AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
HORIZON PCS, INC.
The following Amended and Restated Certificate of Incorporation (i) amends
and restates the provisions of the Certificate of Incorporation of HORIZON PCS,
INC.) (the "Corporation" or the "Company") originally filed with the Secretary
of State of Delaware on April 26, 2000, as amended to date; (ii) supersedes the
original Certificate of Incorporation; and (iii) has been duly proposed by the
Board of Directors of the Corporation and duly adopted by the stockholders of
the Corporation pursuant to Sections 228, 242 and 245 of the Delaware General
Corporation Law.
ARTICLE 1: NAME
The name of the Corporation is HORIZON PCS, INC.
ARTICLE 2: REGISTERED AGENT AND OFFICE
The address of the Corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of the Corporation's registered agent at such
address is The Corporation Trust Company.
ARTICLE 3: PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law.
ARTICLE 4: CAPITALIZATION
A. AUTHORIZED SHARES
The aggregate number of shares of all classes which the corporation has
authority to issue is 560,000,000, of which 300,000,000 shares shall be
designated as Class A Common Stock, $.0001 par value (hereinafter referred to as
"Class A Common Stock"), 75,000,000 shares shall be designated as Class B Common
Stock, $.0001 par value (hereinafter referred to as "Class B Common Stock"), and
185,000,000 shares, $.0001 par value, shall be designated as "Preferred Stock".
The Class A Common Stock and Class B Common Stock are referred to hereinafter,
collectively, as the "Common Stock".
The designations and the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the shares of each class of stock are as follows:
<PAGE>
B. COMMON STOCK
a. Powers and Rights of Holders of Common Stock
1. Except as stated in paragraphs 3, 4, and 5 of this Subpart B of
Article 4, the Class A Common Stock and Class B Common Stock shall be identical
in all respects and shall have equal powers, preferences, rights and privileges.
2. Except as may be otherwise required by law, the holders of Class A
Common Stock, Class B Common Stock and, if and to the extent authorized in
accordance with the provisions of Article 4C hereof, Preferred Stock issued and
outstanding shall have and possess the exclusive voting rights and powers,
whether at a meeting of stockholders or in connection with any action taken by
written consent.
3. Each holder of Class A Common Stock issued and outstanding shall be
entitled to one (1) vote for each share of Class A Common Stock registered in
such holder's name on the books of the Corporation, including the election of
directors, and each holder of Class B Common Stock issued and outstanding shall
be entitled to ten (10) votes for each share of Class B Common Stock registered
in such holder's name on the books of the Corporation, including the election of
directors. Except as may be otherwise required by law, the holders of the Class
A Common Stock and Class B Common Stock shall vote together as a single class.
4. Subject to the following sentence, direct transfer of issued and
outstanding shares of Class B Common Stock shall result in the automatic
conversion of the shares of Class B Common Stock being transferred to such
holder into a like number of shares of Class A Common Stock. For purposes of
this paragraph 4, the following transfers of issued and outstanding shares of
Class B Common Stock shall not result in such automatic conversion: (i) the
transfer of shares of Class B Common Stock to a registered holder of Class B
Common Stock; (ii) the pro-rata distribution by Horizon Telcom, Inc., a Delaware
corporation ("Horizon Telcom") to its shareholders of shares of the Class B
Common Stock; (iii) a bona fide gift of shares of Class B Common Stock to a
spouse or lineal descendent or to a trust for the benefit of a spouse and/or one
or more lineal descendents; or (iv) a transfer upon the death of a holder of
shares of Class B Common Stock pursuant to a last will and testament or pursuant
to the laws of intestate succession. No purported transfer of shares of Class B
Common Stock shall be effective unless and until the transferor has surrendered
to the Corporation, at its office or agency maintained for that purpose, the
certificates representing the shares of Class B Common Stock to be transferred,
which certificates shall be duly endorsed or accompanied by executed stock
powers, with the signatures appropriately guaranteed. All such certificates
shall be accompanied by written notice of the holder's intention to transfer the
shares, including a statement of the number of shares of Class B Common Stock to
be transferred and, if applicable, converted and the name or names and address
or addresses in which the certificate or certificates for shares of Class A
Common Stock or shares of Class B Common Stock, as the case may be, issuable
upon such transfer and conversion shall be issued and, if required, funds for
the payment of any applicable transfer taxes. The Corporation, as soon as
practicable thereafter, will deliver at said office to the transferee of the
transferred and, if applicable, converted shares of Class B Common Stock, or to
any nominee or designee of such transferee, a certificate or certificates for
the number of full shares of Class A Common Stock or shares of Class B Common
Stock, as the case may be, issuable upon such transfer and, if applicable,
2
<PAGE>
conversion and, in the event that the transferor is transferring less than the
aggregate number of shares represented by the certificates surrendered, a
certificate or certificates for the number of full shares of Class B Common
Stock not being transferred. Shares of Class B Common Stock shall be deemed to
have been converted as of the date of the surrender of the shares for transfer
and conversion as hereinbefore provided and the person or persons in whose name
Class A Common Stock is issuable upon such transfer and conversion shall be
treated for all purposes as the record holder or holders of such Class A Common
Stock on such date.
5. Each holder of Class B Common Stock issued and outstanding shall be
entitled, at such holder's option, to convert shares of Class B Common Stock
registered on the books of the Corporation in such holder's name into a like
number of shares of Class A Common Stock. The Corporation, as soon as
practicable after receipt of (i) written notice of conversion from a holder and
(ii) the certificate or certificate(s) representing the Class B Common Stock to
be converted, which certificate or certificate(s) shall be duly endorsed, will
deliver to such holder a certificate or certificates for the Class A Common
Stock. Pending delivery of certificates for shares of Class A Common Stock after
receipt of such notice and such certificate or certificate(s), certificate(s)
for shares of Class B Common Stock so converted shall be deemed to be
certificates for an equal number of shares of Class A Common Stock as of the
date of the surrender of the shares for transfer and conversion as hereinbefore
provided and the holder shall be treated for all purposes as the record holder
or holders of such Class A Common Stock on such date.
The Corporation shall at all times reserve for issuance a number of shares of
Class A Common Stock (which may include Class A Common Stock held by the
Corporation as treasury stock) which shall be sufficient for issuance upon
transfer and conversion of all of the then outstanding Class B Common Stock
pursuant to this Article 4 or otherwise.
6. Subject to any prior rights of any Preferred Stock issued by the
Corporation, dividends may be paid to the holders of the Class A Common Stock
and Class B Common Stock, as and when declared by the Board of Directors, out of
any funds of the Corporation legally available for the payment of such
dividends. If and when dividends on the Class A Common Stock and Class B Common
Stock are declared from time to time by the Board of Directors, whether payable
in cash, in property or in shares of stock of the Corporation, the holders of
the Class A Common Stock and Class B Common Stock shall be entitled to share
equally, on a per share basis, in such dividends. If shares of Class B Common
Stock are paid as dividends on Class B Common Stock and shares of Class A Common
Stock are paid as dividends on Class A Common Stock, in an equal amount per
share of Class B Common Stock and Class A Common Stock, such payment will be
deemed to be a like dividend or other distribution.
7. Upon liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after all amounts due and owing to the holders
of any Preferred Stock of the Corporation have been paid or the payment has been
fully provided for, the net assets of the Corporation shall be distributed to
the holders of the Class A Common Stock and Class B Common Stock, based on the
number of shares held by each such holder, without regard to class.
3
<PAGE>
8. If the Corporation shall in any manner split, subdivide, combine or
reclassify any outstanding shares of Class A Common Stock or Class B Common
Stock, the outstanding shares of the other class of Common Stock shall be
proportionately split, subdivided, combined or reclassified in the same manner
and on the same basis as the outstanding shares of the class of Common Stock
that have been split, subdivided, combined or reclassified.
C. PREFERRED STOCK
a. Designation of Amount
1. Of the authorized and unissued shares of Preferred Stock,
69,000,000 shares shall be designated the "Series A Preferred Stock" (the
"Series A Preferred Stock"), and 106,000,000 shares shall be designated the
"Series A-1 Preferred Stock" (the "Series A-1 Preferred Stock"). Subject to the
further provisions of this Article 4, Subpart C, the Board of Directors is
hereby authorized as it may determine to issue the remaining authorized and
unissued shares of Preferred Stock at any time and from time to time, in one or
more series, and to fix or alter the designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions, of such shares of Preferred Stock, including without limitation
of the generality of the foregoing, dividend rights, dividend rates, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), redemption price or prices and liquidation preferences of any
wholly unissued series of preferred shares and the number of shares constituting
any of such series and the designation thereof, or any of them; and to increase
or decrease the number of shares of that series, but not below the number of
shares of such series then outstanding.
b. Dividends.
