-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GHZBZxSb9UVZB5fcwyD/eCnCqrL0K2g7FHajreyiq1kjCvbuyey0KzZKKv+6UPe9 18hvHh+dQXVZgJc0gfKL+A== 0000893838-99-000327.txt : 19991203 0000893838-99-000327.hdr.sgml : 19991203 ACCESSION NUMBER: 0000893838-99-000327 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19991202 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FIBERNET TELECOM GROUP INC\ CENTRAL INDEX KEY: 0001001868 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 133859938 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-56267 FILM NUMBER: 99768094 BUSINESS ADDRESS: STREET 1: 570 LEXINGTON AVENUE STREET 2: 3RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 MAIL ADDRESS: STREET 1: 570 LEXINGTON AVENUE STREET 2: 3RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: DESERT NATIVE DESIGNS INC DATE OF NAME CHANGE: 19960517 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SIGNAL EQUITY PARTNERS L P CENTRAL INDEX KEY: 0001095521 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 134035077 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 10 EAST 53RD STREET 32ND SLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128721180 MAIL ADDRESS: STREET 1: 10 EAST 53RD STREET 32ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 SCHEDULE 13D/AMENDMENT NO. 4 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 4) FiberNet Telecom Group, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 315653105 - -------------------------------------------------------------------------------- (CUSIP Number) Mr. Timothy P. Bradley Signal Equity Partners, L.P. 10 East 53rd Street, 32nd Floor New York, NY 10022 212-872-1180 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 30, 1999 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 13d-7(b) for other parties to whom copies of this statement are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 3 CUSIP NO. 315653105 Page 2 of 3 This Amendment No. 4 amends the Statement on Schedule 13D (the "Schedule 13D") filed on May 17, 1999, as amended, by and on behalf of Signal Equity Partners, L.P. (formerly Signal Capital Partners, L.P.), Trident Telecom Partners LLC and Concordia Telecom Management, L.L.C. with respect to their ownership of Common Stock, par value $.001 per share, of FiberNet Telecom Group, Inc. Capitalized terms used and not defined herein have the meanings ascribed thereto in the Schedule 13D. ITEM 4. PURPOSE OF TRANSACTION. The following paragraphs are hereby added after the last paragraph of Item 4 to the Schedule 13D: On November 30, 1999, Signal exercised its right as "Majority in Interest" under the Securities Purchase Agreement and the September Securities Purchase Agreement (together, the "Securities Purchase Agreements") to convert its Notes and all other outstanding Notes into shares of the Issuer's Common Stock. In connection the with conversion, the Issuer agreed to exchange, at the option of the Former Noteholders (as defined below), shares of newly designated Series D Preferred Stock (the "Series D Preferred Stock") to the Investing Persons who held 4% Senior Secured Convertible Notes issued in the May Transaction, Series E Preferred Stock (the "Series E Preferred Stock") to the Investing Persons who held 8% Senior Secured Convertible Notes issued in the May Transaction and Series F Preferred Stock (the "Series F Preferred Stock" and together with the Series D Preferred Stock and the Series E Preferred Stock, the "Preferred Stock") to the September Investors who held 8% Senior Secured Convertible Notes issued in the September Transaction (together, the Investing Persons and the September Investors are referred to as the "Former Noteholders") for any and all Common Stock received by the Former Noteholders in such conversion, pursuant to a Conversion and Exchange Agreement (the "Conversion and Exchange Agreement") dated as of November 30, 1999 by and among the Issuer and the Noteholders listed therein. Pursuant to the Conversion and Exchange Agreement, the Securities Purchase Agreements (taking into account certain amendments reflecting the change of the Notes to equity securities), the Stockholders Agreement and the Registration Rights Agreement remain in full force and effect. The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to the Conversion and Exchange Agreement and the Certificate of Designation of Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock of FiberNet Telecom Group, Inc., which are being filed as Exhibits S and T, respectively, to this Amendment No. 4 to the Schedule 13D and are incorporated herein by reference. ITEM 7. EXHIBITS. The following exhibits are added to the Schedule 13D: Exhibit S - Conversion and Exchange Agreement dated as of November 30, 1999 Exhibit T - Certificate of Designation of Series D Preferred Stock of FiberNet Telecom Group, Inc. Exhibit U - Certificate of Designation of Series E Preferred Stock of FiberNet Telecom Group, Inc. Exhibit V - Certificate of Designation of Series F Preferred Stock of FiberNet Telecom Group, Inc. 2 CUSIP NO. 315653105 Page 3 of 3 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: December 2, 1999 SIGNAL EQUITY PARTNERS, L.P. By: Signal Equity Advisors, L.P. Its: General Partner By: Signal Equity Advisors, Inc. Its: General Partner By:/s/ Timothy P. Bradley ----------------------------------- Timothy P. Bradley Director TRIDENT TELECOM PARTNERS LLC By: Trident Telecom Management, L.L.C. Its: Managing Member By: Needham Management, Inc. Its: Managing Member By:/s/ Donald W. Kuzon ----------------------------------- Donald W. Kuzon President CONCORDIA TELECOM MANAGEMENT, L.L.C. By:/s/ Michael S. Liss ----------------------------------- Michael S. Liss Sole Member EX-99 2 CONVERSION AND EXCHANGE AGREEMENT EXHIBIT S CONVERSION AND EXCHANGE AGREEMENT dated as of November 30, 1999 ("Agreement") by and among FIBERNET TELECOM GROUP, INC., a Nevada corporation (the "Company"), and certain noteholders ("Noteholders") of the Company listed on Annex I hereto. Recitals WHEREAS, each Noteholder purchased a 4% Senior Secured Convertible Note due May 7, 2004 of the Company ("4% May Note") or an 8% Senior Secured Convertible Note due May 7, 2004 of the Company ("8% May Note" and together with the 4% May Note, the "May Notes") pursuant to the Securities Purchase Agreement dated as of May 7, 1999 ("May Purchase Agreement"), as amended, by and among the Company and the purchasers listed therein, or an 8% Senior Secured Convertible Note due September 28, 2004 of the Company ("8% September Note" and together with the May Notes, the "Notes") pursuant to the Securities Purchase Agreement dated as of September 28, 1999 ("September Purchase Agreement" and together with the May Purchase Agreement, the "Purchase Agreements"), by and among the Company and the purchasers listed therein, all in such aggregate principal amounts as set forth on Annex I hereto. WHEREAS, the Notes provide that the Notes shall be deemed convertible into shares of Common Stock, $.001 par value ("Common Stock") of the Company upon the conversion of the Notes held by the Majority in Interest (as defined herein), which is currently Signal Equity Partners, L.P. (formerly Signal Capital Partners, L.P.) ("Signal"). WHEREAS, the Company and the Noteholders wish to provide herein for the conversion of the Notes into shares of Common Stock and the immediate exchange of such shares of Common Stock into which the Notes are convertible for shares of Series D Preferred Stock, $.001 par value ("Series D Preferred") of the Company in the case of the 4% May Notes, shares of Series E Preferred Stock, $.001 par value ("Series E Preferred") of the Company in the case of the 8% May Notes, and shares of Series F Preferred Stock, $.001 par value ("Series F Preferred" and together with the Series D Preferred and Series E Preferred, the "Preferred Stock") of the Company in the case of the 8% September Notes. NOW, THEREFORE, the parties hereby agree as follows: Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the May Purchase Agreement or the September Purchase Agreement, whichever is applicable and as specified herein. Section 2. Conversion of Notes. (a) Signal, as the Majority in Interest (as defined in the May Purchase Agreement and the September Purchase Agreement), hereby converts the aggregate principal amount of its 4% May Note and 8% September Note into that number of shares of Common Stock set forth on Annex I hereto as of the date hereof. (b) Each of the parties hereby acknowledges that the aggregate principal amount of such Note or Notes held by each Noteholder shall be converted into the number of shares of Common Stock set forth on Annex I hereto in accordance with the terms of the Notes (the "Conversion") simultaneously with the conversion of the 4% May Note and 8% September Note held by Signal. Section 3. Agreement to Exchange Common Stock. (a) Authorization. The Company has authorized the issuance of 500,000 shares of Series D Preferred, 750,000 shares of Series E Preferred and 500,000 shares of Series F Preferred. (b) Exchange. The parties hereto agree that immediately upon the Conversion at the Closing (as defined herein), the Company shall issue the number of shares of: (i) Series D Preferred to those Noteholders who owned 4% May Notes prior to the Conversion set forth beside such Noteholder's name on Annex I; (ii) Series E Preferred to those Noteholders who owned 8% May Notes prior to the Conversion set forth beside such Noteholder's name on Annex I; and (iii) Series F Preferred to those Noteholders who owned 8% September Notes prior to the Conversion set forth beside such Noteholder's name on Annex I, all in exchange for shares of Common Stock received by each such Noteholder in the Conversion (such transactions referred to as the "Exchange"); provided, that the Company shall not issue fractional shares of Preferred Stock upon the Exchange and shall distribute cash in lieu of such fractional shares in an amount equal to the product of (x) the Fair Market Value Per Share of Common Stock and (y) the number of shares of Common Stock not exchanged for shares of Preferred Stock. For purposes of this Agreement, "Fair Market Value Per Share" shall mean the fair value of each share of Common Stock as determined in good faith by the Board of Directors of the Company minus ten percent (10%) illiquidity discount. (c) Delivery. At the Closing, the Company will deliver to each Noteholder a certificate or certificates registered in the Noteholder's name, representing the number of shares of Preferred Stock owed to such Noteholder in exchange for such Noteholder's shares of Common Stock received pursuant to the Conversion. (d) Closing. The closing ("Closing") of the Conversion and the Exchange will take place at the offices of O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza, New York, New York, on or about 10:00 a.m., New York City time, on November 30, 1999 (the "Closing Date") or at such other time and place as the Company and the Majority in Interest may mutually agree upon. -2- Section 4. Amendments to Certain Agreements. (a) Pursuant to the terms hereof, each of the Purchase Agreements will be deemed amended as follows: (i)All of the terms Article VII ("Events of Default") of each of the Purchase Agreements shall be deleted in their entirety and replaced with "[INTENTIONALLY OMITTED]"; and (ii) All references to the "Notes", "Collateral", "Loan Parties" or other references applicable to the issuance of Notes but not applicable to Preferred Stock will be deemed modified to accurately reflect that the Purchasers (as respectively defined in each Purchase Agreement) hold equity securities in the form of Preferred Stock and Common Stock and no longer hold debt securities. (b) The Company and the Noteholders shall take any and all action necessary on or after the date hereof, including, without limitation, the execution of amendments and/or supplemental agreements or instruments, to effect the intent of this Section 4. (c) The changes and amendments to each of the Purchase Agreements contemplated herein shall constitute the only changes and amendments to such Purchase Agreements as of the date hereof, and the Registration Rights Agreement and the Stockholders Agreement shall remain in full force and effect. Section 5. Termination of the Collateral Agreements; Cancellation of Notes. (a) It is understood and agreed by the parties hereto that all of the Collateral Agreements will be automatically terminated and of no further force or effect immediately upon Closing. (b) The Company and the Noteholders shall take any and all action necessary, on or after the date hereof, including, without limitation, the execution of UCC termination statements or other instruments to effect a release of liens, to effect the intent of this Section 5 and to ensure, among other things, that all of the Collateral shall be released and that the Noteholders shall have no further rights thereto as lenders or secured parties. (c) It is understood and agreed by the parties hereto that the Notes shall be cancelled and the Company's obligations thereunder shall terminate upon the Closing. Section 6. Representations and Warranties of the Company. The Company represents and warrants to each Noteholder as of the date hereof as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of State of Nevada. -3- (b) The Company has the power to execute, deliver and perform its obligations under this Agreement and to issue the Preferred Stock. (c) The execution, delivery and performance by the Company of this Agreement and the issuance of the Preferred Stock of the Company have been duly authorized by all required corporate or Noteholder action of the Company. (d) Except the consents required by the Majority in Interest in accordance with the Purchase Agreements, no filing with or consent or approval of, by other action by, any Governmental Authority or other Person is or will be required by any Applicable Law or agreement in connection with the execution, delivery