EXHIBIT 10.27.1
SETTLEMENT AND ASSUMPTION AGREEMENT AND RELEASE
THIS SETTLEMENT AND ASSUMPTION AGREEMENT AND RELEASE (this "Agreement") is
made as of the 31st day of August, 2004 by and between
HORIZON PCS, INC. ("Horizon"), BRIGHT PERSONAL COMMUNICATIONS SERVICES,
INC. ("Bright") and HORIZON PERSONAL COMMUNICATIONS, INC. ("Percom" and
collectively with Horizon and Bright, the "Debtors"),
and
SBA BROADBAND, INC. ("Broadband"), SBA NETWORK SERVICES, INC. ("Network"),
SBA PROPERTIES, INC. ("Properties"), SBA SITES, INC. ("Sites") and SBA
TOWERS, INC. ("Towers" and, collectively with Broadband, Network,
Properties and Sites, the "SBA Entities").
RECITALS
A. On August 15, 2003 (the "Petition Date") the Debtors each filed a
voluntary petition for relief under Chapter 11 of title 11 of the United States
Code, 11 U.S.C. Sections 101-1330, as amended (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Eastern
Division (the "Bankruptcy Court"). The Chapter 11 cases of the Debtors
(individually a "Case," and collectively, the "Cases") have been consolidated
for procedural purposes only.
B. The Debtors and the SBA Entities are parties to numerous contracts and
leases related to the provision of wireless personal communications services.
The Debtors and certain of the SBA Entities are parties to approximately 375
leases of wireless telecommunications tower sites pursuant to a Master Site
Agreement (the "Percom MSA") dated August 17, 1999 between Percom and Towers and
a Master Site Agreement dated as of October 1999 between Bright and Towers (the
"Bright MSA" and, together with the Percom MSA, the "MSAs"). The MSAs set forth
the general terms and conditions pursuant to which the SBA Entities agree to
lease space to the Debtors; individual site locations are governed by separate
Site License Acknowledgements ("SLAs") entered into by one of the Debtors and
one of the SBA Entities. Each SLA authorizes one of the Debtors to maintain and
operate wireless communications equipment at a particular telecommunications
tower site, with each such SLA specifying the applicable site location, monthly
lease payments for that particular site and annual escalations of such lease
payments, lease term, and equipment to be installed by or for the account of the
particular Debtor.
C. On August 17, 1999 Percom and Towers entered into the following
additional agreements:
1. Master Design Build Agreement (the "Percom BTS Agreement")
whereby the SBA Entities would construct to the Debtors'
specifications additional telecommunication towers at sites
jointly determined by the Debtors and the SBA Entities, and
the Debtors would lease space at such tower sites from the SBA
Entities, pursuant to the Percom MSA and an SLA to be entered
into following construction of such tower.
2. Site Development Agreement (the "SDA") pursuant to which the
SBA Entities agreed to pay certain development fees to the
Debtors for certain telecommunications tower sites which the
SBA Entities construct on behalf of the Debtors.
D. In October 1999 Bright and Towers entered into a Master Design Build
Agreement (the "Bright BTS Agreement" and, together with the Percom BTS
Agreement, the "BTS Agreements") substantially similar to the Percom BTS
Agreement.
E. From time to time the MSAs, the BTS Agreements and the SDA have been
amended by the parties.
F. In 2001, the Debtors and the SBA Entities entered into, inter alia, one
or more documents entitled as amendments to 100 of the then-existing SLAs
pursuant to which the SBA Entities acquired and installed emergency power
generators (the "Generators") at the telecommunication tower sites which were
the subject of such SLAs in order to supply backup power to such sites in the
event of a power failure. Documents entitled as amendments to such SLAs (the
"Generator Amendments") specified the particular tower site subject to such
amendments and increased the monthly rent under the applicable SLA in the
initial amount of $200.00 (the "Additional Rent"). There is a dispute between
the parties as to whether the Generator Amendments are separate agreements or
true amendments to the applicable SLAs, which issue is being resolved as part of
this Agreement. On January 2, 2004 the Debtors filed their Motion of the Debtors
and Debtors-in-Possession for an Order Approving the Rejection of Unexpired
Power Generators Leases with SBA Towers, Inc. and SBA Properties, Inc. (the
"Generator Lease Rejection Motion"). Towers and Properties filed an Objection to
the Generator Lease Rejection Motion on the basis that the Generator Amendments
are integral and non-severable parts of the MSAs and the applicable SLAs, which
the Debtors contested. The Bankruptcy Court has held an evidentiary hearing and
the parties have filed extensive legal memoranda. No decision on the Generator
Lease Rejection Motion has been made by the Bankruptcy Court.
G. At various dates in 2001 and 2003 Broadband and one or more of the
Debtors entered into agreements (the "SBA Microwave Service Agreements") whereby
Broadband agreed to provide digital microwave network services to the Debtors in
Indiana and
Pennsylvania. On August 6, 2004 the Debtors filed with the Bankruptcy Court the
Motion of the Debtors and Debtors-in-Possession for an Order Approving the
Rejection of Certain Unexpired Microwave Service Agreements with SBA Broadband
Services, Inc. (the "Microwave Services Rejection Motion"), which the Bankruptcy
Court approved by Stipulated Order entered on August 26, 2004 (the "Microwave
Services Rejection Order") [Docket No. 999].
H. The SBA Entities have timely filed numerous proofs of claim (the
"Proofs of Claim") in the Cases for, among other things, rent for space at
telecommunications tower sites under the MSAs and the SLAs, construction and
development services under the BTS Agreements, obligations of the Debtors under
the BTS Agreements, and services fees under the SBA Microwave Service
Agreements, all accruing or arising prior to the Petition Date. In addition, the
SBA Entities have asserted claims under all such agreements that accrued or
arose after the Petition Date. The Debtors have asserted claims against one or
more of the SBA Entities under, among other things, the SDA, and the Debtors
have disputed certain of the Proofs of Claim.
I. By Order dated August 13, 2004 the Bankruptcy Court approved the
Disclosure Statement for the Joint Plan of Reorganization of the Debtors (the
"Joint Plan"). The Debtors are in the process of soliciting votes to approve the
Joint Plan and the Bankruptcy Court has scheduled a hearing to consider
confirmation of the Joint Plan on September 21, 2004.
J. The Debtors desire to continue to lease space at telecommunications
tower sites of the SBA Entities. In order to induce the Debtors to assume the
MSAs and the SLAs, as modified herein, the SBA Entities have agreed to certain
modifications of the SLAs, the Debtors have agreed to pay certain amounts to
cure defaults under such SLAs and agreements and to pay certain post-petition
obligations under the BTS Agreements, the SBA Entities have agreed to
support the Joint Plan, and the parties have agreed to resolve the disputes
concerning the Generator Amendments, the SBA Microwave Service Agreements and
the Proofs of Claim, all as set forth herein.
NOW, THEREFORE, intending to be legally bound hereby and in consideration
of the premises and the agreements set forth herein and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
Debtors and the SBA Entities agree as follows:
AGREEMENT
1. This Agreement is subject to approval of the Bankruptcy Court, which
shall be sought either through the filing of a stipulation, or the filing of a
motion, so that Court approval of the Agreement shall be obtained at or before
the hearing scheduled for September 21, 2004. This Agreement shall become
effective on the date (10/1/04) that the order of the Bankruptcy
Court approving this Agreement becomes a final, non-appealable order.
2. The Debtors hereby assume, as of the Effective Date, their respective
MSAs and SLAs, including all Generator Amendments, as modified herein.
a. In connection with such assumption, the Debtors will on the
Effective Date pay the following amounts by wire transfer to
the SBA Entities in order to cure all defaults in existence
under the MSAs and the SLAs on the Effective Date:
i. The sum of $593,676.45, subject to subsequent refund
(not to exceed $50,000.00) in the event of further
reconciliation of amounts due and modification of rental
commencement dates, for rental payments, including
Additional Rent, accruing prior
to the Petition Date, in full and final satisfaction of
Proofs of Claim Nos. 267, 288-91, 294-97; and
ii. The amount of any unpaid rental payments, excluding
Additional Rent, for the month of September, 2004; and
iii. The sum of $178,802 in respect of Additional Rent
accruing from and after the Petition Date,
iv. The sum of $48,317.00 in respect of installation
services at the Country Club site, in full and final
satisfaction of Proof of Claim No. 262; and
v. The sum of $29,440.21, subject to receipt of validation
reasonably satisfactory to the Debtors, in respect of
utility bills incorrectly billed to (and paid by)
Network for the account of the Debtors for the eleven
sites listed on Exhibit A attached hereto.