1. Commencing on the Original Issuance Date, the holders of the then
outstanding shares of Series A Preferred Stock and Series A-1 Preferred Stock
will be entitled to receive, when, as and if declared by the Board of Directors
out of funds of the Company legally available therefor, cumulative dividends,
accruing on a daily basis from the Original Issuance Date through and including
the date on which such dividends are paid at the annual rate of 7.50%, as
adjusted pursuant to Article 4, Subpart C, Subsection k hereof (the "Applicable
Rate"), of (i) the Series A Liquidation Preference (as hereinafter defined) per
share of the Series A Preferred Stock, and (ii) the Series A-1 Liquidation
Preference (as hereinafter defined) per share on the Series A-1 Preferred Stock,
payable semi-annually in arrears on the first day of each of May and November
(the "Dividend Payment Date", commencing on May 1, 2001; provided that: (i) if
any such payment date is not a Business Day then such dividend shall be payable
on the next Business Day, and (ii) accumulated and unpaid dividends for any
prior semi-annual period may be paid at any time. Such dividends shall be deemed
to accrue on the Series A Preferred Stock and Series A-1 Preferred Stock from
the Original Issuance Date thereof and be cumulative whether or not declared and
whether or not there are profits, surplus or other funds of the Company legally
available for the payment of dividends. The term "Business Day" means any day
other than a Saturday, Sunday or day on which banking institutions in New York
are authorized or required to remain closed. The term "Original Issuance Date"
means, with respect to the Series A Preferred Stock and Series A-1 Preferred
Stock, the first date of issuance, and, with respect to the Additional
Securities (as hereinafter defined), the date upon which they are issued or, if
4
<PAGE>
not issued, the applicable dividend payment date on which the Additional
Securities were to have been issued. Notwithstanding any provision herein to the
contrary, if, prior to May 1, 2001 (i) the Series A Preferred Stock is converted
into Class A Common Stock, no dividends will be payable on the Series A
Preferred Stock; (ii) the Series A-1 Preferred Stock is redeemed pursuant to
Article 4, Subpart C, Subsection f.2.(i) below, no dividends will be payable on
the Series A-1 Preferred Stock.
2. Dividends on such Series A Preferred Stock and Series A-1 Preferred
Stock shall be paid through the issuance of additional shares of Series A
Preferred Stock (to holders of Series A Preferred Stock) and Series A-1
Preferred Stock (to holders of Series A-1 Preferred Stock) ("Additional
Securities"). The number of Additional Securities that are issued to the holders
of the Series A Preferred Stock and Series A-1 Preferred Stock under this
paragraph will be the number obtained by dividing (i) the total dollar amount of
cumulative dividends due and payable on the applicable dividend payment date by
(ii) the Series A Liquidation Preference (for holders of the Series A Preferred
Stock) per share of Series A Preferred Stock, or the Series A-1 Liquidation
Preference (for holders of the Series A-1 Preferred Stock) per share of Series
A-1 Preferred Stock, provided, that the Company shall not be required to issue
fractional shares of Series A Preferred Stock or Series A-1 Preferred Stock, but
in lieu thereof shall pay in cash the portion of any dividend payable in shares
of Series A Preferred Stock or Series A-1 Preferred Stock that would otherwise
require the issuance of a fractional share.
3. In addition to dividends received pursuant to Article 4, Subpart C,
Subsection b, paragraph 2 hereof, holders of Series A Preferred Stock and the
Series A-1 Preferred Stock shall receive, when declared by the Board of
Directors, out of funds legally available therefor, dividends equal to the
amount of dividends paid on each share of Common Stock, determined on an
"as-converted" basis.
4. If dividends are not paid in full, or declared in full and sums set
apart for the payment thereof, upon the shares of Series A Preferred Stock,
Series A-1 Preferred Stock and the shares of any other series of Preferred Stock
ranking on a parity as to dividends with the Series A Preferred Stock and Series
A-1 Preferred Stock ("Parity Stock"), if any, all dividends declared upon shares
of Series A Preferred Stock and Series A-1 Preferred Stock and upon all Parity
Stock shall be paid or declared pro rata so that in all cases the amount of
dividends paid or declared per share on the Series A Preferred Stock, Series A-1
Preferred Stock, and such Parity Stock shall bear to each other the same ratio
that unpaid accumulated dividends per share, including dividends accrued or in
arrears, if any, on the shares of Series A Preferred Stock, Series A-1 Preferred
Stock, and such other shares of Parity Stock, bear to each other. Unless and
until full cumulative dividends on the shares of Series A Preferred Stock and
Series A-1 Preferred Stock in respect of all past semi-annual dividend periods
have been paid, and the full amount of dividends on the shares of Series A
Preferred Stock and Series A-1 Preferred Stock in respect of the then current
semi-annual dividend period shall have been or are contemporaneously declared in
full and sums set aside for the payment thereof, (i) no dividends shall be paid
or declared or set aside for payment or other distribution upon the Common
Stock, or any other capital stock of the Company ranking junior to the Series A
Preferred Stock and Series A-1 Preferred Stock as to dividends (together with
the Common Stock, "Junior Stock"), other than in shares of, or warrants or
rights to acquire, Junior Stock; and (ii) no shares of Junior Stock or Parity
5
<PAGE>
Stock shall be redeemed, retired, purchased or otherwise acquired for any
consideration (or any payment made to or available for a sinking fund for the
redemption of any such shares) by the Company or any Subsidiary of the Company
(except by conversion into or exchange for shares of Junior Stock). For the
purposes hereof, a "Subsidiary" shall mean any corporation, association or other
business entity (i) at least 50% of the outstanding voting securities of which
are at the time owned or controlled by the Company; or (ii) with respect to
which the Company possesses, directly or indirectly, the power to direct or
cause the direction of the affairs or management of such person.
The terms "accrued dividends," "dividends accrued" and "dividends in
arrears," whenever used herein with reference to shares of Series A Preferred
Stock and Series A-1 Preferred Stock shall be deemed to mean an amount which
shall be equal to dividends thereon at the Applicable Rate per share for the
respective series from the date or dates on which such dividends commence to
accrue to the end of the then current semi-annual dividend period for such
Preferred Stock (or, in the case of redemption, to the date of redemption),
whether or not earned or declared and whether or not assets for the Company are
legally available therefor, and if full dividends are not declared or paid
(whether in cash or in Additional Securities), then such dividends shall
cumulate, with additional dividends thereon, compounded semi-annually, at the
Applicable Rate, for each semi-annual period during which such dividends remain
unpaid, less the amount of all such dividends paid, or declared in full and sums
set aside for the payment thereof, upon such shares of Preferred Stock.
5. The amount of any dividends per share of Series A Preferred Stock
and Series A-1 Preferred Stock for any full semi-annual period shall be computed
by multiplying the Applicable Rate for such semi-annual dividend period by the
Liquidation Preference per share and dividing the result by two. Dividends
payable on the shares of Series A Preferred Stock and Series A-1 Preferred Stock
for any period less than a full semi-annual dividend period shall be computed on
the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed for any period less than one month.
6. Holders of Series A Preferred Stock and Series A-1 Preferred Stock
shall also be entitled to receive a special dividend with respect to the portion
of the Series A Preferred Stock and Series A-1 Preferred Stock that is subject
to a Cash-Out, if a transaction which includes a Cash Out occurs within five
years of the Original Issuance Date for the Series A Preferred Stock and the
Series A-1 Preferred Stock. Such dividend shall be payable in Additional
Securities in an amount equal to the dividends that would have been payable to
holders of shares of Series A Preferred Stock and Series A-1 Preferred Stock
subject to the Cash-Out pursuant to Article 4, Subpart C, Subsection b,
paragraph 1 hereof as if such dividends were to be paid in Additional Securities
for the period beginning on the date of the Cash-Out and ending on the date that
is five years after the Original Issuance Date and shall be payable immediately
prior to the time holders of Common Stock must surrender their shares of Common
Stock for cash pursuant to a Cash Out.
6
<PAGE>
c. Liquidation Preference.
1. Series A Preferred Stock. In the event of a liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of Series A Preferred Stock then outstanding shall be entitled to
receive out of the available assets of the Company, whether such assets are
stated capital or surplus of any nature, an amount in cash on such date equal to
the greater of (i) $5.88 for each share of Series A Preferred Stock outstanding
(the "Series A Liquidation Preference") plus the amount of any accrued and
unpaid dividends as of such date, calculated pursuant to Article 4, Subpart C,
Subsection b hereinabove, or (ii) such amount per share of Series A Preferred
Stock, as would have been payable had each such share been converted into Common
Stock pursuant to Article 4, Subpart C, Section h immediately prior to such
liquidation, dissolution or winding up. Such payment shall be made before any
payment shall be made or any assets distributed to the holders of any class or
series of the Common Stock or any other class or series of the Company's capital
stock ranking junior as to liquidation rights to the Series A Preferred Stock.
Following payment to the holders of the Series A Preferred Stock of the Series A
Liquidation Preference and to Series A-1 Preferred Stock of the Series A-1
Liquidation Preference (as defined below), the remaining assets (if any) of the
Company available for distribution to stockholders of the Company shall be
distributed, subject to the rights of the holders of shares of any other series
of Preferred Stock ranking prior to the Common Stock as to distributions upon
liquidation, dissolution or winding up of the Company to the holders of the
Common Stock and any other shares of capital stock of the Company ranking on a
parity with the Common Stock as to distributions upon liquidation, dissolution
or winding up of the Company. If upon any such liquidation, dissolution or
winding up of the Company the assets available for payment of the Liquidation
Preference are insufficient to permit the payment to the holders of the Series A
Preferred Stock and Series A-1 Preferred Stock of the full preferential amounts
described in this Article 4, Subpart C, Subsection c, then all the remaining
available assets shall be distributed among the holders of the then outstanding
Series A Preferred Stock, Series A-1 Preferred Stock and any other then
outstanding Parity Stock pro rata according to the number of then outstanding
shares of stock held by each holder thereof.
