock and all other Parity Securities
are not paid in full, the holders of the Series B Preferred Stock and
the Parity Securities will share equally and ratably in any
distribution of assets of the Company in proportion to the full
Liquidation Preference and accrued and unpaid dividends, to which each
is entitled. However, neither the voluntary sale, conveyance, exchange
or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with or into
one or more Persons will be deemed to be a voluntary or involuntary
liquidation, dissolution or winding-up of the Company or reduction or
decrease in capital stock, unless such sale, conveyance, exchange or
transfer shall be in connection with a liquidation, dissolution or
winding-up of the business of the Company.
5. Redemption by the Company.
a. At all times, the Company shall have the option to
redeem, in whole or in part, (subject to the legal
availability of funds therefor) all outstanding shares of
Series B Preferred Stock at a price (the "Redemption Price")
in cash equal to the Liquidation Preference thereof, plus
accrued and unpaid dividends (including an amount in cash
equal to a prorated dividend for any partial dividend period)
to the date of redemption . The Company shall not be required
to make sinking fund payments with respect to the Series B
Preferred Stock. The Company shall take all actions required
or permitted under the DGCL to permit such redemption.
b. In case of redemption of less than all of the shares
of Series B Preferred Stock at the time outstanding, the
shares to be redeemed shall be selected pro rata or by lot as
determined by the Company in its sole discretion.
c. Notice of any redemption shall be sent by or on
behalf of the Company not less than 30 nor more than 60
A-31
34
days prior to the date specified for redemption in such notice
(the "Redemption Date"), by first class mail, postage prepaid,
to all holders of record of the Series B Preferred Stock at
their last addresses as they shall appear on the books of the
Company; provided, however, that no failure to give such
notice or any defect therein or in the mailing thereof shall
affect the validity of the proceedings for the redemption of
any shares of Series B Preferred Stock except as to the holder
to whom the Company has failed to give notice or except as to
the holder to whom notice was defective. In addition to any
information required by law or by the applicable rules of any
exchange upon which Series B Preferred Stock may be listed or
admitted to trading, such notice shall state: (i) the
Redemption Date; (ii) the Redemption Price; (iii) the number
of shares of Series B Preferred Stock to be redeemed and, if
less than all shares held by such holder are to be redeemed,
the number of such shares to be redeemed; (iv) the place or
places where certificates for such shares are to be
surrendered for payment of the Redemption Price, including any
procedures applicable to redemptions to be accomplished
through book-entry transfers; and (v) that dividends on the
shares to be redeemed will cease to accumulate on the
Redemption Date. Upon the mailing of any such notice of
redemption, the Company shall become obligated to redeem at
the time of redemption specified thereon all shares called for
redemption.
d. If notice has been mailed in accordance with Section
5(c) above and provided that on or before the Redemption Date
specified in such notice, all funds necessary for such
redemption shall have been set aside by the Company, separate
and apart from its other funds in trust for the pro rata
benefit of the holders of the shares so called for redemption,
so as to be, and to continue to be available therefor, then,
from and after the Redemption Date, dividends on the shares of
the Series B Preferred Stock so called for redemption shall
cease to accumulate, and said shares shall no longer be deemed
to be outstanding and shall not have the status of shares of
Series B Preferred Stock, and all rights of the holders
thereof as stockholders of the Company (except the right to
receive from the Company the Redemption Price) shall cease.
Upon surrender, in accordance with said notice, of the
certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Company shall so require and the
notice shall so state), such shares shall be redeemed by the
Company at the Redemption Price. In case fewer than all the
shares represented by any such certificate
A-32
35
are redeemed, a new certificate or certificates shall be
issued representing the unredeemed shares without cost to the
holder thereof.
e. Any funds deposited with a bank or trust company for
the purpose of redeeming Series B Preferred Stock shall be
irrevocable except that:
i. the Company shall be entitled to receive
from such bank or trust company the interest or other
earnings, if any, earned on any money so deposited in
trust, and the holders of any shares redeemed shall
have no claim to such interest or other earnings; and
ii. any balance of monies so deposited by the
Company and unclaimed by the holders of the Series
B Preferred Stock entitled thereto at the
expiration of two years from the applicable
Redemption Date shall be repaid, together with any
interest or other earnings earned thereon, to the
Company, and after any such repayment, the holders
of the shares entitled to the funds so repaid to
the Company shall look only to the Company for
payment without interest or other earnings.
f. No Series B Preferred Stock may be redeemed except
with funds legally available for the purpose. The Company
shall take all actions required or permitted under the DGCL to
permit any such redemption.
g. Notwithstanding the foregoing provisions of this
Section 5, unless the full cumulative dividends on all
outstanding shares of Series B Preferred Stock shall have been
paid or contemporaneously are declared and paid for all past
dividend periods, none of the shares of Series B Preferred
Stock shall be redeemed.
h. All shares of Series B Preferred Stock redeemed
pursuant to this Section 5 shall be restored to the status of
authorized and unissued shares of Series B Preferred Stock,
without designation as to series or class and may thereafter
be reissued as shares of any series or class of preferred
stock other than shares of Series B Preferred Stock.
