EXHIBIT 3.1
CERTIFICATE OF DESIGNATION OF PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
OF
6% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
GLOBIX CORPORATION
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PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
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Globix Corporation (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that (i) pursuant to authority conferred upon the board of directors
(the "Board of Directors") by its Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors is authorized to issue Preferred Stock of the
Company in one or more series; and (ii) the resolutions set forth below (the
"Resolutions") were duly adopted by the Board of Directors, by a vote at a
meeting duly called and duly held on September 28, 2004;
"WHEREAS, the Board of Directors of the Company is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation of
the Company, to provide by resolution or resolutions for the issuance of shares
of its preferred stock, par value $0.01 per share (the "Preferred Stock"), and
by filing a certificate of designation in the manner prescribed under the laws
of the State of Delaware, to fix and amend the voting powers, full or limited,
or no voting powers, and the designation, preferences and relative,
participating, optional and other special rights, if any, and qualification,
limitations and restrictions thereof;
WHEREAS, the Board of Directors of the Company desires to authorize and
fix the terms of a series of Preferred Stock and the number of shares
constituting such series; and
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings specified in Section 14 hereof;
NOW, THEREFORE, BE IT RESOLVED that, pursuant to the authority vested
in the Board of Directors by its Certificate of Incorporation, the Board of
Directors does hereby designate, create, authorize and provide for the issuance
of 6% Series A Cumulative Convertible Preferred Stock, par value $0.01 per
share, with a liquidation preference of $3.60 per share, consisting of 4,500,000
shares having the designation, preferences, relative, participating, optional
and other special rights and the qualification, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
1. DESIGNATION. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Company a series of Preferred Stock
designated as the "6% Series A Cumulative Convertible Preferred Stock" (the
"Convertible Preferred Stock"). The authorized number of shares constituting the
Convertible Preferred Stock shall be 4,500,000. The liquidation preference of
the Convertible Preferred Stock shall be $3.60 per share (the "Liquidation
Preference"). The date the Convertible Preferred Stock is first issued is
referred to as the "Issue Date."
2. RANK. The Convertible Preferred Stock will, with respect to dividend
rights and rights upon the liquidation, dissolution or winding up of the
Company, rank (i) junior to each class of Capital Stock or series of Preferred
Stock, established hereafter by the Board of Directors, the terms of which
expressly provide that such class or series will rank senior to the Convertible
Preferred Stock as to dividend rights and upon liquidation, dissolution or
winding up of the Company ("Senior Capital Stock"); (ii) pari passu with each
class of Capital Stock or series of Preferred Stock, established hereafter by
the Board of Directors, the terms of which expressly provide that such class or
series will rank on a parity with the Convertible Preferred Stock as to dividend
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rights and upon the liquidation, dissolution or winding up of the Company
("Parity Capital Stock") and (iii) senior to all series of common stock, par
value $0.01 per share, of the Company (the "Common Stock") and to any Capital
Stock or series of Preferred Stock, established hereafter by the Board of
Directors, that expressly provides that it will rank junior to the Convertible
Preferred Stock as to dividend rights and upon the liquidation, dissolution or
winding up of the Company ("Junior Capital Stock").
3. DIVIDENDS.
(a) The Holder of shares of the Convertible Preferred Stock
will be entitled to receive, when, as and if dividends are declared by
the Board of Directors out of funds of the Company legally available
therefor, cumulative preferential dividends from the Issue Date of the
Convertible Preferred Stock accruing at the rate of $0.216 per share of
Convertible Preferred Stock per annum, or $0.108 per share of
Convertible Preferred Stock semi-annually, payable semi-annually in
arrears on June 15 and December 15 of each year, commencing on December
15, 2004 or, if any such date is not a Business Day, on the next
succeeding business day (each, a "Dividend Payment Date"), to the
Holders of record on the 10th day prior to the relevant Dividend
Payment Date (each, a "Record Date"). Accrued but unpaid dividends, if
any, may be paid on such dates as determined by the Board of Directors.
(b) Dividends payable on the Convertible Preferred Stock will
be computed on the basis of a 360-day year of twelve 30-day months and
will be deemed to accrue on a daily basis. Dividends on the Convertible
Preferred Stock will accrue from the Issue Date.
(c) Any dividend on the Convertible Preferred Stock shall be,
at the option of the Company, payable (i) in cash, or (ii) through the
issuance of a number of additional shares (including fractional shares)
of Convertible Preferred Stock (the "Additional Shares") equal to the
dividend amount divided by the Liquidation Preference of such
Additional Shares.
(d) The Convertible Preferred Stock will not be redeemable
unless all dividends accrued through such redemption date shall have
been paid in full. Notwithstanding anything to the contrary herein
contained, the Company shall not be required to declare or pay a
dividend if another person (including, without limitation, any of its
subsidiaries) pays an amount to the Holders equal to the amount of such
dividend on behalf of the Company and, in such event, the dividend will
be deemed paid for all purposes.
(e) Dividends on the Convertible Preferred Stock will accrue
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
semi-annual period to which they relate. Accumulated unpaid dividends
will accrue and cumulate dividends at a rate of 6% per annum. The
Company will take all reasonable actions required or permitted under
Delaware law to permit the payment of dividends on the Convertible
Preferred Stock.
