[EXECUTION COPY]
CONTRIBUTION AND EXCHANGE AGREEMENT
DATED
MAY 4, 2000
BY AND AMONG
HORIZON TELCOM, INC.,
HORIZON PERSONAL COMMUNICATIONS, INC.
HORIZON PCS, INC.
XXXXXX XXXXXXXX -, AS BRIGHT HOLDERS' REPRESENTATIVE
AND
THOSE PARTIES LISTED ON ATTACHMENT A HERETO
CONTRIBUTION AND EXCHANGE AGREEMENT
THIS AGREEMENT is made as of May 4, 2000 (the "Agreement Date"), by and
among HORIZON PERSONAL COMMUNICATIONS, INC., an Ohio corporation ("Percom"),
HORIZON TELCOM, INC., an Ohio corporation ("Telcom"), HORIZON PCS, INC., a
Delaware corporation ("PCS Holdings"), and those Persons listed on Attachment A
hereto (collectively, the "Bright Holders"), and Xxxxxx Xxxxxxxx, as the "Bright
Holders Representative" (as defined in Section 7E herein).
W I T N E S S E T H:
WHEREAS, Percom owns a membership interest in Bright Personal
Communications Services, LLC, an Ohio limited liability company ("Bright PCS");
and
WHEREAS, each of the Bright Holders owns membership interests (the "Units")
in Bright PCS; and
WHEREAS, Telcom owns all of the issued and outstanding stock of Percom; and
WHEREAS, as part of the plan to capitalize PCS Holdings, Telcom caused PCS
Holdings to be incorporated on April 26, 2000; and
WHEREAS, Telcom and the Bright Holders desire to subscribe for shares of
the Class B common stock of PCS Holdings, and, as consideration therefor, Telcom
shall contribute all of its interest in Percom to PCS Holdings, and the Bright
Holders shall contribute certain of their Units in Bright PCS (the "Bright/PCS
Units") to PCS Holdings, all pursuant to a plan which is intended to qualify for
a nonrecognition treatment under IRC Section 351, all as more particularly set
forth below (collectively, the "Contribution"); and
WHEREAS, Percom and the Bright Holders desire to exchange certain of the
shares of Telcom owned by Percom for the remaining Units in Bright PCS owned by
the Bright Holders (the "Bright/Telcom Units") all as more particularly set
forth below (the "Exchange").
NOW, THEREFORE, in consideration of mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
Section 1 Definitions. For the purposes of this Agreement, the following
terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person.
"Agreement" means this Contribution and Exchange Agreement, as amended,
supplemented or restated from time to time in accordance with its terms.
"Agreement Date" shall have the meaning set forth in the preamble to this
Agreement.
"Common Stock" means the Class B Common Stock of PCS Holdings, par value
$.001 per share.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Governing Documents" means, with respect to (i) a limited partnership,
such limited partnership's certificate of limited partnership and the agreement
of limited partnership, and any amendments or modifications of any of the
foregoing; (ii) a corporation, such corporation's articles or certificate of
incorporation, by-laws or regulations and any applicable authorizing
resolutions, and any amendments or modifications of any of the foregoing; (iii)
a limited liability company, such limited liability company's articles or
certificate of organization or formation and operating agreement or agreement of
limited liability company, and any amendments or modifications of any of the
foregoing; and (iv) a trust, such trust's declaration of trust, articles
supplementary and by-laws and any amendments or modifications of any of the
foregoing.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Indemnified Person" means the Person or Persons entitled to, or claiming a
right to, indemnification under Section 8.
"Indemnifying Person" means the Person or Persons claimed by the
Indemnified Person to be obliged to provide indemnification under Section 8.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"IRS" means the United States Internal Revenue Service.
"Latest Balance Sheet" shall have the meaning set forth in Section 4G.
"Licenses" means all federal, state, local and foreign franchises, tariffs,
licenses, ordinances, certifications, approvals, authorizations and permits
issued or granted by governmental authorities.
"Loss" or "Losses" means any and all loss, cost, claim, damage, liability,
or expense (including reasonable attorneys' fees).
"Material Adverse Effect" means a material adverse effect upon the assets,
liabilities, prospects, financial condition or business operations of a Person
and its Subsidiaries, taken as a whole.
"Motorola" means Motorola, Inc., a Delaware corporation.
"Motorola Consent" means the consent by Motorola to the transactions
contemplated by this Agreement.
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"Percom Shares" means the 100,000 shares of the issued and outstanding
Class B common stock of Percom, no par value, all of which are currently owned
by Telcom.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
a limited liability company and a governmental entity or any department, agency
or political subdivision thereof.
"RTFC" means the Rural Telephone Finance Cooperative.
"RTFC Consent" means the consent of the RTFC to the transactions
contemplated in this Agreement.
"SEC" means the Securities and Exchange Commission and any governmental
body or agency succeeding to the functions thereof.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"Shares" means the shares of the Class B Common Stock of PCS Holdings to be
issued by PCS Holdings to Telcom and to the Bright Holders pursuant to the
Contribution.
"Subsidiary" means, with respect to a Person, (i) any other corporation of
which the securities having a majority of the ordinary voting power in electing
the board of directors are, at the time as of which any determination is being
made, owned by such Person either directly or through one or more Subsidiaries,
(ii) any partnership, joint venture or similar entity of which or in which such
Person, such Person and one or more of its Subsidiaries, or one or more
Subsidiaries of such Person directly or indirectly own more than 50% of the
capital interest or profits interest, or (iii) any trust, association or other
unincorporated organization of which or in which such Person, such Person and
one or more of its Subsidiaries, or one or more Subsidiaries of such Person
directly or indirectly own more than 50% of the beneficial interest.
"Sprint PCS" means the Affiliates of Sprint Corporation who are the parties
to the Sprint PCS Management Agreement with Bright PCS.
"Sprint PCS Consent" means the consent of Sprint PCS to the transactions
contemplated in this Agreement.
"Tax Authority" means any United States federal, foreign, national, state,
county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising tax regulatory authority.
"Tax Return" means any return, amended return, estimated return,
information return and statement (including any related or supporting
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information) filed or to be filed with any Tax Authority in connection with the
determination, assessment, collection or administration of any Tax.
"Taxes" means all taxes, charges, fees, interest, fines, penalties,
additions to tax or other assessments, including without limitation, income,
excise, environmental, property, sales, gross receipts, gains, transfer,
occupation, privilege, employment (including social security and unemployment),
use, value added, capital stock or surplus, franchise taxes, advance corporate
tax and customs duties imposed by any Tax Authority.
"Telcom Shares" means shares of the Class A Common Stock and Class B Common
Stock of Telcom, no par value per share, as currently owned by Percom.
"Treasury Regulations" means the United States Treasury Regulations
promulgated under the IRC, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
Section 2 Contributions and Exchanges; Adjustments.
2A. Contributions by Telcom. At the Closing, Telcom shall assign, transfer,
convey and contribute to PCS Holdings the Percom Shares, and in consideration
therefor, PCS Holdings will issue to Telcom 46,000,000 Shares.
2B. Contribution by the Bright Holders. At the Closing, each Bright Holder
will assign, transfer, convey and contribute 70% of its Units to PCS Holdings,
and in consideration therefor PCS Holdings will issue to the Bright Holders,
that number of Shares as set forth on Attachment A hereto.
2C. Exchange. At the Closing, each Bright Holder will assign, convey,
transfer, and exchange 30% of its Units to Percom, and in consideration
therefor, Percom will convey, transfer and exchange to the Bright Holders that
number of Telcom Shares as set forth on Attachment A hereto.
2D. Adjustments to Issuance of Shares. Each of Telcom and the Bright
Holders acknowledge that, from and after the date hereof but before the Closing
Date, PCS Holdings may determine it to be in its best interest to increase or
decrease its authorized Class B Common Stock and/or to increase or decrease the
number of Shares to be issued pursuant to this Agreement. Each of Telcom and the
Bright holders consent and agree to the foregoing, so long as the number of
Shares issued hereunder are issued in the same proportionate percentages (i.e.,
92% to Telcom; and 8%, collectively, to the Bright Holders).
Section 3 Conditions to Closing.