and performance by the Company of this Agreement. (e) This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms. (f) The Preferred Stock, when issued and delivered in accordance with the terms of this Agreement for the consideration provided for herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement, the Stockholders Agreement and under applicable state and federal securities laws. (g) The issuance of the Preferred Stock contemplated hereby is exempt from registration under the Securities Act of 1933, as amended (the "Act"), and has been made in compliance with the Act and all applicable state securities or blue sky laws. Section 7. Representations and Warranties of the Noteholders. Each Noteholder, severally and only with respect to itself, represents and warrants to the Company as follows: (a) Such Noteholder is acquiring the Preferred Stock to be purchased by it or him and, should such Noteholder acquire other capital stock of the Company issuable upon conversion of any Preferred Stock, it or he will acquire such other capital stock, for its or his own account, for investment and not with a view to the distribution thereof, nor with any present intention of distributing the same. (b) Such Noteholder understands that the Preferred Stock has not been, and any other capital stock of the Company issuable upon conversion of any Preferred Stock, will not be, registered under the Act, by reason of its issuance in a transaction exempt from the registration requirements of the Act, and that they must be held indefinitely unless a subsequent disposition thereof is registered under the Act or is exempt from registration. (c) Such Noteholder is an "accredited investor," as defined in Rule 501 (the provisions of which are known to such Noteholder) promulgated under the Act and has been -4- advised by individuals with such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Company, has the ability to bear the economic risks of its investment for an indefinite period of time, has been furnished with and has had access to such information as reasonably requested and has had the opportunity to ask, and has received satisfactory answers for, questions of the Company. (d) Such Noteholder has all requisite power and authority to enter into this Agreement, to perform its or his obligations hereunder, and to consummate the transactions contemplated hereby. Such Noteholder has not been organized, reorganized or recapitalized specifically for the purpose of investing in the Company. (e) Such Noteholder has taken all requisite corporate, partnership or other action necessary to authorize its or his execution and delivery of this Agreement, its or his performance of its or his obligations hereunder, and its or his consummation of the transactions contemplated hereby. This Agreement has been executed and delivered by an officer or duly authorized representative of each Noteholder in accordance with such authorization. This Agreement constitutes valid and binding obligations of such Noteholder, enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, and similar laws affecting creditors' rights generally and to general principles of equity. (f) No person or entity acting on behalf or under the authority of such Noteholder is or will be entitled to any broker's, finder's, or similar fee or commission in connection with the transactions contemplated hereby which would become an obligation of the Company. Section 8. Conditions of Closing. The obligation of the parties to consummate the Conversion and Exchange is subject to the following conditions: (a) Notes. Each Noteholder shall have (i) delivered its Note duly endorsed for surrender to the Company and (ii) delivered a properly completed and executed "Information Sheet" (attached as Exhibit C to the Information Memorandum dated November 19, 1999 and distributed to the Noteholders). (b) Certificate of Designation. The Company shall have filed the Certificate of Designation for the Series D Preferred, Series E Preferred and Series F Preferred with the Secretary of State of Nevada. (c) The Noteholders shall have received a legal opinion from Thomas Kimble, Nevada counsel to the Company, in such form and substance reasonably satisfactory to the Noteholders. Section 9. Transfer of Securities. (a) The Preferred Stock shall only be transferable in accordance with the Stockholders Agreement and applicable state and federal securities laws. -5- (b) Each certificate representing Preferred Stock shall be stamped or otherwise imprinted with a legend substantially in the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. IN ADDITION, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCKHOLDERS AGREEMENT DATED AS OF MAY 7, 1999, AS AMENDED, BY AND AMONG FIBERNET TELECOM GROUP, INC. AND THE STOCKHOLDERS LISTED THEREIN. NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED." Section 10. Notices. Subject to the express provisions of this Agreement, all communications provided for or permitted hereunder shall be in writing, personally delivered to an officer or other responsible employee of the addressee or sent by registered mail, charges prepaid, or by telecopy with confirmed receipt (with hard copy to follow), telegram or other means of recorded telecommunication, charges prepaid, to the applicable address set forth below or to such other address as either party hereto may from time to time designate to the other in such manner, provided that no communication shall be sent by mail pending any threatened or during any actual postal strike or other disruption of postal service in the United States. Any communication so personally delivered shall be deemed to have been validly and effectively given on the date of such delivery. Any communication so sent by registered mail shall be deemed to have been validly and effectively given on the tenth Business Day next following the day on which it is sent. Any communication so sent by telecopy, telegram or other means of recorded telecommunication shall be deemed to have been validly and effectively given on the Business Day next following the day on which it is sent. Communications sent to the Company shall be addressed to: FiberNet Telecom Group, Inc. 570 Lexington Avenue, Third Floor New York, New York 10022 Attention: President Telephone: (212) 405-6200 Telecopier: (212) 421-8920 -6- With a copy to: O'SULLIVAN GRAEV & KARABELL, LLP 30 Rockefeller Plaza New York, NY 10112 Attention: Gordon R. Caplan, Esq. Telephone: (212) 408-2400 Telecopier: (212) 408-2420 Communications sent to the Noteholders shall be addressed to each such Noteholder's address in the Company's records. Section 11. Governing Law. This Agreement shall be governed by the laws of the State of New York without giving effect to any choice of law or conflict of law provisions. Section 12. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties and their respective successors and assigns, transferees, legal representatives and heirs. Section 13. Entire Agreement. This Agreement and the other writings referred to herein or delivered pursuant hereto contain the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings with respect hereto. Section 14. Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute but one and the same instrument; either party may execute this Agreement by signing any counterpart of it. -7- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. FIBERNET TELECOM GROUP, INC. By: -------------------------------------- Name: Michael S. Liss Title: President and Chief Executive Officer NOTEHOLDERS: ----------- [A signature page for each Noteholder will follow.] SIGNAL EQUITY PARTNERS, L.P. By: Signal Equity Advisors, L.P. Its: General Partner By: Signal Equity Advisors, Inc. Its: General Partner By: -------------------------------------- Name: Title: BURDEN DIRECT INVESTMENT FUND III By: William A.M. Burden & Co., L.P. Its: Managing General Partner By: Burden Brothers, Inc., Its: Sole General Partner By: -------------------------------------- Name: Title: [Signature Page to Conversion and Exchange Agreement] PEQUOT SCOUT FUND, LP By: -------------------------------------- Name: Title: PENNY LANE PARTNERS, L.P. By: Penny Lane Associates, L.P. Its: General Partner By: Penny Lane, Inc. Its: General Partner By: -------------------------------------- Name: Title: ALEXANDER ENTERPRISE HOLDINGS CORP. By: -------------------------------------- Name: Title: KING STREET CAPITAL LTD. By: -------------------------------------- Name: Title: KING STREET CAPITAL LP By: -------------------------------------- Name: Title: [Signature Page to Conversion and Exchange Agreement] TAURUS TELECOMMUNICATION, INC. By: -------------------------------------- Name: Title: EXETER CAPITAL PARTNERS IV, L.P. By: Exeter IV Advisors, L.P. Its: General Partner By: Exeter IV Advisors, Inc. Its: General Partner By: -------------------------------------- Name: Title: EXETER EQUITY PARTNERS, L.P. By: Exeter Equity Advisors, L.P. Its: General Partner By: Exeter Equity Advisors, Inc. Its: General Partner By: -------------------------------------- Name: Title: WATERVIEW PARTNERS, LP By: BRCM LLC Its: General Partner By: -------------------------------------- Name: [Signature Page to Conversion and Exchange Agreement] Title: DELTA OPPORTUNITY FUND, LTD. By: -------------------------------------- Name: Title: DELTA OPPORTUNITY FUND (INSTITUTIONAL), LLC By: Diaz & Altschul Management, LLC By: -------------------------------------- Name: Title: OVERBROOK FUND I, LLC By: -------------------------------------- Name: Title: ----------------------------------------- Reinaldo M. Diaz MADISON INVESTMENT PARTNERS II LP By: Madison Investment Partners II LLC Its: General Partner By: -------------------------------------- Name: Title: [Signature Page to Conversion and Exchange Agreement] ----------------------------------------- Howard M. Bergtraum FIBER ISLAND, LLC By: -------------------------------------- Name: Title: ----------------------------------------- Robert I. Bodian ----------------------------------------- Stephen Aiello ----------------------------------------- Michael Balog PRISM PARTNERS I, L.P. By: -------------------------------------- Name: Title: THE RAPTOR GLOBAL PORTFOLIO LTD. By: Tudor Investment Corp. Its: Investment Advisor By: -------------------------------------- Name: [Signature Page to Conversion and Exchange Agreement] Title: [Signature Page to Conversion and Exchange Agreement] ANNEX I ------- Noteholders ----------- Please see the attached tables. EX-99 3 CERTIFICATE OF DESIGNATION OF SERIES D EXHIBIT T CERTIFICATE OF DESIGNATION OF SERIES D PREFERRED STOCK OF FIBERNET TELECOM GROUP, INC. Pursuant to Section 78.1955 of the General Corporation Law of the State of Nevada, the undersigned, Michael S. Liss, being the President and Chief Executive Officer of FIBERNET TELECOM GROUP, INC., a corporation organized and existing under the laws of the State of Nevada (the "Corporation"), hereby certifies that the following resolution has been hereby adopted by the Board of Directors of the Corporation. RESOLVED, that pursuant to the authority expressly granted to, and vested in, the Board of Directors of the Corporation by the provisions of its Articles of Incorporation ("Articles of Incorporation"), there is hereby authorized 500,000 shares of Series D Preferred Stock, $.001 par value ("Series D Preferred Stock"), 750,000 shares of Series E Preferred Stock, $.001 par value ("Series E Preferred Stock"), and 500,000 shares of Series F Preferred Stock, $.001 par value ("Series F Preferred Stock"), out of 5,000,000 shares of Preferred Stock, $.001 par value, of the Corporation, and the rights, preferences and privileges of the Series D Preferred Stock are set forth in the Certificate of Designation of the Series D Preferred Stock to be filed with the Secretary of State of Nevada substantially in the form attached as Exhibit A. --------- IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this 30th day of November, 1999. ---------------------------- Name: Michael S. Liss Title: President and Chief Executive Officer ---------------------------- Name: Roy (Trey) Farmer III Title: Secretary 2 EXHIBIT A --------- SERIES D PREFERRED STOCK ------------------------ 1. Authorized Shares. 500,000 shares of Series D Preferred Stock, $.001 par value ("Series D Preferred Stock") of the Corporation have been authorized by the Corporation for issuance. 2. Dividends. (a) The holders of Series D Preferred Stock shall be entitled to receive dividends at the rate of 4% per annum (payable semi-annually) of the Base Amount (as adjusted from time to time as provided below) for each 12-month period (or portion thereof) ending December 31, calculated on the basis of a year of 360 days comprised of twelve 30-day months. The "Base Amount" shall initially be $15.00 per share of the Series D Preferred Stock, in respect of which the dividend is being calculated. Such dividends shall be payable at the option of the Corporation in cash or in lieu of such cash payment by issuance of shares of Series D Preferred Stock to holders of Series D Preferred Stock. (b) Dividends on a share of Series D Preferred Stock shall accrue and be cumulative from and after the Original Issuance Date up to the first to occur of (i) a Liquidation or (ii) the conversion of such share of Series D Preferred Stock into Common Stock. Dividends shall be payable semi-annually when, as and if declared by the Board of Directors of the Corporation, on June 30 and December 31 of each year (each, a "Dividend Reference Date"), commencing on December 31, 1999. In the event that the full amount of a dividend in respect of any share of Series D Preferred Stock is not paid during any such six-month period or portion thereof, the Base Amount shall be increased by the amount of the dividend not paid, effective as of the immediately succeeding July 1 or January 1, as applicable. To the extent not paid on any such Dividend Reference Date, all dividends which have accrued on each share of Series D Preferred Stock outstanding during the six-month period (or other period in the case of the initial Dividend Reference Date) ending upon such Reference Date shall be accumulated and shall remain accumulated dividends with respect to such share of Series D Preferred Stock until paid to the holder thereof. If any Dividend Reference Date occurs on a day other than a Business Day, any dividends otherwise payable on such Dividend Reference Date shall be paid on the next Business Day. Dividends shall be paid to the holders of record of the Series D Preferred Stock as their names shall appear on the share register of the Corporation on the record date for such dividend. (c) If the Corporation pays less than the total amount of dividends then accrued on the Total Preferred Stock, such cash payment or issuance of shares of Total Preferred Stock shall be made on a pari passu basis pro rata among the holders of the Preferred Stock based upon the aggregate accrued but unpaid dividends on the shares of the Total Preferred Stock held by each such holder. If and when any shares of Total Preferred Stock are issued under this Section 1(c) for payment of accrued dividends, such shares of Total Preferred Stock shall be deemed 2 to be validly issued and outstanding and fully paid and nonassessable. After payment of all dividends owing to the holders of Total Preferred Stock, such holders shall share ratably (on an as if converted basis) in any dividends thereafter paid on the Common Stock. (d) In the event the Corporation shall fail to pay in full all accrued dividends on all shares of the Total Preferred Stock, then the Corporation shall not thereafter declare or pay or set apart for payment any dividend or other distribution upon shares of Common Stock, or any other stock ranking on a parity with or junior to the Total Preferred Stock as to dividends. 3. Liquidation. Upon a Liquidation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of Series D Preferred Stock shall be entitled to receive, pro rata on a pari passu basis with holders of the Series C Preferred Stock, Series E Preferred Stock and Series F Preferred Stock, out of the remaining assets of the Corporation available for distribution to its stockholders, with respect to each share of the Series D Preferred Stock, an amount equal to the Liquidation Amount for each such share of Series D Preferred Stock before any distribution shall be made to the holders of the Common Stock or any other class of capital stock of the Corporation ranking junior to the Total Preferred Stock. If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of Total Preferred Stock the full Liquidation Amount for each such series of Total Preferred Stock to which they shall be entitled, the holders of each such series of Total Preferred Stock shall share in any distribution of assets in accordance with such full Liquidation Amount (pro rata on a pari passu basis in accordance with the total Liquidation Amount for each such series of Total Preferred Stock that each such holder would have received had there been such sufficient assets). After the payment of the full Liquidation Amount for each such series of Preferred Stock to the holders of Preferred Stock, such holders of Preferred Stock shall share ratably (on an as if converted basis) with the holders of Common Stock in all remaining assets of the Corporation available for distribution to its stockholders; provided, that in no event will the holders of Preferred Stock receive upon a Liquidation more than the greater of the Liquidation Amount per share or the amount per share such holders would have been entitled to receive if such shares of Preferred Stock had been converted into Common Stock immediately prior to the Liquidation. 4. Voting Rights. Prior to the conversion of Series D Preferred Stock, the Series D Preferred Stock shall not be entitled to any vote and the holders thereof shall not be entitled to vote as stockholders of the Corporation. 5. Conversion. (a) Upon the terms set forth in this Section 5, each holder of each share of Series D Preferred Stock shall have the right, at such holder's option, at any time and from time to time, to convert such share into the number of fully paid and nonassessable shares of 2 Common Stock equal to the quotient obtained by dividing (A) the Liquidation Amount for the Series D Preferred Stock by (B) the Conversion Price (as defined below) for the Series D Preferred Stock, as last adjusted and then in effect, by surrender of the certificate representing such share. The conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares of Series D Preferred Stock shall be $1.50 for the Series D Preferred Stock, as adjusted pursuant to Section 5(f) below (the "Conversion Price"). The holder of any shares of Series D Preferred Stock may exercise the conversion right pursuant to this Section 5(a) by delivering to the Corporation the certificate for the shares to be converted, duly endorsed or assigned in blank or to the Corporation (if required by it), accompanied by written notice stating that the holder elects to convert such shares and stating the name or names (with address) in which the certificate or certificates for the shares of Common Stock are to be issued. Conversion shall be deemed to have been effected on the date when such delivery is made or upon the consummation of a Qualified Public Offering as provided below, if applicable (in each such case, the "Conversion Date"). The Corporation shall give holders of Series D Preferred Stock reasonable prior notice of a Sale of the Corporation, including the price and material terms and conditions thereof, in order to provide such holders a reasonable opportunity to consider whether to convert the Series D Preferred Stock into Common Stock at or prior to such Sale of the Corporation. (b) Upon written notice of the conversion of shares of Preferred Stock owned or held by the Majority in Interest in accordance with this Section 5 to the remaining holders of Preferred Stock, all shares of Preferred Stock shall be deemed to be converted to that number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (A) Liquidation Amount for each such series of Preferred Stock for the share being converted by (B) the applicable Conversion Price, as last adjusted and then in effect. (c) Upon the terms set forth in this Section 5, each share of Series D Preferred Stock shall automatically be converted to that number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (A) the Liquidation Amount for the Series D Preferred Stock for the share being converted by (B) the applicable Conversion Price, as last adjusted and then in effect, upon the consummation of a Qualified Public Offering. (d) As promptly as practicable after the conversion of any shares of Preferred Stock into Common Stock under Section 5(a), 5(b) or 5(c) above, the Corporation shall issue and deliver upon the written order of such holder, to the place designated by such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled, and a cash amount in respect of any fractional interest in a share of Common Stock as provided in Section 5(e) below. The person in whose name the certificate or certificates for Common Stock are to be issued shall be deemed to have become a stockholder of record on the Conversion Date unless the transfer books of the Corporation are closed on that date, in which event such person shall be deemed to have become a stockholder of record on the next succeeding date on which the transfer books are open, but the Conversion Price shall be that in effect on the Conversion Date, and the rights of the holder of the shares of Preferred Stock so converted shall cease on the Conversion Date. Upon conversion of only a portion of the number of shares covered by a certificate representing shares of Preferred Stock surrendered for conversion, the Corporation shall issue and deliver, upon the written order of the holder of the 3 certificate so surrendered for conversion, to the place designated by such holder, at the expense of the Corporation, a new certificate covering the number of shares of Preferred Stock representing the unconverted portion of the certificate so surrendered. (e) Upon conversion, the Corporation will not be obligated to issue fractional shares of its Common Stock and shall distribute cash in lieu of such fractional shares. The number of full shares of Common Stock issuable upon conversion of each such the Series D Preferred Stock shall be computed on the basis of the aggregate number of shares of the Series D Preferred Stock to be converted. If fractional shares of Common Stock which would otherwise be issuable upon conversion of any such share are not issued, the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal to the product of (i) the price of one share of Common Stock as determined in good faith by the Board and (ii) such fractional interest. The holders of fractional interests shall not be entitled to any rights as stockholders of the Corporation in respect of such fractional interests. (f) The Conversion Price for each share of Series D Preferred Stock shall be subject to adjustment from time to time as follows: (i) If the Corporation shall, at any time or from time to time after the Original Issuance Date, issue any shares of Common Stock (or be deemed to have issued shares of Common Stock as provided herein), other than Excluded Stock, without consideration or for a consideration per share less than the applicable Conversion Price, in effect immediately prior to each such issuance, then the Conversion Price, as in effect immediately prior to each such issuance, shall forthwith be lowered to a price equal to the quotient obtained by dividing: (A) an amount equal to the sum of (x) the total number of shares of Common Stock outstanding on a fully-diluted basis immediately prior to such issuance, multiplied by the applicable Conversion Price in effect immediately prior to such issuance, and (y) the consideration received by the Corporation upon such issuance; by (B) the total number of shares of Common Stock outstanding on a fully-diluted basis immediately after the issuance of such Common Stock. (ii)For the purposes of any adjustment of the applicable Conversion Price pursuant to clause (i) above, the following provisions shall be applicable: (A) In the case of the issuance of Common Stock for cash in a public offering or private placement, the consideration shall be deemed to be the amount of cash paid therefor after deducting therefrom any discounts, commissions or placement fees payable by the Corporation to any underwriter or placement agent in connection with the issuance and sale thereof. (B) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the Fair Value Per Share thereof notwithstanding any accounting treatment. (C) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable securities except for options to acquire Excluded Stock: (1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Sections 5(f)(ii)(A) and 5(f)(ii)(B) above), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby; (2) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities, options, or rights were issued and for a consideration equal to the consideration received by the Corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Corporation upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Sections 5(f)(ii)(A) and 5(f)(ii)(B) above); (3) on any change in the number of shares or exercise price of Common Stock deliverable upon exercise of any such options or rights or conversions of or exchanges for such securities, other than a change resulting from the antidilution provisions thereof, the Conversion Price shall forthwith be readjusted to the Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights or securities not converted prior to such change or options or rights related to such securities not converted prior to such change been made upon the basis of such change; and (4) on the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price shall forthwith be readjusted to the Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights, securities or options or rights related to such securities been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities, or upon the exercise of the options or rights related to such securities and subsequent conversion or exchange thereof. (iii) If, at any time after the Original Issuance Date, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, subdivision or split-up, the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of Preferred Stock shall be increased in proportion to such increase in outstanding shares. (iv)If, at any time after the Original Issuance Date, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then, following the record date for such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. (v) In the event of any capital reorganization of the Corporation, any reclassification of the stock of the Corporation (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or any consolidation or merger of the Corporation, each share of Series D Preferred Stock shall after such reorganization, reclassification, consolidation, or merger be convertible into the kind and number of shares of stock or other securities or property of the Corporation or of the corporation resulting from such consolidation or surviving such merger to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon conversion of such share of Series D Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation or merger. The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, consolidations or mergers. (vi)No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least .1% in such Conversion Price; provided, that any adjustments not required to be made by virtue of this sentence shall be carried forward and taken into account in any subsequent adjustment. All calculations under Sections 5(f)(i) through 5(f)(v) above shall be made to the nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of a share, as