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(f) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding
share of the Convertible Preferred Stock with respect to any dividend
period unless all dividends for all preceding dividend periods have
been declared and paid upon, or declared and a sufficient sum set apart
for the payment of such dividend upon, all outstanding shares of
Convertible Preferred Stock. Unless full cumulative dividends on all
outstanding shares of Convertible Preferred Stock due for all past
dividend periods shall have been declared and paid, or declared and a
sufficient sum for the payment thereof set apart, then: (i) no dividend
(other than, in the case of Junior Capital Stock, a dividend payable
solely in shares of Junior Capital Stock or options, warrants or rights
to purchase Junior Capital Stock, or in the case of Parity Capital
Stock, a dividend payable solely in shares of Junior Capital Stock or
Parity Capital Stock or options, warrants or rights to purchase Junior
Capital Stock or Parity Capital Stock) shall be declared or paid upon,
or any sum set apart for the payment of dividends upon, any shares of
Parity Capital Stock or Junior Capital Stock; (ii) no other
distribution shall be declared or made upon, or any sum set apart for
the payment of any distribution upon, any shares of Parity Capital
Stock or Junior Capital Stock; (iii) no shares of Parity Capital Stock
or Junior Capital Stock or any warrants, rights, calls or options
exercisable for or convertible into any Parity Capital Stock or Junior
Capital Stock shall be purchased, redeemed or otherwise acquired or
retired for value (excluding an exchange for shares of other Parity
Capital Stock or Junior Capital Stock or a purchase, redemption or
other acquisition from the proceeds of a substantially concurrent sale
of Parity Capital Stock or Junior Capital Stock, and repurchases of
Capital Stock held by an employee in connection with the termination of
such employee's termination) 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 a Parity Capital
Stock or Junior Capital Stock or any warrants, rights, calls or options
exercisable for or convertible into any Parity Capital Stock or Junior
Capital Stock by the Company or any of its subsidiaries. Holders of the
Convertible Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the full
cumulative dividends as herein described.
(g) Dividends on account of arrears and dividends in
connection with any optional redemption may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to
holders of record on such date, not more than 45 days prior to the
payment thereof, as may be fixed by the Board of Directors of the
Company.
4. LIQUIDATION RIGHTS. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company after payment in full of the
outstanding debt obligations of the Company and the liquidation preference (and
any accrued and unpaid dividends) on Senior Capital Stock, if any, each Holder
of shares of the Convertible Preferred Stock shall be entitled to payment out of
the assets of the Company available for distribution of the Liquidation
Preference per share of the Convertible Preferred Stock held by such Holder,
plus an amount equal to the accrued and unpaid dividends on the Convertible
Preferred Stock to the date fixed for liquidation, dissolution or winding up,
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before any distribution is made on any Junior Capital Stock, including, without
limitation, any series of Common Stock of the Company. After payment in full of
the Liquidation Preference and an amount equal to the accrued and unpaid
dividends to which Holders of Convertible Preferred Steak are entitled, such
Holders will not be entitled to any further participation in any distribution of
assets of the Company. 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 corporations
will be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Company, unless such sale, conveyance, exchange, transfer,
consolidation or merger shall be in connection with a liquidation, dissolution
or winding up of the Company.
5. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Convertible Preferred Stock may
be redeemed, in whole or in part, at the option of the Company after
2005 at the redemption prices specified below (expressed as percentages
of the Liquidation Preference thereof), in each case, together with an
amount equal to accrued and unpaid dividends on the Convertible
Preferred Stock and Additional Shares (if any), to the date of
redemption, upon not less than 15 nor more than 60 days' prior written
notice, during the 12-month period commencing on December 16 of each of
the years set forth below:
Period Redemption Price
2005 and 2006 106%
2007 103%
2008 and thereafter 100.000%
(b) GENERAL. On and after any date fixed for redemption (the
"Redemption Date"), provided that the Company has made available at the
office of the Transfer Agent a sufficient amount of cash to effect the
redemption, dividends will cease to accrue on the Convertible Preferred
Stock called for redemption (except that, in the case of a Redemption
Date after a dividend payment Record Date and prior to the related
Dividend Payment Date, holders of Convertible Preferred Stock on the
dividend payment Record Date will be entitled on such Dividend Payment
Date to receive the dividend payable on such shares), such shares shall
no longer be deemed to be outstanding and all rights of the holders of
such shares as holders of Convertible Preferred Stock shall cease
except the right to receive the cash deliverable upon such redemption,
without interest from the Redemption Date.
(c) PARTIAL REDEMPTION. In the event of a redemption of only a
portion of the then outstanding shares of Convertible Preferred Stock,
the Company shall effect such redemption on a pro rata basis, except
that the Company may redeem all of the shares held by Holders of fewer
than 100 shares (or all of the shares held by Holders who would hold
less than 100 shares as a result of such redemption), as may be
determined by the Company.
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(d) MECHANICS. With respect to a redemption pursuant hereto,
the Company will send a written notice of redemption by first class
mail to each holder of record of shares of Convertible Preferred Stock,
not fewer than 15 days nor more than 60 days prior to the Redemption
Date at its registered address (the "Redemption Notice"); provided,
however, that no failure to give such notice nor any deficiency therein
shall affect the validity of the procedure for the redemption of any
shares of Convertible Preferred Stock to be redeemed except as to the
holder or holders to whom the Company has failed to give said notice or
except as to the holder or holders whose notice was defective. The
Redemption Notice shall state:
(i) the redemption price;
(ii) whether all or less than all the outstanding
shares of the Convertible Preferred Stock
are to be redeemed and the total number of
shares of the Convertible Preferred Stock
being redeemed;
(iii) the Redemption Date;
(iv) that the holder is to surrender to the
Company, in the manner, at the place or
places and at the price designated, his
certificate or certificates representing the
shares of Convertible Preferred Stock to be
redeemed; and
(v) that dividends on the shares of the
Convertible Preferred Stock to be redeemed
shall cease to accumulate on such Redemption
Date unless the Company defaults in the
payment of the redemption price.
