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Exhibit 3.1(i)
CORRECTED CONFORMED COPY CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF
THE 6% CLASS A CONVERTIBLE PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF   Pursuant to Section 151 of the
General Corporation Law of the State of Delaware   XO Communications, Inc. (the Company), a corporation organized and
existing under the laws of the State of Delaware, certifies that pursuant to
the authority contained in its Certificate of Incorporation, as amended from
time to time (the Certificate of Incorporation), and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware (the DGCL), the Board of Directors of the Company (the Board of
Directors) has duly approved and adopted the following resolution on August 4,
2004 (the Resolution): RESOLVED, that pursuant to the authority vested in the Board of Directors
by the Certificate of Incorporation, and Section 151 of the DGCL, the Board of
Directors does hereby designate, create, authorize and provide for the issue
of one class of convertible preferred stock, which shall be designated as 6%
Class A Convertible Preferred (liquidation preference of $50 per share plus
any accretion as provided herein) in an amount not to exceed 4,000,000 shares,
having the designations, preferences, relative, participation, optional and
other special rights and the qualifications, limitations and restrictions
thereof that are set forth is the Certificate of Incorporation and in this
Resolution as follows: (a) Designation. There is hereby created out of the authorized and unissued Preferred Stock
of the Company a class of 6% Class A Convertible Preferred Stock designated as
the 6% Class A Convertible Preferred Stock. The number of shares
constituting such class shall not exceed 4,000,000. The liquidation
preference at any date of the 6% Class A Convertible Preferred Stock shall be
$50 per share plus the aggregate amount of the accretion through and including
the date provided for in paragraph (d)(i) below (the Liquidation Preference). (b) Ranking. The 6% Class A Convertible Preferred Stock will, with respect to rights on
liquidation, winding-up and dissolution, rank (i) senior to each other class of
capital stock outstanding or established hereafter by the Company the terms of
which do not expressly provide that it ranks senior to, or on a parity with,
the 6% Class A Convertible Preferred Stock as to rights on




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liquidation, winding-up and dissolution of the Company (collectively referred
to as Junior Shares); (ii) on a parity with each other class or series of
preferred stock established hereafter by the Company the terms of which
expressly provide that such class or series will rank on a parity with the 6%
Class A Convertible Preferred Stock as to rights on liquidation, winding-up and
dissolution (collectively referred to as Parity Shares); and (iii) junior to
each other class or series of preferred stock established after the date hereof
by the Company the terms of which expressly provide that such class or series
will rank senior to the 6% Class A Convertible Preferred Stock as to rights
upon liquidation, winding-up and dissolution of the Company (collectively
referred to as Senior Shares). (c) Dividends. No dividends will be declared or paid on the shares
of the 6% Class A Convertible Preferred Stock. (d) Liquidation Preference. (i) The Liquidation Preference on each share of 6% Class A
Convertible Preferred Stock shall accrete quarterly on each March 31,
June 30, September 30 and December 31 of each year (each an Accretion
Date), commencing on September 30, 2004, at the rate of 1.5% per quarter
on the Liquidation Preference as in effect immediately prior to such
Accretion Date until the earlier of (x) the Redemption Date of such
share, (y) the date such share is converted as provided in paragraph (k)
and (z) the date an event referred to in paragraph (d)(ii) occurs. For
any accretion period which is less than a full quarter, the Liquidation
Preference shall accrete in an amount to be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days
elapsed. Accretion on the Liquidation Preference pursuant to this
paragraph (d)(i) with respect to any shares of 6% Class A Convertible
Preferred Stock to be redeemed shall cease on the Redemption Date for
such shares unless the Company defaults in the payment of the redemption
price. (ii) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of affairs of the Company, the Holders of
shares of 6% Class A Convertible Preferred Stock then outstanding shall
be entitled to be paid, out of the assets of the Company available for
distribution to its shareholders, an amount in cash equal to the
Liquidation Preference (which shall for the avoidance of doubt include
the aggregate amount of any accretion at such time as provided in
paragraph (d)(i) above) at such time before any payment shall be made or
any assets distributed to the holders of any of the Junior Shares.
Except as provided in the preceding sentence, Holders of shares of 6%
Class A Convertible Preferred Stock shall not be entitled to any
distribution in the event of any liquidation, dissolution or winding-up
of the affairs of the Company. If the assets of the Company are not
sufficient to pay in full the liquidation payments payable to the Holders
of outstanding shares of 6% Class A Convertible Preferred Stock and all
Parity Shares, then the holders of all such shares shall share equally
and ratably in such distribution of assets in proportion to the full
Liquidation Preference at such time. (iii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or
assets of the Company nor the consolidation or merger 2




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of the Company with or into one or more entities shall be deemed to
be a liquidation, dissolution or winding-up of the affairs of the
Company. (iv) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Company to pay or set apart for payment, any amounts for
the payment of the Liquidation Preference on 6% Class A Convertible
Preferred Stock at any time. (e) Redemption. (i) (A) Mandatory Redemption. On January 15, 2010, the
Company shall redeem in cash and in the manner provided for in
paragraph (e)(ii) hereof, all of the shares of 6% Class A
Convertible Preferred Stock then outstanding at a redemption price
equal to 100% of the Liquidation Preference per share as of the
Redemption Date. (B) Redemption Upon Change of Control. Any Holder may,
at any time upon a Change of Control pursuant to prior written
notice as provided below, demand that the Company redeem in cash
and in the manner provided for in paragraph (e)(ii) hereof all, but
not less than all, of the outstanding shares of 6% Series A
Convertible Preferred Stock held by such Holder at a redemption
price equal to 100% of the Liquidation Preference per share as of
the Redemption Date. If a Holder demands redemption under this
paragraph (i)(B), such Holder shall include in such notice the
Redemption Date (provided that such Redemption Date shall be
a date no less than thirty-five (35) nor more than sixty-five (65)
days after the date such Holder demands redemption). (C) Optional Redemption. The 6% Class A Convertible
Preferred Stock shall be redeemable, at any time on or after the
third anniversary of the Issue Date, in whole or in part, at the
option of the Company, at a cash redemption price equal to 100% of
the Liquidation Preference per share as of the Redemption Date;
provided that redemptions pursuant to this paragraph (i)(C)
shall be made only if the Market Price of the Companys Common
Stock shall have equaled or equals or exceeds 250% of the
Conversion Price in effect at such time for 20 Trading Days in any
period of any 30 consecutive Trading Days ended prior to the date
of the applicable Redemption Notice. (ii) Procedures for Redemption. (A) At least thirty (30) days and not more than sixty (60)
days prior to the date fixed for any redemption of shares of 6%
Class A Convertible Preferred Stock pursuant to paragraph (e)(i)
hereof, written notice (each, a Redemption Notice) shall be given
by first class mail, postage prepaid, to each Holder of record on
the record date fixed for such redemption of shares of 6% Class A
Convertible Preferred Stock called for redemption at such Holders
address as it appears on the stock books of the Company;
provided that no failure to give such 3




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notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of 6%
Class A Convertible Preferred Stock to be redeemed except as to the
Holder or Holders to whom the Company has failed to give said
notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:  (1)
    
    The redemption price;(2)
    
    The Redemption Date; and(3)
    
    That the Holder is to surrender to
the Company, in the manner, at the place or places and
at the price designated, its certificate or certificates
representing the shares of 6% Class A Convertible
Preferred Stock to be redeemed. (B) Each Holder of shares of 6% Class A Convertible Preferred
Stock shall surrender the certificate or certificates representing
such shares to the Company, duly endorsed (or otherwise in proper
form for transfer, as determined by the Company), in the manner and
at the place designated in the Redemption Notice, and on the
Redemption Date the full redemption price for such shares shall be
payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired. (C) On and after the Redemption Date, unless the Company
defaults in the payment in full of the applicable redemption price,
all rights of the Holders of redeemed shares shall terminate with
respect thereto on the Redemption Date, other than the right to
receive the redemption price, without interest; provided
however, that if a notice of redemption shall have been
given as provided in paragraph (ii)(A) above and the funds
necessary for redemption shall have been irrevocably deposited in
trust for the equal and ratable benefit for the Holders of the shares called for redemption, then, at the close of business on the
day on which such funds are segregated and set apart, the Holders
of the shares to be redeemed shall cease to be shareholders of the
Company with respect to the shares so redeemed and shall be
entitled only to receive the redemption price, without interest. (f) Voting Rights. Each issued and outstanding share of 6% Series A Convertible Preferred
Stock shall be entitled to the number of votes equal to the number of shares of
Common Stock into which each such share of 6% Series A Convertible Preferred
Stock is convertible (as adjusted from time to time pursuant hereto) at each
meeting of stockholders of the Company (or pursuant to any action by written
consent) with respect to any and all matters presented to the stockholders of
the Company for their action or consideration and as otherwise required by
Delaware law. Except as provided by law, Holders of shares of 6% Series A
Convertible Preferred Stock shall vote together with the holders of Common
Stock as a single class. 4




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(g) Reissuance of 6% Class A Convertible Preferred Stock. Shares of 6% Class A Convertible Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of Delaware) have the
status of authorized and unissued shares of Preferred Stock undesignated as to
series and may be redesignated and reissued as part of any series of Preferred
Stock; provided that such reacquired shares shall not be reissued as
shares of 6% Class A Convertible Preferred Stock. (h) Business Day. If any payment, redemption or exchange shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment, redemption
or exchange shall be made on the immediately succeeding Business Day. (i) Reports. So long as any shares of 6% Class A Convertible Preferred Stock are
outstanding, the Company will provide to the Holders of 6% Class A Convertible
Preferred Stock, within 15 days after it files them with the Securities and
Exchange Commission (or any successor agency performing similar functions),
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the Commission
may by rules and regulation prescribe) which the Company files with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. (j) Definitions. As used in this Certificate of Designation, the following terms shall have
the following meanings (with terms defined in the singular having comparable
meanings when used in the plural and vice versa), unless the context otherwise
requires: Affiliate of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, control when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and
controlled have meanings correlative to the foregoing. Business Day means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the Borough of Manhattan,
The City of New York, New York are authorized or obligated by law or executive
order to close. Capital Stock of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general
or limited, of such Person. Change of Control means, at any time, 5




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(A) any Person or any Persons acting together that would constitute
a group for purposes of Section 13(d) under the Exchange Act, or any
successor provision thereto (other than a Permitted Holder or Affiliates
of a Permitted Holder or an underwriter engaged in a firm commitment
underwriting on behalf of Company) shall beneficially own (within the
meaning of Rule 13d-3 under the Exchange Act, or any successor provision
thereto) more than 25% of the aggregate voting power of all classes of
voting stock of the Company unless a Permitted Holder or an Affiliate of
a Permitted Holder continues to own more than such Person or Persons; or (B) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the shareholders of the Company was proposed
by a vote of a majority of the directors of the Company then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in
office; provided that a Change of Control shall not result from transfers to a
Permitted Holder or an Affiliate of a Permitted Holder. Common Stock means the Common Stock, par value $0.01 per share, of the
Company. Conversion Agent means the conversion agent for the 6% Class A
Convertible Preferred Stock designated by the Company from time to tune. Conversion Price means $4.62, subject to adjustment pursuant to
paragraph (k) hereof. Conversion Rate means, at any date, the quotient obtained by dividing
the Liquidation Preference as of such date by the Conversion Price as of such
date. Depositary means, with respect to the shares of 6% Class A Convertible
Preferred Stock issuable or issued in whole or in part in the form of a Global
Share Certificate, DTC for so long as it shall be a clearing agency registered
under the Exchange Act, or such successor (which shall be a clearing agency
registered under the Exchange Act) as the Company shall designate from time to
time in an officers certificate of the Company delivered to the Transfer
Agent. DTC means The Depository Trust Company. Exchange Act means the Securities Exchange Act of 1934, and the rules
and regulations promulgated thereunder. Holder means a holder of shares of 6% Class A Convertible Preferred
Stock as reflected in the share books of the Company. Icahn Family means and includes: (i) Carl C. Icahn, his spouse, and his
children; (ii) the current and former spouses of any person described in clause
(i) of this definition; and (iii) the ancestors, siblings and descendants,
whether by blood, marriage or adoption, of any person described in clause (i)
or (ii) of this definition. 6




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Initial Conversion Date means the earlier of (i) the first anniversary
of the Issue Date, (ii) the date on which a Change of Control occurs and (iii)
the date on which a going private transaction subject to Rule 13e-3 of the
Exchange Act is consummated. Issue Date means the date of original issuance of the 6% Class A
Convertible Preferred Stock. Liquidation Preference shall have the meaning ascribed to it in
paragraph (a) hereof. Junior Shares shall have the meaning ascribed to it in paragraph (b)
hereof. Market Price shall have the meaning ascribed to it in paragraph
(k)(v)(B) hereof. Parity Shares shall have the meaning ascribed to it in paragraph (b)
hereof. Permitted Holder means and includes: (i) any member of the Icahn Family;
(ii) any conservatorship, custodianship, or decedents estate of any member of
the Icahn Family, (iii) any trust established for the benefit of, among others,
any Person described in clause (i) or (ii) of this definition; and (iv) any
corporation, limited liability company, partnership, or other entity, the
controlling equity interests in which are held by or for the benefit of any one
or more persons described in clause (i), (ii), or (iii) of this definition; and
(v) any foundation or charitable organization established by a member of the
Icahn Family, and having at least one director, trustee, or member who is a
member of the Icahn Family. Person means any individual, company, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization, government or agency or political subdivision thereof or any
other entity. Preferred Stock of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such person. Redemption Date, with respect to any share of 6% Class A Convertible
Preferred Stock, means the date on which such share of 6% Class A Convertible
Preferred Stock is redeemed by the Company. Redemption Notice shall have the meaning ascribed to it in paragraph
(e)(ii) hereof. Senior Shares shall have the meaning ascribed to it in paragraph (b)
hereof. Trading Day means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market. Transfer Agent means the transfer agent for the 6% Class A Convertible
Preferred Stock designated by the Company from time to time. 7




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(k)
Conversion Rights. (i) On or after the Initial Conversion Date, each share of 6% Class
A Convertible Preferred Stock may be converted on any date, at the option
of the Holder thereof, into the number of shares of Common Stock equal to
the Conversion Rate in effect on such date. The right to convert a share
of the 6% Class A Convertible Preferred Stock called for redemption will
terminate at the close of business on the Redemption Date for such share
of 6% Class A Convertible Preferred Stock. (ii) The right of conversion attaching to any shares of 6% Class A
Convertible Preferred Stock may be exercised by the Holder thereof by
delivering the shares to be converted to the office of the Conversion
Agent, accompanied by a duly signed and completed notice of conversion in
form reasonably satisfactory to the Conversion Agent. The conversion date
will be the date on which the shares of 6% Class A Convertible Preferred
Stock and the duly signed and completed notice of conversion are so
delivered. The Person or Persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock as of such conversion date
and such Person or Persons will cease to be a record Holder or record
Holders of the 6% Class A Convertible Preferred Stock on that date. As
promptly as practicable on or after the conversion date, the Company will
issue and deliver to the Conversion Agent a certificate or certificates
for the number of full shares of Common Stock issuable upon conversion,
with any fractional shares rounded up to full shares or, at the Companys
option, payment in cash in lieu of any fraction of a share, based on the
Market Price of the Common Stock on the Trading Day preceding the
conversion date. Such certificate or certificates will be delivered by
the Conversion Agent to the appropriate Holder on a book-entry basis or
by mailing certificates evidencing the additional shares to the Holders
at their respective addresses set forth in the register of Holders
maintained by the Transfer Agent. No payment or adjustment for dividends,
or for any dividends in respect of shares of Common Stock, will be made
upon conversion. Holders of Common Stock issued upon conversion will not
be entitled to receive any dividends payable to holders of Common Stock
as of any record time before the close of business on the conversion
date. (iii) The Company shall at all times reserve and keep available out
of its authorized and unissued Common Stock, solely for issuance upon the
conversion of the 6% Class A Convertible Preferred Stock, such number of shares of Common Stock as shall from time to time be issuable upon the
conversion of all the shares of 6% Class A Convertible Preferred Stock
then outstanding. Any shares of Common Stock issued upon conversion of
the 6% Class A Convertible Preferred Stock shall be duly authorized,
validly issued and fully paid and nonassessable and shall rank pari passu
with the other shares of Common Stock outstanding from time to time. The
Conversion Agent shall deliver the shares of Common Stock received upon
conversion of the 6% Class A Convertible Preferred Stock to the
converting Holder free and clear of all liens, charges, security
interests and encumbrances, except for United States withholding taxes.
The Company shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may be
required by law, and shall comply with all applicable requirements as to
registration or qualification of the Common Stock 8




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(and all requirements to list the Common Stock issuable upon
conversion of the 6% Class A Convertible Preferred Stock that are at the
time applicable), in order to enable the Company to lawfully issue Common
Stock upon conversion of the 6% Class A Convertible Preferred Stock and
to lawfully deliver the Common Stock to each Holder upon conversion of
the 6% Class A Convertible Preferred Stock. (iv) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion
of 6% Class A Convertible Preferred Stock. The Company shall not,
however, be required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock
in a name other than that in which the 6% Class A Convertible Preferred
Stock so converted were registered, and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to the
Conversion Agent the, amount of any such tax, or has established to the
satisfaction of the Conversion Agent that such tax has been paid. (v) The Conversion Price shall be subject to adjustment (without
duplication) from time to time as follows: (A) Changes in Capital Stock. If the Company at any
time or from time to time after the date hereof shall (i) pay a
dividend or make a distribution on Common Stock, in each case,
consisting of shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a larger number of shares
of Common Stock (including by means of a stock split), (iii)
combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) issue, in a
reclassification of the Common Stock, other securities of the
Company (including any such reclassification in connection with a
consolidation or merger of the Company in which the Company is the
surviving entity), the Conversion Price shall be adjusted so that
each holder of 6% Class A Convertible Preferred Stock shall be
entitled upon conversion to receive the kind and number of shares
of Common Stock or other securities of the Company which such
holder would have owned or have been entitled to receive after the
happening of any of the events described above, had conversion
occurred immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to
this paragraph (A) shall become effective on the effective date of
such event retroactive to the record date, if any, for such event. (B) Distributions. If the Company at any time or from
time to time after the date hereof shall distribute to all holders
of Common Stock (including any such distribution made to the
shareholders of the Company in connection with a consolidation or
merger in which the Company is the continuing corporation)
evidences of its indebtedness, shares of another class of its
capital stock, cash or other property of any nature (other than
distributions and dividends payable in shares of Common Stock and
Ordinary Cash Dividends), or any options, warrants or other rights
to subscribe for or purchase any of the foregoing, then, in each
case, the Conversion Price shall be adjusted by multiplying the Conversion Price 9




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in effect immediately prior
to the record date for the determination of shareholders entitled
to receive such distribution by a fraction, the numerator of which
shall be the Market Price (as defined below) per share of Common
Stock as of the business day immediately preceding such record
date, less the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive for
all purposes) of the portion of the evidences of indebtedness, shares or property so to be distributed (net of the purchase price
therefor in the case of distribution of options, warrants or other
rights to subscribe or purchase such indebtedness, shares or other
property), applicable to one share, and the denominator of which
shall be such Market Price per share of Common Stock as of the
business day immediately preceding such record date. Such
adjustment shall be made whenever any such distribution is made and
shall become effective at the close of business on such record
date. The term Market Price means (x) the average closing price of
a share of Common Stock for the ten consecutive Trading Days
immediately preceding, but not including, the date of as of which
the Market Price is to be determined as reported on the principal
national securities exchange on which the shares of Common Stock
are listed or admitted to trading or (y) if not listed or admitted
to trading on any national securities exchange, the average of the
closing bid and asked prices during such ten Trading Day period in
the over-the-counter market as reported by the NASD Automated
Quotation System (Nasdaq) National Market or any comparable
system or (z) in all other cases, as determined in good faith by
the Board of Directors of the Company, whose determination shall be
conclusive absent manifest error; and the term Ordinary Cash
Dividends means quarterly cash dividends, not to exceed (in the
aggregate in any calendar year) 5% of the value of all Common Stock
outstanding (valued at the Market Price thereof at the close of
business on the date of any such declaration), and not to exceed,
in any quarter, the greater of (x) the net income of the Company
for the quarter last ended and (y) the cumulative increase in
retained earnings of the Company from the Issue Date through the
end of such quarter. (C) Reorganization, Reclassification, Consolidation, Merger
or Sale. If any capital reorganization of the Company, or any
reclassification of the Common Stock, or any consolidation or
merger of the Company with or into any other Person, or any sale,
lease or other transfer of all or substantially all of the assets
of the Company to any other Person, shall be effected in such a way
that the holders of the Common Stock shall be entitled to receive
(either directly or upon subsequent liquidation) stock, securities,
cash or other property (whether such stock, securities, cash or
other property are issued or distributed by the Company or any
other person) with respect to or in exchange for the Common Stock
(each such transaction, an Organic Change), then, as a condition
to consummation of such Organic Change, lawful, enforceable and
adequate provision shall be made whereby the Holders of the 6%
Class A Convertible Preferred Stock shall thereafter have the right
to acquire and receive upon conversion, in lieu of or addition to
(as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon conversion, such 10




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shares of stock, securities, cash or other property issuable
or payable in the Organic Change with respect to or in exchange for
such number of outstanding shares of Common Stock as would have
been received had conversion occurred immediately before such
Organic Change, subject to adjustments for events subsequent to the
effective date of such Organic Change as nearly equivalent as may
be practicable to the adjustments provided for in this paragraph
(k). The Company shall not effect any Organic Change unless prior
to the consummation thereof, the successor entity (if different
from the Company) resulting from such consolidation or merger or
the entity purchasing or leasing such assets assumes by written
instrument delivered to the Holders of 6% Class A Convertible
Preferred Stock the obligation to deliver to each such holder such shares of stock, securities, cash or other property as, in
accordance with the foregoing provisions, such holder may be
entitled to acquire. In any such event, effective provisions shall
be made in the certificate or articles of incorporation of the
resulting or surviving person, or in any contract of sale, merger,
conveyance, lease, transfer or otherwise, so that the provisions
set forth herein for the protection of the rights of the Holders of
6% Class A Convertible Preferred Stock shall thereafter continue to
be applicable. The foregoing provisions of this paragraph (v)(C)
shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, leases or other
transfers. If this paragraph (v)(C) applies to any reorganization,
reclassification, consolidation, merger, sale, lease or other
transfer, then neither paragraph (v)(A) nor paragraph (v)(B) shall
apply to such transaction. (D) Below Market Equity Issuances. (1) If at any time or from time to time the Company issues or
sells, or is deemed to issue or sell any shares of Common Stock,
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 (other than (1) an issuance
of Common Stock as a dividend or in a split of or subdivision in
respect of which an adjustment provided for in paragraph (v)(A)
above applies, and (2) as set forth in clause (3) below) for
consideration per share of Common Stock less than (x) in the case of
a public offering, the closing price on the principal exchange on
which the Common Stock is quoted on the day before the pricing of
such offering and (y) in all other cases, the Market Price per share
of Common Stock as of the date immediately prior to the first public
announcement of such transaction (or consummation of such
transaction if the Common Stock is not then publicly traded), or the
record date for determination of shareholders entitled to receive
(or purchase) such rights, options, warrants, or convertible
securities (or options to purchase convertible securities) in the
case of a distribution or issuance thereof in respect of the
Companys capital stock, then, and in each such case, the Conversion
Price shall be adjusted by multiplying the Conversion Price
immediately prior to such issuance or sale by a fraction (not
greater than one), 11




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##### 



(x) the numerator of which equals the sum of (A) the
product
of (1) the number of shares of Common Stock of the
Company outstanding immediately before such public
announcement date, consummation date or record date as the
case may be (and assuming, with respect to rights, options,
warrants or convertible or exchangeable securities (or
options or rights to purchase convertible or exchangeable
securities) that all in-the-money rights, options, warrants
or convertible or exchangeable securities (or options or
rights to purchase convertible or exchangeable securities)
had been fully exercised or converted into Common Stock, as
the case may be), and (2) the Market Price per share of
Common Stock as of immediately before such public
announcement date, consummation date or record date, as the
case may be, and (B) the aggregate consideration received by
the Company for the Common Stock to be so issued or sold or
to be purchased or subscribed for, whether directly or
issuable upon exercise of such rights, options or warrants or
upon conversion or exercise of such convertible or
exchangeable securities; and (y) the denominator of which equals the product of (1)
the number of shares of Common Stock of the Company
outstanding after giving effect to such sale or issuance (and
assuming with respect to rights, options, warrants or
convertible or exchangeable securities (or options or rights
to purchase convertible or exchangeable securities) that all
in-the-money rights, options, warrants or convertible or
exchangeable securities (or options or rights to purchase
convertible or exchangeable securities) had been fully
exercised or converted into Common Stock, as the case may be)
and (2) the Market Price per share of Common Stock as of
immediately prior to such public announcement date,
consummation date or record date, as the case may be. For
the purposes of such adjustments, the Common Stock which the
holders of any such rights, options, warrants or convertible
or exchangeable securities (or options or rights to purchase
convertible or exchangeable securities) shall be entitled to
subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such public announcement date,
consummation date or record date, as the case may be.
Notwithstanding anything herein to the contrary, no
adjustment to the Conversion Price shall be made under this
paragraph (v)(D) to the extent that the holders participate
in any such distribution by way of an adjustment pursuant to
paragraphs (v)(A), (B) or (C). (2) For the purposes of any adjustment to the Conversion Price
pursuant to paragraph (v)(D)(1), the following provisions shall be
applicable: (x) In the case of the issuance of Common Stock or
rights, options, warrants or convertible or exchangeable
securities (or options or rights to purchase convertible or
exchangeable securities) containing the right to subscribe
for or purchase Common Stock for cash in a public offering or
private placement, the consideration shall be deemed to be
the 12




