XO Communications 2010 Annual Report Download - page 70

XO Holdings, Inc.
Notes to Consolidated Financial Statements
10. REDEEMABLE PREFERRED STOCK − (continued)
Company, the redemption of such shares held by affiliates shall require the approval of a special committee of
the Board of Directors comprised of disinterested directors in respect of such affiliates.
At any time after the (a) Restricted Period and (b) the Extended Period, and to the extent that an excess
ownership event, as defined in the Certificate of Designation, has not occurred, each share of Class B
convertible preferred stock may be converted on any date, at the option of the holder thereof, based upon a
conversion price (initially $1.50) as of such date. The holders of Class B convertible preferred stock also have
anti-dilution protection in the event that the Company issues shares of common stock at a price below the
then prevailing market price of the Company’s common stock.
Each issued and outstanding share of Class B convertible preferred stock will be entitled to the number
of votes equal to the number of shares of common stock into which each such share of Class B convertible
preferred stock is convertible (as adjusted from time to time) 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, the holders of shares of Class B convertible preferred stock will vote as a single
class together with the holders of common stock and all other shares of the Company which are granted rights
to vote.
As of December 31, 2010, the Class B convertible preferred stock was convertible into
438,244,214 shares of common stock with a liquidation and redemption value of $657.4 million, consisting of
the face value and accreted dividends.
Terms of Class C Perpetual Preferred Stock
The Class C perpetual preferred stock, with respect to rights to participate in distributions or payments in
the event of any liquidation, dissolution or winding up of the Company, will rank on a parity with the Class B
convertible preferred stock and senior to the common stock, the Class A preferred stock and each other class
of the Company’s capital stock outstanding or thereafter established by the Company the terms of which do
not expressly provide that it ranks senior to, or on a parity with, the Class C perpetual preferred stock.
Dividends on the Class C perpetual preferred stock will accrete on a quarterly basis at a rate of 2.375% of the
liquidation preference, which is initially $1,000 per share, (the ‘‘Dividend Payment’’), thus increasing the
liquidation preference of the shares, unless paid in cash at the option of the Board of Directors of the
Company, otherwise the liquidation preference will be adjusted and increased by an amount equal to the
Dividend Payment per share that is not paid in cash to the holders on such date.
The Company will not be required to redeem any outstanding shares of the Class C perpetual preferred
stock, provided that any holder may, upon or any time within 120 days following a change of control (as
defined in the Certificate of Designation), require that the Company redeem in cash all, but not less than all,
of the outstanding shares of Class C perpetual preferred stock held by such holder at a redemption price equal
to 100% of the liquidation preference per share as of the redemption date.
The Class C perpetual preferred stock is redeemable, at any time, 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. To the extent shares to be so redeemed are held by affiliates of the Company, the redemption
of such shares held by affiliates shall require the approval of a special committee of the Board of Directors
comprised of disinterested directors in respect of such affiliates.
Each issued and outstanding share of Class C perpetual preferred stock will be entitled to the number of
votes equal to the quotient obtained by dividing the liquidation preference by the conversion price for the
Class B convertible preferred stock, each as in effect on such date (as adjusted from time to time and without
regard to whether any shares of the Class B convertible preferred stock remain outstanding), 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 Class C perpetual
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