2. Series A-1 Preferred Stock. In the event of a liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of Series A-1 Preferred Stock then outstanding shall be entitled to
receive out of the available assets of the Company, whether such assets are
stated capital or surplus of any nature, an amount in cash on such date equal to
the greater of (i) $5.07 for each share of Series A-1 Preferred Stock
outstanding (the "Series A-1 Liquidation Preference") plus the amount of any
accrued and unpaid dividends as of such date, calculated pursuant to Article 4,
Subpart C, Subsection b hereinabove, or (ii) such amount per share of Series A-1
Preferred Stock, as would have been payable had each such share been converted
into Common Stock pursuant to Article 4, Subpart C, Section h immediately prior
to such liquidation, dissolution or winding up. Such payment shall be made
before any payment shall be made or any assets distributed to the holders of any
class or series of the Common Stock or any other class or series of the
Company's capital stock ranking junior as to liquidation rights to the Series
A-1 Preferred Stock. Following payment to the holders of the Series A Preferred
Stock of the Series A Liquidation Preference and to Series A-1 Preferred Stock
of the Series A-1 Liquidation Preference, the remaining assets (if any) of the
Company available for distribution to stockholders of the Company shall be
distributed, subject to the rights of the holders of shares of any other series
of Preferred Stock ranking prior to the Common Stock as to distributions upon
liquidation, dissolution or winding up of the Company to the holders of the
Common Stock and any other shares of capital stock of the Company ranking on a
7
<PAGE>
parity with the Common Stock as to distributions upon liquidation, dissolution
or winding up of the Company. If upon any such liquidation, dissolution or
winding up of the Company the assets available for payment of the Liquidation
Preference are insufficient to permit the payment to the holders of the Series A
Preferred Stock and Series A-1 Preferred Stock of the full preferential amounts
described in this Article 4, Subpart C, Subsection c, then all the remaining
available assets shall be distributed among the holders of the then outstanding
Series A Preferred Stock, Series A-1 Preferred Stock and any other then
outstanding Parity Stock pro rata according to the number of then outstanding
shares of stock held by each holder thereof.
d. Mandatory Redemption. On September 26, 2011 (the "Redemption Date"), the
Company shall redeem for cash all shares of Series A Preferred Stock and Series
A-1 Preferred Stock that are then outstanding and any shares of Series A
Preferred Stock and Series A-1 Preferred Stock then issuable in respect of
accrued but unpaid dividends, in each case, at a redemption price per share
equal to the greater of (i) the sum of 100% of the Series A Liquidation
Preference (with respect to the Series A Preferred Stock) or the Series A-1
Liquidation Preference (with respect to the Series A-1 Preferred Stock), plus
the amount of any accrued and unpaid dividends as of such date (including an
amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date), or (ii)
an amount per share of Series A Preferred Stock or Series A-1 Preferred Stock,
as applicable, equal to the fair market value, as of the Redemption Date, of the
Common Stock into which such shares are convertible pursuant to Article 4,
Subpart C, Section h hereof, as determined by the Company's Board of Directors
in good faith ("Redemption Price"). Not more than sixty (60) nor less than
thirty (30) days prior to the Redemption Date, notice by first class mail,
postage prepaid, shall be given to each holder of record of the Series A
Preferred Stock and Series A-1 Preferred Stock, at such holder's address as it
shall appear upon the stock transfer books of the Company on such date. Each
such notice of redemption shall be irrevocable and shall specify the date that
is the Redemption Date, the Redemption Price, the identification of the shares
to be redeemed, the place or places of payment and that payment will be made
upon presentation and surrender of the certificate(s) evidencing the shares of
Series A Preferred Stock and Series A-1 Preferred Stock to be redeemed and that
dividends on the shares of the Series A Preferred Stock and Series A-1 Preferred
Stock cease to accrue on the Redemption Date. On or after the Redemption Date,
each holder of shares of Series A Preferred Stock and Series A-1 Preferred Stock
shall surrender the certificate evidencing such shares to the Company at the
place designated in such notice and shall thereupon be entitled to receive
payment of the Redemption Price in the manner set forth in the notice. If, on
the Redemption Date, funds in cash in an amount sufficient to pay the aggregate
Redemption Price for all outstanding shares of Series A Preferred Stock and
Series A-1 Preferred Stock shall be available therefor and shall have been
irrevocably set aside and deposited with a bank or trust company in trust for
purposes of payment of such Redemption Price, then, notwithstanding that the
certificates evidencing any shares so called for redemption shall not have been
surrendered, the shares shall no longer be deemed outstanding, the holders
thereof shall cease to be stockholders, and all rights whatsoever with respect
to the shares so called for redemption (except the right of the holders to
receive the Redemption Price upon surrender of their certificates therefor)
shall terminate. If at the Redemption Date, the Company does not have sufficient
funds legally available to redeem all the outstanding shares of Series A
Preferred Stock and Series A-1 Preferred Stock, the Company shall take all
measures permitted under the Delaware General Corporation Law to increase the
amount of its capital and surplus legally available, and the Company shall
8
<PAGE>
purchase as many shares of Series A Preferred Stock and Series A-1 Preferred
Stock as it may legally redeem, ratably from the holders thereof in proportion
to the number of shares held by them, and shall thereafter from time to time, as
soon as it shall have funds available therefor, redeem as many shares of Series
A Preferred Stock and Series A-1 Preferred Stock as it legally may until it has
redeemed all of the outstanding shares of Series A Preferred Stock and Series
A-1 Preferred Stock.
e. Change of Control
1. In the event that any Change of Control (as hereinafter defined)
shall occur at any time while any shares of Series A Preferred Stock and Series
A-1 Preferred Stock are outstanding, any holder of Series A Preferred Stock or
Series A-1 Preferred Stock shall have the right to give notice that it is
exercising a Change of Control election (a "Change of Control Election"), with
respect to all or any number of such holder's shares of Series A Preferred Stock
or Series A-1 Preferred Stock, during the period (the "Exercise Period")
beginning on the 30th day and ending on the 60th day after the date of such
Change of Control. Upon any such election, the Company shall redeem for cash
each of such Holder's shares (including any shares then issuable in respect of
accrued but unpaid dividends) for which such an election is made, to the extent
permitted by applicable law, at a redemption price per share equal to the sum of
(i) 101% of the sum of the Series A Liquidation Preference (with respect to the
Series A Preferred Stock) or the Series A-1 Liquidation Preference (with respect
to the Series A-1 Preferred Stock), plus the amount of any accrued and unpaid
dividends as of the date of such Change of Control event (the "Change of Control
Date") plus (ii) a cash amount that is equal to the dividends that would have
been payable in Additional Securities on each share of Series A Preferred Stock
or Series A-1 Preferred Stock, as applicable, during the period beginning on the
Change of Control Date and ending on the date that is five years from the
Original Issuance Date for the Series A Preferred Stock and the Series A-1
Preferred Stock, or September 26, 2005 (the "Change of Control Redemption
Price").
2. As used herein, "Change of Control" means the occurrence of any of
the following events:
(1) the acquisition by any person or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) other than Horizon Telcom
(to the extent controlled by the McKell Family) or the McKell
Family, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act ("beneficial ownership"), of
more than 50% of the combined voting power of the then
outstanding securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities");
(2) the acquisition by any person or group (within the meaning the
Exchange Act) of "beneficial ownership" of more than 50% of the
combined voting power of the then outstanding securities of
9
<PAGE>
Horizon Telcom entitled to vote generally in the election of
directors (the "Outstanding Telcom Voting Securities");
(3) the consummation of any transaction, including without
limitation, any merger or consolidation, resulting in a "person"
or "group" (as defined above) (other than the Principals)
acquiring beneficial ownership of more than 35% of the
Outstanding Company Voting Securities and Horizon Telcom or the
McKell Family beneficially owning less than the number of
Outstanding Company Voting Securities held by such person or
group;
(4) the consummation of any transaction, including without
limitation, any merger or consolidation, resulting in a "person"
or "group" (as defined above) (other than the Principals)
acquiring beneficial ownership of more than 35% of the
Outstanding Telcom Voting Securities and the McKell Family
beneficially owning less than the number of Outstanding Telcom
Voting Securities held by such person or group;
(5) approval by the Board of Directors or stockholders of the Company
of a merger, consolidation, sale, transfer lease or other
conveyance of all or substantially all of the assets or other
similar business combination transaction (a "Combination
Transaction") or a recapitalization or reorganization, the
consummation of which would result in the stockholders of the
Company owning less than 50% of the combined voting power of the
then outstanding securities of the surviving company entitled to
vote generally in the election of directors;
(6) approval by the Board of Directors or stockholders of Horizon
Telcom of a Combination Transaction or a recapitalization or
reorganization, the consummation of which would result in the
stockholders of Horizon Telcom owning less than 50% of the
combined voting power of the then outstanding securities of the
surviving company entitled to vote generally in the election of
directors;
(7) the first day on which a majority of the members of Board of
Directors of the Company are not Continuing Directors of such
Board of Directors;
(8) the first day on which a majority of the members of Board of
Directors of the Horizon Telcom are not Continuing Directors of
such Board of Directors;
(9) the approval by the stockholders of the Company of a Combination
Transaction, the consummation of which would directly result in
William McKell ceasing to be the Company's or the successor
Company's Chairman or Chief Executive Officer; or
(10) the adoption of a plan relating to liquidation, dissolution or a
winding up of the Company or the issuance of a dividend or
distribution to stockholders of the Company of more than 50% of
the Company's assets.
; provided, however, that the term "Change of Control" shall not
include any Affiliate Merger or any pro rata distribution by Horizon
Telcom to its shareholders of shares of Common Stock ("Approved Spin
Off"). Further, upon consummation of an Approved Spin Off, the
restrictions set forth in subsections (2), (4), (6) and (8) in the
definition of "Change of Control" above shall not apply.
10
<PAGE>
3. On or before the tenth (10th) day after a Change of Control, the
Company shall mail to all holders of record of the Series A Preferred Stock or
Series A-1 Preferred Stock at their respective addresses as the same shall
appear on the books of the Company as of such date, a notice disclosing (i) the
Change of Control, (ii) the Change of Control Redemption Price per share of the
Series A Preferred Stock or Series A-1 Preferred Stock applicable hereunder and
(iii) the procedure which the holder must follow to exercise the redemption
right provided above. To exercise the Change of Control Election, if applicable,
a holder of the Series A Preferred Stock or Series A-1 Preferred Stock must
deliver during the Exercise Period written notice to the Company (or an agent
designated by the Company for such purpose) of the holder's exercise of the
Change of Control Election, accompanied by each certificate evidencing shares of
the Series A Preferred Stock or Series A-1 Preferred Stock, as applicable, with
respect to which the Change of Control Election is being exercised, duly
endorsed for transfer. On or prior to the fifth (5th) business day after receipt
of delivery of such written notice (the "Change of Control Payment Date"), the
Company shall accept for payment all shares of Series A Preferred Stock or
Series A-1 Preferred Stock properly surrendered to the Company (or an agent
designated by the Company for such purpose) during the Exercise Period for
redemption in connection with the exercise of the Change of Control Election and
shall cause payment to be made in cash for such shares of Series A Preferred
Stock or Series A-1 Preferred Stock (the "Change of Control Payment"). If, on
the Change of Control Payment Date, funds in cash in an amount sufficient to pay
the aggregate Change of Control Payment for all shares of Series A Preferred
Stock and Series A-1 Preferred Stock for which a Change of Control Election has
been made shall be available therefor and shall have been irrevocably set aside
and deposited with a bank or trust company in trust for purposes of payment of
such Change of Control Payment, then, notwithstanding that the certificates
evidencing such shares shall not have been surrendered, the shares shall no
longer be deemed outstanding, the holders thereof shall cease to be
stockholders, and all rights whatsoever with respect to the shares for which a
Change of Control Election has been made (except the right of the holders to
receive the applicable Change of Control Payment upon surrender of their
certificates therefor) shall terminate. If at the time of any Change of Control,
the Company does not have sufficient capital and surplus legally available to
purchase all of the shares of Series A Preferred Stock and Series A-1 Preferred
Stock surrendered for redemption, the Company shall take all measures permitted
under the Delaware General Corporation Law to increase the amount of its capital
and surplus legally available, and the Company shall offer in its written notice
of such Change of Control to purchase as many of such shares of Series A
Preferred Stock and Series A-1 Preferred Stock as it has capital and surplus
legally available therefor, ratably from the holders thereof in proportion to
the total number of shares tendered, and shall thereafter from time to time, as
soon as it shall have capital and surplus legally available therefor, offer to
purchase as many of such shares of Series A Preferred Stock and Series A-1
Preferred Stock as it has capital and surplus available therefor until it has
offered to purchase all such shares of Series A Preferred Stock and Series A-1
Preferred Stock.
f. Optional Redemption by Company.
1. Series A Preferred Stock. At any time after September 26, 2005, the
Company may elect to redeem all, but not less than all, of the then outstanding
shares of Series A Preferred Stock (including shares issuable in respect of
accrued but unpaid dividends) for cash (the "Series A Optional Redemption") in
an amount (the "Series A Optional Redemption Price") equal to the greater of (i)
11
<PAGE>
104% of the Series A Liquidation Preference (the "Series A Preferred Value"), or
(ii) such amount per share of Series A Preferred Stock equal to the fair market
value of the Common Stock into which such shares are convertible into pursuant
to Article 4, Subpart C, Section h hereof (the "Series A Common Value"), as
determined by the Company's Board of Directors in good faith. Notice of the
Company's exercise of the Series A Optional Redemption shall be given to each
holder of record of the Series A Preferred Stock, at such holder's address as it
shall appear upon the stock transfer books of the Company (the "Series A
Optional Redemption Notice"). Each such notice shall specify the Series A
Optional Redemption Price (including the Series A Preferred Value and the Series
A Common Value), the date of the Series A Optional Redemption (which shall be at
least 60 days but no more than 70 days after the date of the Series A Optional
Redemption Notice) (the "Series A Optional Redemption Date"), the place or
places of payment and that payment will be made upon presentation and surrender
of the certificate(s) evidencing the shares of Series A Preferred Stock to be
redeemed. If the Series A Common Value is greater than the Series A Preferred
Value, then the Company, in the Series A Optional Redemption Notice, may require
the holders of record of the Series A Preferred Stock to (i) elect to convert
such shares into Common Stock pursuant to Article 4, Subpart C, Section h
hereof, or (ii) accept payment of the Series A Preferred Value as full and
complete payment of the Series A Optional Redemption Price. In the event that
the Company requires the holders of record of the Series A Preferred Stock to
make the election as set forth in the immediately preceding sentence, the
holders of the Series A Preferred Stock must provide written notice of a
conversion election to the Company no later than ten (10) business days prior to
the Series A Optional Redemption Date, or they shall be deemed to have elected
to receive payment of the Series A Preferred Value as full and complete payment
of the Series A Optional Redemption Price. Each holder of shares of Series A
Preferred Stock shall surrender the certificate evidencing such shares to the
Company at the place designated in such notice and shall thereupon be entitled
to receive payment of the Series A Optional Redemption Price. If, on the Series
A Optional Redemption Date, funds in cash in an amount sufficient to pay the
aggregate Series A Optional Redemption Price for all outstanding shares of
Series A Preferred Stock shall be available therefor and shall have been
irrevocably set aside and deposited with a bank or trust company in trust for
purposes of payment of such Series A Optional Redemption Price, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the shares shall no longer be deemed
outstanding, the holders thereof shall cease to be stockholders, and all rights
whatsoever with respect to the shares so called for redemption (except the right
of the holders to receive the Series A Optional Redemption Price upon surrender
of their certificates therefor) shall terminate.
2. Series A-1 Preferred Stock.
(i) Mandatory Callback Right. On or before April 30, 2001, if the
Company (i) consummates a sale of its Common Stock in a firm commitment
underwritten public offering pursuant to a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") which generates gross
proceeds to the Company of at least $86,000,000 in the aggregate (a "Callback
Public Offering"), or (ii) consummates an Affiliate Merger with a Listed Company
(A) which has previously consummated a Callback Public Offering, or (B) which
also involves a concurrent Callback Public Offering (a "Callback Merger"), then
12
<PAGE>
the Company shall redeem all, but not less than all, of the outstanding shares
of Series A-1 Preferred Stock for cash (the "Callback") in an amount (the
"Callback Price") equal to $5.42 per share of Series A-1 Preferred Stock, within
five (5) days of the Callback Public Offering or Callback Merger, as applicable.
Notice of the Company's exercise of the Callback shall be given to each holder
of record of the Series A-1 Preferred Stock at such holder's address as it shall
appear on the stock transfer books of the Company. Each notice shall specify the
date of the Callback (the "Callback Date"), the place or places of payment and
that payment will be made upon presentation and surrender of the certificate(s)
evidencing the shares of Series A-1 Preferred Stock. Each holder of shares of
Series A-1 Preferred Stock shall surrender the certificate evidencing such
shares to the Company at the place designated in such notice and shall thereupon
be entitled to receive payment of the Callback Price in the manner set forth in
the notice. If, on the Callback Date, funds in cash in amounts sufficient to pay
the aggregate Callback Price for the outstanding shares of Series A-1 Preferred
Stock shall be available therefor and shall have been irrevocably set aside and
deposited with the bank or trust company in trust for purposes of payment of
such Callback Price, then, notwithstanding that the certificates evidencing any
shares so called for redemption shall not have been surrendered, the shares
shall no longer be deemed outstanding, the holders thereof shall cease to be
stockholders, and all rights whatsoever with respect to the shares so called for
redemption (except the rights of the holders to receive the Callback Price upon
surrender of their certificates therefor) shall terminate.
(ii) Ordinary Optional Redemption. At any time after September
26, 2005, the Company may redeem all, but not less than all, of the then
outstanding shares of Series A-1 Preferred Stock (including shares issuable in
respect of accrued but unpaid dividends) for cash (the "Series A-1 Optional
Redemption") in an amount (the "Series A-1 Optional Redemption Price") equal to
the greater of (i) 104% of the Series A-1 Liquidation Preference (the "Series
A-1 Preferred Value"), or (ii) such amount per share of Series A-1 Preferred
Stock equal to the fair market value of the Common Stock into which such shares
are convertible into pursuant to Article 4, Subpart C, Section h hereof (the
"Series A-1 Common Value"), as determined by the Company's Board of Directors in
good faith. Notice of the Company's exercise of the Series A-1 Optional
Redemption shall be given to each holder of record of the Series A-1 Preferred
Stock, at such holder's address as it shall appear upon the stock transfer books
of the Company (the "Series A-1 Optional Redemption Notice"). Each such notice
shall specify the Series A-1 Optional Redemption Price (including the Series A-1
Preferred Value and the Series A-1 Common Value), the date of the Series A-1
Optional Redemption (which shall be at least 60 days but no more than 70 days
after the date of the Series A-1 Optional Redemption Notice) (the "Series A-1
Optional Redemption Date"), the place or places of payment, and that payment
will be made upon presentation and surrender of the certificate(s) evidencing
the shares of Series A-1 Preferred Stock to be redeemed. If the Series A-1
Common Value is greater than the Series A-1 Preferred Value, then the Company,
in the Series A-1 Optional Redemption Notice, may require the holders of record
of the Series A-1 Preferred Stock to (i) elect to convert such shares into
Common Stock pursuant to Article 4, Subpart C, Section h hereof, or (ii) accept
payment of the Series A-1 Preferred Value as full and complete payment of the
Series A-1 Optional Redemption Price. In the event that the Company requires the
holders of record of the Series A-1 Preferred Stock to make the election as set
forth in the immediately preceding sentence, the holders of the Series A-1
Preferred Stock must provide written notice of a conversion election to the
Company no later than ten (10) business days prior to the Series A-1 Optional
Redemption Date, or they shall be deemed to have elected to receive payment of
the Series A-1 Preferred Value as full and complete payment of the Series A-1
Optional Redemption Price. Each holder of shares of Series A-1 Preferred Stock
shall surrender the certificate evidencing such shares to the Company at the
place designated in such notice and shall thereupon be entitled to receive
13
<PAGE>
payment of the Series A-1 Optional Redemption Price. If, on the Series A-1
Optional Redemption Date, funds in cash in an amount sufficient to pay the
aggregate Series A-1 Optional Redemption Price for all outstanding shares of
Series A-1 Preferred Stock shall be available therefor and shall have been
irrevocably set aside and deposited with a bank or trust company in trust for
purposes of payment of such Series A-1 Optional Redemption Price, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the shares shall no longer be deemed
outstanding, the holders thereof shall cease to be stockholders, and all rights
whatsoever with respect to the shares so called for redemption (except the right
of the holders to receive the Series A-1 Optional Redemption Price upon
surrender of their certificates therefor) shall terminate.
g. Status of Redeemed Shares. Any shares of Series A Preferred Stock and
Series A-1 Preferred Stock which shall at any time have been redeemed pursuant
to Article 4, Subpart C, Subsections d, e, or f hereof shall, after such
redemption, have the status of authorized but unissued shares of Preferred
Stock, without designation as to series.
h. Conversion Rights. The Holders of the Series A Preferred Stock and
Series A-1 Preferred Stock shall have conversion rights as follows:
1. Generally. The shares of Series A Preferred Stock and Series A-1
Preferred Stock shall be convertible into fully paid and non-assessable shares
(calculated as to each conversion to the nearest 1/100 of a share) of Class A
Common Stock, at the conversion price, determined as hereinafter provided, in
effect at the time of conversion, with each share of Series A Preferred Stock
and Series A-1 Preferred Stock having a value equal to the Liquidation
Preference plus the amount of any accrued and unpaid dividends as of such date,
calculated pursuant to Article 4, Subpart C, Subsection b for the purpose of
such conversion. The price at which shares of Class A Common Stock shall be
issued upon conversion of Series A Preferred Stock (herein called the "Series A
Conversion Price") shall be initially $5.88 per share of Class A Common Stock,
and the price at which shares of Class A Common Stock shall be issued upon
conversion of Series A-1 Preferred Stock (herein called the "Series A-1
Conversion Price"; the Series A Conversion Price and the Series A-1 Conversion
Price are collectively referred to as the "Conversion Price") shall be initially
$5.07 per share of Class A Common Stock. The Conversion Price and the number of
shares of Class A Common Stock into which the Series A Preferred Stock and the
Series A-1 Preferred Stock is convertible shall be adjusted in certain instances
as provided below. Provided, however, that notwithstanding anything in this
Article 4, Subpart C, Subsection h to the contrary, in no event shall the Series
A-1 Preferred Stock be convertible into Class A Common Stock on or before April
30, 2001, unless the Company consummates a Qualified Public Offering, a
Combination Transaction that results in a Change of Control, or consummates an
Affiliate Merger with a Listed Company, which transactions do not also qualify
as a Callback Public Offering or a Callback Merger.
14
<PAGE>
2. Mechanics of Conversion. All or any portion of the shares of Series
A Preferred Stock and Series A-1 Preferred Stock held by any Holder shall
convert effective immediately prior to the close of business on the date that
the Company has received from such holder of Series A Preferred Stock or the
Series A-1 Preferred Stock (i) a notice of conversion to the Company, setting
forth the number of shares to be converted, (ii) an executed stock power
assigning and transferring such shares of Series A Preferred Stock or the Series
A-1 Preferred Stock to the Company, (iii) certificates representing the shares
of Series A Preferred Stock or the Series A-1 Preferred Stock to be converted
and (iv) a written notice to the Company stating therein its name or the name or
names of its nominees in which it wishes the Common Stock to be issued. The
shares of Class A Common Stock shall be deemed issued upon compliance with the
forgoing requirements and the holder of Series A Preferred Stock or the Series
A-1 Preferred Stock thereof shall be entitled to exercise and enjoy all rights
with respect to such shares of Class A Common Stock. The Company shall, as soon
as practicable thereafter, but in any event, within 10 days or such earlier date
as required by a Holder of the Series A Preferred Stock or the Series A-1
Preferred Stock to effectuate a sale of the Class A Common Stock, issue and
deliver certificates representing Class A Common Stock at such office to such
Holder of Series A Preferred Stock or Series A-1 Preferred Stock, or to his or
her nominee or nominees. If the conversion is in connection with an underwritten
offering of securities registered pursuant to the Securities Act, the conversion
shall be conditioned upon the closing with the underwriters of the sale of
securities pursuant to such offering, in which event the person(s) entitled to
receive the Class A Common Stock upon conversion of the Series A Preferred Stock
or Series A-1 Preferred Stock shall not be deemed to have converted such Series
A Preferred Stock until immediately prior to the closing of such sale of
securities.
3. Automatic Conversion.
(i) Series A Preferred Stock. Each share of Series A Preferred
Stock shall automatically be converted into shares of Class A Common Stock at
the Series A Conversion Price at the time in effect immediately upon the earlier
of (i) the Company's sale of its Common Stock in a firm commitment underwritten
public offering pursuant to a registration statement under the Securities Act,
the public offering price per share of which is not less than 1.75 times the
then existing Series A Conversion Price (as adjusted by any adjustments pursuant
to Article 4, Subpart C, Subsection h hereof) and with gross proceeds to the
Company of at least $65,000,000 in the aggregate (a "Qualified Public
Offering"), (ii) the consummation of a Combination Transaction that results in a
Change of Control; or (iii) the consummation of an Affiliate Merger with a
Listed Company.
(ii) Series A-1 Preferred Stock. Subject to the provisions of
Article 4, Subpart C, Subsection f.2.(i) hereof, each share of Series A-1
Preferred Stock shall automatically be converted into shares of Class A Common
Stock at the Series A -1 Conversion Price at the time in effect immediately upon
the earlier of (i) the Company's sale of its Common Stock in a Qualified Public
Offering, (ii) the consummation of a Combination Transaction that results in a
Change of Control; or (iii) the consummation of an Affiliate Merger with a
Listed Company.
If notice of such required conversion shall have been duly given, and if, on or
before the date fixed for such required conversion, sufficient shares of Class A
15
<PAGE>
Common Stock shall have been set aside by the Company for the benefit of the
Holders of the Series A Preferred Stock and Series A-1 Preferred Stock subject
to such required conversion, then, notwithstanding that any certificate for
shares of Series A Preferred Stock or Series A-1 Preferred Stock shall not have
been surrendered for cancellation, all shares of Series A Preferred Stock and
Series A-1 Preferred Stock shall no longer be deemed outstanding on and after
such required conversion date, and all rights with respect to such shares shall
forthwith on the required conversion date cease and terminate, except only the
right of Holders thereof to receive shares of Class A Common Stock on the
conversion thereof.
4. Reservation of Shares. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Class A Common Stock
for the purpose of issuance upon conversion of shares of Series A Preferred
Stock and Series A-1 Preferred Stock sufficient shares of Common Stock, and
shall take all action necessary so that shares of Common Stock so issued will be
validly issued, fully paid and nonassessable.
5. Stock Dividends, Splits and Reclassifications. In case the Company
shall (i) pay a dividend in Common Stock or (ii) subdivide or split-up its
outstanding Common Stock, then, following the record date for the determination
of holders of Common Stock entitled to receive such stock dividend, or to be
affected by such subdivision or split-up, the Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of Series A Preferred Stock and Series A-1 Preferred Stock shall be
increased in proportion to such increase in outstanding shares.
6. Upon Combinations. If the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then, following the
record date to determine shares affected by such combination, the Conversion
Price shall be appropriately increased so that the number of shares of Common
Stock issuable on conversion of each share of Series A Preferred Stock and
Series A-1 Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
7. Upon Reclassifications, Reorganizations, Consolidations or Mergers.
In the event of any reorganization of the Company, any reclassification of the
stock of the Company (other than a change in par value or from par value to no
par value or from no par value to par value), any consolidation or merger of the
Company or any other event that results in the Common Stock being changed into
the same or a different number of other securities, each share of Series A
Preferred Stock and Series A-1 Preferred Stock shall concurrently with the
effectiveness such reorganization, reclassification, consolidation, merger or
other event be convertible into the kind and number of shares of stock or other
securities or property of the Company or of the successor corporation resulting
from such consolidation or surviving such merger, if any, to which the holder of
the number of shares of Common Stock deliverable (immediately prior to the time
of such reorganization, reclassification, consolidation, merger or other event)
upon conversion of such Series A Preferred Stock and Series A-1 Preferred Stock
would have been entitled upon such reorganization, reclassification,
consolidation, merger or other event. The provisions of this clause shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers or similar events.
16
<PAGE>
8. Adjustments to the Conversion Price. The Conversion Price shall be
subject to adjustment from time to time as follows:
(i) Series A Conversion Price. If the Company issues any shares
of Common Stock Equivalents (other than an issuance of Common Stock as a
dividend or in a split of or subdivision in respect of which an adjustment
provided for in Article 4, Subpart C, Subsection h, paragraph 5 applies, options
to purchase or rights to subscribe for Common Stock Equivalents, securities by
their terms convertible into or exchangeable for Common Stock Equivalents, or
options to purchase or rights to subscribe for such convertible or exchangeable
securities (other than as provided in Article 4, Subpart C, Subsection h,
paragraph 12 hereof) for consideration per share of Common Stock Equivalents
less than the Series A Conversion Price in effect immediately prior to the
issuance of such Common Stock Equivalent or securities, then the number of
shares of Common Stock into which the Series A Preferred Stock is convertible
shall be that number determined by multiplying the number of shares of Common
Stock into which the Series A Preferred Stock is convertible immediately prior
to the first public announcement (or consummation of such transaction if the
Common Stock is not then publicly traded) of such transaction (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) by a fraction (not to be less than one):
(x) the numerator of which equals the product of
(A) the number of shares of Common Stock Equivalents of the
Company (other than shares issuable upon the conversion of
Preferred Stock (as defined)) outstanding after giving effect to
such sale or issuance (and assuming with respect to rights,
options, warrants or convertible securities (or options to
purchase convertible securities) that such rights, options,
warrants or convertible securities (or options to purchase
convertible securities) had been fully exercised or converted
into Common Stock Equivalents, as the case may be; provided,
however, that Common Stock Equivalents which are also convertible
securities shall be counted only once in determining the number
of shares of the Company outstanding) and (B) the Series A
Conversion Price determined immediately before such public
announcement date, consummation date or record date, as the case
may be; and
(y) the denominator of which equals the sum of (A)
the product of (1) the number of shares of Common Stock
Equivalents of the Company (other than shares issuable upon the
conversion of Preferred Stock) 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 securities (or options to
purchase convertible securities) that such rights, options,
warrants or convertible securities (or options to purchase
convertible securities) had been fully exercised or converted
into Common Stock Equivalents, as the case may be; provided,
however, that Common Stock Equivalents which are also convertible
securities shall be counted only once in determining the number
of shares of the Company outstanding), and (2) the Series A
Conversion Price determined 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 Equivalents 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
17
<PAGE>
upon conversion of such convertible securities. For the purposes
of such adjustments, the Common Stock Equivalents which the
holders of any such rights, options, warrants or convertible
securities (or options to purchase convertible 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.
(ii) Series A-1 Conversion Price. If the Company issues any
shares of Common Stock Equivalents (other than an issuance of Common Stock as a
dividend or in a split of or subdivision in respect of which an adjustment
provided for in Article 4, Subpart C, Subsection h, paragraph 5 applies, options
to purchase or rights to subscribe for Common Stock Equivalents, securities by
their terms convertible into or exchangeable for Common Stock Equivalents, or
options to purchase or rights to subscribe for such convertible or exchangeable
securities (other than as provided in Article 4, Subpart C, Subsection h,
paragraph 12 hereof) for consideration per share of Common Stock Equivalents
less than the Series A-1 Conversion Price in effect immediately prior to the
issuance of such Common Stock Equivalent or securities, then the number of
shares of Common Stock into which the Series A-1 Preferred Stock is convertible
shall be that number determined by multiplying the number of shares of Common
Stock into which the Series A-1 Preferred Stock is convertible immediately prior
to the first public announcement (or consummation of such transaction if the
Common Stock is not then publicly traded) of such transaction (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) by a fraction (not to be less than one):
(x) the numerator of which equals the product of
(A) the number of shares of Common Stock Equivalents of the
Company (other than shares issuable upon the conversion of
Preferred Stock (as defined)) outstanding after giving effect to
such sale or issuance (and assuming with respect to rights,
options, warrants or convertible securities (or options to
purchase convertible securities) that such rights, options,
warrants or convertible securities (or options to purchase
convertible securities) had been fully exercised or converted
into Common Stock Equivalents, as the case may be; provided,
however, that Common Stock Equivalents which are also convertible
securities shall be counted only once in determining the number
of shares of the Company outstanding) and (B) the Series A-1
Conversion Price determined immediately before such public
announcement date, consummation date or record date, as the case
may be; and
(y) the denominator of which equals the sum of (A)
the product of (1) the number of shares of Common Stock
Equivalents of the Company (other than shares issuable upon the
conversion of Preferred Stock) 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 securities (or options to
purchase convertible securities) that such rights, options,
18
<PAGE>
warrants or convertible securities (or options to purchase
convertible securities) had been fully exercised or converted
into Common Stock Equivalents, as the case may be; provided,
however, that Common Stock Equivalents which are also convertible
securities shall be counted only once in determining the number
of shares of the Company outstanding), and (2) the Series A-1
Conversion Price determined 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 Equivalents 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 of such convertible securities. For the purposes
of such adjustments, the Common Stock Equivalents which the
holders of any such rights, options, warrants or convertible
securities (or options to purchase convertible 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.
(iii) Adjustment of a Conversion Price. For the purposes of any
adjustment of a Conversion Price pursuant to Subparagraphs (i) or (ii) of this
Article 4, Subpart C, Subsection h, paragraph 8, the following provisions shall
be applicable:
(x) In the case of the issuance of Common Stock
Equivalents or rights, options, warrants or convertible
securities (or options to purchase convertible securities)
containing the right to subscribe for or purchase Common Stock
Equivalents for cash in a public offering or private placement,
the consideration shall be deemed to be the 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
Equivalents or rights, options, warrants or convertible
securities (or options to purchase convertible securities)
containing the right to subscribe for or purchase Common Stock
Equivalents 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),
then in determining the "consideration received by the Company,"
the Board shall obtain an appraisal of the fair value of said
property by an independent appraiser and such determination of
the independent appraiser shall be binding upon the holder.
(z) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock Equivalents,
securities by their terms convertible into or exchangeable for
Common Stock Equivalents, or options to purchase or rights to
subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares of Common Stock
Equivalents deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock Equivalents 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 Equivalents covered thereby;
19
<PAGE>
(B) the aggregate maximum number of shares of Common Stock
Equivalents 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; and
(C) on any change in the number of shares or exercise price
of Common Stock Equivalents deliverable upon exercise of any such options or
rights or conversions of or exchanges for such securities, other than a change
resulting from the anti-dilution provisions thereof, the applicable Conversion
Price shall forthwith be readjusted to such Conversion Price as would have been
obtained had the adjustment made upon the issuance of such options, rights or
securities not converted prior to such change or options or rights related to
such securities not converted prior to such change been made upon the basis of
such change.
(D) 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 Equivalents on the exercise of any such rights or options or any
conversion or exchange of any such securities.
9. Reservation for Certain Distributions. In the event the Company is
required to distribute to holders of its Common Stock Equivalents evidences of
its indebtedness (including, without limitation, convertible securities referred
to in Article 4, Subpart C, Subsection h, paragraph 8 above) or assets
(excluding periodic cash dividends distributed out of earnings) then the Company
shall hold the property subject to such distribution until such time as the
holders of the Series A Preferred Stock and Series A-1 Preferred Stock convert
their shares of Series A Preferred Stock and Series A-1 Preferred Stock into
Class A Common Stock.
10. Conversion Price Adjustment.
(i) Series A Preferred Stock. Whenever the number of shares of
Common Stock into which the Series A Preferred Stock is convertible is adjusted
as provided under Article 4, Subpart C, Subsection h, the Conversion Price shall
be adjusted by multiplying such Series A Conversion Price immediately prior to
such adjustment by a fraction:
(x) the numerator of which shall be the
number of shares of Common Stock into which the Series A
Preferred Stock is convertible immediately prior to such
adjustment; and
(y) the denominator of which shall be
the number of shares of Common Stock into which the Series A
Preferred Stock is convertible immediately thereafter.
(ii) Series A-1 Preferred Stock. Whenever the number of shares of
Common Stock into which the Series A-1 Preferred Stock is convertible is
adjusted as provided under Article 4, Subpart C, Subsection h, the Conversion
20
<PAGE>
Price shall be adjusted by multiplying such Series A-1 Conversion Price
immediately prior to such adjustment by a fraction:
(x) the numerator of which shall be the
number of shares of Common Stock into which the Series A-1
Preferred Stock is convertible immediately prior to such
adjustment; and
(y) the denominator of which shall be
the number of shares of Common Stock into which the Series
A-1 Preferred Stock is convertible immediately thereafter.