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amount of cash paid therefor before deducting therefrom
any discounts, commissions or placement fees payable by the
Company to any underwriter or placement agent in connection
with the issuance and sale thereof. (y) In the case of the issuance of Common Stock or
rights, options, warrants or convertible or exchangeable
securities (or options or rights to purchase convertible or
exchangeable securities) containing the right to subscribe
for or purchase Common Stock for a consideration consisting,
in whole or part, of property other than cash or its
equivalent (including in connection with the acquisition of
companies and businesses), the consideration received by the
Company shall be the fair market value of said property (as
determined in good faith by the Board of Directors, whose
determination shall be conclusive for all purposes). (z) 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, the following
provisions shall be applicable: (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, if any, received by the
Company 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 of 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 Company 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 Company upon the conversion or
exchange of such securities or the exercise of any
related options or rights. 13




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(3) Upon any change in the number of shares of
Common Stock deliverable upon exercise of any such
options or
rights or conversions of or exchanges for such
securities, the Conversion Price shall forthwith be
readjusted to such number 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. (4) No further adjustment of the Conversion Price
adjusted upon the issuance of any such options, rights,
convertible securities or exchangeable securities shall
be made as a result of the actual issuance of Common
Stock on the exercise of any such rights or options or
any conversion or exchange of any such securities. (5) Upon the expiration of any rights, options,
warrants or conversion privileges (the granting of
which resulted in an adjustment to the Conversion
Price), if such shall not have been exercised after the
date hereof, the Conversion Price, to the extent
conversion has not been occurred, shall, upon such
expiration, be readjusted and shall thereafter be such
as they would have been had they been originally
adjusted (or had the original adjustment not been
required, as the case may be) on the basis of (i) the
fact that the only shares of Common Stock so issued
were the shares of Common Stock, if any, actually
issued or sold upon the exercise of such rights,
options, warrants or conversion rights and (ii) such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon
such exercise plus the consideration, if any, actually
received by the Company (including for purposes hereof,
any underwriting discounts or selling commissions paid
by the Company) for the issuance, sale or grant of all
such rights, options, warrants or conversion rights
whether or not exercised. (3) No Adjustments in Certain Cases. The adjustments in
the Conversion Price under paragraph (1) of this paragraph (v)(D)
shall not apply to (A) the issuance of options awarded to employees,
officers or directors or other qualified plan participants of the
Company pursuant to an option plan or another option grant approved
by the Board of Directors (Management Options), to purchase shares
of Common Stock in an aggregate amount not to exceed 10% of the
Common Stock, on a fully diluted basis (subject to adjustment for
stock splits, stock subdivisions, stock combinations and similar
events) (the Common Stock Option Pool), (B) the issuance of Common
Stock upon the exercise of Management Options whose issuance was
exempt from paragraph (v)(D) pursuant to the immediately preceding
sub-clause (3)(A), up to an amount not to exceed the Common Stock
Option Pool, (C) the issuance of Common Stock or other 14




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securities of the Company upon conversion, or (D) to any
issuance of additional shares of 6% Series A Convertible Preferred
Stock as a dividend pursuant to paragraph (c) hereof. (E) Other Dilutive Events. The Board of Directors
shall make such additional adjustments in application of such
provisions as it deems necessary or appropriate in its sole
discretion, to effectuate the essential intent and principles
established in paragraphs (v)(A), (B), (C) and (D) above, necessary
to preserve the conversion rights exercisable by the holders of 6%
Class A Convertible Preferred Stock, and to avoid or diminish any
income tax to any holders of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or warrants
to purchase or subscribe for stock or from any event treated as
such (i) for federal income tax purposes or (ii) for any other
reasons related to taxes. (F) No De Minimis Adjustment. No adjustment in the
Conversion Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1.0%) in
the number of shares of Common Stock that 6% Class A Convertible
Preferred Stock can be converted to upon conversion;
provided, however, that any adjustments that by
reason of this paragraph (v)(F) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest cent and
to the nearest one-hundredth of a share, as the case may be. (G) Common Stock; Other Securities. For the purpose of
this paragraph (v), the term shares of Common Stock shall mean
(i) the shares of stock designated as the Common Stock of the
Company at the Issue Date, or (ii) any other class of stock
resulting from successive changes or reclassification of such shares consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value. If at any
time, as a result of an adjustment made pursuant to paragraphs
(v)(A) or (C), the holders of 6% Class A Convertible Preferred
Stock shall become entitled to convert 6% Class A Convertible
Preferred Stock into shares of the Company other than shares of Common Stock, thereafter the number of such other shares into which
6% Class A Convertible Preferred Stock can be converted upon
conversion and the applicable Conversion Price of such shares shall
be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect
to such shares contained in paragraphs (v)(A) through (F),
inclusive, above, and the provisions contained herein with respect
to such shares, shall apply on like terms to any such other shares. (H) No Dilution or Impairment. The Company will not,
by amendment of its certificate of incorporation or through any
consolidation, merger, reorganization, transfer of assets,
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 herein or the 6% Class A Convertible Preferred Stock,
but will
at all times in good faith assist in the carrying out of all
such terms and in the taking 15




