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Item 9A. Controls and Procedures

2024-02-29 compared with 2023-02-24 · 57 added, 43 removed, 176 unchanged (36% of the section changed)

3 unchanged sentences

As required by SEC Rule 13a-15(b), an evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under Exchange Act) as of the end of the period covered by this report.

Based upon that evaluation, our management, including our principal executive officer and our principal financial officer, concluded that the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level.

Based upon that evaluation, our management, including our principal executive officer and our principal financial officer, concluded that, with the exception of matters discussed below, the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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We have implemented a system of internal control that was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.

On May 1, 2023 we completed the acquisition of Sprint Communications and Subsidiaries (the “Sprint Wireline”).

In accordance with the SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, management excluded the business that we acquired in the Sprint Wireline acquisition from its assessment of the effectiveness of internal control over financial reporting as of December 31, 2023.

The business that we acquired in the Sprint Wireline acquisition represented approximately 60% of our total assets as of December 31, 2023 and 30% of our consolidated service revenue for the year ended December 31, 2023.

As required by Rule 13a-15(d) of the Exchange Act, we have assessed our internal control system in relation to criteria for effective internal control over financial reporting described in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission (2013 Framework).

Based upon these criteria, we believe that, as of December 31, 2022, our system of internal control over financial reporting was effective.

Aside from the aforementioned Sprint exclusion, based upon these criteria, we believe that, as of December 31, 2023, our system of internal control over financial reporting was effective.

The independent registered public accounting firm, Ernst & Young LLP, has audited our 2023 financial statements.

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In our opinion, Cogent Communications Holdings, Inc., and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Sprint Communications and Subsidiaries, acquired on May 1, 2023, which is included in the 2023 consolidated financial statements of the Company and constituted 60% of total assets as of December 31, 2023 and 30% of revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Sprint Communications and Subsidiaries.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Cogent Communications Holdings, Inc.

and subsidiaries as of December 31, 2022 and 2021, the related consolidated statements of comprehensive (loss) income, shareholders’ deficit and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”) and our report dated February 24, 2023 expressed an unqualified opinion thereon.

and subsidiaries as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), shareholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”) and our report dated February 29, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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February 29, 2024

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OTHER INFORMATION

During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “ Rule 10b5-1 trading arrangement” or “ non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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(as of May 4, 2022) (previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed on May 4, 2022 and incorporated herein by reference).

Indenture related to the 4.375% Senior Notes due 2024, dated as of June 25, 2019, among Cogent Communications Group, Inc., the guarantors named therein, Wilmington Trust, National Association, as trustee, Deutsche Bank AG, London Branch, as paying agent, and Deutsche Bank Luxembourg S.A., as authentication agent and registrar (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on June 25, 2019, and incorporated herein by reference).

Form of 4.375% Senior Notes due 2024 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on Form 8-K, filed on June 25, 2019, and incorporated herein by reference).

First Supplemental Indenture to the Base Indenture, dated as of June 10, 2020, among Cogent Communications Group, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee (previously filed as Exhibit 4.4 to our Current Report on Form 8-K, filed on June 10, 2020, and incorporated herein by reference).

Indenture related to the 4.375% Senior Notes due 2024, dated as of June 3, 2020, among Cogent Communications Finance, Inc., Wilmington Trust, National Association, as trustee, Deutsche Bank AG, London Branch, as paying agent, and Deutsche Bank Trust Company Americas, as authentication agent and registrar (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on June 9, 2020, and incorporated herein by reference).

Form of 4.375% Senior Notes due 2024 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on Form 8-K, filed on June 9, 2020, and incorporated herein by reference).

First Supplemental Indenture to the Temporary Indenture, dated as of June 10, 2020, between Cogent Communications Group, Inc.

and Wilmington Trust, National Association, as trustee (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on June 10, 2020, and incorporated herein by reference).

Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (previously filed as Exhibit 4.10 to our Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 28, 2020, and incorporated herein by reference).

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Indenture related to the 3.500% Senior Secured Notes due 2026, dated as of May 7, 2021, among Cogent Communications Group, Inc., the guarantors named therein, and Wilmington Trust, National Association, as trustee and collateral agent (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on May 11, 2021 and incorporated herein by reference).

Form of 3.500% Senior Secured Notes due 2026 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on From 8-K, filed on May 11, 2021 and incorporated herein by reference).

Form of 3.500% Senior Secured Notes due 2026 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on Form 8-K, filed on May 11, 2021 and incorporated herein by reference).

Indenture related to the 7.000% Senior Notes due 2027, dated as of June 22, 2022, among Cogent Communications Group, Inc., the guarantors named therein, and Wilmington Trust, National Association, as trustee and collateral agent (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on June 22, 2022 and incorporated herein by reference).

Form of 7.00% Senior Secured Notes due 2027 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on From 8-K, filed on June 22, 2022 and incorporated herein by reference).