the case may be. (vii) In any case in which the provisions of this Section 5(f) shall require that an adjustment shall become effective immediately after a record date of an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Series D Preferred Stock converted after such record date and before the occurrence of such event the shares of capital stock issuable upon such conversion by reason of the adjustment required by such event in addition to the shares of capital stock issuable upon such conversion before giving effect to such adjustments, and (B) if applicable, paying to such holder any amount in cash in lieu of a fractional share of capital stock pursuant to Section 5(e) above; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder's right to receive such additional shares and such cash. (viii)Whenever the Conversion Price shall be adjusted as provided in Section 5(f)(i), the Corporation shall make available for inspection during regular business hours, at its principal executive offices or at such other place as may be designated by the Corporation, a statement, signed by its chief executive officer, showing in detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment. The Corporation shall also cause a copy of such statement to be sent by first class certified mail, return receipt requested and postage prepaid, to each holder of Preferred Stock affected by the adjustment at such holder's address appearing on the Corporation's records. Where appropriate, such copy may be given in advance and may be included as part of any notice required to be mailed under the provisions of Section 5(f)(ix) below. (ix)If the Corporation shall propose to take any action of the types described in clauses (iii), (iv) or (v) of this Section 5(f), the Corporation shall give notice to each holder of shares of Preferred Stock, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Conversion Price and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon conversion of shares of Preferred Stock. In the case of any action which would require the fixing of a record date, such notice shall be given at least twenty (20) days prior to the date so fixed, and in case of all other action, such notice shall be given at least thirty (30) days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action. (x) The Corporation shall at all times keep reserved, free from preemptive rights, out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series D Preferred Stock, sufficient shares of Common Stock to provide for the conversion of all outstanding shares of Series D Preferred Stock. (xi)Without duplication of any other adjustment provided for in this Section 5(f), at any time the Corporation makes or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, provision shall be made so that each holder of Series D Preferred Stock shall receive upon conversion thereof, in addition to the shares of Common Stock receivable thereupon, the number of securities of the Corporation which it would have received had its shares of Series D Preferred Stock been converted into shares of Common Stock on the date of such event and had such holder thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by it pursuant to this paragraph during such period, subject to the sum of all other adjustments called for during such period under this Section 5 with respect to the rights of such holder of Series D Preferred Stock. (xii) In the event that the Majority in Interest consents in writing to limit, or waive in its entirety, any anti-dilution adjustment to which the holders of the Series D Preferred Stock would otherwise be entitled hereunder, the Corporation shall not be required to make any adjustment whatsoever with respect to any Series D Preferred Stock in excess of such limit or at all, as the terms of such consent may dictate. (xiii)The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5(f) and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the holders of Series D Preferred Stock against impairment. (xiv) The computations of all amounts under this Section 5(f) shall be made assuming all other anti-dilution or similar adjustments to be made to the terms of all other securities resulting from the transaction causing an adjustment pursuant to this Section 5(f) have previously been made so as to maintain the relative economic interest of the Series D Preferred Stock vis a vis all other securities issued by the Corporation. (xv)The Corporation shall take or cause to be taken such steps as shall be necessary to ensure that the par value per share of Common Stock is at all times less than or equal to the Conversion Price. 6. Definitions. As used herein, the following terms shall have the following meanings: (a) "Affiliate" has the meaning ascribed to it in the Securities Purchase Agreement. (b) "Board" shall mean the Board of Directors of the Corporation. (c) "Change of Control of the Corporation" shall mean any transaction or any event as a result of which (i) any one or more Persons acquires or for the first time controls or is able to vote (directly or through nominees or beneficial ownership) after the Original Issuance Date 51% or more of any class of stock of the Corporation outstanding at the time having power ordinarily to vote for directors of the Corporation or (ii) the control of more than 51% of the number of shares of Common Stock held by Persons on the Original Issuance Date has been transferred (excluding transfers by and among such Persons) since the Original Issuance Date in the aggregate. For purpose of this paragraph (b), "Common Stock" shall include shares of Common Stock issuable upon exercise of warrants, options and other rights to acquire Common Stock outstanding on the Original Issuance Date, whether or not at the time exercised or exercisable. (d) "Common Stock" shall mean the Common Stock, par value $.001, of the Corporation. (e) "Common Stock Equivalent" shall mean all shares of Common Stock outstanding and all shares of Common Stock issuable (without regard to any present restrictions on such issuance) upon the conversion, exchange or exercise of all securities of the Corporation that are convertible, exchangeable or exercisable for Common Stock and all Common Stock appreciation rights, phantom Common Stock rights and other rights to acquire, or to receive or to be paid amounts of, the Common Stock. (f) "Excluded Stock" shall mean (A) up to 6,000,000 shares (as adjusted equitably for stock dividends, stock splits, combinations, etc.) of Common Stock issuable upon exercise of stock options granted to officers, employees, consultants, vendors or directors of the Corporation or its subsidiaries, (B) shares of Common Stock issued upon conversion of shares of Total Preferred Stock, (C) shares of Common Stock issued upon exercise of any existing warrants, notes or other instruments convertible or exercisable for Common Stock as of the date hereof, and (D) Common Stock or other equity securities issued as part of a strategic arrangement or alliance by the Corporation or its Subsidiaries to building licensors, landlords, carriers, joint venture partners, vendors, lessors or lenders, and securities or instruments issued in connection with acquisitions, as each such transaction is approved by the Board of the Corporation, including in the case of (A), (B), (C) and (D), any additional shares of Common Stock as may be issued by virtue of antidilution provisions, if any, applicable to such options, warrants or shares, as the case may be. (g) "Fair Value Per Share" shall mean the fair value of each share of Stock, as determined in good faith by the Board. (h) "Liquidation" shall mean any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, other than any dissolution, liquidation or winding up in connection with any reincorporation of the Corporation in Delaware. (i) "Liquidation Amount" shall mean the Original Issuance Price as to each share of Preferred Stock plus any accrued but unpaid dividends. (j) "Majority in Interest" shall have the meaning ascribed to such term in the Securities Purchase Agreement. (k) "Original Issuance Date" shall mean for the Series D Preferred Stock, the date upon which this Certificate of Designation is filed with the Secretary of State of Nevada. (l) "Original Issuance Price" shall mean $15.00 per share for the Series D Preferred Stock, $15.00 per share for the Series E Preferred Stock and $30.00 per share for the Series F Preferred Stock. (m) "Preferred Stock" shall mean the Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock. (n) "Qualified Public Offering" shall have the meaning ascribed to such term in the Stockholders Agreement. (o) "Sale of the Corporation" shall mean (i) the sale of all or substantially all of the Corporation's assets to a Person who is not an Affiliate of the Corporation, (ii) the sale or transfer of the outstanding capital stock of the Corporation to one or more Persons who are not Affiliates of the Corporation, or (iii) the merger or consolidation of the Corporation with or into another Person who is not an Affiliate of the Corporation, in each case in clauses (ii) and (iii) above under circumstances in which the holders of a majority in voting power of the outstanding capital stock of the Corporation, immediately prior to such transaction, own less than a majority in voting power of the outstanding capital stock of the Corporation or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction. A sale (or multiple related sales) of one or more subsidiaries of the Corporation (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or securities) which constitutes all or substantially all of the consolidated assets of the Corporation shall be deemed a Sale of the Corporation. (p) "Securities Purchase Agreement" shall mean that certain agreement dated as of September 28, 1999 by and among the Corporation and the purchasers named therein, as the same may be amended, modified or supplemented from time to time. (q) "Series C Preferred Stock" shall mean the Series C Preferred Stock, par value $.001, of the Corporation. (r) "Series E Preferred Stock" shall mean the Series E Preferred Stock, par value $.001, of the Corporation. (s) "Series F Preferred Stock" shall mean the Series F Preferred Stock, par value, $.001, of the Corporation. (t) "Stock" shall mean (i) the presently issued and outstanding shares of Common Stock and Preferred Stock and any options or stock subscription warrants exercisable therefor (which options and warrants shall be deemed to be that number of outstanding shares of Stock for which they are exercisable), (ii) any additional shares of capital stock of the Corporation hereafter issued and outstanding and (iii) any shares of capital stock of the Corporation into which such shares may be converted or for which they may be exchanged or exercised. (u) "Stockholders Agreement" shall mean that certain agreement dated as of May 7, 1999 by and among the Corporation and the stockholders named therein, as the same may be amended, modified or supplemented from time to time. (v) "Total Preferred Stock" shall mean the Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and Series F Preferred Stock. EX-99 4 CERTIFICATE OF DESIGNATION OF SERIES E EXHIBIT U CERTIFICATE OF DESIGNATION OF SERIES E PREFERRED STOCK OF FIBERNET TELECOM GROUP, INC. Pursuant to Section 78.1955 of the General Corporation Law of the State of Nevada, the undersigned, Michael S. Liss, being the President and Chief Executive Officer of FIBERNET TELECOM GROUP, INC., a corporation organized and existing under the laws of the State of Nevada (the "Corporation"), hereby certifies that the following resolution has been hereby adopted by the Board of Directors of the Corporation. RESOLVED, that pursuant to the authority expressly granted to, and vested in, the Board of Directors of the Corporation by the provisions of its Articles of Incorporation ("Articles of Incorporation"), there is hereby authorized 500,000 shares of Series D Preferred Stock, $.001 par value ("Series D Preferred Stock"), 750,000 shares of Series E Preferred Stock, $.001 par value ("Series E Preferred Stock"), and 500,000 shares of Series F Preferred Stock, $.001 par value ("Series F Preferred Stock"), out of 5,000,000 shares of Preferred Stock, $.001 par value, of the Corporation, and the rights, preferences and privileges of the Series E Preferred Stock are set forth in the Certificate of Designation of the Series E Preferred Stock to be filed with the Secretary of State of Nevada substantially in the form attached as Exhibit A. --------- IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this 30th day of November, 1999. ---------------------------- Name: Michael S. Liss Title: President and Chief Executive Officer ---------------------------- Name: Roy (Trey) Farmer III Title: Secretary 2 EXHIBIT A --------- SERIES E PREFERRED STOCK ------------------------ 1. Authorized Shares. 750,000 shares of Series E Preferred Stock, $.001 par value ("Series E Preferred Stock") of the Corporation have been authorized by the Corporation for issuance. 