Each holder of Convertible Preferred Stock shall surrender the certificate or
certificates representing such shares of Convertible Preferred Stock to the
Company, duly endorsed (or otherwise in proper form for transfer, as determined
by the Company), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full redemption price for such shares
shall be payable in cash to the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
canceled and retired. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
6. VOTING RIGHTS/CONSENT.
(a) GENERAL. Except as otherwise required under the Delaware
General Corporation Law, the holder of each share of Convertible
Preferred Stock shall have the right to one vote for each share of
Common Stock into which such share of Common Stock could then be
converted (with any fractional share determined on an aggregate
conversion basis being rounded to the nearest whole share), and with
respect to such vote such holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled, notwithstanding any provision hereof, to
notice of any stockholders' meeting in accordance with the Amended and
Restated Bylaws of the Company, and shall be entitled to vote, together
with holders of Common Stock as a single class, with respect to any
question or matter upon which holders of Common Stock have to right to
vote.
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(b) ISSUANCE OF ADDITIONAL STOCK. For so long as there are at
least 200,000 shares of Convertible Preferred Stock outstanding, the
Company may not authorize, create (by way of reclassification or
otherwise) or issue any Senior Capital Stock or Parity Capital Stock
(including additional shares of Convertible Preferred Stock (other than
the issuance of shares of Convertible Preferred Stock in payment of
dividends on the Convertible Preferred Stock as provided in Section
3(c) hereof)), or any obligation or security convertible or
exchangeable into, or evidencing a right to purchase, shares of any
class or series of Senior Capital Stock or Parity Capital Stock
(including additional shares of Convertible Preferred Stock), without
the affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of Convertible Preferred Stock.
7. CHANGE OF CONTROL.
(a) GENERAL. In the event of a Change of Control, each Holder
shall have the right to require the Company to purchase all or a
portion of such Holder's Convertible Preferred Stock (the "Change of
Control Offer") as of the date that is no earlier than 30 days and no
more than 60 days after the Change of Control Notice Date (the "Change
of Control Purchase Date") for a purchase price equal to 101% of the
Liquidation Preference together with accrued and unpaid dividends to
but not including the Change of Control Purchase Date (the "Change of
Control Purchase Price"). No funds shall be paid by the Company
pursuant to a Change of Control Offer prior to the Company's repurchase
of any securities ranking senior to the Convertible Preferred Stock and
requiring repurchase pursuant to the change of control provisions
governing such senior securities, including, without limitation, the
repurchase of the Company's 11% Senior Secured Notes due 2008 issued
pursuant to that certain Indenture, dated as of April 23, 2002, between
the Company, certain subsidiaries of the Company and HSBC Bank USA, as
Trustee (the "Indenture").
(b) COMPANY NOTICE. Within 30 days after the occurrence of a
Change of Control, the Company shall mail to all Holders of record of
the Convertible Preferred Stock a written notice of the Change of
Control, the date of such notice being the "Change of Control Notice
Date." The notice shall include the form of Change of Control Purchase
Notice (as defined in subsection (c) below) to be completed by the
Holder and shall state:
(i) the date of such Change of Control and,
briefly, the events causing such Change of
Control;
(ii) the date by which the Change of Control
Purchase Notice pursuant to this Section 7
must be given;
(iii) the Change of Control Purchase Date;
(iv) the Change of Control Purchase Price;
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(v) briefly, the conversion rights of the
Convertible Preferred Stock;
(vi) the name and address of the Paying Agent and
the Transfer Agent;
(vii) the then current Conversion Rate;
(viii) that Convertible Preferred Stock as to which
a Change of Control Purchase Notice has been
given may be converted into Common Stock
only to the extent that the Change of
Control Purchase Notice has been withdrawn
in accordance with the terms of this
Certificate of Designation;
(ix) the procedures that the Holder must follow
to exercise rights under this Section 7;
(x) the procedures for withdrawing a Change of
Control Purchase Notice, including a form of
notice of withdrawal; and
(xi) that the Holder must satisfy the
requirements set forth in the Convertible
Preferred Stock in order to convert the
Convertible Preferred Stock.
(c) EXERCISE. A Holder may exercise its rights specified in
subsection (a) of this Section 7 upon delivery of a written notice of
the exercise of such rights (a "Change of Control Purchase Notice") to
the Paying Agent at any time prior to the close of business on the
THIRD Business Day next preceding the Change of Control Purchase Date,
stating:
(i) the name of the Holder;
(ii) the certificate numbers of the Convertible
Preferred Stock that the Holder will deliver
to be purchased;
(iii) the number of shares of Convertible
Preferred Stock that the Holder will deliver
to be purchased; and
(iv) that such Convertible Preferred Stock shall
be purchased pursuant to the terms and
conditions specified in this Certificate of
Designations.
The delivery of such Convertible Preferred Stock to the Paying Agent (together
with all necessary endorsements) at the office of the Paying Agent shall be a
condition to the receipt by the Holder of the Change of Control Purchase Price
therefor; provided, however, that such Change of Control Purchase Price shall be
so paid pursuant to this Section 7 only if the Convertible Preferred Stock so
delivered to the Paying Agent shall conform in all respects to the description
thereof set forth in the related Change of Control Purchase Notice.