3A. Conditions Precedent of Telcom and Percom at the Closing. Telcom's, PCS
Holdings' and Percom's obligations under this Agreement to issue Shares, to
exchange Telcom shares, and otherwise consummate the transactions contemplated
herein in respect of the Closing are subject to the satisfaction (or waiver in
writing by Telcom and Percom) of the following conditions on or before the
Closing Date:
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i. No Injunction. No temporary restraining order or preliminary or
permanent injunction of any court or administrative agency of competent
jurisdiction prohibiting the consummation of the transactions contemplated
herein shall be in effect or pending.
ii. Governmental Consents. Telcom, Percom, PCS Holdings, Bright PCS and/or
the Bright Holders shall have made all filings required under the HSR Act
for the transactions contemplated hereby and the applicable waiting period
under the HSR Act shall have expired or have been terminated.
iii. Consents. The RTFC Consent, the Sprint Consent and the Motorola
Consent shall have been obtained and not revoked.
iv. Accuracy of the Representations and Warranties. The representations and
warranties of the Bright Holders contained in this Agreement shall be true
and correct in all material respects on the date hereof and, except for
representations and warranties made with respect to a specified date, at
and as of the Closing Date.
v. Performance of Agreement. The Bright Holders shall have performed, in
all material respects, all of their respective agreements and obligations
required by this Agreement to be performed or complied with by them prior
to or at the Closing.
3B. Conditions Precedent of the Bright Holders at the Closing. The Bright
Holders' obligations under this Agreement to consummate the transactions
contemplated herein in respect of the Closing are subject to the satisfaction
(or waiver in writing by the Bright Holders Representative) of the following
conditions on or before the Closing Date:
i. No Injunction. No temporary restraining order or preliminary or
permanent injunction of any court or administrative agency of competent
jurisdiction prohibiting the consummation of the transactions contemplated
herein shall be in effect or pending.
ii. Governmental Consents. Telcom, Percom, PCS Holdings, Bright PCS and the
Bright Holders shall have made all filings required under the HSR Act for
the transactions contemplated hereby, and the applicable waiting period
under the HSR Act shall have expired or have been terminated.
iii. Consents. The RTFC Consent, Sprint PCS Consent and the Motorola
Consent shall have been obtained and not revoked.
iv. Accuracy of the Representations and Warranties. The representations and
warranties of Telcom, PCS Holdings and Percom contained in this Agreement
shall be true and correct in all material respects on the date hereof and,
except for representations and warranties made with respect to a specified
date, at and as of the Closing Date.
v. Performance of Agreement. Each of Telcom, Percom, and PCS Holdings shall
have performed, in all material respects, all of its respective agreements
and obligations required by this Agreement to be performed or complied with
by it prior to or at the Closing.
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vi. New Percom Markets. Percom shall have entered into an Addendum to its
Sprint PCS Management Agreement which expands Percom's Sprint PCS territory
to include the markets set forth on Attachment B.
vii. Election to Board. Immediately prior to the Closing, Telcom, as the
sole stockholder of PCS Holdings, will, after consultation with the lead
underwriters for PCS Holding's proposed public offering, elect one of the
non-Percom members of the Bright PCS Management Committee to the board of
Directors of PCS Holdings.
viii. Advisory Board. Immediately after Closing the Board of PCS Holdings
will appoint a seven (7) person Advisory Board to monitor and review the
status of PCS Holdings in the current Bright PCS service area. The initial
Advisory Board shall consist of those members who are currently on the
management committee of Bright PCS. The Advisory Board will meet at least
quarterly with a board member from PCS Holdings and other PCS Holdings
management deemed necessary to keep the advisory board informed and
updated. The Advisory Board members will be appointed annually during the
annual Com Net Inc. shareholder's meeting according to the majority rule of
those eligible to vote for Com Net Inc. directors. Provided, however, that
the Board of PCS Holdings shall no longer be required to comply with the
provisions of this Section 3B.viii. from and after the time that the Bright
Holders collectively own seventy-five percent (75%) or less of the Shares
issued to them pursuant to Section 2B. hereof.
Section 4 Representations and Warranties of Telcom, Percom, and PCS
Holdings. Each of Telcom, Percom, and PCS Holdings represents and warrants to
the Bright Holders with respect to each of the following provisions of this
Section 4, at and as of the Agreement Date and (except for those made with
reference to a specific date) again at and as of the Closing Date:
4A. Organization and Corporate Power; Licenses. Each of Telcom, Percom, and
PCS Holdings is duly organized, validly existing and in good standing under the
laws of the state of its incorporation and is qualified to do business in every
jurisdiction in which its ownership of property or conduct of business requires
it to qualify. Each of Telcom, Percom, and PCS Holdings has all requisite
corporate power and authority, and all Licenses, necessary to own and operate
its properties, to carry on its business as now conducted and presently proposed
to be conducted and to carry out the transactions contemplated by this
Agreement.
4B. Authorization. Each of Telcom, Percom, and PCS Holdings has all
necessary corporate power and has been duly authorized by all necessary and
appropriate action to enter into this Agreement and to consummate the
transactions contemplated herein and therein. The officers of Telcom, Percom,
and PCS Holdings executing this Agreement on behalf of such corporations have
been duly authorized by all necessary and appropriate corporate action. This
Agreement is a valid and binding obligation of each of Telcom, Percom, and PCS
Holdings, enforceable against it in accordance with its terms, except insofar as
enforceability may be affected by bankruptcy, insolvency or similar laws
affecting creditor's rights generally or by general principles of equity.
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4C. Capital Stock and Related Matters.
i. As of the date of this Agreement, the authorized capital stock of Telcom
consists of (a) 200,000 shares of Class A Common Stock, of which 99,726
shares are issued and outstanding; and (b) 500,000 shares of Class B Common
Stock, of which 299,178 shares are issued and outstanding.
ii. As of the Closing, Telcom will not have outstanding any stock or
securities convertible or exchangeable into any shares of its stock or
containing any profit participation features, nor will it have outstanding
any rights, warrants, or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable
for its capital stock or any stock appreciation rights or phantom stock
plans, except as set forth in Section 4C of the Disclosure Letter. As of
the Closing, Telcom will not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or any warrants, options, or other rights to acquire its
stock, except as set forth on Section 4C of the Disclosure Letter. As of
the Closing and immediately thereafter, all of the outstanding shares of
Telcom's stock shall be validly issued, fully paid and nonassessable.
iii. There are no agreements among Telcom stockholders with respect to the
voting or transfer of Telcom's capital stock, or with respect to any other
aspect of Telcom's affairs, except as set forth in Section 4C of the
Disclosure Letter.
iv. As of the Closing and immediately thereafter (assuming that the
transactions contemplated herein have been completed and share issuances
have been undertaken in the matter contemplated herein), the authorized and
issued capital stock of PCS Holdings will consist of (a) 125,000,000 shares
of Class A Common Stock, of which no shares shall be issued and
outstanding; (b) 75,000,000 shares of Class B common stock, of which
50,000,000 shares shall be issued and outstanding; and (c) 10,000,000
shares of preferred stock, of which no shares shall be issued and
outstanding. As of the Closing, PCS Holdings will not have outstanding any
stock or securities convertible or exchangeable for any shares of its stock
or contain any profit participation features, nor shall it have outstanding
any rights, warrants, or options to subscribe for or to purchase its stock
or any stock or securities convertible into or exchangeable for its stock
or any stock appreciation rights or phantom stock plans, except as set
forth in Section 4C of the Disclosure Letter. As of the Closing, PCS
Holdings will not be subject to any obligation to repurchase or otherwise
acquire or retire any shares of its stock or any warrants, options, or
other rights to acquire its stock, except as set forth in Section 4C of the
Disclosure Letter. As of the Closing and immediately thereafter, all of the
outstanding shares of PCS Holdings stock shall be validly issued, fully
paid and nonassessable.
v. There are no agreements among PCS Holdings stockholders with respect to
the voting or transfer of PCS Holdings' capital stock or with respect to
any other aspect of PCS Holdings' affairs except as set forth herein or as
set forth in Section 4C of the Disclosure Letter.
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vi. Except as set forth in Section 4C of the Disclosure Letter, Telcom owns
all of the issued and outstanding shares of the capital stock of Percom.
vii. Percom owns the full record and beneficial interest in the Telcom
Shares, free and clear of all pledges, options, liens, security interests
and encumbrances of any nature.
4D. Subsidiaries; Investments. Section 4D of the Disclosure Letter
correctly sets forth the name of each Subsidiary of Telcom, Percom and PCS
Holdings, the jurisdiction of its incorporation and the Persons owning the
outstanding capital stock of such Subsidiary. Each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority and all material
Licenses necessary to own its properties and to carry on its businesses as now
being conducted and as presently proposed to be conducted, and is qualified to
do business in every jurisdiction in which its ownership of property or the
conduct of business requires it to qualify, except for any jurisdiction with
respect to which the failure to qualify would not have a Material Adverse
Effect. All of the outstanding shares of stock of each Subsidiary are validly
issued, fully paid and nonassessable, and all such shares are owned by the
Persons indicated on Schedule 4D free and clear of any lien, charge or
encumbrance except as disclosed in Section 4D of the Disclosure Letter.
4E. No Breach. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any terms, conditions or provisions of (i) the Governing
Documents of Telcom, Percom or PCS Holdings, any agreement with shareholders, or
any other agreement, contract, indenture, mortgage, deed, easement, order,
judgement, decree, arbitration award, statute, regulation or instrument to which
Telcom, Percom or PCS Holdings is a party or by which the assets of Telcom,
Percom or PCS Holdings are bound, in each case except as to matters that would
not be reasonably expected to have a Material Adverse Effect on any such Person
or affect the ability of Telcom, Percom, or PCS Holdings to consummate the
transactions contemplated herein, or (b) constitutes or will constitute a
violation or default under, or create a right to terminate, any of the
foregoing, except as to matters that would not be reasonably expected to have a
Material Adverse Effect or affect the ability of Telcom, Percom, or PCS Holdings
to consummate the transactions contemplated herein. Except as set forth in
Section 4E of the Disclosure Letter, no consent or approval, authorization,
order, registration or qualification of any governmental entity or any other
Person is required for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Telcom, Percom, or PCS
Holdings.
4F. Shares. The issuance, sale or delivery of the Shares and the Telcom
Shares hereunder are not subject to any preemptive right of any Person or to any
contractual right of first refusal or other right in favor of any Person. The
Shares to be issued by PCS Holdings, upon delivery of the contributions
described in Section 2 to PCS Holdings, will be validly issued, fully paid and
non-assessable.
4G. Financial Statements. Telcom and Percom has heretofore delivered to the
Bright Holders the following financial statements:
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i. the audited consolidated balance sheets of Telcom and Percom as of
December 31, 1999, and the related statements of income and cash flows (or
the equivalent) for the twelve-month period then ended;
ii. the unaudited consolidated balance sheets of Telcom and Percom as of
March 31, 2000 (the "Latest Balance Sheet"), and the related statements of
income and cash flows (or the equivalent) for the three-month period then
ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is accurate and complete in all material respects, is
consistent with the books and records of Telcom and Percom (which, in turn, are
accurate and complete in all material respects) and has been prepared in
accordance with generally accepted accounting principles, consistently applied,
and fairly present, in all material respects, the consolidated financial
condition of Telcom and Percom, as the case may be, as of the dates thereof and
the consolidated results of operations and cash flows of Telcom and Percom for
the period shown therein, except that the financial statements in item ii above
are subject to the absence of footnotes and to normal year-end audit
adjustments.
As of this date and immediately prior to the Closing, PCS Holdings (i) will
have no material assets, liabilities or obligations, (ii) will not be a party to
any material contracts and (iii) will not have engaged in any business
operations, except that PCS Holdings will adopt a stock option plan and will
have granted stock options as set forth on Section 4C of the Disclosure Letter.
4H. Absence of Undisclosed Liabilities. Except as set forth in Section 4H
of the Disclosure Letter, Telcom, Percom, and PCS Holdings do not, and upon
consummation of the transactions contemplated herein, will not have any material
obligation or liability (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and regardless of when asserted) arising
out of transactions entered into at or prior to the Closing, or any action or
inaction at or prior to the Closing, or any state of facts existing at or prior
to the Closing other than: (i) liabilities set forth on the Latest Balance Sheet
(including any notes thereto), (ii) liabilities and obligations which have
arisen after the date of the Latest Balance Sheet in the ordinary course of
business (none of which is a material liability), (iii) obligations which are
required to be performed by Telcom, Percom or PCS Holdings after the date
hereof, pursuant to the terms of contracts to which Telcom, Percom or PCS
Holdings is then a party, and (iv) other liabilities and obligations disclosed
in the Disclosure Letter or contemplated by this Agreement.
4I. No Material Adverse Change. Except as set forth in Section 4I of the
Disclosure Letter, since the date of the Latest Balance Sheet, there has been no
material adverse change in the financial condition, assets, business,
liabilities, or operations of Telcom and its Subsidiaries taken as a whole.
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4J. Absence of Certain Developments.
i. Except as expressly contemplated by this Agreement or as set forth in
Section 4J of the Disclosure Letter, since the date of the Latest Balance
Sheet, neither Telcom nor any Subsidiary has:
(a) issued any notes, bonds or other debt securities or any equity
securities or any securities convertible, exchangeable or exercisable into
any equity securities;
(b) borrowed any amount or incurred or become subject to any
liabilities, except current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary
course of business;
(c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability, other than current liabilities paid in the
ordinary course of business;
(d) except as otherwise contemplated herein, declared or made any
payment or distribution of cash or other property to its stockholders with
respect to its stock or purchased or redeemed any shares of its stock or
any warrants, options or other rights to acquire its stock;
(e) mortgaged or pledged any of its properties or assets or subjected
them to any lien, security interest, charge or other encumbrance, except
liens for current property taxes not yet due and payable;
(f) sold, assigned or transferred any of its tangible assets, except
in the ordinary course of business, or canceled any debts or claims;
(g) sold, assigned or transferred any patents or patent applications,
trademarks, service marks, trade names, corporate names, copyrights or
copyright registrations, trade secrets or other intangible assets, or
disclosed any proprietary confidential information to any Person, other
than pursuant to a license arrangement or agreement made in the ordinary
course of business or pursuant to a non-disclosure arrangement or agreement
made in the ordinary course of business or in connection with the
negotiations under this Agreement; or
(h) suffered any extraordinary losses or waived any rights of material
value, whether or not in the ordinary course of business or consistent with
past practice.
ii. No officer, director, employee or agent of Telcom or any of its
Subsidiaries has been or is authorized to make or receive, nor is any such
person making or receiving, any bribe, kickback or other illegal payment
related to Telcom or its Subsidiaries or the conduct of their business.
4K. Assets. Except as set forth in Section 4K of the Disclosure Letter,
Telcom and each Subsidiary have, and upon consummation of the transactions
contemplated herein, will have, good and marketable title to, or a valid
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leasehold interest, license, or right of way in, the properties and assets used
by them, located on their premises or shown on the Latest Balance Sheet or
acquired thereafter.
4L. Tax Matters. Except as set forth in Section 4L of the Disclosure
Letter: Telcom and each Subsidiary have timely filed all Tax Returns that they
are required to file under applicable laws and regulations; all such Tax Returns
are complete and correct in all material respects; Telcom and each Subsidiary
have timely paid all Taxes shown on such Tax Returns to be due and have withheld
and paid over all material Taxes that they are obligated to withhold and pay
over from amounts paid or owing to any employee, stockholder, creditor or other
third party; neither Telcom nor any Subsidiary has waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. Neither Telcom nor any of its
Subsidiaries has made an election under ss.341(f) of the IRC. Neither Telcom nor
any of its Subsidiaries is a party to or bound by any obligation under any Tax
sharing, Tax allocation or indemnification agreement to which any Person other
than Telcom or one or more of its Subsidiaries is a party.
4M. Litigation, etc. Except as set forth in Section 4M of the Disclosure
Letter, there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the best of Telcom's or Percom's knowledge, threatened
against or affecting Telcom or any Subsidiary (or to the best of Telcom's and
Percom's knowledge, pending or threatened against or affecting any of the
officers, directors or employees of Telcom or any of its Subsidiaries with
respect to their businesses or proposed business activities) at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, any actions, suits,
proceedings or investigations with respect to the transactions contemplated by
this Agreement); neither Telcom nor any Subsidiary is subject to any arbitration
proceedings under collective bargaining agreements or otherwise or, to the best
of the Telcom's and Percom's knowledge, any governmental investigations or
inquiries (including inquiries as to the qualification to hold or receive any
license or permit).
4N. Compliance with Laws. Except as set forth in Section 4N of the
Disclosure Letter, neither Telcom nor any Subsidiary has violated any law or any
governmental regulation or requirement which violation could reasonably be
expected to have a Material Adverse Effect, and neither Telcom nor any
Subsidiary has received written notice of any such violation or of any violation
of a law, regulation or requirement. Except as set forth in Section 4N of the
Disclosure Letter, none of Telcom, Percom nor any Subsidiary has received any
notice with respect to any remediation of any environmental condition or any
fine or penalty with respect thereto, and to the knowledge of Telcom and Percom,
neither Telcom nor any Subsidiary is required under any applicable federal,
state or local environmental law or regulation as currently in effect to
remediate any environmental condition or to pay any fine or penalty with respect
thereto.
4O. Affiliated Transactions. Except as set forth in Section 4O of the
Disclosure Letter, no officer, director, shareholder or Affiliate of Telcom or
any Subsidiary or any individual related by blood or marriage to any such Person
or any entity in which any such Person or individual owns any beneficial
interest, is a party to any agreement, contract, commitment or transaction with
Telcom or any Subsidiary or has any material interest in any material property
used by Telcom or any Subsidiary.
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4P. Transfers of Contributed Properties. There is no plan or intention by
PCS Holdings to dispose of any of the Percom shares or Bright Units contributed
to it for its shares as described in Section 2, and PCS Holdings will use the
assets of Bright PCS in the actual conduct of a trade or business.
4Q. No Intention to Redeem. There is no current plan or intention on behalf
of PCS Holdings to redeem or otherwise reacquire any of the Shares issued
pursuant to the transactions described in Section 2 hereof.
4R. Disclosure. Neither this Agreement nor the Disclosure Letter, nor any
of the schedules, attachments, written statements, documents, certificates or
other items delivered by Telcom or any Subsidiary with respect to the
transactions contemplated hereby, contain any untrue statement of a material
fact or omit a material fact necessary to make each statement contained herein
or therein not misleading.
Section 5 Representations and Warranties of the Bright Holders. Each of the
Bright Holders represents and warrants to Telcom, Percom, and PCS Holdings with
respect to each of the following at and as of the Agreement Date and (except for
those made with reference to a specific date) again at and as of the Closing
Date:
5A. Organization and Corporate Power. Each of the Bright Holders which is
an entity represents and warrants that it is duly organized and validly existing
under the laws of the state of its organization and has been duly authorized by
all necessary and appropriate action to enter into this Agreement and to
consummate the transactions contemplated herein. Each of the Bright Holders
which is an entity represents and warrants that the officer executing this
Agreement on behalf of it has been duly authorized by all necessary and
appropriate action. Each of the Bright Holders represents and warrants that this
Agreement is a valid and binding obligation of it, enforceable against it in
accordance with its terms, except insofar as enforceability may be affected by
bankruptcy, insolvency or similar laws affecting creditor's rights generally or
by general principles of equity.
5B. Authorization; No Breach. Each of the Bright Holders represents and
warrants that neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby and thereby nor the
fulfillment of or compliance with the terms and conditions hereof and thereof
(a) conflict with or will result in a breach of any of the terms, conditions or
provisions of (i) its Governing Documents (if such Bright Holder is an entity)
or (ii) any agreement, contract, indenture, mortgage, deed, easement, order,
judgement, decree, arbitration award, statute, regulation or instrument to which
it is a party or by which it or its assets are bound, or (b) constitutes or will
constitute a violation or default or create a right of termination under any of
the foregoing, except as to matters that would not be reasonably expected to
have a Material Adverse Affect or affect the ability of such Bright Holder to
consummate the transactions contemplated herein. Other than the approvals set
forth in Section 4E of the Disclosure Letter or as contemplated in Sections 7B
and 7C hereof, no consent or approval, authorization, order, regulation or
qualification of any governmental entity or any other Person is required for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby.
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5C. Ownership of Units. Each of the Bright Holders represents and warrants
that it owns the Units in Bright as set forth opposite its name on Attachment A
hereto free and clear of any lien, pledge, option, charge, or encumbrance of any
kind or nature, except as disclosed in Section 5C of the Disclosure Letter.
Except as set forth in Section 5C of the Disclosure Letter or as set forth in
the Operating Agreement of Bright PCS, no Bright Holder has granted any right or
option to any other party to acquire such Bright Holders' interests in or to the
Units held by it, which right or option shall be effective after the Agreement
Date. There are no rights of first refusal which cover the Contribution or the
Exchange.
5D. Investment Representations. Each Bright Holder acknowledges that the
Shares have not been and will not be registered or qualified under the
Securities Act or any state securities laws and are offered in reliance upon an
exemption from registration under Regulation D of the Securities Act and similar
state law exceptions. Except as set forth in Section 7J hereof, the Shares to be
received by the Bright Holders hereunder will be held by each Bright Holder for
investment purposes only for its own account, and not with a view to or for sale
in connection with any distribution of the Shares, and each Bright Holder
acknowledges that the Shares cannot be sold or otherwise disposed of unless they
are subsequently registered under the Securities Act or pursuant to an exemption
therefrom.
5E. Accredited Investor. Each Bright Holder represents and warrants that it
is an "accredited investor" within the meaning of Regulation D under the
Securities Act and has the knowledge and experience in financial and business
matters such that it is capable of evaluating the merits and risks of receiving
and owning the Shares and is able to bear the economic risk of such ownership
and understands that an investment in Shares involves substantial risks.
5F. Availability of Information. There has been made available to such
Bright Holder and its respective advisors the opportunity to ask questions of,
and receive answers from, such Bright Holder concerning the terms and conditions
of the investment in the Shares, and to obtain the financial information with
respect to Telcom's, Percom's, and/or PCS Holdings' assets, and any additional
information, to the extent that Telcom, Percom, or PCS Holdings possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information given to such Bright Holder, or to
otherwise make an informed investment decision, that such Bright Holder has had
an opportunity to consult with counsel and other advisors about the investment
in the Shares, and that all material documents, records and books pertaining to
such investment have, on request, been made available to Telcom's, Percom's,
and/or PCS Holdings and its respective advisors.
5G. No General Solicitation. Each Bright Holder represents and warrants
that neither it nor any of its advisors, is aware of or has engaged in any form
of general solicitation or advertising with respect to sales of the Shares,
including (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio; and (ii) any seminar or meeting whose attendees were
invited by any general solicitation or general advertising.
5H. Litigation. Each Bright Holder represents and warrants that there is no
action, suit, proceeding or investigation pending or, to its knowledge,
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threatened against it that questions the validity of this Agreement, which may
affect the ability of it to consummate the transactions contemplated hereby or
relates in any manner to the Xxxxx.
0X. Brokerage. Except as set forth in Section 7J hereof, each Bright Holder
represents and warrants that there are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon it.
5J. No Intention to Transfer Shares. Except as set forth in Section 7J
hereof, each Bright Holder represents and warrants that it does not have any
intention or plan, formally or informally, on the date hereof, to sell,
exchange, dispose, or otherwise transfer any of the Shares received by it
pursuant to this Agreement.
5K. No Written Actions of Bright PCS. Each Bright Holder represents and
warrants that it has not executed any written instrument which would evidence
action in lieu of a meeting of the Bright PCS Members as authorized by Section
6.2.6 of the Bright PCS Operating Agreement. Furthermore, each Bright Holder who
is authorized to appoint a manager under Section 5.3.7 of the Bright PCS
Operating Agreement represents and warrants that such manager has not executed
any written instrument which would evidence action in lieu of a meeting of the
Managers of Bright PCS as authorized by Section 5.3.4 of the Bright PCS
Operating Agreement.
5L. Review of Draft Registration Statement. Each Bright Holder acknowledges
that (i) PCS Holdings has advised it that PCS Holdings intends to file a
registration statement no later than May 31, 2000 with the SEC to register
shares of its Class A Common Stock, (ii) there can be no assurance that PCS
Holdings will file the registration statement, that it will reach final
agreement with one or more underwriters, that the SEC will declare the
registration statement effective, or that the offering will successfully close,
(iii) neither PCS Holdings, nor any Affiliate or representative has given any
assurance, or made any representation, as to the initial price per share of such
public offering (if such offering takes place), and (iv) it has reviewed the
draft registration statement dated April 21, 2000 (and acknowledges that the
draft is subject to change).
5M. Disclosure. Each Bright Holder represents and warrants that neither
this Agreement nor any of the schedules, attachments, written statements,
documents, certificates or other items prepared or supplied to Telcom, Percom,
or PCS Holdings by it with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit a material fact
necessary to make each statement contained herein or therein not misleading.
Section 6 Closing.
6A. Closing Date. The closings of the transactions contemplated by this
Agreement shall take place at the offices of Arnall Golden & Xxxxxxx, LLP, at
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000-0000, or at such
other place as shall be mutually agreed upon by the parties, on May 26, 2000,
(or, in the event that any other conditions to the obligations of the any party
to close as provided hereunder shall not have been met at such date, then on the
date which is no later than three (3) business days following the date on which
such conditions shall have been satisfied or waived by the party whose
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obligations are so conditioned) or at such other date and time as to which the
parties may agree (the "Closing Date").
6B. Deliveries by PCS Holdings at the Closing. At the Closing, PCS Holdings
shall deliver the following documents:
i. A certificate of the President of PCS Holdings certifying that its
representations and warranties are true and correct in all material respects as
of the Closing Date and that it has performed or complied, in all material
respects, with all of its respective agreements and obligations required by this
Agreement to be performed or complied with by it prior to or at the Closing;
ii. A certified copy of resolutions the Board of Directors of PCS Holdings,
authorizing the execution and delivery of this Agreement and the performance of
the obligations of PCS Holdings hereunder;
iii. Certificates representing the Shares to be issued to the Bright
Holders or the Permitted Transferees (as defined in Section 7J hereof);
iv. Certificates representing the Shares to be issued to Telcom;
v. All third party and governmental consents necessary or appropriate to
consummate the transactions contemplated herein; and
vi. Those other closing documents required to be executed by it or as may
otherwise be reasonably necessary or appropriate to consummate the transactions
contemplated herein.
6C. Deliveries by Percom at the Closing. At the Closing, Percom shall
deliver the following documents:
i. a certificate of the President of Percom, certifying that its
representations and warranties are true and correct in all material
respects as of the Closing Date and that it has performed or complied, in
all material respects, with all of its respective agreements and
obligations required by this Agreement to be performed or complied by it
prior to or at the Closing;
ii. certified copy of the resolutions of the Board of Directors of Percom,
authorizing the execution delivery of this Agreement and the performance of
the obligations of Percom hereunder;
iii. certificates representing the Telcom Shares to be issued to the Bright
Holders or the Permitted Transferees;
iv. all third party and governmental consents necessary or appropriate to
consummate the transactions contemplated herein; and
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v. those other closing documents required to be executed by it or as may
otherwise be reasonably necessary or appropriate to consummate the
transactions contemplated herein.
6D. Deliveries by Telcom at the Closing. At the Closing, Telcom shall
deliver the following documents:
i. a certificate of the President of Telcom, certifying that its
representations and warranties are true and correct in all material
respects as of the Closing Date and that it has performed or complied, in
all material respects, with all of its respective agreements and
obligations required by this Agreement to be performed or complied with by
it prior to or at the Closing;
ii. a certified copy of the resolutions of the Board of Directors of
Telcom, authorizing the execution and delivery of this Agreement and the
performance of the obligations of Telcom hereunder;
iii. stock power(s) or other appropriate transfer documents evidencing the
transfer of the Percom Shares to PCS Holdings.
iv. all third party and governmental consents necessary or appropriate to
consummate the transactions contemplated herein; and
v. those other closing documents required to be executed by it or as may
otherwise be reasonably necessary or appropriate to consummate the
transactions contemplated herein.
6E. Deliveries by the Bright Holders at the Closing. At the Closing, each
Bright Holder shall deliver the following documents:
i. A certificate of such Bright Holder and each Permitted Transferee, as
appropriate, certifying that the representations and warranties of such
Bright Holder contained in this Agreement are true and correct in all
material respects as of the Closing Date and that it has performed, in all
material respects, all of its respective agreements and obligations
required by this Agreement to be performed or complied with by it prior to
or at the Closing;
ii. A certified copy of resolutions of the Board of Directors of such
Bright Holder (if a corporation) authorizing the execution and delivery by
it of this Agreement and the performance of the obligations of it
hereunder;
iii. Executed Unit Assignments, in the form of Attachment C attached
hereto, evidencing the transfer and assignment of the Units to PCS Holdings
and/or Percom, as applicable and as set forth on Attachment A hereto;
iv. All third party and governmental consents necessary or appropriate to
consummate the transactions contemplated herein;
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v. Resignations of all the members of the Management Committee of Bright
PCS.
vi. Those other closing documents required to be executed by it or as may
otherwise be reasonably necessary or appropriate to consummate the
transactions contemplated herein.
Section 7 Covenants; Additional Agreements.
7A. Implementing Agreement. Subject to the terms and conditions hereof,
each party hereto shall use its best efforts to take all action required of it
to fulfill its obligations under the terms of this Agreement and to facilitate
the consummation of the transactions contemplated hereby.
7B. HSR Act Filings. Each of the parties hereto shall use reasonable
efforts to prepare and, as soon as practicable after the Agreement Date, file
with the Federal Trade Commission and the Antitrust Division of the Department
of Justice any materials and information required to be filed with or provided
pursuant to the HSR Act with respect to the transactions contemplated by this
agreement. Each of the parties hereto shall promptly supply any additional
information which may be required or requested of it in connection with the HSR
Act filings.
7C. RTFC Filings. Each of the parties hereto shall use reasonable best
efforts to prepare and, as soon as practicable after the Agreement Date, file
with the RTFC any applications necessary to obtain the RTFC Consent.
7D. Lockup Agreement. Except as may be provided in the Registration Rights
Agreement described in Section 7L hereof, each of the Bright Holders agrees for
the benefit of PCS Holdings not to effect any sale or distribution of any
Shares, or any securities convertible into or exchangeable or exercisable for
Shares, including a sale pursuant to Rule 144 under the Securities Act (or any
similar provision then in force), during the ten days before and the 180 days
after any underwritten registration of shares of common stock of PCS Holdings
has become effective. Each of the Bright Holders authorizes the Bright Holders
Representative (as defined below) to execute such documentation as may
reasonably be requested by PCS Holdings, its underwriters, or its counsel to
more appropriately evidence the foregoing.
7E. Bright Holders Representative. After the Closing, Xxxxxx Xxxxxxxx shall
be the representative of the Bright Holders (the "Bright Holders
Representative"). By execution of this Agreement, each of the Bright Holders
irrevocably grants to the Bright Holders Representative an irrevocable proxy
coupled with an interest with respect to the Shares and the Telcom Shares to be
issued to them pursuant to this Agreement, to vote such Shares and the Telcom
Shares, to execute consents, waivers or releases with respect thereto, and to
exercise all other shareholder rights with respect thereto, which proxy shall
continue in full force and effect until the earlier of (i) the consummation of a
public offering of stock of Horizon PCS, or (ii) December 31, 2000.
Additionally, during the period set forth in the previous sentence (i) each of
the Bright Holders irrevocably grants to the Bright Holders Representative a
proxy to enter into such additional documents and instruments as may be
necessary or appropriate (including, without limitation, amendments to this
17
Agreement), to consummate the transactions contemplated herein (provided,
however, that such proxy shall not be applicable to any action or undertaking
that does not affect all of the Bright Holders in a pro rata fashion); and (ii)
all communications with the Bright Holders pursuant to the terms of this
Agreement (including, without limitation, communication with respect to the
provisions of Article 8 hereof) shall be directed to the Bright Holders
Representative, who shall be delegated the authority to act as the
representative of the Bright Holders in their capacity as Indemnifying Persons
or Indemnified Persons hereunder. The Bright Holders further acknowledge and
agree that they shall be bound by any and all actions taken by the Bright
Holders Representative in resolving all disputes or other issues between the
Bright Holders, on the one hand, and Telcom, Percom, and PCS Holdings, on the
other hand, pursuant to the provisions of Article 8 hereof or otherwise under
this Agreement. Telcom, Percom, and PCS Holdings shall be entitled to rely upon
any communication or writings given or executed by the Bright Holders
Representative. All notices to be sent to the Bright Holders pursuant to Article
9 hereof pursuant to this Agreement may be addressed to the Bright Holders
Representative and any notice so sent shall be deemed notice to all of the
Bright Holders.
7F. Access to Information. At all times before the Closing Date, each of
Telcom, PCS Holdings and Percom shall provide the Bright Holders, through the
Bright Holders Representative, with reasonable access to those properties,
files, books, records and other materials relating to Telcom, PCS Holdings and
Percom and their businesses and the right to examine and inspect such materials
as the Bright Holders may deem appropriate (and make copies of the same).
7G. Representations and Warranties, Supplemental Information. From time to
time prior to the Closing, each party shall promptly disclose in writing to the
other any matter hereafter arising which, if existing, occurring or known at the
Agreement Date would have been required to be disclosed to the other or which
would render inaccurate any of the representations, warranties or statements set
forth herein.
7H. Tax Free Transfers. The parties intend that the Contribution will be
part of a single integrated transaction in which no gain or loss will be
recognized pursuant to IRC Section 351, and the parties agree that they will
prepare and file their Federal and state income tax returns in a manner
consistent with such characterization. Further, each of the Bright Holders
agrees to provide to PCS Holdings a statement setting forth the amount of such
Bright Holders' tax basis in the Units so that PCS Holdings can determine its
tax basis in such Units in accordance with IRC Section 362. Each Bright Holder
agrees to file the information required by Treasury Regulation ss. 1.351-3 for
its Federal income tax return for the taxable year of the contribution, and PCS
Holdings agrees to furnish to each Bright Holder information necessary to enable
each Bright Holder to comply with the information reporting requirements of
Treasury Regulation ss. 1.351-3.
7I. Disclosure Letter. The parties hereto shall supplement or amend the
Disclosure Letter from time to time prior to the Closing; provided, however,
that any such supplement or amendment (which does not represent an immaterial
update of matters arising in the ordinary course of business) shall not affect
any rights that the parties may have under this Agreement, whether relating to
closing conditions, indemnification or otherwise.
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7J. Limited Transferability of Units in Bright PCS. Subject to the further
provisions of this Section 7J, no Bright Holder will sell, page, hypothecate,
convey, or otherwise transfer any Unit to any person or entity before the
Closing. Notwithstanding anything in this Agreement to the contrary, the parties
hereto agree that Percom and each of the Bright Holders may transfer, for no
consideration, a limited number of the Units of Bright PCS to one or more of
their key employees, officers, or directors (each such transferee a "Permitted
Transferee" and each such transaction a "Permitted Unit Transfer"), subject to
the following terms and conditions:
(i) Each Permitted Unit Transfer must be accomplished on or before May 19,
2000 (the "Permitted Unit Transfer Period"), and PCS Holdings must be
provided prompt written notice of each Permitted Unit Transfer, which
notice shall include the name and address of the Permitted Transferee,
together with the number of Units transferred;
(ii) Percom and each of the Bright Holders may not transfer more than an
aggregate of 10% of the Units owned by it to Permitted Transferees;
(iii) Percom and each of the Bright Holders may make Permitted Unit
Transfers to only one individual for each 500 Units owned by such
transferor, provided that each Bright Holder shall be permitted to make a
Permitted Unit Transfer to at least one (1) Permitted Transferee; and
(iv) Each Permitted Transferee must, as a condition precedent to the
effectiveness of a Permitted Unit Transfer, execute a receipt and
acknowledgement letter in form and substance satisfactory to PCS Holdings
and its counsel, evidencing each Permitted Transferee's acknowledgement and
agreement that each Unit received in a Permitted Unit Transfer is
specifically subject to the terms and conditions of this Agreement and the
Bright PCS Operating Agreement, and that, by acceptance of a Unit received
in a Permitted Unit Transfer, the Permitted Transferee agrees to be bound
by, and shall perform all of the appropriate obligations under, this
Agreement and the Bright PCS Operating Agreement with respect to the Units
transferred to him or her pursuant to a Permitted Unit Transfer.
The parties hereto also agree that the Bright Holders will, immediately to
the Closing, assign to JSI Capital Advisors LLC, the Bright Holders' independent
financial advisor ("JSI") 140 Units. Such transfer, if accomplished in
accordance with the foregoing, shall also be a "Permitted Unit Transfer" and JSI
shall also be a "Permitted Transferee", provided that (i) PCS Holdings must be
provided with prompt written notice of such transfer, and (ii) JSI must execute
a receipt and acknowledgement letter as contemplated in Section 7J.(iv) above,
in form and substance reasonably satisfactory to PCS Holdings and its counsel.
In addition, the parties further agree that ComNet, Inc. may distribute any
of the Units owned by it to its shareholders before the Closing, which
transaction, if accomplished, shall be a "Permitted Unit Transfer" and the
recipients of such Units shall be "Permitted Transferees", provided that (i) PCS
Holdings is provided prompt written notice of such transfers, and (ii) such
19
recipients must execute a receipt and acknowledgement letter as contemplated in
Section 7J.(iv) above, in form and substance reasonably satisfactory to PCS
Holdings and its counsel.
The parties hereto acknowledge and agree that Attachment A to this
Agreement shall be updated as soon as practicable after the expiration of the
Permitted Unit Transfer Period, and again immediately prior to the Closing, to
appropriately evidence the correct ownership of Units and the appropriate
disposition thereof pursuant to the terms and conditions of this Agreement.
Percom and each of the Bright Holders hereby (a) approves all permitted
Unit Transfers made pursuant to this Section 7J, (b) waives any and all notices,
waiting periods, rights of first offer or refusal set forth in Section 11 of the
Bright PCS Operating Agreement, and (c) approves the admission of each Permitted
Transferee as a Member (as defined in the Bright PCS Operating Agreement) of
Bright PCS.
7K. Continued Applicability of Certain Provisions of Bright PCS Operating
Agreement to Shares. Notwithstanding anything in this Agreement to the contrary,
each of the Bright Holders acknowledge and agree that, from the date hereof
until the earlier of (i) the effectiveness of a public offering of stock of
Horizon PCS, or (ii) December 31, 2000, the provisions of Article 11 of the
Bright PCS Operating Agreement, which set forth certain restrictions upon
transfer of the Units and which set forth certain rights of first refusal with
respect to any contemplated transfer of the Units, shall be applicable to the
Shares received by the Bright Holders, such that such shares shall likewise be
subject to certain restrictions upon transfer, and shall also be subject to
certain rights of first refusal.
7L. Registration Rights Agreement. At the Closing, Holdings and the Bright
Holders shall execute a Registration Rights Agreement in the form of Attachment
D hereto.
Section 8 Indemnification.
8A. Indemnification by Telcom, Percom, and PCS Holdings. Subject to the
terms, conditions and limitations of this Section 8, the Telcom, Percom, and PCS
Holdings jointly and severally shall indemnify the Bright Holders and their
respective officers, directors, trustees, employees, agents and representatives
(the "Bright Holders Indemnified Parties") against, and agree to hold each of
them harmless from, any and all Losses incurred or suffered by them relating to
or arising out of or in connection with any of the following (in each case so
long as notice of a claim for indemnification is made in good faith during the
survival period set forth in Section 9E):
i. any breach of any representation or warranty made by Telcom, Percom, or
PCS Holdings in this Agreement; or
ii. any breach, inaccuracy, or failure by Telcom, Percom, or PCS Holdings
to perform any covenant or obligation of Telcom, Percom, or PCS Holdings
under this Agreement.
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8B. Indemnification by the Bright Holders. Subject to the terms, conditions
and limitations of this Section 8, each Bright Holder shall severally indemnify
Telcom, Percom, and PCS Holdings and their Affiliates and their respective
officers, directors, trustees, employees, agents and representatives (the
"Telcom Indemnified Parties") against, and agree to hold each of them harmless
from, any and all Losses incurred or suffered by them relating to or arising out
of or in connection with any of the following (in each case so long as notice of
a claim for indemnification is made in good faith during the survival period set
forth in Section 9E):
i. any breach of or any inaccuracy in any representation or warranty made
by such Bright Holder in this Agreement;
ii. any breach of or failure by such Bright Holder to perform any covenant
or obligation of it under this Agreement; or
iii. any action taken by Bright Holders' Representative purporting to act
in his capacity as such and any claim by any person that the Bright
Holders' Representative acted outside his duties.
8C. Claims. As soon as is reasonably practicable after becoming aware of a
claim for indemnification under this Agreement the Indemnified Person shall
promptly give notice to the Indemnifying Person of such claim and the amount the
Indemnified Person believes it is entitled to receive hereunder from the
Indemnifying Person; provided that the failure of the Indemnified Person to give
notice shall not relieve the Indemnifying Person of its obligations under this
Section 8, except to the extent (if any) that the Indemnifying Person shall have
been prejudiced thereby. If the Indemnifying Person does not object in writing
to such indemnification claim within 30 calendar days of receiving notice
thereof, the Indemnified Person shall be entitled to recover promptly from the
Indemnifying Person the amount of such claim, and no later objection by the
Indemnifying Person shall be permitted. If the Indemnifying Person agrees that
it has an indemnification obligation but objects that it is obligated to pay
only a lesser amount, the Indemnified Person shall nevertheless be entitled to
recover promptly from the Indemnifying Person the lesser amount, without
prejudice to the Indemnified Person's claim for the difference. Any claim under
this Section 8 must be made on or prior to the end of the survival period set
forth in Section 9E. No claim may be delivered in writing against an
Indemnifying Person under this Section 8 until the aggregate amount of all such
claims equals at least $100,000 at which time the Indemnifying Person shall be
liable for all claims including the initial $100,000 in claims (the "Basket"),
and the maximum Losses (other than a breach of the representations set forth in
Section 4C and 5C) which an Indemnifying Person shall be obligated to pay under
the provisions hereof shall be limited to $9,000,000 in the aggregate (the
"Cap"); provided, however, that the Basket and the Cap shall not be applicable
to a breach of the representations and warranties set forth in Sections 0X.xx,
4C.vii, and 5C hereof.
8D. Assumption of Defense. The Indemnifying Person may, at its own expense,
(a) participate in the defense of any claim, suit, action or proceeding and (b)
upon notice to the Indemnified Person and the Indemnifying Person's delivering
to the Indemnified Person a written agreement that the Indemnified Person is
entitled to indemnification pursuant to Section 8A or 8B for all Losses arising
21
out of such claim, suit, action or proceeding, assume the defense thereof;
provided, however, that (i) the Indemnifying Person's counsel is reasonably
satisfactory to the Indemnified Person and (ii) the Indemnifying Person shall
thereafter consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with respect to such
claim, suit, action or proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest, then
such Indemnified Person may employ separate counsel to represent or defend it in
any such claim, action, suit or proceeding and the Indemnifying Person shall pay
the fees and disbursements of such separate counsel. Whether or not the
Indemnifying Person chooses to defend or prosecute any such claim, suit, action
or proceeding, all of the parties hereto shall cooperate in the defense or
prosecution thereof.
8E. Settlement or Compromise. Any settlement or compromise made or caused
to be made by the Indemnified Person or the Indemnifying Person, as the case may
be, of any such claim, suit, action or proceeding of the kind referred to in
Section 8D shall also be binding upon the Indemnifying Person or the Indemnified
Person, as the case may be, in the same manner as if a final judgment or decree
had been entered by a court of competent jurisdiction in the amount of such
settlement or compromise; provided, however, that no obligation, restriction or
Loss shall be imposed on the Indemnified Person as a result of such settlement
without its prior written consent, which consent will not be unreasonably
withheld or delayed. The Indemnified Person will give the Indemnifying Person at
least 10 days' notice of any proposed settlement or compromise of any claim,
suit, action or proceeding it is defending, during which time the Indemnifying
Person may reject such proposed settlement or compromise; provided, however,
that from and after such rejection, the Indemnifying Person shall be obligated
to assume the defense of and full and complete liability and responsibility for
such claim, suit, action or proceeding and any and all Losses in connection
therewith in excess of the amount of unindemnifiable Losses which the
Indemnified Person would have been obligated to pay under the proposed
settlement or compromise.
8F. Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Person of its
obligations hereunder.
8G. No Set-Off. The indemnification obligations of the parties hereunder
shall be limited as set forth herein and no party shall be entitled to set-off
such indemnification obligations or any other amounts against any amounts owed
to such party by any other party.
8H. Exclusive Remedy. The remedies provided for in this Article 8 shall be
the sole and exclusive remedy for the indemnified parties with respect to any
claim under this Agreement, except for equitable claims or claims based on
fraud.
Section 9 Miscellaneous.
22
9A. Transfer and Similar Taxes. All sales, use, stock, stamp, transfer,
registration or similar taxes or duties, if any, resulting from the transfer by
Telcom, Percom or the Bright Holders of property described in Section 2 hereof
shall be paid by PCS Holdings.
9B. Complete Agreement. This Agreement (including the Exhibits hereto, if
any, and the Disclosure Letter) represents the entire agreement between the
parties hereto covering everything agreed upon or understood in this transaction
and all other prior agreements, written or oral are merged into this Agreement.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof in effect between the parties.
9C. Authorized Signatories. The persons executing this Agreement for and on
behalf of the parties hereto each represent that they have the requisite
authority to bind the entities on whose behalf they are signing.
9D. Termination. In the event that for any reason the Closing does not
occur on or before August 31, 2000, then any party, if not then in breach of its
obligations under this Agreement, may terminate this Agreement by giving written
notice thereof to the other party; provided, however, that no such termination
shall relieve either party of liability for any breach of its obligations
hereunder prior to such termination.
9E. Survival of Representations, Warranties, and Covenants. Regardless of
any investigation made by any party or on its behalf, all representations,
warranties, and covenants contained herein or made in writing by any party in
connection herewith shall survive the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, until June 30,
2001 in the case of all matters other than the representations and warranties
set forth in Sections 4C and 5C hereof, and indefinitely in the case of the
representations and warranties set forth in Sections 0X.xx, 4C.vii, and 5C
hereof.
9F. Successors and Assigns. This Agreement may not be assigned by any
Bright Holders, other than as contemplated in Section 7J hereof or to a
wholly-owned subsidiary entity of such Bright Holder, without the written
consent of Telcom, Percom, and PCS Holdings. This Agreement may not be assigned
by Telcom, Percom, or PCS Holdings without the consent of the Bright Holders
Representative. Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of the parties hereto
shall bind and inure to the benefit of the respective successors and assigns of
the parties hereto whether so expressed or not.
9G. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
9H. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
23
9I. Descriptive Headings: Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a Section of
this Agreement. The use of the word "including" in this Agreement shall be by
way of example rather than by limitation.
9J. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to conflicts of laws principles.
9K. Amendment. No change or addition shall be made to this Agreement except
by a written agreement executed by Telecom, Percom, PCS Holdings, and the Bright
Holders Representative.
9L. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the parties hereto at the address indicated
below:
To Telcom, Percom, or PCS Holdings:
00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxx 00000-0000
With a copy to (which shall not constitute notice):
Arnall Golden & Xxxxxxx, LLP
Suite 2800
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
If to Bright Holders, to the Bright Holders Representative at:
Xxxxxx Xxxxxxxx
Telephone Service Company
Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxx 00000
Fax: 000-000-0000
24
With a copies to (which shall not constitute notice):
Xxxxxxx Xxxx
JSI Capital Advisors, LLC
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Fax: 000-000-0000
and Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
9M. Expenses. Each party hereto will pay its own expenses (whether legal,
tax, accounting, financial advice or otherwise) in connection with these
transactions; provided, however, that PCS Holdings agrees to pay all reasonable
costs and expenses incurred by the parties hereto to XxxXxxxx Valuation Advisors
to perform valuation services with respect to the Telcom Shares and with respect
to the valuation of PCS Holdings.
[signatures on following page]
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
HORIZON TELCOM, INC.
By: /s/ Xxxxxx XxXxxx
--------------------------------
Its: President
HORIZON PERSONAL COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. XxXxxx
--------------------------------
Its: President
HORIZON PCS, INC.
By: /s/ Xxxxxxx X. XxXxxx
-------------------------------
Its: President
BRIGHT HOLDERS REPRESENTATIVE:
____________________________________
Name: ______________________________
BRIGHT HOLDERS:
[see separate signature pages]
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
HORIZON TELCOM, INC.
By: ____________________________
Its: ___________________________
HORIZON PERSONAL COMMUNICATIONS, INC.
By: ____________________________
Its: ___________________________
HORIZON PCS, INC.
By: ____________________________
Its: ___________________________
BRIGHT HOLDERS REPRESENTATIVE:
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
BRIGHT HOLDERS:
[see separate signature pages]
26
XXXXXX MUTUAL TELEPHONE CO.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------
Its: President
[see separate signature pages]
AYERSVILLE TELEPHONE CO.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Its: President
[see separate signature pages]
XXXXXX RIDGE TELEPHONE CO.
By: /s/
-----------------------------
Its: President
[see separate signature pages]
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Its: Vice President and XX
XXXXXX CHOICE, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Its: Vice President
[see separate signature pages]
BUCKLAND TELEPHONE CO.
By: /s/ Xxxx X. Xxxxxx
----------------------------
Its: Secretary, Buckland Telephone Board of Directors
[see separate signature pages]
COM NET, INC.
By: /s/ Xxxx Xxxxxx/Xxxx X. Xxxxxx
------------------------------
Its: CEO
[see separate signature pages]
DOYLESTOWN TELEPHONE CO.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Its: President
[see separate signature pages]
FARMERS MUTUAL TELEPHONE CO.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Its: Secretary
[see separate signature pages]
FT. XXXXXXXX TELEPHONE CO.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Its: Secretary-Treasurer
[see separate signature pages]
GLANDORF TELEPHONE CO.
By: /s/ Xxxxxx Xxxx
----------------------------
Its: President
[see separate signature pages]
KALIDA TELEPHONE CO., INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------
Its: Manager
[see separate signature pages]
XXXXXXX TELEPHONE CO.
By: /s/ Xxxx Xxxxxx
----------------------------
Its: President
[see separate signature pages]
MIDDLE POINT TELEPHONE CO.
By: /s/ Xxxxxx Xxxx
----------------------------
Its: Manager
[see separate signature pages]
NEW KNOXVILLE TELEPHONE CO.
By: /s/ Xxxx Xxxxxxx
----------------------------
Its: President
[see separate signature pages]
REACH OF OHIO, INC.
By: /s/ Sec/Treas.
----------------------------
Its: Xxxxxx X. _________________
[see separate signature pages]
RIDGEVILLE TELEPHONE CO.
By: /s/ Xxxx X. Xxxxx
----------------------------
Its: President
[see separate signature pages]
SHERWOOD MUTUAL TELEPHONE CO.
By: /s/ Xxxx X. _______________
----------------------------
Its: Vice President
[see separate signature pages]
THE SYCAMORE TELEPHONE CO.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Its: Vice President
[see separate signature pages]
TELEPHONE SERVICE CO.
By: _____________ Xxxxx
----------------------------
Its: President
[see separate signature pages]
VAUGHNSVILLE TELEPHONE CO.
By: /s/ Xxx Xxxxx
----------------------------
Its: Plant Manager
[see separate signature pages]
WABASH COMMUNICATIONS, INC.
By: /s/ Xxxxxx M_______
----------------------------
Its: Board Member
[see separate signature pages]
LIST OF SCHEDULES AND EXHIBITS
------------------------------
Exhibit or Attachment Description
--------------------- -----------
2.2 Contribution And Exchange Agreement
None Disclosure Letter
Attachment A Bright Holders and Number of Units Held
Attachment B New Percom Markets
Attachment D Form of Assignment of Units
Attachment D Form of Registration Rights Agreement
AMENDMENT TO CONTRIBUTION AND EXCHANGE AGREEMENT
THIS AMENDMENT is made as of May 19, 2000, by and among HORIZON PERSONAL
COMMUNICATIONS, INC., an Ohio corporation ("Percom"), HORIZON TELCOM, INC., an
Ohio corporation ("Telcom"), HORIZON PCS, INC., a Delaware corporation ("PCS
Holdings") and Xxxxxx Xxxxxxxx (the "Bright Holders Representative").
W I T N E S S E T H
WHEREAS, that certain Contribution and Exchange Agreement (the
"Contribution and Exchange Agreement"), dated May 4, 2000, was entered into by
and among Percom, Telcom, PCS Holdings, the Bright Holders Representative and
certain persons listed on the Attachment to the Contribution and Exchange
Agreement (collectively, the "Bright Holders"); and
WHEREAS, Section 9K of the Contribution and Exchange Agreement allows the
Contribution and Exchange Agreement to be amended by a written amendment
executed by Percom, Telcom, PCS Holdings and the Bright Holders Representative;
and
WHEREAS, the parties to the Contribution and Exchange Agreement desire to
amend the Contribution and Exchange Agreement.
NOW, THEREFORE, in consideration of mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Terms used herein but not defined herein shall have the meaning set
forth in the Contribution and Exchange Agreement.
2. Section 7J(i) is hereby deleted in its entirety and replaced with the
following:
"Percom will promptly provide written notice to the Bright Holder
Representative of its receipt of the Sprint PCS Consent ("Consent Notice").
Each Permitted Unit Transfer must be accomplished on or before the fifth
business day after the receipt of the Consent Notice by the Bright Holders
Representative (the Permitted Unit Transfer Period"), and PCS Holdings must
be provided prompt written notice of each, which notice shall include the
name and address of the Permitted Transferee, together with the number of
units transferred."
3. Xxxx 0X (x) of the Disclosure Letter is hereby deleted in its
entirety and replaced with the following:
"In connection with the proposed grant by Sprint PCS of additional markets
to Percom in Pennsylvania, New York and New Jersey, Sprint PCS will receive
a warrant to acquire shares of the commons stock of PCS Holdings. It is
currently contemplated that, in the event PCS Holdings conducts an IPO,
Sprint PCS will receive a warrant to acquire 2,510,460 shares of PCS
Holdings' Class A Common Stock at a per share exercise price equal to the
price per share to the public in the IPO. If PCS Holdings does not close an
IPO prior to July 31, 2003, Sprint PCS will receive warrants to purchase
shares of Class A Common Stock equal to 3% of the shares of PCS Holdings'
common stock outstanding, on a fully diluted basis, as of July 31, 2003."
4. Item 4C(e) of the Disclosure Letter is hereby deleted in its entirety.
5. The Bright Holders Representative acknowledges and agrees that the
amendments/supplements to the Disclosure Letter contained in paragraphs 3 and 4
above do not affect the Bright Holders' obligation to close the transactions
contemplated in the Agreement and that such amendments/supplements shall not be
used as a reason by the Bright Holders or the Bright Holders Representative to
fail to close the transactions contemplated in the Agreement.
6. Section 9M is hereby deleted in its entirety and replaced with the
following:
"Expenses. Each party hereto will pay its own expenses (whether legal, tax,
accounting, financial advice or otherwise) in connection with these
transactions; provided, however, that PCS Holdings agrees to pay all such
reasonable costs and expenses (whether legal, tax, accounting, financial
advice or otherwise) actually incurred by the Bright Holders (including
without limitation the amounts paid to XxxXxxxx Valuation Advisors to
perform valuation services with respect to the Telcom Shares), up to a
maximum amount of $100,000."
7. This Amendment may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Amendment. In the event of any conflict between any term of this Amendment
and the terms of the Contribution and Exchange Agreement, this Amendment shall
prevail. In all other respects, the Contribution and Exchange Agreement shall
remain in full force and effect.
[signatures on following page(s)]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
HORIZON TELCOM, INC.
By: ______________________________
Its:______________________________
HORIZON PERSONAL COMMUNICATIONS, INC.
By:_______________________________
Its:______________________________
HORIZON PCS, INC.
By:______________________________
Its:_____________________________
BRIGHT HOLDERS REPRESENTATIVE:
_________________________________
Xxxxxx Xxxxxxxx