6. Voting Rights.
The holders of record of shares of the Series B Preferred Stock shall
have no voting rights, except as required by law and as hereinafter
provided in this Section 6.
A-33
36
(a) The Company shall not, without the affirmative vote or consent of
the holders of at least a majority of the shares of Series B Preferred
Stock then outstanding (with shares held by the Company or any of its
affiliates not being considered to be outstanding for this purpose)
voting or consenting as the case may be, as one class:
(i) amend or otherwise alter this Certificate of Designation
(including the provisions of paragraph 6 hereof) in any manner
that adversely affects the specified rights, preferences,
privileges or voting rights of holders of Series B Preferred
Stock, including, but not limited to, any change in the
provisions of Section 3 hereof;
(ii) waive compliance with any provision of this Certificate
of Designation.
(b) Without the consent of each holder affected, an amendment or waiver
of the Company's Certificate of Incorporation or of this Certificate of
Designation may not (with respect to any shares of Series B Preferred
Stock held by a non-consenting holder):
(i) alter the voting rights with respect to the Series B
Preferred Stock or reduce the number of shares of Series B
Preferred Stock whose holders must consent to an amendment,
supplement or waiver;
(ii) reduce the Liquidation Preference of the Series B
Preferred Stock;
(iii) reduce the rate of or change the time for payment of
dividends on any share of Series B Preferred Stock;
(iv) waive the consequences of any failure to pay dividends on
the Series B Preferred Stock;
(v) make any share of Series B Preferred Stock payable in any
form other than that stated in this Certificate of
Designation;
(vi) make any change in the provisions of this Certificate of
Designation relating to waivers of the rights of holders of
Series B Preferred Stock to receive the Liquidation Preference
and dividends on the Series B Preferred Stock;
(vii) make any change in the foregoing amendment and waiver
provisions.
A-34
37
(c) The Company in its sole discretion may without the vote or consent
of any holders of the Series B Preferred Stock amend or supplement this
Certificate of Designation:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Series B Preferred Stock in
addition to or in place of certificated Series B Preferred
Stock; or
(iii) to make any change that would provide any additional
rights or benefits to the holders of the Series B Preferred
Stock or that does not adversely affect the legal rights under
this Certificate of Designation of any such holder.
(d) If there has not been an Effective Registration on or prior to the
later of 180 days after (a) the fourth anniversary of the Series B
Preferred Stock Issue Date and (b) the Demand Date, then the holders of
the Series B Preferred Stock shall have the exclusive right, voting
separately as a class, to elect one director on the board of directors
of the Company (the "Preferred Director"). The right of the holders of
the Series B Preferred Stock to elect the Preferred Director shall
continue until there is an Effective Registration. At such time, the
term of the Preferred Director shall terminate. At any time when the
holders of the Series B Preferred Stock shall have thus become entitled
to elect the Preferred Director, the Company shall take all action
necessary to ensure that the Preferred Director shall be elected to the
board of directors of the Company, including, without limitation (i)
amending the by-laws of the Company to increase the size of the board
of directors, and (ii) causing a special meeting of the stockholders to
be called to elect the Preferred Director. The special meeting of the
stockholders that shall be called for the purpose of electing the
Preferred Director shall be held within 30 days after such right to
elect the Preferred Director arises, upon notice given in the manner
provided in the by-laws of the Company or by law. At any such special
meeting or at any annual meeting at which the holders of the Series B
Preferred Stock shall be entitled to elect a Preferred Director, the
holders of a majority of the then outstanding Series B Preferred Stock
present in person or by proxy shall be sufficient to constitute a
quorum for the election of such director. The person elected by the
holders of the Series B Preferred Stock at any meeting in accordance
with the terms of the preceding sentence shall become a director on the
date of such election.
A-35
38
Except as set forth above, (A) the creation, authorization or issuance
of any shares of Junior Securities, Parity Securities or Senior
Securities or (B) the increase or decrease in the amount of authorized
capital stock of any class, including any Series B Preferred Stock,
shall not require the consent of the holders of the Series B Preferred
Stock and shall not be deemed to affect adversely the rights,
preferences, privileges, special rights or voting rights of holders of
shares of Series B Preferred Stock.
7. Financial Reports. The Company shall furnish without cost to each
record holder of the outstanding Series B Preferred Stock, all
financial reports that the Company is required to deliver pursuant to
Section 13 or 15(d) of the Exchange Act.
8. Amendment. Subject to Section 6 hereof, this Certificate of
Designation shall not be amended, either directly or indirectly, or
through merger or consolidation with another entity, in any manner that
would alter or change the powers, preferences or special rights of the
Series B Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the
outstanding Series B Preferred Stock, voting separately as a class.