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(d) PAYMENT. Upon receipt by the Paying Agent of the Change of
Control Purchase Notice specified in subsection (c) of this Section 7,
the Paying Agent shall promptly so notify the Company, and the Holder
of the Convertible Preferred Stock in respect of which such Change of
Control Purchase Notice was given shall (unless such Change of Control
Purchase Notice is withdrawn as specified below) thereafter be entitled
to receive solely the Change of Control Purchase Price with respect to
such Convertible Preferred Stock. Such Change of Control Purchase Price
shall be paid to such Holder promptly following the later of (i) the
Change of Control Purchase Date with respect to such Convertible
Preferred Stock (provided the conditions in subsection (c) of this
Section 7 have been satisfied) and (ii) the time of delivery of such
Convertible Preferred Stock to the Paying Agent by the Holder thereof
in the manner required by subsection (c) of this Section 7. Convertible
Preferred Stock in respect of which a Change of Control Purchase Notice
has been given by the Holder thereof may not be converted into shares
of Common Stock on or after the date of the delivery of such Change of
Control Purchase Notice unless such Change of Control Purchase Notice
has first been validly withdrawn.
(e) WITHDRAWAL. A Change of Control Purchase Notice may be
withdrawn by means of a written notice of withdrawal delivered by the
Holder to the office of the Paying Agent at any time prior to the close
of business on the Business Day immediately preceding the Change of
Control Purchase Date, specifying:
(i) the name of the Holder;
(ii) the certificate numbers of the Convertible
Preferred Stock in respect of which such
notice of withdrawal is being submitted;
(iii) the number of shares of Convertible
Preferred Stock with respect to which such
notice of withdrawal is being submitted; and
(iv) the number of shares, if any, of each
Convertible Preferred stock that remains
subject to the original Change of Control
Purchase Notice and that has been or will be
delivered for purchase by the Company.
(f) COMPANY DEPOSIT WITH PAYING AGENT. At or before 11:00
a.m., New York City time, on the second Business Day immediately
following a Change of Control Purchase Date, the Company shall deposit
with the Paying Agent an amount of money sufficient to pay the
aggregate Change of Control Purchase Price of all of the shares of
Convertible Preferred Stock that are to be purchased as of such Change
of Control Purchase Date plus accrued and unpaid dividends thereon up
to but not including the Change of Control Purchase Date. The manner in
which the deposit required by this subsection (f) is made by the
Company shall be at the option of the Company, provided that such
deposit shall be made in a manner such that the Paying Agent shall have
immediately available funds on the second Business Day immediately
following the Change of Control Purchase Date.
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(g) FAILURE TO EXERCISE. If a Holder does not exercise the
right to require the Company to purchase such Holder's Convertible
Preferred Stock, each share of such Convertible Preferred Stock shall
thereafter be convertible into the right to receive the consideration
receivable as a result of the Change of Control by a holder of the
number of shares of Common Stock into which such Convertible Preferred
Stock was convertible immediately prior to the Change of Control.
(h) DEFINITION OF CHANGE OF CONTROL. A Change of Control shall
be deemed to have occurred if any of the following occurs: (a) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of
all shares that such person has or has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the Company; (b) during any consecutive
two-year period, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any
new directors whose election to such Board or whose nomination for
election by the stockholders of the Company was approved by a vote of a
majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any
reason to constitute a majority of the Board of Directors then in
office; (c) the Company consolidates with or merges with or into any
person or conveys, transfers or leases all or substantially all of its
assets to any person, or any corporation consolidates with or merges
into or with the Company, in any such event, pursuant to a transaction
in which the outstanding Voting Stock of the Company is changed into or
exchanged for cash, securities or other property, except (i) to the
extent necessary to reflect a change in the jurisdiction of
incorporation of the Company or (ii) where no "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act)
owns, other than Permitted Holders, immediately after such transaction,
directly or indirectly, more than 50% of the total outstanding Voting
Stock of the surviving corporation; or (d) the Company is liquidated or
dissolved or adopts a plan of liquidation or dissolution. The good
faith determination by the Board, based upon advice of outside counsel,
of the beneficial ownership of securities of the Company within the
meaning of Rules 13d-3 or 13d-5 under the Exchange Act shall be
conclusive, absent contrary controlling precedent or contrary written
interpretation published by the Commission. No inference shall be
created that officers or employees of the Company are acting as a
"person" or "group" (as such terms are used in Sections 13(d) or 14(d)
of the Exchange Act) with the power to designate a majority of the
members of the Board solely because such officers or employees
constitute a majority of the members of the Board.
(i) The provisions of this Section 7 may be amended, modified
or waived only with the consent of holders of not less than sixty-six
and two-thirds percent (66-2/3%) of the shares of Convertible Preferred
Stock then outstanding.
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8. CONVERSION RATES.
(a) Each share of Convertible Preferred Stock will be
convertible at the option of the Holder, at any time, unless previously
redeemed or repurchased, into the number of fully paid and
non-assessable shares of Common Stock (calculated as to each conversion
rounded up to the nearest 1/100th of a share) obtained by dividing the
Liquidation Preference by the Conversion Price (as defined below) (the
"Conversion Rate"). The Conversion Price shall initially be $3.60 per
share of the Convertible Preferred Stock (subject to the adjustments
described below, the "Conversion Price"). The right to convert a share
of the Convertible Preferred Stock called for redemption or delivered
for repurchase will terminate at the close of business on the
Redemption Date for such Convertible Preferred Stock or in accordance
with the terms of Section 7 hereof, with respect to a repurchase in
connection with a Change of Control.