11. Notices. Whenever the number of shares of Common Stock into which
the Series A Preferred Stock and the Series A-1 Preferred Stock is convertible
is adjusted as herein provided, the Company shall cause to be promptly delivered
to each holder of shares of Series A Preferred Stock and Series A-1 Preferred
Stock at its last address as it shall appear on the books of the Company by
telecopier transmission or by a nationally recognized overnight delivery
service, notice of such adjustment or adjustments setting forth the number of
shares of Common Stock into which the Series A Preferred Stock or Series A-1
Preferred Stock is convertible and the Series A Conversion Price or Series A-1
Conversion Price after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made. Any such
notice shall be treated as effective or having been given (i) if transmitted by
telecopier, on the business day of confirmed receipt by the addressee thereof,
and (ii) if delivered by overnight courier, on the business day delivered.
The failure to give the notice required in this paragraph or any defect
therein shall not affect the legality or validity of the event causing the
adjustment of the Series A Conversion Price, the Series A-1 Conversion Price, or
any other action taken in connection therewith.
In case:
(i) the Company shall declare a dividend on its Common Stock
Equivalents payable otherwise than in cash;
(ii) the Company shall authorize the granting to the holders of
its Common Stock Equivalents of rights or warrants to subscribe for or purchase
any shares of Common Stock Equivalents (or securities convertible into shares of
Common Stock Equivalents);
(iii) of any reclassification of the capital stock of the Company
(other than a subdivision or combination of outstanding shares of Common Stock),
or of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(iv) the Company shall be (voluntarily or involuntarily)
dissolved, liquidated or wound up;
21
<PAGE>
then the Company shall cause to be mailed to the holders of the Series A
Preferred Stock and Series A-1 Preferred Stock, at least 10 days prior (or in
the case of are involuntarily dissolution or liquidation as soon thereafter as
is practicable) to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such Dividend, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock Equivalents of record to
be entitled to such Dividend, rights or warrants are to be determined, or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock Equivalents of
record shall be entitled to exchange their shares of Common Stock Equivalents
for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
12. Common Stock: Other Securities. The term "Common Stock" shall mean
(i) the Company's Class A Common Stock and Class B Common Stock and (ii) any
other class of stock resulting from successive changes or reclassification of
such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value. In the event that at any
time, as a result of an adjustment made pursuant to this Article 4, Subpart C,
Subsection h, the holder of Series A Preferred Stock or Series A-1 Preferred
Stock shall become entitled to convert its shares of Series A Preferred Stock or
Series A-1 Preferred Stock into any shares of the Company other than Common
Stock, thereafter the number of such other shares into which the Series A
Preferred Stock or Series A-1 Preferred Stock is convertible and the 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 the shares contained in this Article 4, Subpart C, Subsection h.
13. Readjustment. Upon the expiration of any rights, options, warrants
or conversion privileges, if such shall not have been exercised after the date
hereof (the granting of which resulted in an adjustment to the Conversion Price
pursuant Article 4, Subpart C, Subsection h, the number of shares of Common
Stock into which the Series A Preferred Stock and Series A-1 Preferred Stock is
convertible and the Conversion Price, to the extent the Series A Preferred Stock
and Series A-1 Preferred Stock has not been converted, 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 Common
Stock Equivalents so issued were the Common Stock Equivalents, if any, actually
issued or sold upon the exercise of such rights, options, warrants or conversion
rights and (ii) such Common Stock Equivalents, 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; provided, however, that no such
readjustment shall have the affect of increasing the Conversion Price by an
amount in excess of the amount of the adjustment initially made with respect to
the issuance, sale or grant of such rights, options, warrants or conversion
rights.
14. No Adjustment in Certain Cases. No adjustment shall be made in
connection with the issuance of Common Stock or other securities of the Company
22
<PAGE>
upon conversion of the Preferred Stock, or in connection with the issuance of
options to directors or employees pursuant to the Company's existing or a future
stock option plan, or the issuance of Common Stock as a result of the exercise
of existing or future option grants.
i. Voting Rights.
1. The holder of shares of Series A Preferred Stock and Series A-1
Preferred Stock shall have the right to one vote for each share of Class A
Common Stock into which such holder's shares of Series A Preferred Stock or
Series A-1 Preferred Stock could then be converted, with full voting rights and
powers equal to the voting rights and powers of the holders of Class A Common
Stock, except as required by law or as expressly provided herein, including the
Protective Provisions in Article 4, Subpart C, Subsection j below; shall be
entitled, notwithstanding any provision hereof, to notice of any stockholders'
meeting in accordance with the Bylaws of the Company; and shall be entitled to
vote, together with holders of Common Stock, with respect to any question upon
which holders of Common Stock have the right to vote. Fractional votes shall
not, however, be permitted and any fractional voting rights available on an
as-converted basis (after aggregating all shares into which shares of Series A
Preferred Stock or Series A-1 Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with 0.5 being rounded
upward).
2. So long as any Series A Preferred Stock or Series A-1 Preferred
Stock remains outstanding, the Company shall not, without the written consent or
affirmative vote of the Requisite Holders, amend, alter or repeal, whether by
merger, consolidation, combination, reclassification or otherwise, the
Certificate of Incorporation, Bylaws of the Company or any provision thereof
(including the adoption of a new provision thereof) which would adversely affect
the voting power of the Series A Preferred Stock or Series A-1 Preferred Stock
or any other rights or privileges of the holders of the Series A Preferred Stock
or Series A-1 Preferred Stock hereunder.
j. Protective Provisions. In addition to any other rights provided by
applicable law, the Company agrees that until the conversion of all of the
Series A Preferred Stock and Series A-1 Preferred Stock, the Company shall not,
and shall not permit any Subsidiary to, without the prior written consent of the
Requisite Holders:
1. create, authorize or issue any class, series or shares of Preferred
Stock (other than Additional Securities issued pursuant to Article 4, Subpart C,
Subsection b hereof) or any other class of capital stock ranking either as to
payment of dividends or distribution of assets upon liquidation (i) prior to the
Series A Preferred Stock and Series A-1 Preferred Stock, or (ii) on a parity
with the Series A Preferred Stock and Series A-1 Preferred Stock, or (iii)
junior to the Series A Preferred Stock and Series A-1 Preferred Stock, if such
junior securities may be redeemed, in any circumstance, on or prior to the
Redemption Date;
2. change the preferences, rights or powers with respect to the Series
A Preferred Stock or Series A-1 Preferred Stock so as to affect the Series A
Preferred Stock or Series A-1 Preferred Stock adversely; or
23
<PAGE>
3. amend any of the provisions set forth in this Article 4, Subpart C,
Subjection j.
k. Default Rate. In addition to any of the rights holders of the Series A
Preferred Stock and holders of the Series A-1 Preferred Stock have, if the
Company is in default of any of the provisions set forth in its Certificate of
Incorporation or the Securities Purchase Agreement, the Applicable Rate shall be
increased from 7.50% to 9.50% effective immediately on the date of such default
through the date, if any, on which such default is cured; provided, however,
that if the default is a default with respect to the failure to pay dividends
pursuant to Article 4, Subpart C, Subsection b hereinabove, nonpayment of the
Liquidation Preferences pursuant to Article 4, Subpart C, Subsection c
hereinabove, the failure to make a Mandatory Redemption as set forth in Article
4, Subpart C, Subsection d hereinabove, the failure to make a payment when
required pursuant to a Change of Control as set forth in Article 4, Subpart C,
Subsection e hereinabove, a breach of any of the protective provisions set forth
in Article 4, Subpart C, Subsection j hereinabove, or a breach of any of the
covenants set forth in Section 9 and Sections 7.2 and 7.3 of the Securities
Purchase Agreement (other than a breach of a covenant under Sections 7.2(c),
7.2(e), a breach of the covenant as set forth in Section 7.2(i) not to terminate
the Chief Executive Officer or Chief Financial Officer of the Company, or a
breach of the covenants set forth in Sections 7.2(l) and 7.2(n), then the
Applicable Rate shall be increased to 18.0% effective immediately on the date of
such default through the date, if any on which such default is cured.
l. Definitions. For purposes of this Article 4, Subpart C, the following
definitions shall apply:
"Additional Securities" has the meaning set forth in Article 4,
Subpart C, Subsection b hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Affiliate Merger" means a Combination Transaction with another Sprint
PCS Affiliate (or (A) a parent who wholly owns such Sprint PCS Affiliate and has
no direct or indirect operations except as may be conducted by a Sprint PCS
Affiliate, or (B) a wholly-owned subsidiary of a Sprint PCS Affiliate formed or
used for purposes of facilitating a Combination Transaction with the Company)
that would result in the addition of at least 7.0 million POPs to the Company or
a Combination Transaction with an Approved Sprint Affiliate.
"Applicable Rate" has the meaning set forth in Article 4, Subpart C,
Subsection b hereof.
"Approved Spin Off" has the meaning set forth in Article 4, Subpart C,
Subsection e hereof.
24
<PAGE>
"Approved Sprint Affiliate" shall mean those Sprint PCS Affiliates (or
(A) a parent who wholly owns such Sprint PCS Affiliate and has no direct or
indirect operations except as may be conducted by a Sprint PCS Affiliate, or (B)
a wholly-owned subsidiary of a Sprint PCS Affiliate formed or used for purposes
of facilitating a Combination Transaction with the Company), who have between 6
million and 7 million POPs as of the effective date of this Amended and Restated
Certificate of Incorporation of the Company, and over 6 million POPs on the date
of an Affiliate Merger. Notwithstanding the foregoing, US Unwired, Inc. shall be
an "Approved Sprint Affiliate" for all purposes hereof, so long as US Unwired,
Inc.'s business, and corporate structure, shall be substantially the same (other
than the disposal of any non Sprint PCS Affiliate assets, or the acquisition of
additional Sprint PCS Affiliate assets) as of the date of a Combination
Transaction as it is as of the date of its report (on Form 10-Q) filed pursuant
to the Securities Exchange Act of 1934 for the period ended June 30, 2000.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" has the meaning set forth in Article 4, Subpart C,
Subsection b hereof.
