**Exhibit 3.1**

 

**SIXTH AMENDED AND RESTATEDCERTIFICATE OF INCORPORATIONOFESCHELON TELECOM, INC.**

 

Eschelon Telecom, Inc., a corporation organizedand existing under the laws of the State of Delaware (the “Corporation”),hereby certifies as follows:

 

1.             The nameof the Corporation is Eschelon Telecom, Inc.  The original Certificate of Incorporation ofthe Corporation was filed with the Secretary of State of the State of Delawareon September 20, 1999 under the name of Advanced Telecommunications, Inc.

 

2.             The Amendedand Restated Certificate of Incorporation was filed with the Secretary of Stateof the State of Delaware on September 30, 1999.  The Second Amended and Restated Certificateof Incorporation, as amended on April 14, 2000, wasfiled with the Secretary of State of the State of Delaware on December 13,1999.  The Third Amended and RestatedCertificate of Incorporation was filed with theSecretary of State of the State of Delaware on June 27, 2000.  The Fourth Amended and Restated Certificateof Incorporation was filed with the Secretary of Stateof the State of Delaware on July 27, 2000. The First Certificate of Amendment to the Fourth Amended and RestatedCertificate of Incorporation was filed with the Secretary of State of the Stateof Delaware on June 27, 2002 at 1:45 p.m. (the “First Amendment”).  The Second Certificate of Amendment to FourthAmended and Restated Certificate of Incorporation was filed with the Secretaryof State of the State of Delaware on June 27, 2002 at 1:50 p.m. (the “SecondAmendment”).  The Fifth Amended andRestated Certificate of Incorporation was filed withthe Secretary of State of the State of Delaware on June 27, 2002 at 2:00 p.m.  The Fifth Amended and Restated Certificate ofIncorporation, is in effect on the date of the filing of this Sixth Amended andRestated Certificate of Incorporation (the “Charter”).

 

3.             ThisCharter was duly adopted in accordance with the provisions ofSections 242, 245, and 228 of the General Corporation Law of the State ofDelaware (the “DGCL”) by resolution of the board of directors of theCorporation (the “Board of Directors”) and the written consent of theCorporation’s stockholders, with written notice being provided to allstockholders in accordance with Section 228(e).  This Charter restates, integrates, amends,and supersedes the provisions of the Fifth Amended and Restated Certificate ofIncorporation of the Corporation.

 

4.             The textof the Fifth Amended and Restated Certificate of Incorporation of theCorporation is hereby amended and restated to read in its entirety as follows:

 

**ARTICLE I**

 

Name

 

The name of the Corporation is Eschelon Telecom, Inc.

 

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# **ARTICLE II**

 

# Period of Existence

 

The period of existence of the Corporation shall beperpetual.

 

# **ARTICLE III**

 

# Purposes

 

The nature of the business and the purpose or purposesof the Corporation are to engage in any lawful act or activity for whichcorporations may be organized under the DGCL, and to have and exercise all thepowers conferred by the laws of the State of Delaware upon corporations formedunder the DGCL.

 

# **ARTICLE IV**

 

# Authorized Shares

 

### The total number of shares of all classes of stockwhich the Corporation shall have authority to issue is 325,000,000 divided intotwo classes: (a) the first class consisting of 200,000,000 shares ofcommon stock, $0.01 par value per share (the “Common Stock”), and (b) thesecond class consisting of 125,000,000 shares of preferred stock, par value$0.01 (the “Preferred Stock”) of which (i) 100,000,000 shares aredesignated Series A Preferred Stock, (the “Series A Preferred Stock”);and (ii) 25,000,000 shares are designated Series B Preferred Stock(the “Series B Preferred Stock”). The rights, preferences, privileges, and restrictions granted to andimposed on the Common Stock are as set forth below in Article VI; therights, preferences, privileges, and restrictions granted to and imposed on theSeries A Preferred Stock are as set forth below in Article V; and therights, preferences, privileges, and restrictions granted to and imposed on theSeries B Preferred Stock are as set forth below in Article V.

 

# **ARTICLE V**

 

# Terms of Preferred Stock

 

The Preferred Stock shall have the following rights,preferences, powers, privileges and restrictions, qualifications andlimitations.

 

## **1.****             OriginalIssue Price; Original Issue Date.**

 

### (a)           Theoriginal issue price of the Series A PreferredStock shall be $0.5079 per share (the “Series A Original Issue Price”).  The original issue price of the Series BPreferred Stock shall be $0.75 per share (the “Series B Original IssuePrice,” each of the Series B Original Issue Price and the Series A Original Issue Price being referred to herein as an “OriginalIssue Price”).

 

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### (b)           The dateon which the first share of Series A PreferredStock is issued shall hereinafter be referred to as the “Series A OriginalIssue Date.”  The date on which the firstshare of Series B Preferred Stock is issued shall hereinafter be referredto as the “Series B Original Issue Date.” Each of the Series A Original Issue Dateand the Series B Original Issue Date is referred to herein as an “OriginalIssue Date”.

###  

## **2.****             Dividends.**

##  

### (a)           FixedDividends.  The holders of shares ofPreferred Stock shall be entitled to receive, when and if declared by the Boardof Directors, dividends (“Fixed Dividends”) on each share of the PreferredStock, as adjusted for stock splits, stock dividends, recapitalizations,reclassifications and similar events which affect the number of outstandingshares of Preferred Stock (any such event, whether providing such adjustment tothe Preferred Stock or other series or classes of capital stock of theCorporation, an “Adjustment”), at the rate of eight percent (8%) per annum ofthe sum of the applicable Original Issue Price plus all applicable accumulatedand unpaid Fixed Dividends.  In additionto the foregoing, additional Fixed Dividends shall accrue on each share of the Series APreferred Stock issued and outstanding on June 27, 2002 on a daily basisbeginning on June 27, 2002 through and including June 30, 2002 at arate of $0.003386 per day; additional Fixed Dividends shall also accrue on eachshare of the Series B Preferred Stock issued and outstanding on December 30,2004 on a daily basis beginning on the date the Series B Preferred Stockis issued pursuant to the Series B Preferred Stock Purchase Agreementdated December 24, 2004 through and including December 31, 2004 at arate of $0.000166667 per day.  FixedDividends shall accrue on each share of the Preferred Stock on a daily basisbeginning on the date of issuance of such share whether or not they have beendeclared and whether or not there are profits, surplus or other funds of theCorporation legally available for the payment of dividends, and such FixedDividends shall be cumulative such that all accumulated and unpaid FixedDividends shall be fully paid or declared with funds irrevocably set apart forpayment before any dividends, distributions, redemptions or other payments maybe made with respect to any Junior Securities.

###  

### (b)           DividendReference Dates.  To the extent notpaid on March 31, June 30, September 30 and December 31 ofeach year, beginning on June 30, 2002 (the “Dividend Reference Dates”),all Fixed Dividends which have accrued on each share of Preferred Stock outstandingduring the three-month period ending upon each such Dividend Reference Dateshall be accumulated and shall remain accumulated dividends with respect tosuch share of Preferred Stock until paid to the holder thereof.

###  

### (c)           ParticipatingDividends.

###  

### (i)            Inaddition to the Fixed Dividends, if a dividend or other distribution isdeclared or distributed on the Common Stock then the holders of shares ofPreferred Stock shall be entitled to receive dividends or distributions (“CommonParticipating Dividends”, together with Preferred Participating Dividends andthe Fixed Dividends, “Dividends”) in an amount equal to the amount that wouldhave been paid on the Common Stock into which the Preferred Stock is thenconvertible, if all such Common Stock had been issued upon conversion and hadbeen outstanding on the record date for such dividend or distribution on

 

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### Common Stock (or, if no record is taken, the date asof which the record holders entitled to such dividend or distribution aredetermined) and therefore had been entitled to receive such dividends ordistributions.

