EXHIBIT 4.5
RECAPITALIZATION AGREEMENT
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This recapitalization agreement (the "Agreement") is made and entered into
effective as of August ___ 1998, by and among Pinnacle Holdings Inc. (the
"Company") and the persons and entities listed on the signature pages hereto
(collectively referred to herein as the "Participating Stockholders"). Terms
not otherwise defined herein shall have the meanings given in the Company's
Amended and Restated Certificate of Incorporation in effect on the date of this
Agreement.
Recitals
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A. The Company recently began negotiating a proposal with certain
underwriters to commence a public offering of common stock of the Company (the
"Proposed Offering"). The parties desire to set forth herein the terms of the
Participating Stockholders' participation in the Proposed Offering.
B. The Company and the Participating Stockholders are parties to (or have
agreed to be bound by) either a Second Amended and Restated Subscription and
Stockholders Agreement dated as of May 16, 1996, as amended effective July 1,
1997, or certain Employee Subscription Agreements (the "Stockholders
Agreements").
C. As of the date of this Agreement, the Company's outstanding capital
stock consists of: (i) 202,500 shares of Class A Common Stock, par value $0.001
per share ("Class A Common"); (ii) 12,000 shares of Class B Common Stock, par
value $0.001 per share ("Class B Common"); (iii) 40,000 shares of Class D Common
Stock, par value $0.001 per share ("Class D Common"); and (iv) 174,766 shares of
Class E Common Stock, par value $0.001 per share ("Class E Common"). The
ownership of the Company's outstanding capital stock is set forth in Schedule I
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hereto.
D. In connection with the Proposed Offering, the Participating
Stockholders (holders of a majority of the issued and outstanding shares of
capital stock of the Company) desire to cause a recapitalization of the Company
pursuant to which (i) the Company will have a single class of common stock
authorized and outstanding, (ii) the outstanding shares of Class D Common shall
be converted into shares of Class C Common Stock, par value $0.001 per share
("Class C Common"), and (iii) the outstanding shares of Class A Common, Class B
Common, Class C Common and Class E Common shall be converted into shares of a
single class of common stock and, in certain cases, the right to receive
payments from the Company upon the consummation of the Public Offering.
Accordingly, for good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, each party hereto agrees as follows:
1. Certificate of Amendment. The Participating Stockholders will vote or
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act by written consent to approve, and Company will cause to be filed, an
amendment of ARTICLE FOUR of the Company's amended and restated certificate of
incorporation substantially in the form of Exhibit A hereto (the "Certificate of
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Amendment") with the Secretary of State of the State of Delaware prior to the
consummation of the Public Offering, which shall cause the following to occur:
(a) Capitalization. Effective immediately prior to the consummation of
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the closing of a firm underwritten public offering (the "IPO") pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of shares of the Company's common stock (the "IPO
Effective Time"), the authorized capital stock of the Company shall consist of
100,000,000 shares of common stock, $0.001 per share ("Common Stock"), and
5,000,000 shares of preferred stock, $0.001 per share.
(b) Class A Common. At the IPO Effective Time, each outstanding share of
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Class A Common shall be converted into (i) 72.7825668 shares of Common Stock and
(ii) the right to receive from the Company out of its proceeds from the IPO cash
in an amount equal to the Unpaid Yield on such share of Class A Common as of
such date (which is set forth by holder of Class A Common in Schedule I hereto),
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and $100.00, the Unpaid Preference Amount on such share of Class A Common as of
such date.
(c) Class B Common. At the IPO Effective Time, each outstanding share of
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Class B Common shall be converted into (i) 72.7825668 shares of Common Stock and
(ii) the right to receive from the Company out of its proceeds from the IPO
$100.00, the Unpaid Preference Amount on such share of Class B Common as of such
date.
(d) Class C Common and Class D Common. At the IPO Effective Time, each
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outstanding share of Class D Common shall be converted into 1.6221 shares of
Class C Common and, simultaneously therewith, each such share of Class C Common
shall be converted into 72.7825668 shares of Common Stock.
(e) Class E Common. At the IPO Effective Time, each outstanding share of
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Class E Common shall be converted into (i) 72.7825668 shares of Common Stock and
(ii) the right to receive from the Company out of its proceeds from the IPO
$100.00, the Unpaid Preference Amount on such share of Class E Common as of such
date.
2. Proposed Offering.
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(a) Definitions. As used in this Section, the following terms shall have
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the respective meanings set forth in this subsection. Certain additional
defined terms
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used in this Section are defined elsewhere in this Agreement, including
elsewhere in this Section.
"Additional Shares" means any and all shares of Common Stock which the
Underwriters (as defined below) shall have an option to purchase pursuant to the
Underwriting Agreement (as defined below) for the purpose of covering over-
allotments in connection with the Proposed Offering.
"Firm Shares" means any and all shares of Common Stock, other than
Additional Shares, which are purchased pursuant to the Underwriting Agreement in
connection with the Proposed Offering.
"Original Issue Date" means, with respect to any share of Common Stock, the
date of original issuance by the Company of the shares of its capital stock
surrendered for conversion into such share of Common Stock pursuant to the
Certificate of Amendment.