2. Dividends. (a) The holders of Series E Preferred Stock shall be entitled to receive dividends at the rate of 8% per annum (payable semi-annually) of the Base Amount (as adjusted from time to time as provided below) for each 12-month period (or portion thereof) ending December 31, calculated on the basis of a year of 360 days comprised of twelve 30-day months. The "Base Amount" shall initially be $15.00 per share of the Series E Preferred Stock, in respect of which the dividend is being calculated. Such dividends shall be payable at the option of the Corporation in cash or in lieu of such cash payment by issuance of shares of Series E Preferred Stock to holders of Series E Preferred Stock. (b) Dividends on a share of Series E Preferred Stock shall accrue and be cumulative from and after the Original Issuance Date up to the first to occur of (i) a Liquidation or (ii) the conversion of such share of Series E Preferred Stock into Common Stock. Dividends shall be payable semi-annually when, as and if declared by the Board of Directors of the Corporation, on June 30 and December 31 of each year (each, a "Dividend Reference Date"), commencing on December 31, 1999. In the event that the full amount of a dividend in respect of any share of Series E Preferred Stock is not paid during any such six-month period or portion thereof, the Base Amount shall be increased by the amount of the dividend not paid, effective as of the immediately succeeding July 1 or January 1, as applicable. To the extent not paid on any such Dividend Reference Date, all dividends which have accrued on each share of Series E Preferred Stock outstanding during the six-month period (or other period in the case of the initial Dividend Reference Date) ending upon such Reference Date shall be accumulated and shall remain accumulated dividends with respect to such share of Series E Preferred Stock until paid to the holder thereof. If any Dividend Reference Date occurs on a day other than a Business Day, any dividends otherwise payable on such Dividend Reference Date shall be paid on the next Business Day. Dividends shall be paid to the holders of record of the Series E Preferred Stock as their names shall appear on the share register of the Corporation on the record date for such dividend. (c) If the Corporation pays less than the total amount of dividends then accrued on the Total Preferred Stock, such cash payment or issuance of shares of Total Preferred Stock shall be made on a pari passu basis pro rata among the holders of the Preferred Stock based upon the aggregate accrued but unpaid dividends on the shares of the Total Preferred Stock held by each such holder. If and when any shares of Total Preferred Stock are issued under this Section 1(c) for payment of accrued dividends, such shares of Total Preferred Stock shall be deemed 2 to be validly issued and outstanding and fully paid and nonassessable. After payment of all dividends owing to the holders of Total Preferred Stock, such holders shall share ratably (on an as if converted basis) in any dividends thereafter paid on the Common Stock. (d) In the event the Corporation shall fail to pay in full all accrued dividends on all shares of the Total Preferred Stock, then the Corporation shall not thereafter declare or pay or set apart for payment any dividend or other distribution upon shares of Common Stock, or any other stock ranking on a parity with or junior to the Total Preferred Stock as to dividends. 3. Liquidation. Upon a Liquidation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of Series E Preferred Stock shall be entitled to receive, pro rata on a pari passu basis with holders of the Series C Preferred Stock, Series D Preferred Stock and Series F Preferred Stock, out of the remaining assets of the Corporation available for distribution to its stockholders, with respect to each share of the Series E Preferred Stock, an amount equal to the Liquidation Amount for each such share of Series E Preferred Stock before any distribution shall be made to the holders of the Common Stock or any other class of capital stock of the Corporation ranking junior to the Total Preferred Stock. If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of Total Preferred Stock the full Liquidation Amount for each such series of Total Preferred Stock to which they shall be entitled, the holders of each such series of Total Preferred Stock shall share in any distribution of assets in accordance with such full Liquidation Amount (pro rata on a pari passu basis in accordance with the total Liquidation Amount for each such series of Total Preferred Stock that each such holder would have received had there been such sufficient assets). After the payment of the full Liquidation Amount for each such series of Preferred Stock to the holders of Preferred Stock, such holders of Preferred Stock shall share ratably (on an as if converted basis) with the holders of Common Stock in all remaining assets of the Corporation available for distribution to its stockholders; provided, that in no event will the holders of Preferred Stock receive upon a Liquidation more than the greater of the Liquidation Amount per share or the amount per share such holders would have been entitled to receive if such shares of Preferred Stock had been converted into Common Stock immediately prior to the Liquidation. 4. Voting Rights. Prior to the conversion of Series E Preferred Stock, the Series E Preferred Stock shall not be entitled to any vote and the holders thereof shall not be entitled to vote as stockholders of the Corporation. 5. Conversion. (a) Upon the terms set forth in this Section 5, each holder of each share of Series E Preferred Stock shall have the right, at such holder's option, at any time and from time to time, to convert such share into the number of fully paid and nonassessable shares of 2 Common Stock equal to the quotient obtained by dividing (A) the Liquidation Amount for the Series E Preferred Stock by (B) the Conversion Price (as defined below) for the Series E Preferred Stock, as last adjusted and then in effect, by surrender of the certificate representing such share. The conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares of Series E Preferred Stock shall be $1.50 for the Series E Preferred Stock, as adjusted pursuant to Section 5(f) below ( the "Conversion Price"). The holder of any shares of Series E Preferred Stock may exercise the conversion right pursuant to this Section 5(a) by delivering to the Corporation the certificate for the shares to be converted, duly endorsed or assigned in blank or to the Corporation (if required by it), accompanied by written notice stating that the holder elects to convert such shares and stating the name or names (with address) in which the certificate or certificates for the shares of Common Stock are to be issued. Conversion shall be deemed to have been effected on the date when such delivery is made or upon the consummation of a Qualified Public Offering as provided below, if applicable (in each such case, the "Conversion Date"). The Corporation shall give holders of Series E Preferred Stock reasonable prior notice of a Sale of the Corporation, including the price and material terms and conditions thereof, in order to provide such holders a reasonable opportunity to consider whether to convert the Series E Preferred Stock into Common Stock at or prior to such Sale of the Corporation. (b) Upon written notice of the conversion of shares of Preferred Stock owned or held by the Majority in Interest in accordance with this Section 5 to the remaining holders of Preferred Stock, all shares of Preferred Stock shall be deemed to be converted to that number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (A) Liquidation Amount for each such series of Preferred Stock for the share being converted by (B) the applicable Conversion Price, as last adjusted and then in effect. (c) Upon the terms set forth in this Section 5, each share of Series E Preferred Stock shall automatically be converted to that number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (A) the Liquidation Amount for the Series E Preferred Stock for the share being converted by (B) the applicable Conversion Price, as last adjusted and then in effect, upon the consummation of a Qualified Public Offering. (d) As promptly as practicable after the conversion of any shares of Preferred Stock into Common Stock under Section 5(a), 5(b) or 5(c) above, the Corporation shall issue and deliver upon the written order of such holder, to the place designated by such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled, and a cash amount in respect of any fractional interest in a share of Common Stock as provided in Section 5(e) below. The person in whose name the certificate or certificates for Common Stock are to be issued shall be deemed to have become a stockholder of record on the Conversion Date unless the transfer books of the Corporation are closed on that date, in which event such person shall be deemed to have become a stockholder of record on the next succeeding date on which the transfer books are open, but the Conversion Price shall be that in effect on the Conversion Date, and the rights of the holder of the shares of Preferred Stock so converted shall cease on the Conversion Date. Upon conversion of only a portion of the number of shares covered by a certificate representing shares of Preferred Stock surrendered for conversion, the Corporation shall issue and deliver, upon the written order of the holder of the 3 certificate so surrendered for conversion, to the place designated by such holder, at the expense of the Corporation, a new certificate covering the number of shares of Preferred Stock representing the unconverted portion of the certificate so surrendered. (e) Upon conversion, the Corporation will not be obligated to issue fractional shares of its Common Stock and shall distribute cash in lieu of such fractional shares. The number of full shares of Common Stock issuable upon conversion of each such the Series E Preferred Stock shall be computed on the basis of the aggregate number of shares of the Series E Preferred Stock to be converted. If fractional shares of Common Stock which would otherwise be issuable upon conversion of any such share are not issued, the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal to the product of (i) the price of one share of Common Stock as determined in good faith by the Board and (ii) such fractional interest. The holders of fractional interests shall not be entitled to any rights as stockholders of the Corporation in respect of such fractional interests. (f) The Conversion Price for each share of Series E Preferred Stock shall be subject to adjustment from time to time as follows: (i) If the Corporation shall, at any time or from time to time after the Original Issuance Date, issue any shares of Common Stock (or be deemed to have issued shares of Common Stock as provided herein), other than Excluded Stock, without consideration or for a consideration per share less than the applicable Conversion Price, in effect immediately prior to each such issuance, then the Conversion Price, as in effect immediately prior to each such issuance, shall forthwith be lowered to a price equal to the quotient obtained by dividing: (A) an amount equal to the sum of (x) the total number of shares of Common Stock outstanding on a fully-diluted basis immediately prior to such issuance, multiplied by the applicable Conversion Price in effect immediately prior to such issuance, and (y) the consideration received by the Corporation upon such issuance; by (B) the total number of shares of Common Stock outstanding on a fully-diluted basis immediately after the issuance of such Common Stock. (ii)For the purposes of any adjustment of the applicable Conversion Price pursuant to clause (i) above, the following provisions shall be applicable: (A) In the case of the issuance of Common Stock for cash in a public offering or private placement, the consideration shall be deemed to be the amount of cash paid therefor after deducting therefrom any discounts, commissions or placement fees payable by the Corporation to any underwriter or placement agent in connection with the issuance and sale thereof. (B) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the Fair Value Per Share thereof notwithstanding any accounting treatment. (C) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable securities except for options to acquire Excluded Stock: (1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Sections 5(f)(ii)(A) and 5(f)(ii)(B) above), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby; (2) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities, options, or rights were issued and for a consideration equal to the consideration received by the Corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Corporation upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Sections 5(f)(ii)(A) and 5(f)(ii)(B) above); (3) on any change in the number of shares or exercise price of Common Stock deliverable upon exercise of any such options or rights or conversions of or exchanges for such securities, other than a change resulting from the antidilution provisions thereof, the Conversion Price shall forthwith be readjusted to the Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights or securities not converted prior to such change or options or rights related to such securities not converted prior to such change been made upon the basis of such change; and (4) on the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price shall forthwith be readjusted to the Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights, securities or options or rights related to such securities been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities, or upon the exercise of the options or rights related to such securities and subsequent conversion or exchange thereof. (iii) If, at any time after the Original Issuance Date, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, subdivision or split-up, the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of Preferred Stock shall be increased in proportion to such increase in outstanding shares. (iv)If, at any time after the Original Issuance Date, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then, following the record date for such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. (v) In the event of any capital reorganization of the Corporation, any reclassification of the stock of the Corporation (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or any consolidation or merger of the Corporation, each share of Series E Preferred Stock shall after such reorganization, reclassification, consolidation, or merger be convertible into the kind and number of shares of stock or other securities or property of the Corporation or of the corporation resulting from such consolidation or surviving