###  

### (ii)           Other thanwith respect to Fixed Dividends, no dividend or other distribution shall bemade on any class of Preferred Stock unless such dividend or distribution ismade on all classes of Preferred Stock (“Preferred Participating Dividends,”and together with the Common Participating Dividends, the “ParticipatingDividends”) on a Pro Rata Basis.  A “ProRata Basis” shall be a basis that reflects the respective percentages ofthe Common Stock that each holder of Preferred Stock would own if (i) alloutstanding Preferred Stock were converted into Common Stock at theapplicable Conversion Prices in effect at the relevant time, and (ii) noCommon Stock was outstanding prior to such conversion.

###  

### (d)           OtherDividends.  The holders of shares ofPreferred Stock shall be entitled to receive such other dividends ordistributions when and as declared by the Board of Directors, acting in itssole discretion.

###  

### (e)           Paymentof Dividends.  Without the consent ofthe holders of at least sixty percent (60%) of the then outstanding shares ofthe Preferred Stock, the Corporation shall not declare or pay any Dividends onthe Preferred Stock.

###  

### (f)            DividendDefault.  If, on any date on whichParticipating Dividends are due and payable on any shares of Preferred Stockand the funds of the Corporation legally available therefor shall beinsufficient to pay all of the Participating Dividends required to be paid onany shares of Preferred Stock as provided herein on such date or withinforty-five (45) days thereafter, funds to the extent legally available shall beused for such purpose and the Corporation shall effect such dividends pro rataaccording to the aggregate Participating Dividends.  The dividend requirements provided hereinshall be continuous, so that if on any date such requirement shall not be fullydischarged, without further action by any holder of Preferred Stock, fundslegally available shall be applied therefor in the order in which such dividendrequirements arise until such requirements are fully discharged.

###  

## **3.****             Liquidation,Dissolution or Winding Up.**

##  

### (a)           In theevent of any liquidation, dissolution or winding up of the Corporation (whethervoluntary or involuntary) (a “Liquidation”), the assets of the Corporationavailable for distribution to its stockholders, whether from capital, surplusor earnings (the “Corporate Assets”), shall be distributed, before anydistribution of assets shall be made to the holders of any Junior Securities,to the holders of Preferred Stock.

###  

### (b)           Each shareof Series A Preferred Stock then outstanding shall be entitled to be paidout of the Corporate Assets an amount per share equal to the greater of:  (i) two times the Series A OriginalIssue Price (subject to Adjustment), plus all accrued (whether or not yetaccumulated) and unpaid Dividends on such share up to the date of distributionof the Corporate Assets and (ii) the fair market value of the shares ofCommon Stock after taking into account the pari passu rights on liquidation ofthe Series B Preferred Stock (as determined in good faith by

 

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### the Board of Directors) that would be received uponthe conversion into Common Stock of:  (A) suchshare of Series A Preferred Stock at the Series A Original IssuePrice (subject to Adjustment), plus (B) any accrued (whether or not yetaccumulated) and unpaid Dividends on such share of Series A PreferredStock, plus (C) if such date of distribution of the Corporate Assets is onor prior to the fifth (5th) anniversary of the Series A Original IssueDate, all Fixed Dividends that would have accrued and accumulated (assumingthat no such Dividends were declared and paid) in accordance with this Charteron such share of Series A Preferred Stock after the date of distributionof the Corporate Assets through and including the fifth (5th) anniversary ofthe Series A Original Issue Date (such amount, the “Series ALiquidation Preference”).

###  

### (c)           Each shareof Series B Preferred Stock then outstanding shall be entitled to be paidout of the Corporate Assets an amount per share equal to the greater of:  (i) the Series B Original IssuePrice (subject to Adjustment), plus all accrued (whether or not yetaccumulated) and unpaid Dividends on such share up to the date of distributionof the Corporate Assets and (ii) the fair market value of the shares ofCommon Stock after taking into account the pari passu rights on liquidation ofthe Series A Preferred Stock (as determined in good faith by the Board ofDirectors) that would be received upon the conversion into Common Stockof:  (A) such share of Series BPreferred Stock at the Series B Original Issue Price (subject toAdjustment), plus (B) any accrued (whether or not yet accumulated) andunpaid Dividends on such share of Series B Preferred Stock (such amount,the “Series B Liquidation Preference” and, together with the Series ALiquidation Preference, the “Liquidation Preference”).

###  

### (d)           If, uponthe occurrence of a Liquidation, the Corporate Assets are insufficient to paythe holders of shares of Preferred Stock the entire amount of the LiquidationPreference, then the holders of shares of the Preferred Stock shall share on aPro Rata Basis in the distribution of the entire Corporate Assets based uponthe aggregate proportion of the Preferred Stock held by each such holder.

###  

## **4.****             Priority of Preferred Stock on Dividends andRedemptions.**  So long as any Preferred Stock remainsoutstanding, without the prior written consent of the holders of at least sixtypercent (60%) of the then outstanding shares of Preferred Stock, theCorporation shall not, nor shall it permit any Subsidiary to, redeem, purchaseor otherwise acquire directly or indirectly any Junior Securities, nor shallthe Corporation directly or indirectly pay or declare any dividend or make anydistribution upon any Junior Securities; provided that the Corporation mayrepurchase shares of Common Stock from present or former employees of theCorporation and its Subsidiaries in accordance with employment agreements ineffect with respect to such employees that were approved by the Board ofDirectors.

##  

## **5.****             Redemptions**.

##  

### (a)           ScheduledRedemption.  On the tenth (10th)anniversary of the Series A Original Issue Date, the Corporation shallredeem all of the issued and outstanding shares of Preferred Stock (the “MandatoryRedemption Shares”) by paying in cash, out of funds legally available therefor,a price per share equal to the Redemption Price; provided, however, that theCorporation shall not make any redemption in violation of the DGCL.

 

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### (b)           OptionalRedemption.  The Corporation may atany time and from time to time immediately prior to and conditioned upon theeffectiveness of a Qualified Public Offering redeem all of the issued andoutstanding shares of Preferred Stock (such redeemed shares, the “VoluntaryRedemption Shares,” and together with the Mandatory Redemption Shares and theSpecial Redemption Shares, the “Redemption Shares”) by paying in cash, out offunds legally available therefor, a price per share in each particular caseequal to the Redemption Price; provided, however, that the Corporation shallnot make any redemption in violation of the DGCL.

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### (c)           RedemptionPrice.  The “Redemption Price” pershare of Preferred Stock shall be the greater of:  (i) the applicable Original Issue Price(subject to Adjustment) plus all accrued (whether or not yet accumulated) andunpaid Dividends on such share through and including the Redemption Date, and (ii) thefair market value of the shares of Common Stock (as determined in good faith bythe Board of Directors) that would be received upon the conversion into CommonStock of:  (A) such share ofPreferred Stock at the applicable Original Issue Price (subject to Adjustment),plus (B) any accrued (whether or not yet accumulated) and unpaid Dividendson such share of Preferred Stock.

###  

### (d)           RedemptionClosing.  The Corporation shallpurchase, and the holders of shares of Preferred Stock participating in theredemption shall sell, the Redemption Shares, no later than forty-five (45)days after the date of written notice of the proposed redemption (or the nextbusiness day if such date is not a business day) at a time and place mutuallyagreeable to the Corporation and the holders of at least sixty percent (60%) ofthe then outstanding shares of Preferred Stock (the “Redemption Closing”).  The Corporation shall notify all holders ofshares of Preferred Stock participating in the redemption of the date and placeof the Redemption Closing at least seven (7) days prior to the date of theRedemption Closing (the date of each such Redemption Closing, a “RedemptionDate”).