"Cash Out" means the portion of the total consideration to be paid to
the holders of the Series A Preferred Stock and Series A-1 Preferred Stock which
is not represented by common equity in connection with the consummation of any
Combination Transaction, self-tender, stock buyback, recapitalization,
reclassification or similar transaction.
"Change of Control" has the meaning set forth in Article 4, Subpart C,
Subsection e hereof.
"Change of Control Date" has the meaning set forth in Article 4,
Subpart C, Subsection e hereof.
"Change of Control Election" has the meaning set forth in Article 4,
Subpart C, Subsection e hereof.
"Change of Control Redemption Price" has the meaning set forth in
Article 4, Subpart C, Subsection e hereof.
"Combination Transaction" has the meaning set forth in Article 4,
Subpart C, Subsection e hereof.
"Common Stock Equivalents" means all Common Stock and any securities
(whether voting common stock or nonvoting common stock) of any class of the
Company which have no preference in respect of amounts payable in the event of
any voluntary or involuntary liquidation dissolution or winding up of the
Company.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company or Horizon Telcom, respectively,
who:
25
<PAGE>
(1) was a member of such Board of Directors on the Original Issuance
Date; or
(2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were members of
such Board of Directors at the time of such nomination or election.
"Conversion Price" has the meaning set forth in Article 4, Subpart C,
Subsection h hereof.
"Dividend Payment Date" has the meaning set forth in Article 4,
Subpart C, Subsection b hereof.
"Exchange Act" has the meaning set forth in Article 4, Subpart C,
Subsection e hereof.
"Exercise Period" has the meaning set forth in Article 4, Subpart C,
Subsection e hereof.
"Horizon Telcom" means Horizon Telcom, Inc., a Delaware corporation.
"Junior Stock" has the meaning set forth in Article 4, Subpart C,
Subsection b hereof.
"Liquidation Preference" has the meaning set forth in Article 4,
Subpart C, Subsection c hereof.
"Listed Company" shall mean a company whose common equity is listed on
any of the New York Stock Exchange, the American Stock Exchange, or the NASDAQ
National Market.
"McKell Family" means direct descendants of William Scott McKell,
current spouses of such persons, and trusts or family limited partnerships of
which such persons are either grantors or beneficiaries.
"Optional Redemption" has the meaning set forth in Article 4, Subpart
C, Subsection f hereof.
"Optional Redemption Price" has the meaning set forth in Article 4,
Subpart C, Subsection f hereof.
"Original Issuance Date" has the meaning set forth in Article 4,
Subpart C, Subsection b hereof.
"Outstanding Company Voting Securities" has the meaning set forth in
Article 4, Subpart C, Subsection e hereof.
"Outstanding Telcom Voting Securities" has the meaning set forth in
Article 4, Subpart C, Subsection e hereof.
26
<PAGE>
"Parity Stock" has the meaning set forth in Article 4, Subpart C,
Subsection b hereof.
"Person" means all natural persons, corporations, business trusts,
associations, companies, partnerships, joint ventures and other entities and
governments and agencies and political subdivisions.
"POP" means the total population to which such Person has exclusive
rights to market Sprint PCS products and services as estimated pursuant to the
Rand McNally Commercial Atlas and Marketing Guide, 2000 edition.
"Principals" means Horizon Telcom and members of the McKell Family.
"Qualified Public Offering" has the meaning set forth in Article 4,
Subpart C, Subsection h hereof.
"Redemption Date" has the meaning set forth in Article 4, Subpart C,
Subsection d hereof.
"Redemption Price" has the meaning set forth in Article 4, Subpart C,
Subsection d hereof.
"Requisite Holders" means holders of a majority of the Series A
Preferred Stock and Series A-1 Preferred Stock.
"Securities Purchase Agreement" means the Securities Purchase
Agreement entered into as of September 26, 2000 among the Company and certain
investors named therein.
"Senior Facility" means the Credit Agreement dated as of September 26,
2000.
"Senior Notes Offering" means the offering of 295,000 Units consisting
of 14% Senior Discount Notes due 2010 and 295,000 warrants to purchase 3,805,500
shares of Class A Common Stock.
"Sprint PCS Affiliate" means any Person whose sole or predominant
business is operating a personal communications services business pursuant to
arrangements with Sprint Spectrum, L.P. and /or its Affiliates, or their
successors, similar to the Sprint Agreements (as such term is defined the
Securities Purchase Ageement).
"Subsidiary" has the meaning set forth in Article 4, Subpart C,
Subsection b hereof.
27
<PAGE>
ARTICLE 5: BOARD OF DIRECTORS
The initial Board of Directors of the Corporation shall be such number as
is determined in accordance with the Bylaws of the Corporation. The directors of
the Corporation shall be divided into three classes, designated as Class I,
Class II and Class III. In the event that the number of directors shall not be
evenly divisible by three, the Board of Directors shall determine in which class
or classes the remaining director or directors, as the case may be, shall be
included. No Class shall have more than one director more than any other Class
unless such disparity results from the death or resignation of a director or the
removal of a director by the stockholders, in which event the remaining
directors shall promptly fill such vacancy so that no Class has more than one
director more than any other Class. The term of office of each director shall be
three years; provided, however, that, the initial term of office of filing of
the directors in Class I shall expire at the first annual meeting of the
stockholders after the date of filing of this Certificate of Incorporation, the
initial term of office of the directors in Class II shall expire at the second
annual meeting after the date of filing of this Certificate of Incorporation,
and the initial term of office of the directors in Class III shall expire at the
third annual meeting after the date of filing of this Certificate of
Incorporation. At each annual meeting of stockholders, directors shall be
elected for a full term of three years to succeed those whose terms expire.
Notwithstanding any other provision of this Certificate of Incorporation or
the Bylaws of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law), any removal of a director shall be only for
cause and shall be effected only by the affirmative vote of the holders of
two-thirds or more of the outstanding voting power of the capital stock of the
Corporation entitled to vote generally in the election of directors cast at a
meeting of the stockholders called for that purpose.
ARTICLE 6: LIMITATION OF DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i)for any breach of such director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law or (iv) for any transaction from which such director derived an improper
personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. Any repeal or modification of this
Article 6 by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
28
<PAGE>
ARTICLE 7: INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by Section 145 of
the Delaware General Corporation Law, indemnify any and all persons whom it
shall have the power to indemnify under said section from and against any and
all of the expenses, liabilities or other matters referred to in or covered by
said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
other capacities while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
The Corporation may purchase and maintain insurance, at its expense, to
protect itself and any and all directors, officers, employee or agent of the
Corporation or subsidiary or affiliate or another corporation, partnership,
joint venture, trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General Corporation
Law.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any director or officer of the Corporation to the fullest extent
permitted by the Delaware General Corporation Law and to employees and agents to
the same extent as any director or officer.
ARTICLE 8: AMENDMENT OF CERTIFICATE OF INCORPORATION
AND BYLAWS
Notwithstanding any provision of this Certificate of Incorporation or the
Bylaws of the Corporation, no provision of Articles 5, 6, 7, 8 and 9 of this
Certificate of Incorporation shall be amended, modified or repealed, nor shall
any provision of this Certificate of Incorporation inconsistent with any such
provision be adopted, by the stockholders of the Corporation unless approved by
the unanimous written consent of the stockholders or by the affirmative vote of
at least two-thirds of the outstanding voting power of the capital stock of the
Corporation entitled to vote generally in the election of directors cast at a
meeting of the stockholders called for that purpose.
The Board of Directors shall have the power acting by simple majority to
adopt, amend or repeal any provision of the Bylaws of the Corporation.
Notwithstanding any other provision of this Certificate of Incorporation or the
Bylaws of the Corporation (and notwithstanding that some lesser percentage which
may be specified by law), no provision of the Bylaws of the Corporation shall be
amended, modified or repealed by the stockholders of the Corporation, nor shall
any provision of the Bylaws of the Corporation inconsistent with any such
provision be adopted by the stockholders of the Corporation, unless approved by
the unanimous written consent of the stockholders or by the affirmative vote of
at least two-thirds of the outstanding voting power of capital stock of the
Corporation entitled to vote generally in the election of directors cast at a
meeting of the stockholders called for that purpose.
29
<PAGE>
ARTICLE 9: LIMITATION ON ACTION BY STOCKHOLDERS
Following the effective date of an initial public offering of Common Stock
of the Corporation registered with the Securities and Exchange Commission, no
action may be taken by the stockholders except at an annual or special meeting
of the stockholders.
30
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Restated Certificate of
Incorporation to be signed by William A. McKell, its Chairman of the Board,
President and Chief Executive Officer, and attested by Peter M. Holland, its
Assistant Secretary, this 25th day of September, 2000.
By:_____________________________________
Name: William A. McKell
Title: Chairman of the Board, President,
Chief Executive Officer
Attested:
By: _____________________________________
Peter M. Holland, Assistant Secretary