such merger to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon conversion of such share of Series E Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation or merger. The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, consolidations or mergers. (vi)No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least .1% in such Conversion Price; provided, that any adjustments not required to be made by virtue of this sentence shall be carried forward and taken into account in any subsequent adjustment. All calculations under Sections 5(f)(i) through 5(f)(v) above shall be made to the nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of a share, as the case may be. (vii) In any case in which the provisions of this Section 5(f) shall require that an adjustment shall become effective immediately after a record date of an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Series E Preferred Stock converted after such record date and before the occurrence of such event the shares of capital stock issuable upon such conversion by reason of the adjustment required by such event in addition to the shares of capital stock issuable upon such conversion before giving effect to such adjustments, and (B) if applicable, paying to such holder any amount in cash in lieu of a fractional share of capital stock pursuant to Section 5(e) above; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder's right to receive such additional shares and such cash. (viii)Whenever the Conversion Price shall be adjusted as provided in Section 5(f)(i), the Corporation shall make available for inspection during regular business hours, at its principal executive offices or at such other place as may be designated by the Corporation, a statement, signed by its chief executive officer, showing in detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment. The Corporation shall also cause a copy of such statement to be sent by first class certified mail, return receipt requested and postage prepaid, to each holder of Preferred Stock affected by the adjustment at such holder's address appearing on the Corporation's records. Where appropriate, such copy may be given in advance and may be included as part of any notice required to be mailed under the provisions of Section 5(f)(ix) below. (ix)If the Corporation shall propose to take any action of the types described in clauses (iii), (iv) or (v) of this Section 5(f), the Corporation shall give notice to each holder of shares of Preferred Stock, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Conversion Price and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon conversion of shares of Preferred Stock. In the case of any action which would require the fixing of a record date, such notice shall be given at least twenty (20) days prior to the date so fixed, and in case of all other action, such notice shall be given at least thirty (30) days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action. (x) The Corporation shall at all times keep reserved, free from preemptive rights, out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series E Preferred Stock, sufficient shares of Common Stock to provide for the conversion of all outstanding shares of Series E Preferred Stock. (xi)Without duplication of any other adjustment provided for in this Section 5(f), at any time the Corporation makes or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, provision shall be made so that each holder of Series E Preferred Stock shall receive upon conversion thereof, in addition to the shares of Common Stock receivable thereupon, the number of securities of the Corporation which it would have received had its shares of Series E Preferred Stock been converted into shares of Common Stock on the date of such event and had such holder thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by it pursuant to this paragraph during such period, subject to the sum of all other adjustments called for during such period under this Section 5 with respect to the rights of such holder of Series E Preferred Stock. (xii) In the event that the Majority in Interest consents in writing to limit, or waive in its entirety, any anti-dilution adjustment to which the holders of the Series E Preferred Stock would otherwise be entitled hereunder, the Corporation shall not be required to make any adjustment whatsoever with respect to any Series E Preferred Stock in excess of such limit or at all, as the terms of such consent may dictate. (xiii)The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5(f) and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the holders of Series E Preferred Stock against impairment. (xiv) The computations of all amounts under this Section 5(f) shall be made assuming all other anti-dilution or similar adjustments to be made to the terms of all other securities resulting from the transaction causing an adjustment pursuant to this Section 5(f) have previously been made so as to maintain the relative economic interest of the Series E Preferred Stock vis a vis all other securities issued by the Corporation. (xv)The Corporation shall take or cause to be taken such steps as shall be necessary to ensure that the par value per share of Common Stock is at all times less than or equal to the Conversion Price. 6. Definitions. As used herein, the following terms shall have the following meanings: (a) "Affiliate" has the meaning ascribed to it in the Securities Purchase Agreement. (b) "Board" shall mean the Board of Directors of the Corporation. (c) "Change of Control of the Corporation" shall mean any transaction or any event as a result of which (i) any one or more Persons acquires or for the first time controls or is able to vote (directly or through nominees or beneficial ownership) after the Original Issuance Date 51% or more of any class of stock of the Corporation outstanding at the time having power ordinarily to vote for directors of the Corporation or (ii) the control of more than 51% of the number of shares of Common Stock held by Persons on the Original Issuance Date has been transferred (excluding transfers by and among such Persons) since the Original Issuance Date in the aggregate. For purpose of this paragraph (b), "Common Stock" shall include shares of Common Stock issuable upon exercise of warrants, options and other rights to acquire Common Stock outstanding on the Original Issuance Date, whether or not at the time exercised or exercisable. (d) "Common Stock" shall mean the Common Stock, par value $.001, of the Corporation. (e) "Common Stock Equivalent" shall mean all shares of Common Stock outstanding and all shares of Common Stock issuable (without regard to any present restrictions on such issuance) upon the conversion, exchange or exercise of all securities of the Corporation that are convertible, exchangeable or exercisable for Common Stock and all Common Stock appreciation rights, phantom Common Stock rights and other rights to acquire, or to receive or to be paid amounts of, the Common Stock. (f) "Excluded Stock" shall mean (A) up to 6,000,000 shares (as adjusted equitably for stock dividends, stock splits, combinations, etc.) of Common Stock issuable upon exercise of stock options granted to officers, employees, consultants, vendors or directors of the Corporation or its subsidiaries, (B) shares of Common Stock issued upon conversion of shares of Total Preferred Stock, (C) shares of Common Stock issued upon exercise of any existing warrants, notes or other instruments convertible or exercisable for Common Stock as of the date hereof, and (D) Common Stock or other equity securities issued as part of a strategic arrangement or alliance by the Corporation or its Subsidiaries to building licensors, landlords, carriers, joint venture partners, vendors, lessors or lenders, and securities or instruments issued in connection with acquisitions, as each such transaction is approved by the Board of the Corporation, including in the case of (A), (B), (C) and (D), any additional shares of Common Stock as may be issued by virtue of antidilution provisions, if any, applicable to such options, warrants or shares, as the case may be. (g) "Fair Value Per Share" shall mean the fair value of each share of Stock, as determined in good faith by the Board. (h) "Liquidation" shall mean any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, other than any dissolution, liquidation or winding up in connection with any reincorporation of the Corporation in Delaware. (i) "Liquidation Amount" shall mean the Original Issuance Price as to each share of Preferred Stock plus any accrued but unpaid dividends. (j) "Majority in Interest" shall have the meaning ascribed to such term in the Securities Purchase Agreement. (k) "Original Issuance Date" shall mean for the Series E Preferred Stock, the date upon which this Certificate of Designation is filed with the Secretary of State of Nevada. (l) "Original Issuance Price" shall mean $15.00 per share for the Series D Preferred Stock, $15.00 per share for the Series E Preferred Stock and $30.00 per share for the Series F Preferred Stock. (m) "Preferred Stock" shall mean the Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock. (n) "Qualified Public Offering" shall have the meaning ascribed to such term in the Stockholders Agreement. (o) "Sale of the Corporation" shall mean (i) the sale of all or substantially all of the Corporation's assets to a Person who is not an Affiliate of the Corporation, (ii) the sale or transfer of the outstanding capital stock of the Corporation to one or more Persons who are not Affiliates of the Corporation, or (iii) the merger or consolidation of the Corporation with or into another Person who is not an Affiliate of the Corporation, in each case in clauses (ii) and (iii) above under circumstances in which the holders of a majority in voting power of the outstanding capital stock of the Corporation, immediately prior to such transaction, own less than a majority in voting power of the outstanding capital stock of the Corporation or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction. A sale (or multiple related sales) of one or more subsidiaries of the Corporation (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or securities) which constitutes all or substantially all of the consolidated assets of the Corporation shall be deemed a Sale of the Corporation. (p) "Securities Purchase Agreement" shall mean that certain agreement dated as of September 28, 1999 by and among the Corporation and the purchasers named therein, as the same may be amended, modified or supplemented from time to time. (q) "Series C Preferred Stock" shall mean the Series C Preferred Stock, par value $.001, of the Corporation. (r) "Series E Preferred Stock" shall mean the Series E Preferred Stock, par value $.001, of the Corporation. (s) "Series F Preferred Stock" shall mean the Series F Preferred Stock, par value, $.001, of the Corporation. (t) "Stock" shall mean (i) the presently issued and outstanding shares of Common Stock and Preferred Stock and any options or stock subscription warrants exercisable therefor (which options and warrants shall be deemed to be that number of outstanding shares of Stock for which they are exercisable), (ii) any additional shares of capital stock of the Corporation hereafter issued and outstanding and (iii) any shares of capital stock of the Corporation into which such shares may be converted or for which they may be exchanged or exercised. (u) "Stockholders Agreement" shall mean that certain agreement dated as of May 7, 1999 by and among the Corporation and the stockholders named therein, as the same may be amended, modified or supplemented from time to time. (v) "Total Preferred Stock" shall mean the Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and Series F Preferred Stock. EX-99 5 CERTIFICATE OF DESIGNATION OF SERIES F EXHIBIT V CERTIFICATE OF DESIGNATION OF SERIES F PREFERRED STOCK OF FIBERNET TELECOM GROUP, INC. Pursuant to Section 78.1955 of the General Corporation Law of the State of Nevada, the undersigned, Michael S. Liss, being the President and Chief Executive Officer of FIBERNET TELECOM GROUP, INC., a corporation organized and existing under the laws of the State of Nevada (the "Corporation"), hereby certifies that the following resolution has been hereby adopted by the Board of Directors of the Corporation. RESOLVED, that pursuant to the authority expressly granted to, and vested in, the Board of Directors of the Corporation by the provisions of its Articles of Incorporation ("Articles of Incorporation"), there is hereby authorized 500,000 shares of Series F Preferred Stock, $.001 par value ("Series F Preferred Stock"), 750,000 shares of Series F Preferred Stock, $.001 par value ("Series F Preferred Stock"), and 500,000 shares of Series F Preferred Stock, $.001 par value ("Series F Preferred Stock"), out of 5,000,000 shares of Preferred Stock, $.001 par value, of the Corporation, and the rights, preferences and privileges of the Series F Preferred Stock are set forth in the Certificate of Designation of the Series F Preferred Stock to be filed with the Secretary of State of Nevada substantially in the form attached as Exhibit A. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this 30th day of November, 1999. ---------------------------- Name: Michael S. Liss Title: President and Chief Executive Officer ---------------------------- Name: Roy (Trey) Farmer III Title: Secretary 2 EXHIBIT A --------- SERIES F PREFERRED STOCK ------------------------- 1. Authorized Shares. 500,000 shares of Series F Preferred Stock, $.001 par value ("Series F Preferred Stock") of the Corporation have been authorized by the Corporation for issuance. 