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### (e)           RedemptionPayments.  At the Redemption Closingor the Special Redemption Closing, as applicable, the holders of shares ofPreferred Stock participating in the redemption shall deliver to theCorporation certificates representing the Redemption Shares, and theCorporation shall deliver to each such holder the appropriate Redemption Priceor the appropriate Special Redemption Price, as applicable, in cash (by cashier’sor certified check or by wire transfer of immediately available funds to anaccount designated by such holder) for each share of Preferred Stock to beredeemed by the Corporation.

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### (f)            LegallyAvailable Funds.  For the purpose ofdetermining whether funds are legally available for redemption of shares ofPreferred Stock as provided herein, the Corporation shall value its assets atthe highest amount permissible under applicable law.  From and after the Redemption Date or theSpecial Redemption Date, as applicable, unless there shall have been a defaultin payment of the Redemption Price or Special Redemption Price, as applicable,all rights of the holders of the Redemption Shares (except the right to receivethe appropriate Redemption Price or appropriate Special Redemption Price, asapplicable) shall cease with respect to such redeemed shares, and such sharesshall not thereafter be transferred on the books of the Corporation or bedeemed to be outstanding for any purpose whatsoever.

 

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### (g)           RedemptionDefault.  If, on any date on whichshares of Preferred Stock are to be redeemed, funds of the Corporation legallyavailable therefor shall be insufficient to redeem all the Redemption Sharesrequired to be redeemed as provided herein on such date or within forty-five(45) days thereafter, funds to the extent legally available shall be used forsuch purpose and the Corporation shall effect such redemption on a Pro RataBasis.  The shares of Preferred Stock notredeemed shall remain outstanding and each holder of such shares of PreferredStock shall be entitled to all of the rights and preferences provided hereinand all other rights and remedies which such holder has under any applicablelaw and any other agreement or contract. The redemption requirements provided herein shall be continuous, so thatif on any date such requirement shall not be fully discharged, without furtheraction by any holder of Preferred Stock, funds legally available shall beapplied therefor in the order in which such redemption requirements arise untilsuch requirements are fully discharged.

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### (h)           SpecialRedemption.

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#### (i)            If a Changeof Control is proposed to occur, the Corporation shall give prompt writtennotice of such Change of Control describing in reasonable detail the materialterms and date of consummation thereof to each holder of Preferred Stock, butin any event such notice shall not be given later than twenty (20) days priorto the consummation of such Change of Control, and the Corporation shall giveeach holder of Preferred Stock prompt written notice of any material change inthe terms or timing of such transaction.  The holders of at least sixty percent (60%) ofthe then outstanding shares of Preferred Stock may require the Corporation toredeem all or any portion (on a Pro Rata Basis) of the Preferred Stock owned bysuch holders (the “Special Redemption Shares”) by giving written notice to theCorporation of such election prior to the later of:  (A) ten (10) days prior to theconsummation of the Change of Control or (B) ten (10) days afterreceipt of the Corporation’s notice (the “Expiration Date”).  The price per share for each share of Series A Preferred Stock included in the Special Redemption Sharesshall be equal to the Special Series A Redemption Price; the price pershare for each share of Series B Preferred Stock included in the SpecialRedemption Shares shall be equal to the Series B Redemption Price.  The Corporation shall give prompt writtennotice of any such election to all other holders of Preferred Stock within five(5) days prior to the consummation of the Change of Control, and each suchholder shall have until two (2) days after the receipt of such secondnotice to request redemption hereunder (by giving written notice to theCorporation) of all or any portion of the Preferred Stock owned by such holder

####  

#### (ii)           Uponreceipt of such election(s), the Corporation shall be obligated to redeem theaggregate number of shares of Preferred Stock specified therein upon theconsummation of the Change of Control (the “Special Redemption Closing”) (thedate of such Special Redemption Closing, the “Special Redemption Date”).  If any proposed Change of Control does notoccur, all requests for redemption in connection therewith shall beautomatically rescinded, or if there has been a material change in the terms orthe timing of the transaction, the holders of at least sixty percent (60%) ofthe then outstanding shares of Preferred Stock may rescind all requests forredemption in connection therewith by delivering written notice of suchrescission to the Corporation prior to the consummation of the transaction.

 

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#### (iii)          “Changeof Control” means the sale of all or substantially all the assets of theCorporation and its Subsidiaries on a consolidated basis (measured either bybook value in accordance with generally accepted accounting principlesconsistently applied or by fair market value (as determined in good faith bythe Board of Directors)) in any transaction or series of related transactions,or any merger, consolidation or reorganization of the Corporation into or with anothercorporation or other similar transaction or series of related transactions inwhich the stockholders of the Corporation immediately prior to such merger,consolidation or reorganization of the Corporation into or with anothercorporation or other similar transaction or series of related transactions (i) holdless than fifty percent (50%) of the outstanding voting securities of thesurviving corporation following the merger, consolidation or reorganization or (ii) holdless than fifty percent (50%) of the outstanding voting securities of anaffiliated entity of the surviving corporation (if such securities of anaffiliated entity are issued to the stockholders of the Company in suchtransaction).

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#### (iv)          The “Series ASpecial Redemption Price” per share of Series A Preferred Stock shall be: (A) theSeries A Liquidation Preference, if the Change of Control occurs on orprior to the fifth (5th) anniversary of the Series A Original Issue Date;or (B) the Series A Redemption Price, if the Change of Control occursafter the fifth (5th) anniversary of the Series A Original Issue Date.

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#### (v)           Redemptionsmade pursuant to this Section 5(h) shall not relieve the Corporationof its obligation to redeem the Mandatory Redemption Shares pursuant to Section 5(a) above.

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## **6.****             Voting Rights**.

##  

### (a)           Eachholder of outstanding shares of Preferred Stock shall be entitled to the numberof votes equal to the number of whole shares of Common Stock into which theshares of Preferred Stock held of record by such holder are then convertible,at each meeting of stockholders of the Corporation (and written actions ofstockholders in lieu of meetings) with respect to any and all matters presentedto the stockholders of the Corporation for their action or consideration.  Except as provided by lawand as set forth in 6(b), below, the holders of shares of Preferred Stock shallvote together with the holders of Common Stock as a single class.

###  

### (b)           TheCorporation shall not, without first obtaining the written consent oraffirmative vote of the holders of at least sixty percent (60%) of the thenoutstanding shares of Preferred Stock voting together as a single class, givenin writing or by vote at a meeting, consenting or voting, as the case may be,as a single and separate class:

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#### (i)            directly or indirectly declare or pay any dividends or makeany distributions upon any of its capital stock or other equity securitiesother than the Preferred Stock pursuant to the terms of this Charter;

####  

#### (ii)           directlyor indirectly redeem, purchase or otherwise acquire, or permit any Subsidiaryto redeem, purchase or otherwise acquire, any of the Corporation’s or anySubsidiary’s capital stock or other equity securities (including, withoutlimitation, warrants,

 

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#### options and other rights toacquire such capital stock or other equity securities) other than the PreferredStock pursuant to the terms of this Charter;

####  

#### (iii)          authorize,issue or enter into any agreement providing for the issuance (contingent orotherwise) of, (A) any notes or debt securities containing equity features(including, without limitation, any notes or debt securities convertible intoor exchangeable for capital stock or other Equity Securities, issued inconnection with the issuance of capital stock or other Equity Securities orcontaining profit participation features) or (B) any capital stock orother Equity Securities, including any Preferred Stock (or any securitiesconvertible into or exchangeable for any capital stock or other Equity Securities),except the Equity Securities issued pursuant to a stock option plan approved bythe Board of Directors and at least sixty percent (60%) of the then outstandingshares of Preferred Stock (the “Stock Option Plan”);

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#### (iv)          merge or consolidate with any Person, or, permit anySubsidiary to merge or consolidate with any Person (other than a wholly-ownedSubsidiary);