Form of 7.00% Senior Secured Notes due 2027 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on Form 8-K, filed on June 22, 2022 and incorporated herein by reference).

Dark Fiber IRU Agreement, dated April 14, 2000, between WilTel Communications, Inc.

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333-71684, filed on October 16, 2001, and incorporated herein by reference).

O’Neill Employment Agreement with Cogent Communications Group, Inc., dated as of September 25, 2003 (previously filed as Exhibit 10.29 to our Annual Report on Form 10-K, filed on February 27, 2012, and incorporated herein by reference).

Brad Kummer Employment Agreement with Cogent Communications Group, Inc., dated January 11, 2000, (previously filed as Exhibit 10.23 to our Registration Statement on Form S-1, Commission File No.

333-122821, filed on February 14, 2005, and incorporated herein by reference).

David Schaeffer Amendment No.

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5 to Employment Agreement of Dave Schaeffer, dated April 7, 2010 (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on April 7, 2010, and incorporated herein by reference).

Cogent Communications Holdings, Inc.

2004 Incentive Award Plan (as amended through April 17, 2014) (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed April 18, 2014, and incorporated herein by reference).

Assignment and Assumption Agreement, dated as of May 15, 2014, by and between Cogent Communications Group, Inc.

and Cogent Communications Holdings, Inc.

assuming the obligations of the 2004 Incentive Award Plan (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on May 15, 2014, and incorporated herein by reference).

Amendment No.

6 to Employment Agreement of Dave Schaeffer, dated August 6, 2014 (previously filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q, filed on August 7, 2014, and incorporated herein by reference).

Lease Agreement, dated April 16, 2015, between Sodium LLC and Cogent Communications, Inc.

(previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on April 17, 2015, and incorporated herein by reference).

First Amendment to Lease Agreement, dated February 28, 2020, between Sodium LLC and Cogent Communications, Inc.

(previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on March 2, 2020, and incorporated herein by reference).

Restricted Stock Award, dated as of May 3, 2017, between the Company and David Schaeffer (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on May 3, 2017, and incorporated herein by reference).

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Form of Restricted Stock Award, dated as of May 3, 2017, between the Company and the Vice President named executive officers (previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on May 3, 2017, and incorporated herein by reference).

Amendment No.

7 to Employment Agreement of David Schaeffer, dated November 17, 2017 (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on November 20, 2017, and incorporated herein by reference).

Amended and Restated Cogent Communications Holdings, Inc.

2017 Incentive Award Plan (previously filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 15, 2019, and incorporated herein by reference).

First Amendment to Cogent Communications Holdings, Inc.

2018 Incentive Award Plan (previously filed as Appendix B of the Company’s Definitive Proxy Statement on Schedule 14A filed March 15, 2019, and incorporated herein by reference).

Amendment No.

8 to Employment Agreement of David Schaeffer, dated February 14, 2020 (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on February 19, 2020, and incorporated herein by reference).

Amendment No.

9 to Employment Agreement of David Schaeffer, dated as of January 3, 2024 (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on January 5, 2024, and incorporated herein by reference).

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Restricted Stock Award, dated as of February 14, 2020, between the Company and David Schaeffer (previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on February 19, 2020, and incorporated herein by reference).

Employment Letter between the Company and Sean Wallace, effective April 22, 2020 (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on May 11, 2020, and incorporated herein by reference).

Restricted Stock Award, dated May 11, 2020, between the Company and Sean Wallace (previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on May 11, 2020, and incorporated herein by reference).

Severance Agreement, dated May 11, 2020, between the Company and Sean Wallace (previously filed as Exhibit 10.3 to our Current Report on Form 8-K, filed on May 11, 2020, and incorporated herein by reference).

Restricted Stock Award, dated as of February 24, 2021, between the Company and David Schaeffer (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on February 26, 2021, and incorporated herein by reference).

John Chang Severance Agreement with Cogent Communications, Inc., dated December 18, 2012 (previously filed as Exhibit 10.25 to our Annual Report on Form 10-K filed on February 25, 2022, and incorporated herein by reference).

Restricted Stock Award, dated as of January 3, 2022, between the Company and David Schaeffer (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on January 5, 2022, and incorporated herein by reference).

Restricted Stock Award, dated as of January 3, 2023, between the Company and David Schaeffer (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on January 6, 2023, and incorporated herein by reference).

Form of Restricted Stock Award between the Company and David Schaeffer (previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on January 5, 2024, and incorporated herein by reference).

Brad Kummer Employment Agreement with Cogent Communications Group, Inc., dated January 11, 2000, (previously filed as Exhibit 10.23 to our Registration Statement on Form S-1, Commission File No.

333-122821, filed on February 14, 2005, and incorporated herein by reference).