9. Exclusion of Other Rights. Except as may otherwise be required by law,
the shares of Series B Preferred Stock shall not have any voting
powers, preferences and relative, participating, optional or other
special rights, other than those specifically set forth in this
resolution (as such resolution may be amended from time to time) and in
the Certificate of Incorporation.
10. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
11. Severability of Provisions. If any voting powers, preferences and
relative, participating, optional and other special rights of the
Series B Preferred Stock and qualifications, limitations and
restrictions thereof set forth in this resolution (as such resolution
may be amended from time to time) is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all other
voting powers, preferences and relative, participating, optional and
other special rights
A-36
39
of Series B Preferred Stock and qualifications, limitations and
restrictions thereof set forth in this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable
voting powers, preferences and relative, participating, optional and
other special rights of Series B Preferred Stock and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in
full force and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Series B Preferred
Stock and qualifications, limitations and restrictions thereof herein
set forth shall be deemed dependent upon any other such voting powers,
preferences and relative, participating, optional or other special
rights of Series B Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
12. Reissuance of Series B Preferred Stock. Shares of Series B Preferred
Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged or converted, shall (upon
compliance with any applicable provisions of the laws of Delaware) have
the status of authorized but unissued shares of Series B Preferred
Stock of the Company undesignated as to series and may be designated or
redesignated and issued or reissued, as the case may be, as part of any
series or class of Series B Preferred Stock of the Company other than
shares of Series B Preferred Stock.
13. Mutilated or Missing Series B Preferred Stock Certificates. If any of
the Series B Preferred Stock certificates shall be mutilated, lost,
stolen or destroyed, the Company shall issue, in exchange and in
substitution for and upon cancellation of the mutilated Series B
Preferred Stock certificate, or in lieu of and substitution for the
Series B Preferred Stock certificate lost, stolen or destroyed, a new
Series B Preferred Stock certificate of like tenor and representing an
equivalent amount of shares of Series B Preferred Stock, but only upon
receipt of evidence of such loss, theft or destruction of such Series B
Preferred Stock certificate and indemnity, if requested, satisfactory
to the Company and the transfer agent (if other than the Company).
14. Notices. In case at any time or from time to time there shall be a
Consolidation or any event described in the first sentence of Section
4, then the Company shall mail to each holder of shares of Series B
Preferred Stock at such holder's address as it appears on the transfer
books of the Company, as promptly as possible but in any event at least
ten (10) days prior to the applicable date hereinafter specified, a
notice stating (a) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights or warrants or, if a
record is not to be taken, the date as of which the holder of the Class
A Common Stock of record to be entitled to such dividend, distribution
or rights are to be determined, or (b) the date on which such
Consolidation is expected to become effective.
A-37
40
Such notice also shall specify the date as of which it is expected that
holders of Class A Common Stock of record shall be entitled to exchange
their Class A Common Stock for shares of stock or other securities or
property or cash deliverable upon which Consolidation.
15. Transfer Taxes. The issuance or delivery of certificates for Class A
Common Stock upon the conversion of shares of Series B Preferred Stock
shall be made without charge to the converting holder of shares of
Series B Preferred Stock for such certificates or for any tax in
respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued
or delivered in the respective names of, or (subject to compliance with
the applicable provisions of federal and state securities laws) in such
names as may be directed by, the holders of the shares of Series B
Preferred Stock converted; provided, however, that the Company shall
not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate
in a name other than that of the holder of the shares of Series B
Preferred Stock converted, and the Company shall not be required to
issue or deliver such certificate unless or until the Person or Persons
requesting the issuance or delivery thereof shall have paid to the
Company the amount of such tax or shall have established to the
reasonable satisfaction of the Company that such tax has been paid.
16. Certain Remedies. Any registered holder of Series B Preferred Stock
shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Certificate of Designation and to enforce
specifically the terms and provisions of this Certificate of
Designation in any court of the United States, or any state thereof
having jurisdiction, this being in addition to any remedy to which such
holder may be entitled at law or in equity.
17. Certain Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined
in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
A-38
41
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
"Class B Common Stock" means the Class B Common Stock, par value $.01
per share, of the Company.
"Class C Common Stock" means the Class C Common Stock, par value $.01
per share, of the Company.
"Common Stock" means Class A Common Stock, Class B Common Stock, Class
C Common Stock or other common stock of the Company.
"Conversion Price" means the price at which a share of Class A Common
Stock is offered to the public pursuant to an initial underwritten
public offering as set forth in paragraph 3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other
entity.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 9, 1998, between the Company, Interactive
Cable Systems, Inc., Nomura Holding America, Inc. and MCI
Telecommunications Corporation.
"Series B Preferred Stock Issue Date" means the date on which the
Series B Preferred Stock is originally issued by the Company under this
Certificate of Designation.
"Securities Act" means the Securities Act of 1933, as amended.
A-39