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##### 



of all such action as may be necessary
or appropriate in order to protect the rights of the Holders of 6%
Class A Convertible Preferred Stock against dilution or other
impairment. (I) Conversion Certificate. Whenever the Conversion
Price is adjusted as herein provided: (1) the Company shall compute the adjusted Conversion Price
in accordance with paragraph (v) and shall prepare a certificate
signed by the Chief Financial Officer of the Company setting
forth the adjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment is based, and such
certificate shall promptly be filed with the Conversion Agent;
and (2) upon each such adjustment, a notice stating that the
Conversion Price has been adjusted and setting forth the
adjusted Conversion Price shall be required, and as soon as
practicable after it is required, such notice shall be provided
by the Company to all Holders. The Conversion Agent shall not be under any duty or responsibility with
respect to any such certificate or the information and calculations contained
therein, except to exhibit the same to any Holder of 6% Class A Convertible
Preferred Stock desiring inspection thereof at its office during normal
business hours. (l) Restrictions on Transfer. Each share of 6% Class A Convertible Preferred Stock shall contain a
legend substantially to the following effect until the date that is two years
after the later of the Issue Date or the last date on which the Company or any
Affiliate of the Company was the owner thereof, unless the Company determines
otherwise: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE SECURITIES ACT) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, AND IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES. (m) Book Entry Delivery and Form. The 6% Class A Convertible Preferred Stock sold may at the discretion of
the Company be issued in the form of a Global Share Certificate. If so issued,
the Global Share Certificate will be deposited with, or on behalf of, the
Depositary and registered in the name of the Depositary or its nominee. Except
as set forth below, the Global Share Certificate may be transferred, in whole
and not in part, only to the Depositary or other nominee of the Depositary.
Holders may hold
their beneficial interests in the Global Share Certificate directly
through the Depositary if they
have an account with the Depositary or
indirectly through organizations which have accounts with the Depositary. 16




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##### 



The 6% Class A Convertible Preferred Stock represented by the Global Share
Certificate is exchangeable for certificated 6% Class A Convertible Preferred
Stock in definitive form of like tenor as such 6% Class A Convertible Preferred
Stock if (i) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for the Global Share Certificate and a successor is
not promptly appointed or if at any time the Depositary ceases to be a clearing
agency registered under the Exchange Act or (ii) the Company in its discretion
at any time determines not to have all of the 6% Class A Convertible Preferred
Stock represented by the Global Share Certificate. Any 6% Class A Convertible
Preferred Stock that is exchangeable pursuant to the preceding sentence is
exchangeable for certificated 6% Class A Convertible Preferred Stock issuable
in authorized denominations and registered in such names as the Depositary
shall direct. Subject to the foregoing, the Global Share Certificate is not
exchangeable, except for a Global Share Certificate of the same aggregate
denomination to be registered in the name of the Depositary or its nominee. (n) Amendments Without Consent of Holders. Without the Consent of any Holders, the Company, when authorized by Board
Resolution may amend this Certificate of Designation to cure any ambiguity,
correct or supplement any provision herein which may be inconsistent with any
ether provision herein, make any other provisions with respect to matters or
questions arising under this Certificate of Designation that are not
inconsistent with the provisions of this Certificate of Designation;
provided that such action pursuant to this paragraph (n) shall not
adversely affect the legal rights of the Holders. 17




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IN WITNESS WHEREOF, said XO Communications, Inc. has caused this
Certificate to be signed by William Garrahan, its Senior Vice President and
Acting Chief Financial Officer, this 4th day of August, 2004. XO COMMUNICATIONS, INC.By                /s/ William GarrahanName:
    William Garrahan Title:   Senior Vice President and Acting Chief Financial Officer 18