####  

#### (v)           sell,lease or otherwise dispose of, or permit any Subsidiary to sell, lease orotherwise dispose of, more than fifty percent (50%) of the consolidated assetsof the Corporation and its Subsidiaries (computed on the basis of book value,determined in accordance with generally accepted accounting principlesconsistently applied, or fair market value (as determined in good faith by theBoard of Directors)) in any transaction or series of related transactions(other than sales in the ordinary course of business);

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#### (vi)          effect a Change of Control;

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#### (vii)         liquidate,dissolve or effect a recapitalization or reorganization in any form oftransaction (including, without limitation, any reorganization into a limitedliability company, a corporation, a partnership or any other non-corporateentity which is treated as a partnership for federal income tax purposes);

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#### (viii)        acquireor permit any Subsidiary to acquire, any interest in any Corporation orbusiness (whether by a purchase of assets, purchase of stock, merger orotherwise), or enter into any joint venture, involving an aggregateconsideration (including, without limitation, the assumption of liabilitieswhether direct or indirect) greater than $50,000;

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#### (ix)           make anyamendment to this Charter, or the bylaws of the Corporation, or file anyresolution of the Board of Directors with the Secretary of State of the Stateof Delaware containing any provisions or take any other actions, which wouldincrease or decrease the number of authorized shares of the Series APreferred Stock or the Series B Preferred Stock or adversely affect orotherwise impair the rights or the relative preferences and priorities of theholders of the Series A Preferred Stock, the Series B Preferred Stockor the Common Stock under this Charter or the bylaws of the Corporation;

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#### (x)            enterinto, amend, modify or supplement, or permit any Subsidiary to enter into,amend, modify or supplement, any agreement, transaction, commitment orarrangement with any of its or any Subsidiary’s officers, directors, employees,stockholders or

 

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#### Affiliates or with any individual related by blood,marriage or adoption to any such individual or with any entity in which anysuch Person or individual owns a beneficial interest, except for customaryemployment arrangements and benefit programs on reasonable terms;

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#### (xi)           create, incur, assume or suffer to exist, or permit anySubsidiary to create, incur, assume or suffer to exist, any indebtedness;

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#### (xii)          create, incur, assume or suffer to exist, or permit anySubsidiary to create, incur, assume or suffer to exist, any liens;

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#### (xiii)         makeany capital expenditures not set forth in the Corporation’s budget approved bythe Board of Directors (including, without limitation, payments with respect tocapitalized leases, as determined in accordance with generally acceptedaccounting principles consistently applied);

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#### (xiv)        enterinto any leases or other rental agreements (excluding capitalized leases, asdetermined in accordance with generally accepted accounting principlesconsistently applied) under which the amount of the aggregate lease paymentsfor all such agreements exceeds $50,000 on a consolidated basis for anytwelve-month period;

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#### (xv)         increase the authorized size of the Board of Directors aboveeleven (11) members or decrease the authorized size of the Board of Directorsbelow eleven (11) members;

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#### (xvi)        amendor modify any stock option plan or employee stock ownership plan as inexistence as of the date of this Charter, adopt any new stock option plan oremployee stock ownership plan or issue any shares of Common Stock to its or itsSubsidiaries’ employees other than pursuant to the Corporation’s existing stockoption and employee stock ownership plans; or

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#### (xvii)       issue or sell any shares of the capital stock, or rights toacquire shares of the capital stock, of any Subsidiary to any Person other thanthe Corporation or any wholly-owned Subsidiary.

####  

Any such actions taken without the required consent oraffirmative vote of the holders of at least sixty percent (60%) of the thenoutstanding shares of Preferred Stock voting together as a single class shallbe void ab initio.

 

## **7.****             Optional Conversion**.  The holders of shares of Preferred Stockshall have conversion rights as follows (the “Conversion Rights”):

##  

### (a)           Rightto Convert.  Each share of PreferredStock shall be convertible, at the option of the holder thereof, at any timeand from time to time, into such number of fully paid and nonassessable sharesof Common Stock as is determined by dividing the applicable Original IssuePrice (subject to Adjustment) plus all accrued (whether or not yet accumulated)and unpaid Dividends on such share of Preferred Stock by the applicableConversion Price in effect at the time of conversion.  The price at which shares of Common Stockshall be

 

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### deliverableupon conversion of shares of Series A Preferred Stock without payment ofadditional consideration by the holder thereof shall initially be the Series AOriginal Issue Price (the “Series A Conversion Price”).  The price at which shares of Common Stockshall be deliverable upon conversion of shares of Series B Preferred Stockwithout payment of additional consideration by the holder thereof shallinitially be the Series B Original Issue Price (the “Series BConversion Price,” each of the Series B Conversion Price and the Series AConversion Price being referred to as a “Conversion Price”).  The Series AConversion Price and the Series B Conversion Price, and the rate at whichshares of Preferred Stock may be converted into shares of Common Stock, shallbe subject to adjustment as provided below. In the event of a Liquidation, the ConversionRights shall terminate at the close of business on the first full day precedingthe date fixed for the payment of any amounts distributable on Liquidation tothe holders of shares of Preferred Stock.

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### (b)           Mechanicsof Conversion.

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#### (i)            In orderfor a holder of shares of Preferred Stock to convert shares of Preferred Stockinto shares of Common Stock, such holder shall surrender the certificate orcertificates evidencing the ownership of such shares of Preferred Stock at theoffice of the transfer agent for the shares of Preferred Stock (or at theprincipal office of the Corporation if the Corporation serves as its owntransfer agent), together with written notice that such holder elects to convertall or any number of the shares of Preferred Stock represented by suchcertificate or certificates.  Such noticeshall state such holder’s name or the names of the nominees in which suchholder wishes the certificate or certificates for shares of Common Stock to beissued.  If required by the Corporation,certificates surrendered for conversion shall be endorsed or accompanied by awritten instrument or instruments of transfer, in form satisfactory to theCorporation, duly executed by the registered holder or his or itsattorney-in-fact duly authorized in writing. The date of receipt of such certificates and notice by the transferagent (or by the Corporation if the Corporation serves as its own transferagent) shall be the conversion date (the “Conversion Date”).  The Corporation shall, as soon as practicableafter the Conversion Date, issue and deliver at such office to such holder ofshares of Preferred Stock, or to its nominees, a certificate or certificatesfor the number of shares of Common Stock to which such holder shall beentitled.  Such conversion shall bedeemed to have been made immediately prior to the close of business on theConversion Date, and the person or persons entitled toreceive the shares of Common Stock issuable upon such conversion shall betreated for all purposes as the record holder or holders of such shares ofCommon Stock as of such date.  Other thanas set forth in Section 7 below, if the conversion is in connection withan underwritten offer of securities registered pursuant to the Securities Act,the conversion may, at the option of any holder tendering shares of PreferredStock for conversion, be conditioned upon the closing of the sale of securitiespursuant to such offering, in which event the person entitled to receive theCommon Stock issuable upon such conversion of the shares of Preferred Stockshall not be deemed to have converted such shares of Preferred Stock untilimmediately prior to the closing of such sale of securities.

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#### (ii)           TheCorporation shall, at all times when any shares of Preferred Stock shall beoutstanding, reserve and keep available out of its authorized but unissuedstock, for the purpose of effecting the conversion of the shares of PreferredStock, such number of its duly authorized shares of Common Stock as shall fromtime to time be sufficient to effect the

 

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#### conversionof all outstanding shares of Preferred Stock. Before taking any action that would cause an adjustment reducing theapplicable Conversion Price below the then par value of the shares of CommonStock issuable upon conversion of the shares of Preferred Stock, theCorporation will take any corporate action which may, in the opinion of itscounsel, be necessary in order that the Corporation may validly and legallyissue fully paid and nonassessable shares of Common Stock at such adjustedConversion Price.  If at any time thenumber of authorized but unissued shares of Common Stock shall not be sufficientto effect the conversion of all then outstanding shares of Preferred Stock, inaddition to such other remedies as shall be available to the holder of suchshares of Preferred Stock, the Corporation will take such corporate action asmay, in the opinion of its counsel, be necessary to increase its authorized butunissued shares of Common Stock to such number of shares as shall be sufficientfor such purposes.

####  

#### (iii)          Allshares of Preferred Stock that shall have been surrendered for conversion asherein provided shall no longer be deemed to be outstanding and all rights withrespect to such shares, including the rights, if any, to receive notices and tovote, shall immediately cease and terminate on the Conversion Date, except onlythe right of the holders thereof to receive and to vote shares of Common Stockin exchange therefor.  Any shares ofPreferred Stock so converted shall be retired and canceled and shall not bereissued, and the Corporation may from time to time take such appropriateaction as may be necessary to eliminate the authorized Preferred Stock orreduce the authorized number thereof as may be appropriate accordingly.

####  

### (c)           Adjustmentsto Conversion Price:

###  

#### (i)            SpecialDefinitions.  For purposes of this Section 7(c),the following definitions shall apply:

####  

##### (A)          “Option”shall mean rights, options or warrants to subscribe for, purchase or otherwiseacquire Common Stock or Convertible Securities (as defined below) or restrictedstock, excluding options granted to or shares of restricted stock acquired byemployees, directors or consultants of the Corporation pursuant to the StockOption Plan to acquire up to 14,117,647 shares of Common Stock (subject toAdjustment) and any shares of Common Stock issued upon exercise of such options(such excluded options and shares, the “Reserved Option Shares”).

#####  

##### (B)           “ConvertibleSecurities” shall mean any evidences of indebtedness, stock or other securitiesdirectly or indirectly convertible into or exchangeable for Common Stock.

#####  

##### (C)           “AdditionalShares of Common Stock” shall mean all shares of Common Stock issued (or,pursuant to Section 7(c)(iii) below, deemedto be issued) by the Corporation after the Series A Original Issue Date,other than:

#####  

###### (I)            shares ofCommon Stock issued or issuable upon conversion of Preferred Stock;

 

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###### (II)           shares of Common Stock issued or issuable as a dividend ordistribution on the Preferred Stock (in accordance with the provisions hereof);

######  

###### (III)         the Reserved Option Shares;

######  

###### (IV)         shares ofCommon Stock issued in a Qualified Public Offering;

######  

###### (V)           shares ofCommon Stock issued or issuable by reason of a dividend, stock split, split-upor other distribution on shares of Common Stock excluded from the definition ofAdditional Shares of Common Stock by the foregoing clauses I through IV or thisclause V;

######  

###### (VI)         otherOptions or shares of capital stock of the Corporation, which shall be excludedfrom this definition of Additional Shares of Common Stock only upon the writtenconsent of the holders of at least sixty percent (60%) of the then outstandingshares of Preferred Stock; or

######  

###### (VII)        sharesof capital stock issued or issuable by reason of an Adjustment.

######  

#### (ii)           NoAdjustment of Series A Conversion Price.  No adjustment in the number of shares ofCommon Stock into which the shares of Preferred Stock are convertible shall bemade, by adjustment in the Conversion Price thereof pursuant to Section 7(c)(iv) hereof,unless the consideration per share (determined pursuant to Section 7(c)(v))for an Additional Share of Common Stock issued or deemed to be issued by theCorporation is less than the applicable Conversion Price in effect on the dateof, and immediately prior to, the issuance of such Additional Shares of CommonStock.

####  

#### (iii)          Issueof Options and Convertible Securities Deemed Issue of Additional Shares ofCommon Stock.  If the Corporation atany time or from time to time after Series A Original Issue Date shallissue any Options or Convertible Securities or shall fix a record date for thedetermination of holders of any class of securities entitled to receive anysuch Options or Convertible Securities, then the maximum number of shares ofCommon Stock (as set forth in the instrument relating thereto without regard toany provision contained therein for a subsequent adjustment of such number)issuable upon the exercise of such Options or, in the case of ConvertibleSecurities and Options therefor, the conversion or exchange of such ConvertibleSecurities, shall be deemed to be Additional Shares of Common Stock issued asof the time of such issue or, in case such a record date shall have been fixed,as of the close of business on such record date, provided that in any such casein which Additional Shares of Common Stock are deemed to be issued:

####  

##### (A)          no further adjustment in the Conversion Price shall be madeupon the subsequent issue of Convertible Securities or shares of Common Stockupon the exercise of such Options or conversion or exchange of such ConvertibleSecurities and, upon the expiration of any such Option or the termination ofany such right to convert or exchange such

 

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##### ConvertibleSecurities, the applicable Conversion Price then in effect hereunder shallforthwith be increased to the Conversion Price which would have been in effectat the time of such expiration or termination had such Option or ConvertibleSecurities, to the extent outstanding immediately prior to such expiration ortermination, never been issued, and the Common Stock issuable thereunder shallno longer be deemed to be outstanding; provided that if a readjustment wouldresult in an increase of the Series A Conversion Price and/or the Series BConversion Price then in effect, such readjustment shall not be effective untilthirty (30) days after written notice of such readjustment has been given bythe Corporation to all holders of the Series A Preferred Stock and/or the Series BPreferred Stock, as the case may be; and

#####  

##### (B)           if suchOptions or Convertible Securities by their terms provide, with the passage oftime or otherwise, for any increase in the consideration payable to theCorporation, or decrease in the number of shares of Common Stock issuable, uponthe exercise, conversion or exchange thereof, the Series A ConversionPrice and/or the Series B Conversion Price computed upon the originalissue thereof (or upon the occurrence of a record date with respect thereto),and any subsequent adjustments based thereon, shall, upon any such increase ordecrease becoming effective, be recomputed to reflect such increase or decreaseinsofar as it affects such Options or the rights of conversion or exchangeunder such Convertible Securities, provided that no readjustment pursuant tothis clause (B) shall have the effect of increasing the Series AConversion Price and/or the Series B Conversion Price to an amount whichexceeds the lower of (i) the applicable Conversion Price on the originaladjustment date (taking into account any subsequent applicable adjustments) or (ii) theapplicable Conversion Price that would have resulted from any issuance ofAdditional Shares of Common Stock between the original adjustment date and suchreadjustment date; further provided that if a readjustment would result in anincrease of the Series A Conversion Price and/or the Series B ConversionPrice then in effect, such readjustment shall not be effective until thirty(30) days after written notice of such readjustment has been given by theCorporation to all holders of the Series A Preferred Stock and/or the Series BPreferred Stock, as the case may be.

#####  

#### (iv)          Adjustmentof Series A Conversion Price Upon Issuance of Additional Shares of CommonStock.  In the event the Corporationshall issue Additional Shares of Common Stock (including Additional Shares ofCommon Stock deemed to be issued pursuant to Article V, Section 7(c)(iii))after the Series A Original Issue Date and without consideration or for aNet Consideration Per Share less than the Series A Conversion Price ineffect on the date of and immediately prior to such issuance, then and in eachsuch event, the Series A Conversion Price shall be reduced, concurrentlywith such issuance, to a price equal to the per share consideration receivedfor such Additional Shares of Common Stock.

####  

#### (v)           Adjustmentof Series B Conversion Price Upon Issuance ofAdditional Shares of Common Stock. In the event this Corporation shall issue Additional Shares of CommonStock (including Additional Shares of Common Stock deemed to be issued pursuantto Article V, Section 7(c)(iii)) after the Series B OriginalIssue Date and without consideration or for a Net Consideration Per Share lessthan the Series B Conversion Price in effect on the date of andimmediately prior to such issuance, then and in each such event, the Series BConversion Price shall automatically be reduced, concurrently with suchissuance, to a price computed using the following formula:

 

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AdjustedConversion Price   =  CP x CS1 + (NP / CP)

CS2

 

Where:

 

CP   =                      theSeries B Conversion Price in effect immediately prior to the issuance ofthe Additional Shares of Common Stock;

 

CS1   =                    thenumber of outstanding shares of Common Stock outstanding immediately prior tothe issuance of the Additional Shares of Common Stock;

 

CS2   =                    thesum of (I) CS1 plus (II) the total number of Additional Shares of Common Stock;and

 

NP   =                     thenet proceeds received by the Corporation as consideration for the issuance ofthe Additional Shares of Common Stock.