b. As of the Effective Date all SLAs shall be modified in the
following respects:
i. The current term of each SLA shall be extended for a
period of five (5) years beyond the expiration date of
the current term.
ii. The base rent under each SLA following the Effective
Date shall be an amount equal to the excess of (A) the
base rent for such SLA in effect on the Effective Date,
including any Additional Rent applicable to such SLA,
calculated after giving
effect to any existing escalation in such base rent
taking effect prior to the Effective Date, over (B)
one-half (1/2) of the Additional Rent, if any,
applicable to such SLA, calculated after giving effect
to any existing escalation in such Additional Rent
taking effect prior to the Effective Date.
iii. The first annual escalator following the Effective Date
shall be two percent (2%), so that from such escalation
date until the next escalation date the base rent shall
be 102% of the base rent calculated under the foregoing
subparagraph (ii).
iv. The second annual escalator following the Effective Date
shall be 3%, so that from such escalation date until the
next escalation date the base rent shall be 103% of the
base rent calculated under the foregoing subparagraph
(iii).
v. The third and subsequent annual escalators following the
Effective Date shall be the percentage amount applicable
to such periods in the original SLA.
vi. Effective on the third annual escalation date following
the Effective Date, the base rent under each SLA shall
be adjusted to what the base rent would have been on the
third annual escalation date had the escalator
percentage amounts for the first and second annual
escalators in the original SLA been in effect, less the
amount of the Additional Rent (and the escalation
thereon) applicable to each such SLA.
c. At the request of any party, the applicable Debtor and the
applicable SBA Entity shall execute amendments to the
applicable SLAs (i) to reflect agreed modifications of the
rental commencement date, (ii) to reflect the modifications
provided for in the foregoing subparagraph b, or (iii) to
correct any discrepancy between the space which the applicable
Debtor is actually occupying at the tower sites listed in
Exhibit B hereto or on a particular tower at such sites and
the space location specified in the SLA applicable to each
such site.
d. The SBA Entities shall have no further obligation to furnish
any Generators to the Debtors, and the SBA Entities may
disconnect the Generators from the Debtors' equipment and
dispose of them at the sole discretion of the SBA Entities and
retain all proceeds therefrom. If the SBA Entities determine
to disconnect and/or remove any Generators, the SBA Entities
shall provide the Debtors forty-eight (48) hours advance
notice of such disconnection and/or removal.
e. Each of the Debtors acknowledges that the existing amendments
to all SLAs and the amendments contemplated in the foregoing
subparagraph (c) constitute integral and non-severable parts
of each SLA so amended, and covenants and agrees that it will
not, whether in these Cases or in any subsequent bankruptcy
proceeding in which such Debtor or any affiliate of a Debtor
is a debtor, take any action to reject any amendment to an
individual SLA.
3. The BTS Agreements and the SDA have expired by their terms as of
December 31, 2003, and the Parties shall have no further obligations to one
another thereunder except as follows:
a. The following Proofs of Claim shall be allowed as General
Unsecured Trade Claims against Percom, which Claims shall be
treated in accordance with the provisions of the Joint Plan:
i. Proof of Claim No. 266, shall be allowed as a general
unsecured claim in favor of Network in the amount of
$224,654.22 and the balance of Proof of Claim No. 266
shall be disallowed.
ii. Proof of Claim No. 265, shall be allowed as a general
unsecured claim in favor of Network in the amount of
$64,914.61 and the balance of Proof of Claim No. 265
shall be disallowed;
iii. Proof of Claim No. 264 shall be allowed as a general
unsecured claim in favor of Network in the amount of
$21,361.11, and the balance of Proof of Claim No. 264
shall be disallowed;
iv. Proof of Claim No. 299 shall be allowed as a general
unsecured claim in favor of Towers in the amount of
$9,794.27; and
v. Proof of Claim No. 298 shall be allowed as a general
unsecured claim in favor of Network in the amount of
$2,635.71.
b. The Debtors shall use commercially reasonable efforts to cause
the electric meters for the sites listed on Exhibit A hereto
to be changed
from Network's name to the name of the applicable Debtor. The
Debtors will promptly reimburse the SBA Entities for all
electric service billed to and paid by the SBA Entities for
such sites from and after the dates set forth on Exhibit A.