(b) The right of conversion attaching to any share of
Convertible Preferred Stock may be exercised by the Holder thereof by
delivering the share to be converted to the office of the Transfer
Agent, or any agency or office of the Company maintained for that
purpose, accompanied by a duly signed and completed notice of
conversion in form reasonably satisfactory to the Transfer Agent of the
Company. The conversion date will be the date on which the shares and
the duly signed and completed notice of conversion are so delivered. As
promptly as practicable on or after the conversion date, the Company
will issue and deliver to the Transfer Agent a certificate or
certificates for the number of full shares of Common Stock, issuable
upon conversion, with any fractional shares rounded up to full shares
or, at the Company's option, payment in cash in lieu of any fraction of
a share, based on the Closing Price of the Common Stock on the Trading
Day preceding the conversion date. Such certificate or certificates
will be delivered by the Transfer Agent to the appropriate Holder on a
book-entry basis or by mailing certificates evidencing the additional
shares to the Holders at their respective addresses set forth in the
register of Holders maintained by the Transfer Agent. All shares of
Common Stock issuable upon conversion of the Convertible Preferred
Stock will be fully paid and nonassessable and will rank pari passu
with the other shares of Common Stock outstanding from time to time.
Any shares of Convertible Preferred Stock surrendered for conversion
during the period from the close of business on any Record Date to the
opening of business on the next succeeding Dividend Payment Date must
be accompanied by payment of an amount equal to the dividends payable
on such Dividend Payment Date on the shares of Convertible Preferred
Stock being surrendered for conversion. No other payment or adjustment
for dividends, or for any dividends in respect of shares of Common
Stock, will be made upon conversion. Except as otherwise provided
herein, dividends accrued shall not be paid on Convertible Preferred
Stock converted. If any Holder surrenders shares of Convertible
Preferred Stock for conversion between a Record Date and the related
Dividend Payment Date, then notwithstanding such conversion, the
dividend payable on such Dividend Payment Date will be paid to the
Holder on such Record Date. Holders of Common Stock issued upon
conversion will not be entitled to receive any dividends payable to
holders of Common Stock as of any record time before the close of
business on the conversion date.
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(c) Each share of Convertible Preferred Stock shall be
automatically converted into shares of Common Stock at the Conversion
Rate then in effect (i) upon the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the outstanding
shares of such Convertible Preferred Stock, or (ii) on the day
immediately following the date on which the Closing Price of the Common
Stock has equaled or exceeded $10.80 (as adjusted for stock splits,
combinations or similar capital changes) for a period of 45 consecutive
Trading Days. Upon the occurrence of either of the foregoing events,
the outstanding shares of Convertible Preferred Stock shall be
converted automatically without any further action by the holders of
such shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent; provided,
however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion
unless the certificates evidencing such shares of Convertible Preferred
Stock are either delivered to the Company or its transfer agent as
provided below, or the holder notifies the Company or its Transfer
Agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such
certificates.
(d) The Conversion Rate shall be adjusted from time to time by
the Company as follows:
(i) In case the Company shall (A) pay a dividend
in shares of Common Stock to all holders of
Common Stock, (B) make a distribution in
shares of Common Stock to all holders of
Common Stock, (C) subdivide its outstanding
Common Stock into a greater number of shares
or (D) combine its outstanding Common Stock
into a smaller number of shares, the
Conversion Rate in effect immediately prior
thereto shall be adjusted so that the Holder
of any share of Convertible Preferred Stock
thereafter surrendered for conversion shall
be entitled to receive that number of shares
of Common Stock which it would have owned
had such share of Convertible Preferred
Stock been converted immediately prior to
the happening of such event. An adjustment
made pursuant to this subsection (i) shall
become effective immediately after the
record date in the case of a dividend in
shares or distribution and shall become
effective immediately after the effective
date in the case of subdivision or
combination.
(ii) In case the Company shall issue rights or
warrants to all or substantially all holders
of any series of its Common Stock entitling
them to subscribe for or purchase shares of
Common Stock (or securities convertible into
Common Stock) at a price per share less than
the current Market Price per share of Common
Stock at the record date for the
determination of shareholders entitled to
receive such rights or warrants, the
Conversion Rate in effect immediately prior
thereto shall be adjusted so that the same
shall equal the rate determined by
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multiplying the Conversion Rate in effect
immediately prior to such record date by a
fraction, of which the denominator shall be
the number of shares of Common Stock
outstanding on such record date, plus the
number of shares which the aggregate
offering price of the total number of shares
of Common Stock so offered (or the aggregate
conversion price of the convertible
securities so offered) would purchase at
such current Market Price, and of which the
numerator shall be the number of shares of
Common Stock outstanding on such record date
plus the number of additional shares of
Common Stock offered (or into which the
convertible securities so offered are
convertible). Such adjustment shall be made
successively whenever any such rights or
warrants are issued, and shall become
effective immediately after such record
date. If at the end of the period during
which such rights or warrants are
exercisable not all rights or warrants shall
have been exercised, the adjusted Conversion
Rate shall be immediately readjusted to what
it would have been based upon the number of
additional shares of Common Stock actually
issued (or the number of shares of Common
Stock issuable upon conversion of
convertible securities actually issued).