 

For the purposes of this section (v),the number of outstanding shares of Common Stock shall be deemed to include theCommon Stock issuable on conversion of all other outstanding Preferred Stock, any other shares issuable****upon conversion or exercise of any other outstandingConvertible Securities and upon exercise of all outstanding Options (andassuming conversion of Convertible Securities issuable upon exercise ofoutstanding Options), but only to the extent the consideration to be paid uponthe exercise, conversion or exchange per share of underlying Common Stock isless than or equal to the per share consideration for the additional stockwhich has given rise to the Series B Conversion Price adjustment beingcalculated.

 

#### (vi)          Determinationof Consideration.  For purposes ofthis Section 7(c), the “Net Consideration PerShare” shall mean the per share consideration received by the Corporation forthe issue of any Additional Shares of Common Stock and shall be computed asfollows:

####  

##### (A)          Cash andProperty:              Such consideration shall:

#####  

###### (I)            insofaras it consists of cash, be computed at the aggregate of cash received by theCorporation, excluding amounts paid or payable for accrued interest or accrueddividends;

######  

###### (II)           insofar asit consists of property other than cash, be computed at the fair market valuethereof (as determined in good faith by the Board of Directors)  at the time of such issue; and

######  

###### (III)         inthe event Additional Shares of Common Stock are issued together with othershares or securities or other assets of the Corporation for consideration whichcovers both, be the proportion of such consideration so received, computed asprovided in clauses (I) and (II) above, as determined in good faith by theBoard of Directors.

 

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##### (B)           Optionsand Convertible Securities.  Theconsideration per share received by the Corporation for Additional Shares ofCommon Stock deemed to have been issued pursuant to Section 7(c)(iii),relating to Options and Convertible Securities, shall be determined by dividing

#####  

(x)            the totalamount, if any, received or receivable by the Corporation as consideration forthe issue of such Options or Convertible Securities, plus the minimum aggregateamount of additional consideration (as set forth in the instruments relatingthereto, without regard to any provision contained therein for a subsequentadjustment of such consideration) payable to the Corporation upon the exerciseof such Options or the conversion or exchange of such Convertible Securities,or in the case of Options for Convertible Securities, the exercise of suchOptions for Convertible Securities and the conversion or exchange of suchConvertible Securities, by

 

(y)           themaximum number of shares of Common Stock (as set forth in the instrumentsrelating thereto, without regard to any provision contained therein for asubsequent adjustment of such number) issuable upon the exercise of suchOptions or the conversion or exchange of such Convertible Securities.

 

#### (vii)         Adjustmentfor Combinations or Consolidation of Common Stock.  If, at any time after the Series AOriginal Issue Date the number of shares of Common Stock outstanding aredecreased by a combination of the outstanding shares of Common Stock, thenfollowing the record date fixed for such combination (or the date of suchcombination, if no record date is fixed), the applicable Conversion Price shallbe increased so that the number of shares of Common Stock issuable onconversion of each share of Preferred Stock shall be decreased in proportion tosuch decrease in outstanding shares of Common Stock.

####  

#### (viii)        Adjustmentfor Stock Dividends, Splits, Etc.  Ifthe Corporation shall at any time after the Series A Original Issue Datefix a record date for the subdivision, split-up or stock dividend of shares ofCommon Stock, then, following the record date fixed for the determination ofholders of shares of Common Stock entitled to receive such subdivision,split-up or dividend (or the date of such subdivision, split-up or dividend, ifno record date is fixed), the applicable Conversion Price shall beappropriately decreased so that the number of shares of Common Stock issuableon conversion of each share of Preferred Stock shall be increased in proportionto such increase in outstanding shares; provided, however, that the ConversionPrice shall not be decreased at such time if the amount of such reduction wouldbe an amount less than $0.01, but any such amount shall be carried forward andreduction with respect thereto made at the time of and together with anysubsequent reduction which, together with such amount and any other amount oramounts so carried forward, shall aggregate $0.01 or more.

####  

#### (ix)           Adjustmentfor Merger or Reorganization, etc. In case of any consolidation, recapitalization or merger of theCorporation with or into another corporation or the sale of all orsubstantially all of the assets of the Corporation to another corporation, eachshare of Preferred Stock shall thereafter be convertible into the type andamount of shares of

 

16

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#### stock or othersecurities or property to which a holder of the number of shares of CommonStock of the Corporation deliverable upon conversion of such shares ofPreferred Stock would have been entitled upon such consolidation, merger orsale; and, in such case, appropriate adjustment (as determined in good faith bythe Board of Directors) shall be made in the application of the provisions setforth in this Section 7 with respect to the rights and interest thereafterof the holders of the shares of Preferred Stock, to the end that the provisionsset forth in this Section 7 (including provisions with respect to changesin and other adjustments of the applicable Conversion Price) shall thereafterbe applicable, as nearly as reasonably may be, in relation to any shares ofstock or other property thereafter deliverable upon the conversion of theshares of Preferred Stock.

####  

### (d)           NoImpairment.  The Corporation shallnot, by amendment of this Charter or through any reorganization, transfer ofassets, consolidation, merger, dissolution, issue or sale of securities or anyother voluntary action, avoid or seek to avoid the observance or performance ofany of the terms to be observed or performed hereunder by the Corporation, butwill at all times in good faith assist in the carrying out of all theprovisions of this Section 7 and in the taking of all such action as maybe necessary or appropriate in order to protect the Conversion Rights of theholders of the shares of Preferred Stock against impairment.

###  

### (e)           Certificateas to Adjustments.  Upon theoccurrence of each adjustment or readjustment of each applicable ConversionPrice pursuant to this Section 7, the Corporation at its expense shallpromptly compute such adjustment or readjustment in accordance with the terms hereofand furnish to each holder of shares of Series A Preferred Stock and/or Series BPreferred Stock, as the case may be, a certificate setting forth suchadjustment or readjustment and showing in detail the facts upon which suchadjustment or readjustment is based.  TheCorporation shall, upon the written request at any time of any holder ofPreferred Stock, furnish or cause to be furnished to such holder a similarcertificate setting forth (i) such adjustments and readjustments, (ii) theapplicable Conversion Price then in effect, and (iii) the number of sharesof Common Stock and the amount, if any, of other property which then would bereceived upon the conversion of the shares of Preferred Stock.

###  

### (f)            Noticeof Record Date.  In the event:

###  

#### (i)            that theCorporation takes a record of the holders of any class of securities for thepurpose of determining the holders thereof who are entitled to receive anydividend (other than a cash dividend) or any other distribution, any right tosubscribe for, purchase or otherwise acquire any shares of stock of any classor any other securities or property, or to receive any other right;

####  

#### (ii)           that the Corporation subdivides or combines its outstandingshares of Common Stock;

####  

#### (iii)          ofany reclassification of the Common Stock of the Corporation (other than asubdivision or combination of its outstanding shares of Common Stock or a stockdividend or stock distribution thereon), or of any consolidation or merger ofthe Corporation into

 

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#### orwith another corporation, or of the sale of all or substantially all of theassets of the Corporation; or

####  

#### (iv)          ofthe involuntary or voluntary dissolution, liquidation or winding up of theCorporation;

####  

then the Corporation shall cause to be filed at itsprincipal office or at the office of the transfer agent of the Preferred Stock,and shall cause to be mailed to the holders of the Preferred Stock at theirlast addresses as shown on the records of the Corporation or such transfer agent,at least ten days prior to the record date specified in (A) below ortwenty (20) days before the date specified in (B) below, a notice stating:

 

##### (A)          the recorddate of such dividend, distribution, subdivision or combination, or, if arecord is not to be taken, the date as of which the holders of Common Stock ofrecord to be entitled to such dividend, distribution, subdivision orcombination are to be determined; or

#####  

##### (B)           the dateon which such reclassification, consolidation, merger, sale, dissolution, liquidationor winding up is expected to become effective, and the date as of which it isexpected that holders of Common Stock of record shall be entitled to exchangetheir shares of Common Stock for securities or other property deliverable uponsuch reclassification, consolidation, merger, sale, dissolution or winding up.