4. The following provisions shall apply to the SBA Microwave Service
Agreements:
a. Pursuant to the Microwave Services Rejection Order, the
Debtors' rejection of the SBA Microwave Services Agreements
was effective as of August 31, 2004.
b. Notwithstanding the effective date of rejection of the SBA
Microwave Service Agreements, the Debtors shall be entitled to
use the SBA Entities' digital microwave network in the
Commonwealth of Pennsylvania (the "Pennsylvania Microwave
Network") after August 31, 2004 as long as the Debtors
continue to pay the SBA Entities a monthly service fee (the
"Post-Rejection Monthly Payment") equal to 76% of the amount,
for each month or part thereof, specified under the SBA
Microwave Service Agreements with respect to monthly service
on all sites in the Pennsylvania Microwave Network. (The Post-
Rejection Monthly Payment shall be $9,290.24); provided,
however, that if this Agreement is not approved by the
Bankruptcy Court, the Post-Rejection Monthly Payment shall be
equal to 100% of the amount, for each month or part thereof,
specified under the SBA Microwave Service Agreements with
respect to monthly service on all
sites in the Pennsylvania Microwave Network (in which case the
Post-Rejection Monthly Payment shall be $12,224.00).
c. The Post-Rejection Monthly Payment shall be a post-petition
administrative expense or a post-emergence expense, as the
case may be, and shall be remitted to Broadband during the
month in which the post-rejection usage occurs. The Debtors
shall have the right to discontinue such service on all sites
in the Pennsylvania Microwave Network at any time, subject to
at least ten (10) days' notification to the SBA Entities of
such discontinuance during the preceding month.
d. From and after the effective date of the Debtors' cessation of
use of the SBA Entities' microwave service at any site or
location, the SBA Entities may disconnect the equipment
providing microwave backhaul services and dispose of such
equipment at the sole discretion of the SBA Entities and
retain all proceeds therefrom.
e. The SBA Entities shall have the following General Unsecured
Trade Claims (as defined in the Joint Plan) against Percom,
which claims shall be treated in accordance with the
provisions of the Joint Plan:
i. Proof of Claim No. 263 shall be allowed as a
General Unsecured Trade Claim against Percom in
the amount of $163,884.97;
ii. Proof of Claim No. 260 shall be deemed withdrawn
as of the Effective Date as duplicative of Proof
of Claim No. 263; and
iii. Broadband shall be allowed a General Unsecured
Trade Claim for damages arising from the Debtors'
rejection of the SBA Microwave Service Agreements
in the amount of
$2,097,256.00. The SBA Entities shall have no obligation
to file any additional proofs of claim in respect of
such rejection damage claim.
5. The SBA Entities agree to cast their ballots in favor of, and otherwise
support, the Joint Plan.
6. Provided that the Debtors make all payments provided for in this
Agreement on the Effective Date and perform all of the obligations and
transactions contemplated to be performed under this Agreement by the Debtors,
on the Effective Date each of the SBA Entities shall be deemed to release,
acquit, and forever discharge each of the Debtors and their agents, employees,
representatives, officers, attorneys, shareholders, directors, parent and/or
subsidiary corporations, affiliates, assigns and successors-in-interest
(collectively, the "Debtors Released Parties") from any and all claims, causes
of action, liabilities, obligations or suits, whether known or unknown, of any
nature or type, that the SBA Entities have or may have against the Debtor
Released Parties as of the Effective Date, including, but not limited to, those
arising from or relating to the MSAs, the SLAs, the BTS Agreements and the SDA
and any other transactions between the parties.
7. Provided that the SBA Entities perform all of the obligations and
transactions contemplated to be performed under this Agreement by the SBA
Entities, on the Effective Date each of the Debtors shall be deemed to release,
acquit, and forever discharge each of the SBA Entities and their agents,
employees, representatives, officers, attorneys, shareholders, directors, parent
and/or subsidiary corporations, affiliates, assigns and successors-in-interest
(collectively, the "SBA Released Parties") from any and all claims, causes of
action, liabilities, obligations or suits, whether known or unknown, of any
nature or type, that the Debtors have or may have against the SBA Released
Parties as of the Effective Date, including, but not limited to, those
arising from or relating to the MSAs, the SLAs, the BTS Agreements and the SDA
and any other transactions between the parties.