(iii) In case the Company shall distribute to all
or substantially all holders of its Common
Stock any shares of Capital Stock of the
Company (other than Common Stock), evidence
of indebtedness or other non-cash assets
(including securities of any company other
than the Company) or shall distribute to all
or substantially all holders of its Common
Stock rights or warrants to subscribe for or
purchase any of its securities (excluding
those referred to in subsection (ii) above),
then in each such case the Conversion Rate
shall be adjusted so that the same shall
equal the rate determined by multiplying the
Conversion Rate in effect immediately prior
to the date of such distribution by a
fraction, of which the denominator shall be
the current Market Price per share of the
Common Stock on the record date mentioned
below less the fair market value on such
record date (as determined by the Board of
Directors, whose determination shall be
conclusive evidence of such fair market
value) of the portion of the Capital Stock,
evidences of indebtedness or other non-cash
assets so distributed or of such rights or
warrants applicable to one share of Common
Stock (determined on the basis of the number
of shares of Common Stock outstanding on the
record date), and of which the numerator
shall be the current Market Price per share
of the Common Stock on such record date.
Such adjustment shall become effective
immediately after the record date for the
determination of shareholders entitled to
receive such distribution. Notwithstanding
the foregoing, in the event that the Company
shall distribute rights or warrants (other
than those referred to in subsection (ii)
above) ("Rights") pro rata to holders of
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Common Stock, the Company may, in lieu of
making any adjustment pursuant to this
Section 8, make proper provision so that
each Holder of a share of Convertible
Preferred Stock who converts such shares of
Convertible Preferred Stock (or any portion
thereof) after the record date for such
distribution and prior to the expiration or
redemption of the Rights shall be entitled
to receive upon such conversion, in addition
to the shares of Common Stock issuable upon
such conversion (the "Conversion Shares"), a
number of Rights to be determined as
follows: (i) if such conversion occurs on or
prior to the date for the distribution to
the holders of Rights of separate
certificates evidencing such Rights (the
"Distribution Date"), the same number of
Rights to which a holder of a number of
shares of Common Stock equal to the number
of Conversion Shares is entitled at the time
of such conversion in accordance with the
terms and provisions of and applicable to
the Rights, and (ii) if such conversion
occurs after the Distribution Date, the same
number of Rights to which a holder of the
number of shares of Common Stock into which
the number of shares of Convertible
Preferred Stock so converted was convertible
immediately prior to the Distribution Date
would have been entitled on the Distribution
Date in accordance with the terms and
provisions of and applicable to the Rights.
(iv) In case the Company shall, by dividend or
otherwise, at any time distribute (a
"Triggering Distribution") to all or
substantially all holders of its Common
Stock cash in an aggregate amount that,
together with the aggregate amount of all
cash distributions to all or substantially
all holders of its Common Stock made within
the 12 months preceding the date of payment
of the Triggering Distribution and in
respect of which no Conversion Rate
adjustment pursuant to this Section 8 has
been made, exceeds 10.0% of the product of
the current Market Price per share of Common
Stock on the Business Day immediately
preceding the day on which such Triggering
Distribution is declared by the Company (the
"Determination Date") multiplied by the
number of shares of Common Stock outstanding
on such date (excluding shares held in the
treasury of the Company), the Conversion
Rate shall be increased so that the same
shall equal the rate determined by
multiplying such Conversion Rate in effect
immediately prior to the Determination Date
by a fraction, of which the denominator
shall be the current Market Price per share
of the Common Stock on the Determination
Date less the amount of cash (plus the fair
market value of such other consideration) so
distributed within such 12 months
(including, without limitation, the
Triggering Distribution) applicable to one
share of Common Stock (determined on the
basis of the number of shares of Common
Stock outstanding on the Determination Date)
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and the numerator shall be such current
Market Price per share of the Common Stock
on the Determination Date, such increase to
become effective immediately prior to the
opening of business on the day following the
date on which the Triggering Distribution is
paid.
(v) In case any transaction or event (including,
without limitation, any merger,
consolidation, sale of assets, tender or
exchange offer, reclassification, compulsory
share exchange or liquidation) shall occur
in which all or substantially all
outstanding Common Stock is converted into
or exchanged for stock, other securities,
cash or assets (each, a "Fundamental
Change"), the holder of each share of
Convertible Preferred Stock outstanding
immediately prior to the occurrence of such
Fundamental Change shall have the right upon
any subsequent conversion to receive (but
only out of legally available funds, to the
extent required by applicable law) the kind
and amount of stock, other securities, cash
and assets that such holder would have
received if such share had been converted
immediately prior thereto.
(vi) In any case in which this Section 8 shall
require that an adjustment be made following
a record date or a Determination Date, as
the case may be, established for purposes of
this Section 8, the Company may elect to
defer (but only until five Business Days
following the filing by the Company with the
Transfer Agent of the certificate described
in subsection (i) of this Section 8) issuing
to the Holder of any Convertible Preferred
Stock converted after such record date or
Determination Date the shares of Common
Stock and other Capital Stock of the Company
issuable upon such conversion over and above
the shares of Common Stock and other Capital
Stock of the Company issuable upon such
conversion only on the basis of the
Conversion Rate prior to adjustment; and, in
lieu of the shares the issuance of which is
so deferred, the Company shall issue or
cause its transfer agents to issue due bills
or other appropriate evidence prepared by
the Company of the right to receive such
shares. If any distribution in respect of
which an adjustment to the Conversion Rate
is required to be made as of the record
date, effective date or Determination Date
therefor is not thereafter made or paid by
the Company for any reason, the Conversion
Rate shall be readjusted to the Conversion
Rate which would then be in effect if such
record date had not been fixed or such
effective date or Determination Date had not
occurred.
(vii) No adjustment in the Convention Price or the
corresponding Conversion Rate shall be
required unless such adjustment would
require an increase or decrease of at least
1% in such rate; provided, however, that any
adjustments which by reason of this
paragraph are not required to be made shall
be carried forward and taken into account in
any subsequent adjustment. All calculations
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under this paragraph shall be made by the
Company and shall be made to the nearest
cent or to the nearest one-hundredth of a
share, as the case may be. No adjustment
need be made for a change in the par value
or no par value of the Common Stock.
(viii) No adjustment need be made for a transaction
referred to in this Section 8 if all holders
of all of the Company's securities are
entitled to participate in the transaction
on a basis and with notice that the Board of
Directors determines to be fair and
appropriate in light of the basis and notice
on which holders of Common Stock participate
in the transaction. The Company shall give
notice to the Transfer Agent of any such
determination.
(ix) No adjustment need to be made for rights to
purchase Common Stock or issuances of Common
Stock pursuant to a Company plan for
reinvestment of dividends of interest. No
adjustment need be made for a change to the
par value or a change to no par value of the
Common Stock. To the extent that the
Convertible Preferred Stock becomes
convertible into the right to receive cash,
no adjustment need be made thereafter as to
the cash. Interest will not accrue on the
cash.
(x) To the extent that any occurrence specified
in this Section 8(d) shall affect only a
particular series of Common Stock, then any
adjustment in respect thereof shall be
computed as though all reference to Common
Stock were to such series of Common Stock.
To the extent that any occurrence specified
in this Section 8(d) shall affect a
particular series of Common Stock
differently from other series of Common
Stock, then any adjustment in respect
thereof shall be computed separately for
each series of Common Stock.
(e) The Company shall be entitled to make such adjustments in
the Conversion Rate, in addition to those required by Section 8, as it
in its discretion shall determine to be advisable in order that any
stock dividends, subdivisions of shares, distributions of rights to
purchase stock or securities or distributions of securities convertible
into or exchangeable for stock hereafter made by the Company to its
shareholders shall not be taxable.
(f) The Company may from time to time reduce the Conversion
Rate by an amount for any period of time if the period is at least 20
days or such longer period as required by law and if the reduction is
irrevocable during the period; provided, however, that in no event may
the Conversion Rate be reduced such that the Conversion Price is less
than the par value of a share of Common Stock.
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(g) Whenever the Conversion Rate is adjusted, the Company
shall promptly file with the Transfer Agent an Officers' Certificate
briefly stating the facts requiring the adjustment and the manner of
computing it.
(h) The Company shall provide to the Holders reasonable notice
of any event that would result in an adjustment to the Conversion rate
so as to permit the Holders to effect a conversion of Convertible
Preferred Stock into shares of Common Stock prior to the occurrence of
such event.
9. CERTAIN COVENANTS.
(a) PAYMENTS FOR CONSENT. Neither the Company nor any of its
subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of dividend or other distribution, fee or
otherwise, to any Holder of shares of the Convertible Preferred Stock
for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Certificate of Designation or the
Convertible Preferred Stock unless such consideration is offered to be
paid and is paid to all Holders of the Convertible Preferred Stock that
consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
(b) REPORTS. Whether or not required by the rules and
regulations of the Commission, so long as any shares of the Convertible
Preferred Stock are outstanding, the Company shall furnish to the
Holders of the Convertible Preferred Stock (i) as soon as practicable
after the end of each fiscal year of the Company a consolidated balance
sheet, as at the end of such fiscal year, a consolidated statement of
operations for such year and a consolidated statement of cash flows for
such year, accompanied by a report and opinion thereon by independent
public accountants of national standing selected by the Board of
Directors; (ii) as soon as practicable after the end of each quarterly
accounting period of the Company, a consolidated balance sheet of the
Company as of the end of each such fiscal quarter, and a consolidated
statement of income and a consolidated statement of cash flows of the
Company for such period and for the current fiscal year to date as well
as any additional information necessary to satisfy the information
requirements of Rule 144A(d)(4) promulgated under the Securities Act of
1933, as amended. In the event the Company has filed any such report
with the Commission, it shall not be obligated to separately furnish
the report to any Holder unless and until such Holder requests a copy
of the report.
10. REISSUANCE OF CONVERTIBLE PREFERRED STOCK. Shares of Convertible
Preferred Stock redeemed for or converted into Common Stock or that have been
reacquired in any manner shall not be reissued as shares of Convertible
Preferred Stock and shall (upon compliance with any applicable provisions of the
laws of Delaware) have the status of authorized and unissued shares of Preferred
Stock undesignated as to series and may be redesignated and reissued as part of
any series of Preferred Stock; provided, however, that so long as any shares of
Convertible Preferred Stock are outstanding, any issuance of such shares must be
in compliance with the terms hereof.
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11. BUSINESS DAY. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment redemption or exchange shall be made on the immediately succeeding
Business Day,
12. AMENDMENT, SUPPLEMENT AND WAIVER. The Company may amend this
Certificate of Designation with the affirmative vote or consent of the holders
of a majority of the shares of Convertible Preferred Stock then outstanding
(including votes or consents obtained in connection with a tender offer or
exchange offer for the Convertible Preferred Stock) and, except as otherwise
provided by applicable law, any past default or failure to comply with any
provision of this Certificate of Designation may also be waived with the consent
of such holders. Notwithstanding the foregoing, however, without the consent of
each Holder affected, an amendment (including any amendment or restatement of
the Company's Certificate of Incorporation) or waiver may not (with respect to
any shares of the Convertible Preferred Stock held by a non-consenting Holder);
(i) alter the voting rights with respect to the Convertible Preferred Stock or
reduce the number of shares of the Convertible Preferred Stock whose Holders
must consent to an amendment, supplement or waiver, (ii) reduce the Liquidation
Preference of any share of the Convertible Preferred Stock or adversely alter
the provisions with respect to the redemption of the Convertible Preferred
Stock, (iii) reduce the rate of or change the time for payment of dividends on
any share of the Convertible Preferred Stock, (iv) waive a default in the
payment of dividends on the Convertible Preferred Stock, (v) make any share of
the Convertible Preferred Stock payable in money other than United States
dollars, (vi) make any change in the provisions of the Certificate of
Designation relating to waivers of the rights of Holders of the Convertible
Preferred Stock to receive the Liquidation Preference, to receive dividends on
the Convertible Preferred Stock or (vii) make any change in the foregoing
amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of the
Convertible Preferred Stock, the Company may (to the extent permitted by, and
subject to the requirements of, Delaware law) amend or supplement this
Certificate of Designation to cure any ambiguity, defect or inconsistency, to
provide for uncertificated shares of the Convertible Preferred Stock in addition
to or in place of certificated shares of the Convertible Preferred Stock, to
make any change that would provide any additional rights or benefits to the
Holders of the Convertible Preferred Stock or to make any change that the Board
of Directors determines, in good faith, is not materially adverse to Holders of
the Convertible Preferred Stock or is required for the Company to comply with
the Indenture as in effect on the Issue Date.
13. TRANSFER AND EXCHANGE. When Convertible Preferred Stock is
presented to the Transfer Agent with a request to register the transfer of such
Convertible Preferred Stock or to exchange such Convertible Preferred Stock for
an equal number of shares of Convertible Preferred Stock of other authorized
denominations, the Transfer Agent shall register the transfer or make the
exchange as requested if its reasonable requirements for such transaction are
met and such transfer or exchange is in compliance with applicable laws or
regulations.
14. CERTAIN DEFINITIONS. As used in this Certificate of Designation,
the following terms shall have the following meanings (and (1) terms defined in
the singular have comparable meanings when used in the plural and vice versa,
(2) "including" means including without limitation, (3) "or" is not exclusive
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and (4) an accounting term not otherwise defined has the meaning assigned to it
in accordance with United States generally accepted accounting principles as in
effect on Issue Date and all accounting calculations will be determined in
accordance with such principles), unless the content otherwise requires:
"Affiliate" of any specified Person means (i) any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, the specified Person, (ii) any other Person that
owns, directly or indirectly, 10% or more of the specified Person's Voting Stock
or (iii) any executive officer or director of the specified Person.
"Board of Directors" mean the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of the Board.
"Business Day" means each day which is not a legal holiday.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or non-voting) of, such Person's capital stock, including
Preferred Stock, and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into such
capital stock.
"Closing Price" means on any day the reported last sale price on such
day, or in case no sale takes place on such day, the average of the reported
closing bid and ask prices on the principal national securities exchange (which
shall include the Nasdaq National Market) on which such stock is listed or
admitted to trading (and if the Common Stock is listed or admitted to trading on
more than one U.S. national or non-U.S. securities exchange, the Company shall
determine, in its reasonable discretion, the principal securities exchange on
which such Common Stock is listed or admitted to trading), or if not listed or
admitted to trading on any securities exchange, the average of the closing bid
and ask prices as furnished by any independent registered broker-dealer firm,
selected by the Company for that purpose, in each case adjusted for any stock
split during the relevant period.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" means the registered holders from time to time of the
Convertible Preferred Stock.
"Market Price," for any security as of any date, means the average of
the daily Closing Price for the five consecutive trading days ending on such
date for such security or, if no Closing Prices are available for such security,
the current market value shall be an amount equal to the fair market value of
such security determined in the good faith judgment of the Board of Directors of
the Company.
"Officers' Certificate" means a certificate signed by two officers of
the Company.
"Paying Agent" means the paying agent for the Convertible Preferred
Stock appointed by the Company, which initially shall be Mellon Investor
Services.
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"Permitted Holders" means (i) AIG/SUN America Investments, Inc., (ii)
American General, (iii) AIM Capital Management, (iv) American Express Financial
Advisors, (v) Goldman, Sachs & Co. Special Situations Investing, (vi) LC Capital
Partners, LP, (vii) Lehman Brothers, (viii) Lord Abbett, (ix) Mackay Shields,
(x) Morgan Stanley Asset Management, (xi) Oppenheimer Funds, (xii) Putnam
Investments, (xiii) Romulus Holdings, Inc., (xiv) Triage Capital Management,
(xv) Commonwealth Advisors, Inc., (xvi) Lutheran Brotherhood, (xvii) Lampe
Conway & Co. LLC, (xviii) Bay Harbour Management, (xix) Loeb Partners Corp., and
(xx) with respect to each of the foregoing, any majority-owned Affiliate
thereof.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, and including, without limitation,
all classes and series of preferred or preference stock of such Person.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Day" means, in respect of any securities exchange or
securities market, each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are not traded on the applicable securities
exchange or in the applicable securities market.
"Transfer Agent" means the transfer agent for the Convertible Preferred
Stock appointed by the Company, which initially shall be Mellon Investor
Services.
"Voting Stock" means, with respect to any Person, the Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors or other members of the governing body of such Person."
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IN WITNESS WHEREOF, said Globix Corporation, has caused this
Certificate of Designation to be signed by Peter K. Stevenson, its President and
Chief Executive Officer, this 7th day of March, 2005.
GLOBIX CORPORATION
By: /s/ Peter K. Stevenson
----------------------
Name: Peter K. Stevenson
Title: President and Chief Executive Officer
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