#####  

## **8.****             AutomaticConversion.**

##  

### (a)           In theevent a registration statement under the Securities Act covering the offer andsale of Common Stock for the account of the Corporation pursuant to a QualifiedPublic Offering is declared effective, then effective upon the closing of thesale of such shares of Common Stock by the Corporation pursuant to suchQualified Public Offering, the Corporation may at any time require alloutstanding shares of Preferred Stock to automatically convert to shares ofCommon Stock in the manner provided in Section 7 herein, at the thenapplicable Conversion Price.

###  

### (b)           Upon theconsent of the holders of at least sixty percent (60%) of the then outstandingshares of Preferred Stock, all outstanding shares of Preferred Stock shallautomatically convert to shares of Common Stock in the manner provided in Section 7herein, at the then applicable Conversion Price.

###  

### (c)           In thecase of an automatic conversion pursuant to this Section 8, theoutstanding shares of Preferred Stock shall be converted automatically withoutany further action by the holders of such shares and whether or not thecertificates representing such shares are surrendered to the Corporation or itstransfer agent; provided, that the Corporation shall not be obligated to issueto any holder certificates evidencing the shares of Common Stock issuable uponsuch conversion unless certificates evidencing such shares of Preferred Stockare delivered either to the Corporation or any transfer agent of theCorporation.

 

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### (d)           Allcertificates evidencing shares of Preferred Stock which are required to besurrendered for conversion in accordance with the provisions hereof shall, fromand after the date such certificates are so required to be surrendered, bedeemed to have been retired and canceled and the shares of Preferred Stockrepresented thereby converted into Common Stock for all purposes,notwithstanding the failure of the holder or holders thereof to surrender suchcertificates on or prior to such date. The Corporation may thereafter take such appropriate action as may benecessary to reduce the authorized Preferred Stock accordingly.

###  

## **9.****             Registrationof Transfer.**

##  

The Corporation shall keep at its principal office aregister for the registration of Preferred Stock.  Upon the surrender of any certificaterepresenting Preferred Stock at such place, the Corporation shall, at the requestof the record holder of such certificate, execute and deliver (at theCorporation’s expense) a new certificate or certificates in exchange thereforrepresenting in the aggregate the number of shares of Preferred Stockrepresented by the surrendered certificate. Each such new certificate shall be registered in such name and shallrepresent such number of shares of Preferred Stock as is requested by theholder of the surrendered certificate and shall be substantially identical inform to the surrendered certificate, and dividends shall accrue on thePreferred Stock represented by such new certificate from the date to whichdividends have been fully paid on such shares of Preferred Stock represented bythe surrendered certificate.

 

## **10.****          Replacement**.

##  

Upon receipt of evidence reasonably satisfactory tothe Corporation (an affidavit of the registered holder shall be satisfactory)of the ownership and the loss, theft, destruction or mutilation of anycertificate evidencing shares of Preferred Stock, and in the case of any suchloss, theft or destruction, upon receipt of indemnity reasonably satisfactoryto the Corporation (provided that if the holder is a financial institution orother institutional investor its own agreement shall be satisfactory), or, inthe case of any such mutilation upon surrender of such certificate, theCorporation shall (at its expense) execute and deliver in lieu of suchcertificate a new certificate of like kind representing the number of shares ofPreferred Stock of such class represented by such lost, stolen, destroyed or mutilatedcertificate and dated the date of such lost, stolen, destroyed or mutilatedcertificate, and dividends shall accrue on the Preferred Stock represented bysuch new certificate from the date to which dividends have been fully paid onsuch lost, stolen, destroyed or mutilated certificate.

 

## **11.****          Certain Definitions**.

##  

“Affiliate” of any particular Person or entity meansany other Person or entity controlling, controlled by or under common controlwith such particular Person or entity.

 

“Equity Securities” means any equity securities of theCompany, including, without limitation, the Series A Preferred Stock, the Series BPreferred Stock, the Common Stock, and any other securities or instrumentswhich have equity features or which are convertible into or exercisable for anysuch securities or instruments.

 

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“Junior Securities” means any capital stock or otherEquity Securities, except for the Series APreferred Stock and Series B Preferred Stock.

 

“Person” means an individual, a partnership, acorporation, a limited liability company, an association, a joint stockcompany, a trust, a joint venture, an unincorporated organization and agovernmental entity or any department, agency or political subdivision thereof.

 

“Public Offering” means any offering by theCorporation of securities of any kind whatsoever to the public pursuant to aneffective registration statement under the Securities Act of 1933, as then ineffect, or any comparable statement under any similar federal statute then inforce.

 

“Qualified Public Offering” means a Public Offering ofnewly issued or outstanding securities which yieldsaggregate proceeds to the Corporation (net of commissions and discounts) of atleast $50,000,000.

 

“Subsidiary” means, with respect to any Person, anycorporation, limited liability company, partnership, association or otherbusiness entity of which (i) if a corporation, a majority of the totalvoting power of shares of stock entitled (without regard to the occurrence ofany contingency) to vote in the election of directors, managers or trusteesthereof is at the time owned or controlled, directly or indirectly, by thatPerson or one or more of the other Subsidiaries of that Person or a combinationthereof, or (ii) if a limited liability company, partnership, associationor other business entity, a majority of the partnership or other similarownership interest thereof is at the time owned or controlled, directly orindirectly, by any Person or one or more Subsidiaries of that person or acombination thereof.  For purposeshereof, a Person or Persons shall be deemed to have a majority ownershipinterest in a limited liability company, partnership, association or otherbusiness entity if such Person or Persons shall be allocated a majority oflimited liability company, partnership, association or other business entitygains or losses or shall be or control the managing general partner of suchlimited liability company, partnership, association or other business entity.  For purposes of this Charter, reference toany “Subsidiary” means a Subsidiary of the Corporation.

 

## **12.****          Amendment and Waiver**.

##  

No amendment, modification or waiver shall be bindingor effective with respect to any provision of this Article V without theprior written consent of the holders of at least sixty percent (60%) of thethen outstanding shares of Preferred Stock at the time such action is taken.

 

## **13.****          Notices**.

##  

Except as otherwise expressly provided hereunder, allnotices referred to herein shall be in writing and shall be delivered byregistered or certified mail, return receipt requested and postage prepaid, orby reputable overnight courier service, charges prepaid, and shall be deemed tohave been given when so mailed, or sent to (i) the Corporation, at itsprincipal executive offices and (ii) any stockholder, at such holder’saddress as it appears in the stock

 

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recordsof the Corporation (unless otherwise indicated in writing to the Corporation byany such holder).

 

# **ARTICLE VI**

 

# Terms of Common Stock

 

The rights, preferences, powers, privileges andrestrictions, qualifications and limitations of the Common Stock shall be asset forth in this Article VI.

 

## **1.****             Dividends**.

##  

After dividends on the Preferred Stock shall have beenpaid, subject to the provisions of Section 3 and Section 6(b)(i) of Article V and to the provisions of anyJunior Securities that are senior to the Common Stock, the holders of CommonStock shall be entitled to receive, when and if declared by the Board ofDirectors, from funds legally available for the payment of dividends, suchdividends as may be declared from time to time or at any time by the Board ofDirectors.

 

## **2.****             Voting Rights**.

##  

Except as otherwise provided hereunder or as otherwiserequired by law, the holders of Common Stock shall be entitled to one vote foreach share held on any matter submitted to a vote of the stockholders of theCorporation.

 

## **3.****             Liquidation**.

##  

Subject to the provisions of the Preferred Stock andto the provisions of any Junior Securities that are senior to the Common Stock,the holders of Common Stock shall be entitled to participate in alldistributions to the holders of Common Stock in any Liquidation (ratably amongsuch holders based upon the number of shares of Common Stock held by each suchholder as of the time of such distribution).

 

## **4.****             Registration of Transfer**.

##  

The Corporation shall keep at its principal office (orsuch other place as the Corporation reasonably designates) a register for theregistration of shares of the Common Stock. Upon the surrender of any certificate representing shares of any classof Common Stock at such place, the Corporation shall, at the request of theregistered holder of such certificate, execute and deliver a new certificate orcertificates in exchange therefor representing in the aggregate the number ofshares of such class represented by the surrendered certificate, and theCorporation forthwith shall cancel such surrendered certificate.  Each such new certificate will be registeredin such name and will represent such number of shares of such class isrequested by the holder of the surrendered certificate and will besubstantially identical in form to the surrendered certificate.  The issuance of new certificates shall bemade without charge to the holders of the surrendered certificates for anyissuance tax in respect thereof or other cost incurred by the Corporation inconnection with such issuance.

 

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## **5.****             Replacement**.

##  

Upon receipt of evidence reasonably satisfactory tothe Corporation (an affidavit of the registered holder will be satisfactory) ofthe ownership and the loss, theft, destruction or mutilation of any certificateevidencing one or more shares of any class of Common Stock, and in the case ofany such loss, theft or destruction, upon receipt of indemnity reasonablysatisfactory to the Corporation (provided that if the holder is a financialinstitution or other institutional investor its own agreement will besatisfactory), or, in the case of any such mutilation upon surrender of suchcertificate, the Corporation shall (at its expense) execute and deliver in lieuof such certificate a new certificate of like kind representing the number ofshares of such class represented by such lost, stolen, destroyed or mutilatedcertificate and dated the date of such lost, stolen, destroyed or mutilatedcertificate.

 

## **6.****             Amendment and Waiver**.

##  

No amendment, modification or waiver shall be bindingor effective with respect to any provision of this Article VI without theprior written consent of the holders of a majority of the then outstandingshares of Common Stock and Preferred Stock voting together as a single class.

 

## **7.****             Notices**.

##  

Except as otherwise expressly provided hereunder, allnotices referred to herein shall be in writing and shall be delivered byregistered or certified mail, return receipt requested and postage prepaid, orby reputable overnight courier service, charges prepaid, and shall be deemed tohave been given when so mailed, or sent to (i) the Corporation, at itsprincipal executive offices and (ii) any stockholder, at such holder’saddress as it appears in the stock records of the Corporation (unless otherwiseindicated in writing to the Corporation by any such holder).

 

# **ARTICLE VII**

 

# Preemptive Rights

 

Except as may otherwise be specifically agreed inwriting between the Corporation and a stockholder, no stockholder of thisCorporation shall have any preferential, preemptive or other rights ofsubscription to any shares of any class or series of stock of this Corporationallotted or sold or to be allotted or sold, whether now or hereafterauthorized, or to any obligations or securities convertible into any class orseries of capital stock of this Corporation.

 

# **ARTICLE VIII**

 

# Registered Office and Agent

 

The address of the Corporation’s registered office inthe State of Delaware is Corporation Trust Center, 1209 Orange Street, in theCity of Wilmington, County of New Castle, Delaware

 

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19801.  The name of the Corporation’s registeredagent at such address is The Corporation Trust Company.

 

# **ARTICLE IX**

 

# Directors

 

The number of directors constituting the Board ofDirectors shall be fixed by or in the manner provided by the bylaws of theCorporation.  In furtherance and not inlimitation of the powers conferred by statute, the Board of Directors shallhave power to adopt, and to alter, amend or repeal the bylaws of the Corporation,subject to the right of the stockholders entitled to vote with respect theretoto amend, alter or repeal bylaws.

 

# **ARTICLE X**

 

# Stockholders Meetings/Voting

 

## **1.****             Meetings of Stockholders**.  Meetings of stockholders may be held withinor without the State of Delaware, as the bylaws of the Corporation may provide.

##  

## **2.****             No Cumulative Voting**.  No stockholder of the Corporation shall beentitled to any cumulative voting rights.

##  

## **3.****             Voting Generally**.  The stockholders of the Corporation shalltake action by the affirmative vote of the holders of a majority of the sharespresent and entitled to vote, except where a larger proportion is required bylaw, this Charter or a stockholder control agreement.

##  

# **ARTICLE XI**

 

# Indemnification

 

The Corporation shall, to the maximum extent permittedfrom time to time under the law of the State of Delaware, indemnify and uponrequest shall advance expenses to any person who is or was a party or isthreatened to be made a party to any threatened, pending or completed action,suit, proceeding or claim, whether civil, criminal, administrative orinvestigative, by reason of the fact that such person is or was or has agreedto be a director or officer of the Corporation or while a director or officeris or was serving at the request of the Corporation as a director, officer, partner,trustee, employee or agent of any corporation, partnership, joint venture,trust or other enterprise, including service with respect to employee benefitplans, against expenses (including attorney’s fees and expenses), judgments,fines, penalties and amounts paid in settlement incurred in connection with theinvestigation, preparation to defend or defense of such action, suit,proceeding or claim; provided, however, that the foregoing shall not requirethe Corporation to indemnify or advance expenses to any person in connectionwith any action, suit, proceeding, claim or counterclaim initiated by or onbehalf of such person.  Suchindemnification shall not be exclusive of other indemnification rights arisingunder any bylaw, agreement, vote of directors or stockholders or otherwise andshall inure to the benefit of the

 

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heirsand legal representatives of such person. Any person seeking indemnification under this Article XI shall bedeemed to have met the standard of conduct required for such indemnificationunless the contrary shall be established. Any repeal or modification of the foregoing provisions of this Article XIshall not adversely affect any right or protection of a director or officer ofthe Corporation with respect to any acts or omissions of such director orofficer occurring prior to such repeal or modification.

 

# **ARTICLE XII**

 

# Director Liability

 

To the fullest extent permitted by the DGCL as thesame exists or may hereafter be amended, a director of the Corporation shallnot be personally liable to the Corporation or to any stockholder of theCorporation for monetary damages for a breach of fiduciary duty as adirector.  Any repeal or amendment ofthis Article XII shall be prospective only and shall not adversely affectany limitation on the liability of a director of the Corporation existing atthe time of such repeal or amendment.

 

# **ARTICLE XIII**

 

# Miscellaneous

 

1.             Theelection of directors need not be by ballot unless the bylaws of the Corporationshall so require.

 

2.             Thebooks of this Corporation may (subject to any statutory requirements) be keptoutside the State of Delaware as may be designated by the Board of Directors orin the bylaws of the Corporation.

 

3.             Ifat any time this Corporation shall have a class of stock registered pursuant tothe provisions of the Securities Exchange Act of 1934, for so long as suchclass is so registered, any action by the stockholders of such class must betaken at an annual or special meeting of stockholders and may not be taken bywritten consent.

 

4.             ThisCorporation shall not be governed by Section 203 of the DGCL.

 

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IN WITNESS WHEREOF, the President of the Corporationhas executed this Sixth Amended and Restated Certificate of Incorporation ofEschelon Telecom, Inc. on December 29, 2004.

 
|   | ESCHELON TELECOM, INC. |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    | /s/  Richard A. Smith |   |
|   |                   | Richard  A. Smith |
|   |                   | Chief  Executive Officer |

 

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