2. Dividends. (a) The holders of Series F Preferred Stock shall be entitled to receive dividends at the rate of 8% per annum (payable semi-annually) of the Base Amount (as adjusted from time to time as provided below) for each 12-month period (or portion thereof) ending December 31, calculated on the basis of a year of 360 days comprised of twelve 30-day months. The "Base Amount" shall initially be $30.00 per share of the Series F Preferred Stock, in respect of which the dividend is being calculated. Such dividends shall be payable at the option of the Corporation in cash or in lieu of such cash payment by issuance of shares of Series F Preferred Stock to holders of Series F Preferred Stock. (b) Dividends on a share of Series F Preferred Stock shall accrue and be cumulative from and after the Original Issuance Date up to the first to occur of (i) a Liquidation or (ii) the conversion of such share of Series F Preferred Stock into Common Stock. Dividends shall be payable semi-annually when, as and if declared by the Board of Directors of the Corporation, on June 30 and December 31 of each year (each, a "Dividend Reference Date"), commencing on December 31, 1999. In the event that the full amount of a dividend in respect of any share of Series F Preferred Stock is not paid during any such six-month period or portion thereof, the Base Amount shall be increased by the amount of the dividend not paid, effective as of the immediately succeeding July 1 or January 1, as applicable. To the extent not paid on any such Dividend Reference Date, all dividends which have accrued on each share of Series F Preferred Stock outstanding during the six-month period (or other period in the case of the initial Dividend Reference Date) ending upon such Reference Date shall be accumulated and shall remain accumulated dividends with respect to such share of Series F Preferred Stock until paid to the holder thereof. If any Dividend Reference Date occurs on a day other than a Business Day, any dividends otherwise payable on such Dividend Reference Date shall be paid on the next Business Day. Dividends shall be paid to the holders of record of the Series F Preferred Stock as their names shall appear on the share register of the Corporation on the record date for such dividend. (c) If the Corporation pays less than the total amount of dividends then accrued on the Total Preferred Stock, such cash payment or issuance of shares of Total Preferred Stock shall be made on a pari passu basis pro rata among the holders of the Preferred Stock based upon the aggregate accrued but unpaid dividends on the shares of the Total Preferred Stock held by each such holder. If and when any shares of Total Preferred Stock are issued under this Section 1(c) for payment of accrued dividends, such shares of Total Preferred Stock shall be deemed to be validly issued and outstanding and fully paid and nonassessable. After payment of all dividends owing to the holders of Total Preferred Stock, such holders shall share ratably (on an as if converted basis) in any dividends thereafter paid on the Common Stock. (d) In the event the Corporation shall fail to pay in full all accrued dividends on all shares of the Total Preferred Stock, then the Corporation shall not thereafter declare or pay or set apart for payment any dividend or other distribution upon shares of Common Stock, or any other stock ranking on a parity with or junior to the Total Preferred Stock as to dividends. 3. Liquidation. Upon a Liquidation, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of Series F Preferred Stock shall be entitled to receive, pro rata on a pari passu basis with holders of the Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, out of the remaining assets of the Corporation available for distribution to its stockholders, with respect to each share of the Series F Preferred Stock, an amount equal to the Liquidation Amount for each such share of Series F Preferred Stock before any distribution shall be made to the holders of the Common Stock or any other class of capital stock of the Corporation ranking junior to the Total Preferred Stock. If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of Total Preferred Stock the full Liquidation Amount for each such series of Total Preferred Stock to which they shall be entitled, the holders of each such series of Total Preferred Stock shall share in any distribution of assets in accordance with such full Liquidation Amount (pro rata on a pari passu basis in accordance with the total Liquidation Amount for each such series of Total Preferred Stock that each such holder would have received had there been such sufficient assets). After the payment of the full Liquidation Amount for each such series of Preferred Stock to the holders of Preferred Stock, such holders of Preferred Stock shall share ratably (on an as if converted basis) with the holders of Common Stock in all remaining assets of the Corporation available for distribution to its stockholders; provided, that in no event will the holders of Preferred Stock receive upon a Liquidation more than the greater of the Liquidation Amount per share or the amount per share such holders would have been entitled to receive if such shares of Preferred Stock had been converted into Common Stock immediately prior to the Liquidation. 4. Voting Rights. Prior to the conversion of Series F Preferred Stock, the Series F Preferred Stock shall not be entitled to any vote and the holders thereof shall not be entitled to vote as stockholders of the Corporation. 5. Conversion. (a) Upon the terms set forth in this Section 5, each holder of each share of Series F Preferred Stock shall have the right, at such holder's option, at any time and from time to time, to convert such share into the number of fully paid and nonassessable shares of Common 2 Stock equal to the quotient obtained by dividing (A) the Liquidation Amount for the Series F Preferred Stock by (B) the Conversion Price (as defined below) for the Series F Preferred Stock, as last adjusted and then in effect, by surrender of the certificate representing such share. The conversion price per share at which shares of Common Stock shall be issuable upon conversion of shares of Series F Preferred Stock shall be $3.00 for the Series F Preferred Stock, as adjusted pursuant to Section 5(f) below (the "Conversion Price"). The holder of any shares of Series F Preferred Stock may exercise the conversion right pursuant to this Section 5(a) by delivering to the Corporation the certificate for the shares to be converted, duly endorsed or assigned in blank or to the Corporation (if required by it), accompanied by written notice stating that the holder elects to convert such shares and stating the name or names (with address) in which the certificate or certificates for the shares of Common Stock are to be issued. Conversion shall be deemed to have been effected on the date when such delivery is made or upon the consummation of a Qualified Public Offering as provided below, if applicable (in each such case, the "Conversion Date"). The Corporation shall give holders of Series F Preferred Stock reasonable prior notice of a Sale of the Corporation, including the price and material terms and conditions thereof, in order to provide such holders a reasonable opportunity to consider whether to convert the Series F Preferred Stock into Common Stock at or prior to such Sale of the Corporation. (b) Upon written notice of the conversion of shares of Preferred Stock owned or held by the Majority in Interest in accordance with this Section 5 to the remaining holders of Preferred Stock, all shares of Preferred Stock shall be deemed to be converted to that number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (A) Liquidation Amount for each such series of Preferred Stock for the share being converted by (B) the applicable Conversion Price, as last adjusted and then in effect. (c) Upon the terms set forth in this Section 5, each share of Series F Preferred Stock shall automatically be converted to that number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (A) the Liquidation Amount for the Series F Preferred Stock for the share being converted by (B) the applicable Conversion Price, as last adjusted and then in effect, upon the consummation of a Qualified Public Offering. (d) As promptly as practicable after the conversion of any shares of Preferred Stock into Common Stock under Section 5(a), 5(b) or 5(c) above, the Corporation shall issue and deliver upon the written order of such holder, to the place designated by such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled, and a cash amount in respect of any fractional interest in a share of Common Stock as provided in Section 5(e) below. The person in whose name the certificate or certificates for Common Stock are to be issued shall be deemed to have become a stockholder of record on the Conversion Date unless the transfer books of the Corporation are closed on that date, in which event such person shall be deemed to have become a stockholder of record on the next succeeding date on which the transfer books are open, but the Conversion Price shall be that in effect on the Conversion Date, and the rights of the holder of the shares of Preferred Stock so converted shall cease on the Conversion Date. Upon conversion of only a portion of the number of shares covered by a certificate representing shares of Preferred Stock surrendered for conversion, the Corporation shall issue and deliver, upon the written order of the holder of the 3 certificate so surrendered for conversion, to the place designated by such holder, at the expense of the Corporation, a new certificate covering the number of shares of Preferred Stock representing the unconverted portion of the certificate so surrendered. (e) Upon conversion, the Corporation will not be obligated to issue fractional shares of its Common Stock and shall distribute cash in lieu of such fractional shares. The number of full shares of Common Stock issuable upon conversion of each such the Series F Preferred Stock shall be computed on the basis of the aggregate number of shares of the Series F Preferred Stock to be converted. If fractional shares of Common Stock which would otherwise be issuable upon conversion of any such share are not issued, the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal to the product of (i) the price of one share of Common Stock as determined in good faith by the Board and (ii) such fractional interest. The holders of fractional interests shall not be entitled to any rights as stockholders of the Corporation in respect of such fractional interests. (f) The Conversion Price for each share of Series F Preferred Stock shall be subject to adjustment from time to time as follows: (i) if the Corporation shall, at any time or from time to time after the Original Issuance Date, issue any shares of Common Stock (or be deemed to have issued shares of Common Stock as provided herein), other than Excluded Stock, without consideration or for a consideration per share less than the applicable Conversion Price, then (x) with respect to any such issuance prior to the earlier of (1) March 28, 2001 or (2) any public and/or private offering or offerings of Common Stock or debt and/or equity securities that are convertible, exchangeable or exercisable for Common Stock that in the aggregate exceeds $30,000,000 (but excluding any such issuance in which the $30,000,000 threshold is first met) (the first to occur of (1) or (2), a "Capital Event"), the applicable Conversion Price as in effect immediately prior to each such issuance shall forthwith be lowered to a price equal to the issuance, conversion, exchange or exercise price, as applicable, of any such securities so issued and (y) with respect to any issuance after the occurrence of a Capital Event, the applicable Conversion Price, as in effect immediately prior to each such issuance, shall forthwith be lowered in accordance with Section 5(f)(ii) below. (ii)If the Corporation shall, at any time or from time to time after the Original Issuance Date, issue any shares of Common Stock (or be deemed to have issued shares of Common Stock as provided herein), other than Excluded Stock, without consideration or for a consideration per share less than the applicable Conversion Price, and in accordance with the provisions in Section 5(f)(i) above, then the applicable Conversion Price of each such series of Preferred Stock, as in effect immediately prior to each such issuance, shall forthwith be lowered to a price equal to the quotient obtained by dividing: (A) an amount equal to the sum of (x) the total number of shares of Common Stock outstanding on a fully-diluted basis immediately prior to such issuance, multiplied by the applicable Conversion Price in effect immediately prior to such issuance, and (y) the consideration received by the Corporation upon such issuance; by (B) the total number of shares of Common Stock outstanding on a fully-diluted basis immediately after the issuance of such Common Stock. (iii) For the purposes of any adjustment of the applicable Conversion Price pursuant to clauses (i) and (ii) above, the following provisions shall be applicable: (A) In the case of the issuance of Common Stock for cash in a public offering or private placement, the consideration shall be deemed to be the amount of cash paid therefor after deducting therefrom any discounts, commissions or placement fees payable by the Corporation to any underwriter or placement agent in connection with the issuance and sale thereof. (B) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the Fair Value Per Share thereof notwithstanding any accounting treatment. (C) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable securities except for options to acquire Excluded Stock: (1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Sections 5(f)(iii)(A) and 5(f)(iii)(B) above), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby; (2) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities, options, or rights were issued and for a consideration equal to the consideration received by the Corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Corporation upon the conversion or exchange of such securities or 5 the exercise of any related options or rights(the consideration in each case to be determined in the manner provided in Sections 5(f)(iii)(A) and 5(f)(iii)(B) above); (3) on any change in the number of shares or exercise price of Common Stock deliverable upon exercise of any such options or rights or conversions of or exchanges for such securities, other than a change resulting from the antidilution provisions thereof, the Conversion Price shall forthwith be readjusted to the Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights or securities not converted prior to such change or options or rights related to such securities not converted prior to such change been made upon the basis of such change; and (4) on the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price shall forthwith be readjusted to the Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights, securities or options or rights related to such securities been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities, or upon the exercise of the options or rights related to such securities and subsequent conversion or exchange thereof. (iv)If, at any time after the Original Issuance Date, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, subdivision or split-up, the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of Preferred Stock shall be increased in proportion to such increase in outstanding shares. (v) If, at any time after the Original Issuance Date, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then, following the record date for such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. (vi)In the event of any capital reorganization of the Corporation, any reclassification of the stock of the Corporation (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or any consolidation or merger of the Corporation, each share of Series F Preferred Stock shall after such reorganization, reclassification, consolidation, or merger be convertible into the kind and number of shares of stock or other securities or property of the Corporation or of the 6 corporation resulting from such consolidation or surviving such merger to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon conversion of such share of Series F Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation or merger. The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, consolidations or mergers. (vii) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least .1% in such Conversion Price; provided, that any adjustments not required to be made by virtue of this sentence shall be carried forward and taken into account in any subsequent adjustment. All calculations under Sections 5(f)(i) through 5(f)(vi) above shall be made to the nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of a share, as the case may be. (viii)In any case in which the provisions of this Section 5(f) shall require that an adjustment shall become effective immediately after a record date of an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Series F Preferred Stock converted after such record date and before the occurrence of such event the shares of capital stock issuable upon such conversion by reason of the adjustment required by such event in addition to the shares of capital stock issuable upon such conversion before giving effect to such adjustments, and (B) if applicable, paying to such holder any amount in cash in lieu of a fractional share of capital stock pursuant to Section 5(e) above; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder's right to receive such additional shares and such cash. (ix)Whenever the Conversion Price shall be adjusted as provided in Sections 5(f)(i) and 5(f)(ii), the Corporation shall make available for inspection during regular business hours, at its principal executive offices or at such other place as may be designated by the Corporation, a statement, signed by its chief executive officer, showing in detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment. The Corporation shall also cause a copy of such statement to be sent by first class certified mail, return receipt requested and postage prepaid, to each holder of Preferred Stock affected by the adjustment at such holder's address appearing on the Corporation's records. Where appropriate, such copy may be given in advance and may be included as part of any notice required to be mailed under the provisions of Section 5(f)(x) below. (x) If the Corporation shall propose to take any action of the types described in clauses (iv), (v) or (vi) of this Section 5(f), the Corporation shall give notice to each holder of shares of Preferred Stock, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be 7 known at the date of such notice) on the Conversion Price and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon conversion of shares of Preferred Stock. In the case of any action which would require the fixing of a record date, such notice shall be given at least twenty (20) days prior to the date so fixed, and in case of all other action, such notice shall be given at least thirty (30) days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action. (xi)The Corporation shall at all times keep reserved, free from preemptive rights, out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series F Preferred Stock, sufficient shares of Common Stock to provide for the conversion of all outstanding shares of Series F Preferred Stock. (xii) Without duplication of any other adjustment provided for in this Section 5(f), at any time the Corporation makes or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, provision shall be made so that each holder of Series F Preferred Stock shall receive upon conversion thereof, in addition to the shares of Common Stock receivable thereupon, the number of securities of the Corporation which it would have received had its shares of Series F Preferred Stock been converted into shares of Common Stock on the date of such event and had such holder thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by it pursuant to this paragraph during such period, subject to the sum of all other adjustments called for during such period under this Section 5 with respect to the rights of such holder of Series F Preferred Stock. (xiii)In the event that the Majority in Interest consents in writing to limit, or waive in its entirety, any anti-dilution adjustment to which the holders of the Series F Preferred Stock would otherwise be entitled hereunder, the Corporation shall not be required to make any adjustment whatsoever with respect to any Series F Preferred Stock in excess of such limit or at all, as the terms of such consent may dictate. (xiv) The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5(f) and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the holders of Series F Preferred Stock against impairment. (xv)The computations of all amounts under this Section 5(f) shall be made assuming all other anti-dilution or similar adjustments to be made to the terms of all other securities resulting from the transaction causing an adjustment pursuant to this Section 5(f) have previously been made so as to maintain the relative economic interest of the Series F Preferred Stock vis a vis all other securities issued by the Corporation. (xvi) The Corporation shall take or cause to be taken such steps as shall be necessary to ensure that the par value per share of Common Stock is at all times less than or equal to the Conversion Price. 6. Definitions. As used herein, the following terms shall have the following meanings: (a) "Affiliate" has the meaning ascribed to it in the Securities Purchase Agreement. (b) "Board" shall mean the Board of Directors of the Corporation. (c) "Change of Control of the Corporation" shall mean any transaction or any event as a result of which (i) any one or more Persons acquires or for the first time controls or is able to vote (directly or through nominees or beneficial ownership) after the Original Issuance Date 51% or more of any class of stock of the Corporation outstanding at the time having power ordinarily to vote for directors of the Corporation or (ii) the control of more than 51% of the number of shares of Common Stock held by Persons on the Original Issuance Date has been transferred (excluding transfers by and among such Persons) since the Original Issuance Date in the aggregate. For purpose of this paragraph (b), "Common Stock" shall include shares of Common Stock issuable upon exercise of warrants, options and other rights to acquire Common Stock outstanding on the Original Issuance Date, whether or not at the time exercised or exercisable. (d) "Common Stock" shall mean the Common Stock, par value $.001, of the Corporation. (e) "Common Stock Equivalent" shall mean all shares of Common Stock outstanding and all shares of Common Stock issuable (without regard to any present restrictions on such issuance) upon the conversion, exchange or exercise of all securities of the Corporation that are convertible, exchangeable or exercisable for Common Stock and all Common Stock appreciation rights, phantom Common Stock rights and other rights to acquire, or to receive or to be paid amounts of, the Common Stock. (f) "Excluded Stock" shall mean (A) up to 6,000,000 shares (as adjusted equitably for stock dividends, stock splits, combinations, etc.) of Common Stock issuable upon exercise of stock options granted to officers, employees, consultants, vendors or directors of the Corporation or its subsidiaries, (B) shares of Common Stock issued upon conversion of shares of Total Preferred Stock, (C) shares of Common Stock issued upon exercise of any existing warrants, notes or other instruments convertible or exercisable for Common Stock as of the date hereof, and (D) Common Stock or other equity securities issued as part of a strategic arrangement or alliance by the Corporation or its Subsidiaries to building licensors, landlords, carriers, joint venture partners, vendors, lessors or lenders, and securities or instruments issued in connection with acquisitions, as each such transaction is approved by the Board of the Corporation, including in the case of (A), (B), (C) and (D), any additional shares of Common Stock as may be issued by virtue of antidilution provisions, if any, applicable to such options, warrants or shares, as the case may be. (g) "Fair Value Per Share" shall mean the fair value of each share of Stock, as determined in good faith by the Board. (h) "Liquidation" shall mean any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, other than any dissolution, liquidation or winding up in connection with any reincorporation of the Corporation in Delaware. (i) "Liquidation Amount" shall mean the Original Issuance Price as to each share of Preferred Stock plus any accrued but unpaid dividends. (j) "Majority in Interest" shall have the meaning ascribed to such term in the Securities Purchase Agreement. (k) "Original Issuance Date" shall mean for the Series F Preferred Stock, the date upon which this Certificate of Designation is filed with the Secretary of State of Nevada. (l) "Original Issuance Price" shall mean $15.00 per share for the Series D Preferred Stock, $15.00 per share for the Series E Preferred Stock and $30.00 per share for the Series F Preferred Stock. (m) "Preferred Stock" shall mean the Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock. (n) "Qualified Public Offering" shall have the meaning ascribed to such term in the Stockholders Agreement. (o) "Sale of the Corporation" shall mean (i) the sale of all or substantially all of the Corporation's assets to a Person who is not an Affiliate of the Corporation, (ii) the sale or transfer of the outstanding capital stock of the Corporation to one or more Persons who are not Affiliates of the Corporation, or (iii) the merger or consolidation of the Corporation with or into another Person who is not an Affiliate of the Corporation, in each case in clauses (ii) and (iii) above under circumstances in which the holders of a majority in voting power of the outstanding capital stock of the Corporation, immediately prior to such transaction, own less than a majority in voting power of the outstanding capital stock of the Corporation or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction. A sale (or multiple related sales) of one or more subsidiaries of the Corporation (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or securities) which constitutes all or substantially all of the consolidated assets of the Corporation shall be deemed a Sale of the Corporation. (p) "Securities Purchase Agreement" shall mean that certain agreement dated as of September 28, 1999 by and among the Corporation and the purchasers named therein, as the same may be amended, modified or supplemented from time to time. (q) "Series C Preferred Stock" shall mean the Series C Preferred Stock, par value $.001, of the Corporation. (r) "Series D Preferred Stock" shall mean the Series D Preferred Stock, par value $.001, of the Corporation. (s) "Series E Preferred Stock" shall mean the Series E Preferred Stock, par value, $.001, of the Corporation. (t) "Stock" shall mean (i) the presently issued and outstanding shares of Common Stock and Preferred Stock and any options or stock subscription warrants exercisable therefor (which options and warrants shall be deemed to be that number of outstanding shares of Stock for which they are exercisable), (ii) any additional shares of capital stock of the Corporation hereafter issued and outstanding and (iii) any shares of capital stock of the Corporation into which such shares may be converted or for which they may be exchanged or exercised. (u) "Stockholders Agreement" shall mean that certain agreement dated as of May 7, 1999 by and among the Corporation and the stockholders named therein, as the same may be amended, modified or supplemented from time to time. (v) "Total Preferred Stock" shall mean the Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and Series F Preferred Stock. -----END PRIVACY-ENHANCED MESSAGE-----