“Brad” Kummer Severance Agreement with Cogent Communications, Inc., dated September 25, 2003 (previously filed as Exhibit 10.26 to our Annual Report on Form 10-K filed on February 25, 2022, and incorporated herein by reference).

Henry Kilmer Severance Agreement with Cogent Communications, Inc., dated March 13, 2012 (filed herewith).

Weed Employment Agreements, dated September 25, 2003 through October 26, 2006 (filed as Exhibit 10.28 to our Annual Report on Form 10-K filed on March 14, 2007, and incorporated herein by reference).

Henry Kilmer Severance Agreement with Cogent Communications, Inc., dated March 13, 2012 (previously filed as Exhibit 10.27 to our Annual Report on Form 10-K filed on February 24, 2023, and incorporated herein by reference).

Form of Restricted Stock Award between the Company and the Vice President named executive officers (Retention) (filed herewith).

Cogent Communications Holdings, Inc.

2004 Incentive Award Plan (as amended through April 17, 2014) (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed April 18, 2014, and incorporated herein by reference).

Assignment and Assumption Agreement, dated as of May 15, 2014, by and between Cogent Communications Group, Inc.

and Cogent Communications Holdings, Inc.

assuming the obligations of the 2004 Incentive Award Plan (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on May 15, 2014, and incorporated herein by reference).

Amended and Restated Cogent Communications Holdings, Inc.

2017 Incentive Award Plan (previously filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 15, 2019, and incorporated herein by reference).

First Amendment to Cogent Communications Holdings, Inc.

2018 Incentive Award Plan (previously filed as Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed March 15, 2019, and incorporated herein by reference).

Amended and Restated Cogent Communications Holdings, Inc.

2017 Incentive Award Plan (previously filed as Annex A to our Definitive Proxy Statement on Schedule 14A, filed March 15, 2023, and incorporated herein by reference).

Lease Agreement, dated April 16, 2015, between Sodium LLC and Cogent Communications, Inc.

(previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on April 17, 2015, and incorporated herein by reference).

First Amendment to Lease Agreement, dated February 28, 2020, between Sodium LLC and Cogent Communications, Inc.

(previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on March 2, 2020, and incorporated herein by reference).

Lease Agreement (office space), dated January 6, 2023, between Thorium LLC and Cogent Communications, Inc.

2 unchanged sentences

for technical space at 196 Van Buren Street, Herndon, VA (previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on January 11, 2023 and incorporated herein by reference).

First Amendment to Lease Agreement, dated February 20, 2023, between Germanium LLC and Cogent Communications, Inc., for early access to technical space at 196 Van Buren Street, Herndon, VA.

(previously filed as Exhibit 10.6 to our Quarterly Report on Form 10-Q, filed on August 9, 2023, and incorporated herein by reference)

Second Amendment to Lease Agreement, dated July 25, 2023, between Germanium LLC and Cogent Communications, Inc., for technical space at 196 Van Buren Street, Herndon, VA (filed as Exhibit 10.1 to our periodic report on Form 8-K dated July 27, 2023 and incorporated herein by reference).

Guaranty, dated as of September 6, 2022, by and between Cogent Communications Holdings, Inc.

and Sprint LLC (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on September 7, 2022 and incorporated herein by reference).

Restricted Stock Award, dated as of May 4, 2022, between the Company and Thaddeus G.

Weed (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on May 5, 2022 and incorporated herein by reference).

Transition Services Agreement, dated as of May 1, 2023, by and between Cogent Infrastructure, Inc.

and Sprint LLC (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on May 1, 2023, and incorporated herein by reference).

IP Transit Agreement, dated as of May 1, 2023, by and between Cogent Communications, Inc.

and T-Mobile USA, Inc.

(previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on May 1, 2023, and incorporated herein by reference).

Customer Subscriber Agreement, dated as of May 1, 2023, by and between Cogent Infrastructure, Inc.

and T-Mobile USA, Inc.

(previously filed as Exhibit 10.3 to our Current Report on Form 8-K, filed on May 1, 2023, and incorporated herein by reference).

Subsidiaries (filed herewith)

1 unchanged sentence

Certification of Chief Executive Officer (filed herewith)

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Certification of Chief Financial Officer (filed herewith)

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Certification of Chief Financial Officer (furnished herewith)

Policy for Recovery of Erroneously Awarded Compensation (filed herewith)

Policy Against Excise Tax Gross-ups on “Golden Parachute” Payments, with effect from April 7, 2010 (previously filed as Exhibit 99.1 to our Current Report on Form 8-K, filed on April 7, 2010, and incorporated herein by reference).

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The following materials from the Annual Report on Form 10-K of Cogent Communications Group, Inc.

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Portions have been omitted pursuant to this request where indicated by an asterisk.

Indicates a management contract or compensatory plan or arrangement in which directors or executive officers are eligible to participate.

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February 29, 2024

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures