EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 12th day of May, 2004, by and between Sprint Spectrum L.P., a
Delaware limited partnership ("Sprint"), and Horizon Personal Communications,
Inc., an Ohio corporation ("Horizon").
PREAMBLE
A. On this date, Sprint and certain of its affiliates and Horizon have
entered into a Settlement Agreement and Mutual Release (the "Release").
B. Pursuant to the Release, each party is waiving certain obligations of
the other party under the Management Agreement, dated June 8, 1998, as amended,
between Horizon, Sprint and certain of its affiliates (the "Management
Agreement") respecting the wireless telecommunications business in the
territories covered by the Network Services Agreement (the "NSA"), dated as of
August 12, 1999, between Virginia PCS Alliance, LC and West Virginia PCS, LC
(collectively, "nTelos") and Horizon (the "nTelos Service Area") will be
terminated.
C. Sprint and Horizon desire that Sprint purchase Horizon's economic
interests in the subscribers in the nTelos Service Area, as well as other
related assets, upon the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS
1.1 PURCHASED ASSETS. Subject to and upon the terms and conditions set
forth herein, Horizon agrees to sell to Sprint, and Sprint agrees to purchase
from Horizon, at the Closing (as defined below) the following assets
(collectively, the "Purchased Assets"):
(a) All of the economic and other interests and rights with respect to
the subscribers of Horizon within the nTelos Service Area as of the Closing
except for subscribers located in the Customer Service Areas listed on Schedule
1.1(a) attached hereto (collectively, the "Subscribers"), including, without
limitation, all of Horizon's rights under all outstanding subscriber contracts
(the "Subscriber Contracts") for the Subscribers;
(b) All of Horizon's interest, if any, in customer records related to
the Subscribers;
(c) Any interest of Horizon in the NPA-NXXs associated directly with
the nTelos Service Area, including, without limitation, any unused NPA-NXX
blocks;
(d) Any security deposits made by Subscribers and held by Horizon and
any prepayments made by Subscribers and held by Horizon for services rendered or
to be rendered on or after the Effective Date;
(e) All of Horizon's rights as lessee under the lease agreements
related to Horizon's seven retail stores in the nTelos Service Area (the "Retail
Stores"), as identified on Schedule 1.1(e) attached hereto (collectively, the
"Assigned Leases");
(f) All of Horizon's right, title and interest (whether an ownership
interest, leasehold interest, as licensee or otherwise) in and to all furniture,
fixtures, equipment, furnishings and leasehold improvements located within the
Retail Stores as of the Closing, as identified on Schedule 1.1(f);
(g) All of Horizon's right, title and interest (whether an ownership
interest, leasehold interest, as licensee or otherwise) in (i) the data-related
equipment which is owned by Horizon and which resides at the nTelos switches
located in the nTelos Service Area, and (ii) the signal repeaters owned by
Horizon and which reside at certain Radio Shack locations in the nTelos Service
Area, all as identified on Schedule 1.1(g); and
(h) All handset and accessory inventory within the Retail Stores as of
the Closing (the "Inventory").
1.2 NO LIENS OR ENCUMBRANCES. Horizon agrees that the Purchased Assets will
be transferred and conveyed to Sprint at Closing free and clear of all claims,
liens, encumbrances, easements, security interests and similar interests of any
kind or nature whatsoever (collectively, "Encumbrances").
ARTICLE II
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE. The purchase price for the Purchased Assets (the
"Purchase Price") shall be determined as follows:
The Purchase Price for all of the Purchased Assets shall be an amount
equal to (a) the product of (i) $390 and (ii) the number of Qualified
Subscribers (as determined below) as of the date of the Closing (the "Effective
Date") plus (b) the actual cost paid by Horizon for the Inventory existing as of
the Effective Date. For purposes of this Agreement, "Qualified Subscribers"
shall mean only those Subscribers who as of the Effective Date are currently
active in any Sprint wireless billing system. The number of Qualified
Subscribers as of the Effective Date shall be determined as follows: On the day
before the Closing, Sprint will provide Horizon with a written notice of the
number of Qualified Subscribers as of the most recent practicable date prior
thereto. At the Closing, Sprint will pay Horizon the Purchase Price based on
this preliminary number of Qualified Subscribers. Within thirty (30) days after
the Effective Date, representatives of Sprint and Horizon will confer to
determine the actual number of Qualified Subscribers as of the Effective Date.
If the parties are unable to agree upon a final determination of the number of
Qualified Subscribers as of the Effective Date within such thirty day period,
either party may initiate the dispute resolution provision of Section 14.2 of
the Management Agreement. On the day before the Closing, Horizon will provide
Sprint with a written notice of the estimated Inventory as of the Closing. At
the Closing, Sprint will pay Horizon the Inventory based portion of the Purchase
Price based on this estimate of Inventory. Within thirty (30) days after the
Effective Date, representatives of Sprint and Horizon will confer to determine
the actual Inventory as of the Effective Date. If the parties are unable to
agree upon a final determination of the actual Inventory as of the Effective
Date within such thirty day period, either party may initiate the dispute
resolution provision of Section 14.2 of the Management Agreement. Upon a final
agreement of the parties or arbitration award as to the number of Qualified
Subscribers or Inventory on the Effective Date, the applicable party will make
an adjustment payment to the other party, which will reflect the difference
between (a) the preliminary number of Qualified Subscribers and the actual
number of Qualified Subscribers and (b) the estimated Inventory and the actual
Inventory. The parties agree that, from the date hereof through the Effective
Date, the parties will continue to report the number of Subscribers and
Subscriber deactivations, will conduct the Subscriber collections and
deactivation process, will conduct Subscriber sales practices, and will conduct
Subscriber credit practices, in the ordinary course of business, consistent with
past practice.
2.2 ASSUMED LIABILITIES. At the Closing, Sprint shall assume only the
following obligations and liabilities of Horizon (collectively, the "Assumed
Liabilities"):
(a) All of the executory duties and obligations to the Subscribers and
under the Subscriber Contracts arising from and after the Closing (including, if
applicable, any return of deposits made by Subscribers); and
(b) All of the executory duties and obligations of Horizon as a party
under the Assigned Leases arising from and after the Closing.
2.3 EXCLUDED LIABILITIES. Except for the Assumed Liabilities, it is
expressly understood and agreed that Sprint will not assume or have any
liability or obligation with respect to any of Horizon's other obligations,
contracts, debts and agreements (collectively, the "Excluded Liabilities"),
including but not limited to:
(a) any liability or obligation of Horizon for any Taxes of any kind
accrued during, applicable to or arising from any period (or portion of any
period) ending on or before the Effective Date;
(b) the amounts necessary to cure monetary defaults of Horizon under
the contracts contained in the Purchased Assets (collectively, the "Cure
Amounts"); or
(c) any liability or obligation of Horizon under any Environmental,
Heath and Safety Requirements arising from any period ending on or before the
Effective Date.
ARTICLE III
CLOSING
3.1 BANKRUPTCY COURT APPROVAL. Promptly after the execution of this
Agreement, Horizon will use reasonable best efforts, and Sprint will reasonably
cooperate with Horizon, to seek entry of an order (the "Sale Order") by the
Bankruptcy Court in the Chapter 11 proceeding filed by Horizon and its
affiliates on August 15, 2003 in the United States Bankruptcy Court for the
Southern District of Ohio (the "Chapter 11 Case") approving (a) the sale of the
Purchased Assets, on the terms set forth in this Agreement, in accordance with
11 U.S.C. 363, which Sale Order shall include a finding that Sprint is a good
faith purchaser pursuant to 11 U.S.C. 363(m) and shall provide for the sale of
the Purchased Assets free and clear of any Encumbrances to the extent permitted
by law; (b) the assumption and assignment of the Assigned Leases effective as of
the Closing in accordance with 11 U.S.C. 365; and (c) the compromise and
settlement provided for in the Release pursuant to Bankruptcy Rule 9019. The
Closing shall occur on the first business day following the date all conditions
to Closing set forth in Section 7 have been satisfied or waived. At the Closing,
Sprint shall pay, via wire transfer instructions provided by Horizon, the
aggregate amount of the Purchase Price in full as calculated based upon the
initial determination of Qualified Subscribers and Inventory pursuant to Section
2.1.
ARTICLE IV
OTHER COVENANTS AND AGREEMENTS
4.1 TRANSITION COMPENSATION. Subject to the terms and conditions of this
Section 4.1, Sprint agrees to compensate Horizon for the net operating losses
which Horizon will incur in the operation of the nTelos Service Area from the
date of this Agreement to the earliest to occur of the following (i) August 2,
2004; (ii) the Effective Date; (iii) entry by the Bankruptcy Court of a final
order of the Bankruptcy Court denying Horizon's motion to approve this Agreement
and the Release; or (iv) the mutual written agreement of the parties (the
"Transition Period"). The compensation payment will be equal to $25,000
multiplied by the number of days during the Transition Period (the "Transition
Payment"). The Transition Payment shall be due in full upon the earliest to
occur of (a) the Effective Date and (b) 3 business days following the expiration
of the Transition Period. The Transition Payment shall be treated as additional
Purchase Price for the Purchased Assets. Notwithstanding any provision herein to
the contrary, in no event will the Transition Payment exceed $2 million.
4.2 EMPLOYEE MATTERS. Sprint shall, in good faith, consider whether to
employ the Horizon employees who are currently associated with the Retail Stores
and the sales, marketing and sales support activities of Horizon within the
nTelos Service Area, as identified on Schedule 4.2(a) (the "Current Employees").
Sprint shall have the right and option, but not the obligation, to offer
employment to and hire any of the Current Employees as of or after the Closing
and shall have the right to interview the Current Employees at any time after
the date hereof. At Sprint's election (in its sole discretion), Current
Employees hired at Closing or within thirty (30) days thereafter by Sprint may
be given credit, under and in accordance with applicable employee benefit plans
of Sprint, toward eligibility and vesting for the period of time prior to
Closing during which such persons were employees of Horizon if such period of
time would otherwise
qualify for eligibility and vesting under Sprint's plans. Sprint shall be solely
liable for all duties and obligations arising from and after the Effective Date
to Current Employees hired by Sprint hereunder. Horizon shall be responsible for
any severance payments payable to Current Employees as a result of the
transactions contemplated herein.
4.3 CONDUCT OF BUSINESS BY HORIZON PENDING THE CLOSING.
(a) Ordinary Course. Horizon covenants and agrees that, unless Sprint
shall otherwise consent in writing (which consent will not be unreasonably
withheld or delayed) and except as otherwise set forth herein, between the date
hereof and the Closing, Horizon shall conduct its business in the nTelos Service
Area only in, and Horizon shall not take any action except in, the ordinary
course of Horizon's business and in a manner consistent with past practice
(including, without limitation, the acquisition of new Subscribers).
(b) Certain Actions. By way of amplification and not limitation,
except as expressly provided for in this Agreement, Horizon shall not, between
the date hereof and the Closing, do any of the following without the prior
written consent of Sprint, which consent will not be unreasonably withheld or
delayed:
(i) sell any of the Purchased Assets, except for the sale of
Inventory in the ordinary course of Horizon's business in the nTelos Service
Area;
(ii) pledge, remove, dispose of, or encumber any of the Purchased
Assets or enter into any material contract or agreement, except for the
incurrence of purchase money security interests in the ordinary course of
Horizon's business in the nTelos Service Area;
(iii) amend any Assigned Lease or breach the provisions of any
Assigned Lease; or
(iv) take any action with respect to increasing the compensation
of any Current Employee, except in the ordinary course of business.
(c) NSA. Notwithstanding any other provision of this Section 4.3,
Horizon may file a motion with the Bankruptcy Court to reject the NSA pursuant
to the terms of the Release.
4.4 EXPENSES.
(a) Expenses of Sprint. All of the expenses incurred by Sprint in
connection with the authorization, negotiation, preparation, execution and
performance of this Agreement, including, without limitation, all fees and
expenses of agents, representatives, brokers, counsel and accountants for
Sprint, shall be paid by Sprint.
(b) Expenses of Horizon. All of the expenses incurred by Horizon in
connection with the authorization, negotiation, preparation, execution and
performance of this
Agreement, including, without limitation, all fees and expenses of agents,
representatives, brokers, counsel and accountants for Horizon, shall be paid by
Horizon.
4.5 TAX MATTERS.
(a) Purchase Price Allocation. The parties agree that the Purchase
Price shall be allocated among the Purchased Assets pursuant to Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code"), in accordance with
Schedule 4.5, to which the parties have agreed. Horizon and Sprint agree to
report the federal, state and local income and other tax consequences of the
transactions contemplated hereby, and in particular to report the information
required by Section 1060(b) of the Code, in a manner consistent with the agreed
upon allocation, and to file all other applicable tax returns and forms
necessary to reflect the Purchase Price allocation. Neither Sprint nor Horizon
shall take any position inconsistent with such allocation upon any examination
of any tax return, in any refund claim, in any litigation or otherwise unless
required to do so by law.
(b) Post Closing Cooperation. Sprint and Horizon shall furnish or
cause to be furnished to each other, upon request, as promptly as practical,
such information and assistance relating to the Purchased Assets as is
reasonably necessary for filing of all Tax returns, including any claim for
exemption or exclusion from the application or imposition of any Taxes or making
of any election related to Taxes, the payment of Taxes, the preparation for any
audit by any taxing authority and the prosecution or defense of any proceeding
relating to any Tax return.
(c) Transfer Taxes. In the event that the transaction is not deemed
exempt from Transfer Taxes pursuant to Section 1146(c) of the Bankruptcy Code,
all Transfer Taxes arising out of the transfer of the Purchased Assets and any
Transfer Taxes required to effect any recording or filing with respect thereto
shall be borne 50% by Sprint and 50% by Horizon. The Transfer Taxes shall be
calculated assuming that no exemption from Transfer Taxes is available, unless
otherwise indicated in the Sale Order or, at Closing, Sprint shall provide an
appropriate resale exemption certificate or other evidence acceptable to Horizon
of exemption from such Transfer Taxes. Horizon and Sprint shall cooperate to
timely determine the amount of any Transfer Taxes and timely prepare and file
any returns or other filings relating to such Transfer Taxes, in form and
substance satisfactory to each party, including any claim for exemption or
exclusion from the application or imposition of any Transfer Taxes. Horizon
shall pay such Transfer Taxes and shall file all necessary documentation and
returns with respect to such Transfer Taxes when due, and shall promptly
following the filing thereof furnish a copy of such return or other filing and a
copy of a receipt showing payment of any such Transfer Tax to Sprint, and Sprint
shall reimburse Horizon promptly for 50% of such Transfer Taxes paid after
giving effect to the Sale Order. Horizons' portion of any Transfer Taxes to be
paid hereunder shall be deemed to be included in the Excluded Liabilities.
(d) Tax Proration. Except as provided in Section 4.5(c), all real
property Taxes, personal property Taxes and similar ad valorem obligations
levied with respect to the Purchased Assets for a Tax period that includes (but
does not end on) the Closing Date, whether imposed or assessed before or after
the Closing Date, shall be apportioned between Horizon, on the one hand, and
Sprint, on the other, as of the Closing Date, based on the number of days in any
such period falling prior to and including the Closing Date, on the one hand,
and after the
Closing Date, on the other hand. Horizon shall be responsible for the portion of
such apportioned Taxes attributable to the period up to and including the
Closing Date and Sprint shall be responsible for the portion of such apportioned
Taxes attributable to the period after the Closing Date. Accordingly, if any
Taxes required to be apportioned hereunder are paid by Sprint, on the one hand,
or Horizon, on the other hand, then Horizon or Sprint, as the case may be, shall
promptly reimburse the paying party for the non-paying party's share of such
apportioned Taxes. Similarly, if Sprint, on the one hand, or Horizon, on the
other hand, receive a refund of any Taxes that are required to be apportioned
hereunder, then the recipient of such refund shall promptly pay to the other
party such other party's share of such refund as determined in accordance with
the foregoing apportionment provisions (assuming that Sprint and Horizon
contributed to the applicable Tax payment in accordance with the first two
sentences of this Section 4.5(d)).
4.6 COLLECTION OF ACCOUNTS RECEIVABLE. Ten business days after the
Effective Date, Sprint will pay to Horizon the Account Receivables Payment for
all outstaying accounts receivables of Subscribers and all unbilled usage and
other fees as of the Effective Date. Prior to the Effective Date, Sprint and
Horizon will each cause their respective settlements and finance groups to
determine the method of calculating the Account Receivables Payment. The method
will be based on the following principles:
(a) The party receiving the revenue should have responsibility for the
liabilities associated with generating the revenue. For example, with respect to
the MRC, if Horizon is liable for payments to nTelos for 1/3 of the xxxx cycle
and Sprint for 2/3, then the total MRC for that xxxx cycle would be allocated
1/3 to Horizon and 2/3 to Sprint; and
(b) The profile percentage will be used. For purposes of further
clarification the "profile percentage" means the profile used by the settlements
group for Sprint in determining "Collected Revenue" (as that term is defined in
the Management Agreement) for Horizon. The parties understand that the profile
percentage makes adjustment for the 8% retainage by Sprint of Collected Revenue.
If that understanding is not correct then the parties will take account of that
retainage by Sprint in calculating the Qualified Accounts Receivable Payment.
Bad debt percentages will be determined based on past experience.
The parties will have their respective settlements groups work
cooperatively to make the calculations contemplated by this section and will
work to satisfactorily resolve any issues that arise because of data or system
limitations.
The parties will settle travel for the nTelos Service Area incurred prior
to the Effective Date in accordance with the already established settlement
processes for travel. For purposes of clarification the parties acknowledge that
the settlement of travel may take some time after the Effective Date because of
the timing involved with clearing house functions and systems availability.
4.7 COOPERATION. Following the Closing, Sprint and Horizon will cooperate
with each other and use commercially reasonable efforts to complete in an
expeditious manner
changes in any operations arising from the transactions contemplated by this
Agreement, including without limitation, the redirecting of switching from the
Horizon switches to switches designated by Sprint and the transitioning of
Retail Stores and Current Employees.
4.8 ALLOCATION OF CERTAIN ITEMS. With respect to certain expenses incurred
with respect to the Purchased Assets, the following allocations shall be made
between Horizon and Sprint:
(a) Utilities. Utilities, water and sewer charges shall be apportioned
based upon the number of days occurring prior to (and including) the Effective
Date and following the Effective Date during the billing period for each such
charge.
(b) Lease Payments. Rent payments shall be apportioned based upon the
number of days occurring prior to (and including) the Effective Date and
following the Effective Date during the billing period for each such charge.
Appropriate cash payments by Horizon and Sprint, as the case may require, shall
be made hereunder from time to time as soon as practicable after the facts
giving rise to the obligation for such payments are known in the amounts
necessary to give effect to the allocations provided for in this Section 4.8.
4.9 ASSUMPTION AND ASSIGNMENT OF ADDITIONAL EXECUTORY CONTRACTS. Horizon
agrees to cooperate fully with Sprint to (i) identify any contracts, leases or
other agreements of Horizon that relate exclusively to the nTelos Service Area
and are reasonably required by Sprint for the use of the Purchased Assets in the
same manner as used by Horizon in the operation of the nTelos Service Area, and
(ii) take all actions, including but not limited to filing all motions with the
Bankruptcy Court, reasonably required to accomplish the assignment to and
assumption by Sprint of such contracts, leases or other agreements that should
have been assigned to and assumed by Sprint and that are not included in the
Purchase Assets. In the event that any such contracts, leases or other
agreements may not be assigned to Sprint, Horizon will, at Sprint's option, use
commercially reasonable efforts to make the benefits of such contracts, leases
or other agreements available to Sprint in exchange for Sprint's payment of the
associated costs under such contracts, leases or other agreements. To the extent
any software licenses contain assignment restrictions, the parties will
cooperate as set forth above to give Sprint the use of such software.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF HORIZON
In order to induce Sprint to enter into this Agreement and consummate the
transactions contemplated hereby, Horizon hereby makes the following
representations, warranties and covenants to Sprint, each of which is material
to and is relied upon by Sprint:
5.1 ORGANIZATION AND AUTHORITY OF HORIZON. Horizon is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Horizon is
duly qualified as a foreign corporation in all jurisdictions in which the
conduct of its business or the ownership of its properties requires such
qualification. Horizon has all necessary corporate or other power and authority
to own, lease and operate its properties and conduct its business as it is
currently being conducted.
5.2 POWER AND AUTHORITY; DUE AUTHORIZATION. Subject to the required
approval of the Bankruptcy Court as described in Section 3.1, Horizon has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The board of directors of
Horizon has duly approved and authorized the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and no
other corporate proceedings are necessary. Assuming that this Agreement
constitutes a valid and binding agreement of Sprint, this Agreement constitutes
a valid and binding agreement of Horizon enforceable by Sprint in accordance
with its terms, subject to laws of general application in effect affecting
creditors' rights and subject to the exercise of judicial discretion in
accordance with general equity principles.
5.3 TITLE TO PURCHASED ASSETS. Horizon has good and valid title to all of
the Purchased Assets, free and clear of any and all Encumbrances. At the
Closing, Horizon will transfer to Sprint good and valid, marketable title to all
of the Purchased Assets, free and clear of any and all Encumbrances.
5.4 NO CONFLICT; REQUIRED CONSENTS. Except for the consents, approvals,
authorizations and other actions listed on Schedule 5.4 or as contemplated by
Section 4.9, the execution and delivery by Horizon of this Agreement and the
consummation by Horizon of the transactions contemplated hereby do not and will
not (a) require the consent, approval or action of, or any filing or notice to,
any corporation, firm, person or other entity or any public, governmental or
judicial authority; (b) violate the terms of any instrument, document or
agreement to which Horizon is a party, or by which Horizon or the property of
Horizon (including the Purchased Assets) is bound, or be in conflict with,
result in a breach of or constitute (upon the giving of notice or lapse of time
or both) a default under any such instrument, document or agreement, or result
in the creation of any lien upon any of the property or assets of Horizon
(including the Purchased Assets); (c) violate any order, writ, injunction,
decree, judgment, ruling, law, rule or regulation of any federal, state, county,
municipal, or foreign court or governmental authority applicable to Horizon or
relating to the Purchased Assets; or (d) violate the Articles of Incorporation,
or bylaws, of Horizon; excluding from the foregoing clauses (a), (b) and (c)
such consents, approvals, authorizations and other actions which would not have,
individually or in the aggregate, a material adverse effect on the operations of
the Purchased Assets.
5.5 CONTRACTS. The Assigned Leases are valid, legally binding and
enforceable against Horizon and the other parties thereto, subject to laws of
general application in effect affecting creditors' rights and subject to the
exercise of judicial discretion in accordance with general equitable principles.
Except as set forth on Schedule 5.5, neither Horizon nor, to Horizon's
knowledge, any other party to any of the Assigned Leases is in breach of, or in
default under, any of the Assigned Leases; and to Horizon's knowledge, no event
has occurred which, with the giving of notice or lapse of time, or both, would
constitute a default by Horizon or any
other party to any of the Assigned Leases. The assignment of any of the Assigned
Leases to Sprint in accordance with this Agreement will not constitute a breach
or violation of such Assigned Leases, except as set forth on Schedule 5.5. The
Subscriber Contracts are form agreements which have been provided to Horizon by
Sprint and Horizon has not made any alterations to the assignability provisions
of such form agreements in the Subscriber Contracts.
5.6 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Horizon has complied in all
material respects and is in compliance in all material respects with all
Environmental, Health, and Safety Requirements in connection with the operation
of the nTelos Service Area. Horizon has obtained and complied in all material
respects with, and is in compliance with in all material respects, all permits,
licenses and other authorizations that are required under Environmental, Health,
and Safety Requirements for the operation of the nTelos Service Area. Horizon
has not received any written notice, report or other document asserting any
actual or alleged violation of Environmental, Health, and Safety Requirements
related to the operation of the nTelos Service Area, or any liabilities or
potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) related to the nTelos Service Area, including any investigatory,
remedial or corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements, except where such
liability or violation would not have a material adverse effect on the
operations of the Purchased Assets. Horizon has not treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled, or released
any substance in connection with the operation of the nTelos Service Area in a
manner that has given or would give rise to material liabilities under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or any other Environmental, Health, and Safety Requirements.
5.7 LITIGATION. In addition to the commencement of the Chapter 11 Case,
Schedule 5.7 sets forth each instance that Horizon: (i) is subject to any
outstanding injunction, judgment, order, decree, ruling or charge related to the
Purchased Assets, or (ii) is a party or, to Horizon's knowledge, is threatened
to be made a party to any action, suit, proceeding, hearing or investigation of,
in or before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator as a
result of the operation of the Purchased Assets, including but not limited to
any action, suit, proceeding, hearing or investigation related to any liability
for Taxes which could reasonably be expected to result in any material adverse
effect on the operations of the Purchased Assets.
5.8 INTELLECTUAL PROPERTY. To Horizon's knowledge, Horizon owns and
possesses or has the right to use under a valid and enforceable written license,
sublicense, agreement, or permission all material Intellectual Property included
in the Purchased Assets. Each item of material Intellectual Property owned or
used by Horizon in the operation of the nTelos Service Area immediately prior to
the Closing and included in the Purchased Assets will be owned or available for
use by Sprint on identical terms and conditions immediately subsequent to the
Closing. The use of the Intellectual Property contained in the Purchased Assets
does not breach in any material respect any terms of any license or other
contract between Horizon and any third party. Horizon is in compliance in all
material respects with the terms and conditions of all license agreements in
favor of Horizon relating to the Intellectual Property included in the Purchased
Assets. To Horizon's knowledge, no third party has interfered with, infringed
upon or misappropriated any Intellectual Property rights of Horizon included in
the Purchased Assets.
To the knowledge of Horizon, the Intellectual Property contained in the
Purchased Assets does not infringe any patent, copyright, trademark or trade
secret or any other intellectual property right of any third party. Horizon has
not granted rights in the Intellectual Property contained in the Purchased
Assets to any third party.
5.9 TANGIBLE ASSETS. Each of the tangible Purchased Assets has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear), and is suitable for the
purposes for which it presently is used.
5.10 TAXES. Except as set forth on Schedule 5.10 and except as shall be
extinguished by the Sale Order, no Tax liens have been filed or otherwise exist
affecting any Purchased Assets and no claims are being asserted in writing with
respect to any Taxes.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF SPRINT
In order to induce Horizon to enter into this Agreement and consummate the
transactions contemplated hereby, Sprint hereby makes the following
representations and warranties to Horizon, each of which representations and
warranties is material to and relied upon by Horizon:
6.1 ORGANIZATION OF SPRINT. Sprint is a limited partnership validly
existing under the laws of the State of Delaware and has the power and authority
to own, lease and operate its properties and to carry on its business as it is
currently being conducted.
6.2 POWER AND AUTHORITY; DUE AUTHORIZATION. Sprint has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and no other proceedings on the part of Sprint
are necessary to approve and authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. Assuming
that this Agreement constitutes a valid and binding agreement of Horizon, this
Agreement constitutes a valid and binding agreement of Sprint enforceable by
Horizon in accordance with its terms, subject to laws of general application in
effect affecting creditors' rights and subject to the exercise of judicial
discretion in accordance with general equitable principles.
6.3 NO CONFLICT; CONSENTS. The execution and delivery by Sprint of this
Agreement, and the consummation by Sprint of the transactions contemplated
hereby and thereby do not and will not (a) require the consent, approval or
action of, or any filing or notice to, any corporation, firm, person or other
entity or any public, governmental or judicial authority; (b) violate the terms
of any material instrument, document or agreement to which Sprint is a party, or
by which Sprint or the property of Sprint is bound, or be in conflict with,
result in a breach of or constitute (upon the giving of notice or lapse of time,
or both) a default under any such instrument, document or agreement; (c) violate
Sprint's governing documents; or (d) violate any order, writ, injunction,
decree, judgment, ruling, law or regulation of any federal, state, county,
municipal, or foreign court or governmental authority applicable to Sprint or
the business or assets of Sprint, and relating to the purchase of the Purchased
Assets.
6.4 LITIGATION. There is (a) no action, suit or proceeding pending by or
before any court or governmental or regulatory authority or, to the knowledge of
Sprint, threatened against Sprint, and (b) no investigation by any governmental
entity of which Sprint has received written notice that is pending or, to the
knowledge of Sprint, threatened against Sprint, in either case which challenges
the validity of this Agreement or which would reasonably be expected to,
individually or in the aggregate, have an adverse affect on or restrict the
ability of Sprint to consummate the transactions contemplated by this Agreement.
Sprint is not in default with respect to or subject to any order, judgment,
decision, decree, injunction or ruling of any federal, state, or local court or
governmental agency, department or authority which challenges the validity of
this Agreement which would reasonably be expected to, individually or in the
aggregate, have an adverse affect on or restrict the ability of Sprint to
consummate the transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS TO CLOSE
7.1 CONDITIONS TO OBLIGATION OF SPRINT. The obligation of Sprint to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction or waiver by Sprint of all of the following
conditions:
(a) A duly authorized officer of Horizon shall have executed and
delivered a certificate stating that (i) the representations and warranties of
Horizon set forth in Section 5 will be true and correct in all material respects
at and as of the Effective Date and (ii) Horizon will have performed and
complied with all of its covenants under this Agreement in all material respects
through the Effective Date.
(b) Horizon will have executed and delivered to Sprint a Xxxx of Sale
in the form attached as Exhibit A (the "Xxxx of Sale").
(c) Horizon will have executed and delivered to Sprint the Assignment
and Assumption Agreement in the form attached as Exhibit B (the "Assignment and
Assumption Agreement").
(d) The Bankruptcy Court shall have issued the Sale Order and the Sale
Order shall have become a Final Order.
(e) All of the parties to the Release (including all of the Creditors
(as defined in the Release)) shall have executed and delivered the Release to
Sprint, the Release shall still be in full force and effect, and the parties
shall have performed the obligations set forth in the Release, including
Horizon's payment to Sprint of the $4 million settlement payment at the Closing.
7.2 CONDITIONS TO OBLIGATION OF HORIZON. The obligation of Horizon to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction or waiver by Horizon of all of the following
conditions:
(a) A duly authorized officer of Sprint shall have executed and
delivered a certificate stating that (i) the representations and warranties of
Sprint set forth in 6 will be true and correct in all material respects at and
as of the Closing Date and (ii) Sprint will have performed and complied with all
of its covenants under this Agreement in all material respects through the
Closing.
(b) Sprint will have executed and delivered to Horizon the Assignment
and Assumption Agreement.
(c) Sprint shall have paid the Purchase Price to Horizon.
(d) The Bankruptcy Court shall have issued the Sale Order and the Sale
Order shall have become a Final Order.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY HORIZON. Subject to Section 8.5, Horizon hereby
agrees to indemnify Sprint and its respective affiliates, employees, officers,
directors, representatives, agents, successors and assigns (collectively,
"Sprint Indemnitees") and agrees to defend and hold them harmless from and
against, all claims, liabilities, damages, payments, obligations, losses, costs
and expenses (including reasonable attorneys' fees), and judgments (at law or in
equity) (collectively, "Losses") incurred or suffered by any of them and arising
out of or resulting from any of the following:
(a) any breach of a representation or warranty or failure to
perform of any agreement or covenant of Horizon contained herein; and
(b) any and all Excluded Liabilities.
8.2 INDEMNIFICATION BY SPRINT. Subject to Section 8.5, Sprint hereby agrees
to indemnify Horizon and its respective affiliates, employees, officers,
directors, representatives, agents successors and assigns (collectively,
"Horizon Indemnitees") and agrees to defend and hold them harmless from and
against all Losses incurred or suffered by any of them and arising out of or
resulting from any of the following:
(a) any breach of a representation or warranty or failure to
perform of any agreement or covenant of Sprint contained herein; and
(b) any and all Assumed Liabilities.
8.3 PROVISIONS REGARDING INDEMNIFICATION. The indemnified party (or
parties) shall promptly notify the indemnifying party (or parties) of any claim,
demand, action or proceeding for which indemnification will or may be sought
under Article 8. Such notice shall specify facts reasonably known to the
indemnified party (or parties) giving rise to such indemnity rights.
Unless the indemnifying party (or parties) notifies the indemnified party (or
parties), in writing, within ten (10) business days following its receipt of the
indemnified party's (or parties') notice that it disputes the right of such
indemnified party (or parties) to indemnification hereunder, the indemnified
party (or parties) shall be conclusively deemed entitled to indemnification
hereunder. Any rights of indemnification established pursuant to the terms of
this Article 8 shall promptly thereafter be paid and satisfied by such
indemnifying party (or parties). To the extent a dispute exists between such
indemnified party (or parties) and the applicable indemnifying party (or
parties), such dispute shall be resolved in accordance with Section 14.2 of the
Management Agreement.
8.4 SURVIVAL. The representations and warranties contained in this
Agreement shall survive the Closing and shall expire twelve (12) months
following the Effective Date (except for the representations and warranties set
forth in Section 5.10 (Taxes) which will survive for the applicable state or
federal statute of limitations) and shall thereafter cease to be of any force
and effect, except for claims as to which notice has been given in accordance
with Section 8.3 hereof prior to such date and which are pending on such date.
All indemnification obligations of either party herein shall expressly survive
the Closing.
8.5 LIMITATIONS ON LIABILITY. Notwithstanding any other provisions of this
Agreement to the contrary:
(a) Base Amount. The Sprint Indemnitees and the Horizon Indemnitees
shall have no right to assert an indemnification claim under Section 8.1(a) or
8.2(a) respectively until the total of all such claims equals or exceeds in the
aggregate $100,000 (the "Base Amount"), at which time all indemnification claims
by the Sprint Indemnitees and the Horizon Indemnitees under Section 8.1(a) or
8.2(a) respectively in excess of the Base Amount may be claimed in full, and if
indemnifiable under this Article 8, shall be indemnified in full.
(b) Cap. The maximum aggregate amount of liability to which Horizon or
Sprint may be subject for indemnification claims made under Section 8.1(a) or
8.2(a) respectively hereof is $2,000,000, and the Sprint Indemnitees and Horizon
Indemnities shall not be permitted to make any such claims in excess of such
amount. Notwithstanding the foregoing, the limitations set forth in this Section
8.5(b) do not apply to Losses caused or arising as a result of (i) gross
negligence or willful misconduct of a party; (ii) third-party claims with regard
to which a party has an indemnification obligation under this Section 8; or
(iii) failure to comply with Environmental, Health and Safety Regulations.
(c) No Consequential Damages. Neither party will be liable to the
other party for any indirect, consequential, incidental, punitive damages and/or
loss of profit, under any theory of law (including tort, contract and strict
liability) regardless of whether such party knew or should have known of the
possibility of such damages or loss of profit.
(d) All amounts paid by or on behalf of Horizon as indemnification
shall be treated as adjustments to the Purchase Price except as required by
applicable law.
8.6 SOLE REMEDY. Except for fraud, the provisions of this Section 8 set
forth the exclusive rights and remedies of Horizon and Sprint with respect to
any breach by the other party of any representation, warranty or covenant
contained in this Agreement; provided however, that the parties hereto expressly
acknowledge that any damages or potential damages to Horizon or Sprint resulting
from any breach or threatened breach of any covenant or agreement contained in
this Agreement may be intangible in whole or in part and incapable of being
assessed a monetary value and could result in irreparable harm to the business
of the Horizon, on one hand, or Sprint, on the other hand. Accordingly, Horizon
and Sprint shall be entitled to seek specific performance, injunctive relief and
other equitable remedies in addition to the remedies provided herein.
ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any time before the
Closing Date:
(a) by mutual written consent of Sprint and Horizon; or
(b) by written notice from either party in the event that the
Bankruptcy Court shall have not issued the Sale Order and the Sale Order shall
have not become a Final Order on or before August 2, 2004.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 SEVERABILITY. If any provision of this Agreement is prohibited by the
laws of any jurisdiction as those laws apply to this Agreement, that provision
shall be ineffective to the extent of such prohibition and/or shall be modified
to conform with such laws, without invalidating the remaining provisions hereto.
10.2 MODIFICATION AND WAIVER. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by Sprint
and Horizon. No change, amendment or attempted waiver of any provision hereof
shall be binding on the other parties unless reduced to writing and signed by
Sprint and Horizon. Unless specifically provided otherwise herein or agreed to
by Sprint and Horizon in writing, no modification, waiver, termination,
rescission, discharge or cancellation of this Agreement shall affect the right
of the parties hereto to enforce any claim, whether or not liquidated, which
accrued prior to the date of such modification, waiver, termination, rescission,
discharge, or cancellation of this Agreement, and no waiver of any provision or
of any default under this Agreement shall affect the right of any party to
enforce such provision or to exercise any right or remedy in the event of any
other default, whether or not similar.
10.3 ASSIGNMENT, SURVIVAL AND BINDING AGREEMENT. This Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties but Sprint may (a) assign any or all of its rights and interests under
this Agreement to one or more of its
Affiliates, or (b) designate one or more of its Affiliates to perform its
obligations under this Agreement, except that Sprint will not be relieved of its
obligations under this Agreement after any such assignment or designation. The
terms and conditions hereof shall survive the Closing as provided herein and
shall inure to the benefit of and be binding upon the parties hereto and their
respective representatives, agents, successors and assigns. "Affiliate" with
respect to any person means any person directly or indirectly controlling,
controlled by or under common control with the person. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") means possession, directly or indirectly, of power
to direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by contract
or otherwise).
10.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, with the same effect as
if the signatures thereto were in the same instrument. This Agreement shall be
effective and binding on all parties when all parties have executed and
delivered a counterpart of this Agreement. Facsimile signatures to this
Agreement shall bind the parties in the same manner as original signatures.
10.5 NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, or sent by a recognized overnight
delivery service which guarantees next day delivery ("Overnight Delivery") or
mailed registered or certified mail, return receipt requested, postage prepaid,
transmitted or addressed to the intended recipient as set forth below:
If to Horizon: Horizon PCS, Inc.
00 X. Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telefax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxx Xxxxxxx LLP
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx.
Telefax: (000) 000-0000
If to Sprint: Sprint Corporation
Attention: Xxxx Xxxx
AVP Strategic Transactions
KS0PHJ0206-2A971
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
Telefax: (000) 000-0000
with a copy to: Sprint Corporation
Attention: Xxxxxxx Xxxxxx
Vice President Law-Corporate Transactions
KSOPHF0302-3B579
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
Telefax: (000) 000-0000
with a copy to: Xxxxxxx & Xxxx X.X.
0000 Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telefax: (000) 000-0000
with a copy to: King & Spalding LLP
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, III
Telefax: (000) 000-0000
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
mail, will be deemed received three (3) business days immediately following the
date sent. For purposes of this Agreement, a "business day" is a day on which
Sprint is open for business and shall not include a Saturday or Sunday or legal
holiday. Notwithstanding anything to the contrary in this Agreement, in the
event an action required or permitted by this Agreement is to be taken by a
certain date (e.g. 10 days after Closing) and such date is not a business day,
such action may be performed on the next succeeding day which is a business day.
10.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and the
Release together with the Schedules attached thereto, constitute the entire
agreement and supersede any and all other prior agreements and undertakings
(including the Letter of Intent, dated May 6, 2004), both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
and, except as otherwise expressly provided herein, is not intended to confer
upon any person other than Sprint and Horizon any rights or remedies hereunder.
10.7 FURTHER ASSURANCES. The parties to this Agreement agree to execute
and/or deliver, both before and after Closing, any additional information,
documents or agreements contemplated hereby and/or necessary or appropriate to
effect and consummate the transactions contemplated hereby. Horizon agree to
provide to Sprint, both before and after the Closing, such information as Sprint
may reasonably request in order to consummate the transactions contemplated
hereby.
10.8 CONSTRUCTION. Within this Agreement the singular shall include the
plural and the plural shall include the singular and any gender shall include
all other genders, all as the meaning and context of this Agreement shall
require. In connection with any action or event which by the terms hereof
requires consent of a party hereto, such consent shall not be unreasonably
withheld or delayed. Unless otherwise indicated, a reference to an Article,
Section or Schedule means an Article, Section or Schedule hereof.
10.9 CHOICE OF LAW. This Agreement and all documents executed in connection
therewith shall be governed by, and construed in accordance with, the laws of
the State of Kansas, regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
10.10 DEFINITIONS. The following terms used in this Agreement shall have
the following meanings:
(a) "Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sectiion
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
(b) "Environmental, Health, and Safety Requirements" means all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
(c) "Intellectual Property" means all of the following in any
jurisdiction throughout the world: (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (ii) all trademarks, service marks, trade dress, logos,
slogans, trade names, corporate names, Internet domain names, and rights in
telephone numbers, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (iii) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (iv) all mask works and all applications,
registrations, and renewals in connection therewith, (v) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, subscriber and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (vi) all computer software
(including source code, executable code, data, databases and related
documentation), (vii) all advertising and promotional materials, (viii) all
other proprietary rights, and (ix) all copies and tangible embodiments thereof
(in whatever form or medium).
(d) "Final Order" means an order or judgment of the Bankruptcy Court
as entered on its docket that has not been reversed, stayed pursuant to
Bankruptcy Rule 8005 or any other applicable rule of civil or appellate
procedure, modified or amended, and as to which the time to appeal, petition for
certiorari, or seek reargument or rehearing has expired and as to which no
notice of appeal, petition for certiorari, or motion for reargument or rehearing
was timely filed, or as to which any right to appeal, petition for certiorari or
seek reargument or rehearing has been waived in writing in a manner satisfactory
to Horizon and Sprint, or, if a notice of appeal, petition for certiorari, or
motion for reargument or rehearing was timely filed, the order or judgment of
the Bankruptcy Court has been affirmed by the highest court to which the order
or judgment was appealed or from which the reargument or rehearing was sought,
or certiorari has been denied, and the time to file any further appeal or to
petition for certiorari or to seek further reargument or rehearing has expired.
(e) "Transfer Tax" means any federal, state, county, local, foreign
and other sales, use, transfer, conveyance, documentary transfer, recording or
other similar Tax, fee or charge imposed upon the sale, transfer or assignment
of property or any interest therein or the recording thereof, and any penalty,
addition to Tax or interest with respect thereto (but excluding any gains and
income Taxes).
[signatures on following page]
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement under seal as of the date first written above.
HORIZON PERSONAL COMMUNICATIONS, INC.
By:
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Its:
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SPRINT SPECTRUM L.P.
By:
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Its:
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