8. The parties acknowledge that (a) they have read and considered this
Agreement carefully; (b) that it was negotiated by their attorneys with their
express approval and that they have discussed it in detail with their attorneys;
(c) that they have been given a reasonable period of time (as long as they
deemed necessary) to consider this Agreement before execution thereof; (d) that
they fully understand the extent and impact of the provisions of this Agreement;
and (e) that they have executed this Agreement knowingly and voluntarily and
without any coercion, undue influence, threat or intimidation of any kind
whatsoever. The terms of this Agreement shall govern notwithstanding any
contrary provisions contained in the Joint Plan.
9. The Bankruptcy Court shall retain jurisdiction to resolve any disputes
or controversies arising from or related to this Agreement. To the extent
federal bankruptcy law is otherwise inapplicable, this Agreement shall be
governed by and interpreted in accordance with the laws of the State of Ohio.
10. The parties' respective rights under this Agreement shall inure to the
benefit of their predecessors, successors, assigns, and transferees, including,
in the case of the Debtors, the respective debtors-in-possession, and following
the effectiveness of the Joint Plan, the reorganized Debtors. The provisions of
this Agreement shall be binding upon the parties and their successors and
assigns, including without limitation any trustee in bankruptcy appointed for
any of the Debtors.
11. This Agreement may be amended, supplemented, or otherwise modified
only by way of a subsequent writing executed by all parties or by the authorized
agents or representatives thereof.
12. This Agreement may be executed by facsimile signatures, which
signatures shall, for the purposes of this Agreement, be deemed to constitute an
original signature and be binding as such. Additionally, this Agreement may be
executed in counterparts, each of which shall be deemed to be an original, but
all of which shall together constitute the same agreement.
Dated: As of August 31, 2004
DEBTORS: THE SBA ENTITIES:
HORIZON PCS, INC. SBA BROADBAND, INC.
By: _________________________________ By: /s/ Thomas P. Hunt
-----------------------------------
Thomas P. Hunt
Its: ________________________________ Its: Senior Vice President and
General Counsel
BRIGHT PERSONAL COMMUNICATIONS SBA NETWORK SERVICES, INC.
SERVICES, INC.
By: _________________________________ By: /s/ Thomas P. Hunt
-----------------------------------
Thomas P. Hunt
Its: ________________________________ Its: Senior Vice President and
General Counsel
HORIZON PERSONAL COMMUNICATIONS, SBA PROPERTIES, INC.
INC.
By: _________________________________ By: /s/ Thomas P. Hunt
-----------------------------------
Thomas P. Hunt
Its: ________________________________ Its: Senior Vice President and
General Counsel
SBA SITES, INC.
By: /s/ Thomas P. Hunt
-----------------------------------
Thomas P. Hunt
Its: Senior Vice President and
General Counsel
SBA TOWERS, INC.
By: /s/ Thomas P. Hunt
-----------------------------------
Thomas P. Hunt
Its: Senior Vice President and
General Counsel
EXHIBIT A TO SETTLEMENT AND ASSUMPTION AGREEMENT AND RELEASE
SITE ID SBA PAYMENT DATE
- ------- ----------------
OH 03166 07/07/04
VA 04136 01/01/03
PA 05342 08/06/04
PA 06748 07/21/04
TN 00368 07/16/04
PA 05334 08/06/04
TN 00548 07/14/04
OH 03167 06/18/04
NY 06156 07/30/04
PA 05343 07/16/04
PA 05322 Needs Further Review
EXHIBIT B TO SETTLEMENT AND ASSUMPTION AGREEMENT AND RELEASE
RELOCATION SITES
SBA SITE ID SBA SITE NAME
- ----------- -------------
OH03153-B-01 Rio Grande
OH03154-B-01 Vinton
OH03156-B-01 New Boston
OH03157-B-01 Gallipolis 2, OH
OH03170-B-01 Jackson South 2, OH
OH04142-B-01 Lima North