(b) Structure of Proposed Offering. The Proposed Offering involves the
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proposed sale by the Company and the Participating Stockholders of shares of
Common Stock to certain underwriters to be listed in a schedule to the
Underwriting Agreement referred to below (the "Underwriters"), for whom Xxxxxx
Xxxxxxx & Co. Incorporated, Xxxxxxx, Sachs & Co., NationsBanc Xxxxxxxxxx
Securities LLC, Xxxxxxx Xxxxx & Associates and Xxxxx Xxxxxx Inc. are expected to
act as representatives (the "Representatives"), for distribution of such shares
(the "Shares") to the public under a Registration Statement on Form S-11 to be
filed under the Securities Act of 1933, as amended, as such Registration
Statement is thereafter amended. Based on its discussions with the
Representatives to date, the Company anticipates that pursuant to the
Underwriting Agreement, and subject to their respective terms and conditions,
the Underwriters will commit to purchase from the Company and the Participating
Stockholders a specified number of Firm Shares and will be granted an "over-
allotment" option to purchase up to a specified number of Additional Shares.
(c) Participation of Participating Stockholders. The parties to this
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Agreement have agreed that, notwithstanding any provision of the applicable
Stockholders Agreements:
(1) Each of the Company and the Participating Stockholders
(collectively, the "Sellers") shall be entitled to register and sell to the
Underwriters (A) the percentage of the total number of Firm Shares which
are registered and sold to the Underwriters by the Sellers which is set
forth opposite the name of such Seller in Schedule II attached to this
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Agreement (such Seller's "Allocation Percentage"), and (B) the same
Allocation Percentage of the total number of Additional Shares which are
registered and sold to the Underwriters by the Sellers. The Allocation
Percentages of the Sellers set forth on Schedule II
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hereto shall apply regardless of the number of Firm Shares or Additional
Shares (if any) which may be registered or sold in the Proposed Offering.
(2) If any Seller notifies the Company in writing prior to the
execution of the Underwriting Agreement that it shall not tender, at the
closing of the sale and purchase of any Firm Shares or Additional Shares
pursuant to and in accordance with the terms of the Underwriting Agreement,
the full number of Firm Shares or Additional Shares which such
Participating Stockholder is entitled to sell pursuant to the Underwriting
Agreement and this Agreement (including by reason of this Section 2(c)(2)),
then the aggregate number of Firm Shares or Additional Shares (as the case
may be) that the remaining Participating Stockholders (the "Other Sellers")
shall be entitled to sell pursuant to the Underwriting Agreement shall be
increased by the number of such shares that such Seller failed to tender
(the "Extra Shares"). Unless all of the Other Sellers otherwise agree, the
Extra Shares shall be allocated among the Other Sellers pro rata, based on
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the ratio which the Allocation Percentage of each Other Seller bears to the
sum of the Allocation Percentages of all Other Sellers Each Other Seller
shall have the option, but not the obligation, to elect to sell its
proportionate part of such Extra Shares and may exercise such option in
whole or in part. If any such Other Seller declines or fails for any
reason to exercise such option at all or in full, then the Extra Shares as
to which such option was not exercised shall be apportioned among the
remaining Other Sellers who exercised their options in full on a similar
pro rata basis, and such process shall continue until either the full
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number of Extra Shares have been allocated to one or more Other Sellers or
until each of the Other Sellers has obtained by this process of
apportionment the right to sell the entire percentage of the Extra Shares
that it desires. If, after completion of such process, there remains any
Extra Shares which have not been allocated to one or more Other Sellers,
then the Company may increase by an equivalent number the number of Firm
Shares or Additional Shares (as the case may be) which are to be sold by
the Company pursuant to the Underwriting Agreement. If any Seller fails or
refuses for any reason to tender, at the closing of the sale and purchase
of any Firm Shares or Additional Shares pursuant to and in accordance with
the terms of the Underwriting Agreement, the full number of Firm Shares or
Additional Shares which such Participating Stockholder is entitled to sell
pursuant to such agreement and if such agreement is not terminated in
accordance with its terms, then the aggregate number of Firm Shares or
Additional Shares (as the case may be) that the remaining Sellers shall be
entitled to sell pursuant to the Underwriting Agreement shall be increased
in such manner as the Company, the Participating Stockholders (excluding
any thereof who is such a nontendering Seller) and the Representatives
shall agree.
(3) The Company covenants and agrees that (A) unless all of the
Participating Stockholders otherwise agree in writing, no person not named
on
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Schedule II hereto shall be entitled to register or sell securities in the
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Proposed Offering and (B) no Participating Stockholder shall be permitted
to participate in the Proposed Offering on any basis which is more
favorable than the basis on which any Participating Stockholder is
permitted to participate. Without limiting the generality of subclause (B)
of this clause, no Participating Stockholder shall be required to execute
or deliver any underwriting agreement, custody agreement, power-of-
attorney, "lock-up" agreement or other agreement or instrument which
contains provisions that are materially more adverse to such Holder than
the most favorable form thereof required of any Participating Stockholder
(disregarding variations which appropriately reflect factual differences,
such as differences in the form of organization of Participating
Stockholders which are entities or in the number or type of securities held
or being registered and sold by the Participating Stockholders).
(4) Notwithstanding the foregoing, no Participating Stockholder
shall have any obligation to participate in the Proposed Offering in the
event that the offering price per share of Common Stock in the Proposed
Offering is less than $_____.
(5) The Firm Shares and Additional Shares to be sold by a
Participating Stockholder shall be take from the shares of Common Stock
owned by such Participating Stockholder based on the Original Issue Date of
such shares of Common Stock as follows: (A) first, shares of Common Stock
held by such Participating Stockholder, if any, with an Original Issue Date
which is more than one year, but not more than two years prior to the IPO
Effective Time, with those shares of Common Stock with the most recent
Original Issue Date being sold first; (B) second, shares of Common Stock
held by such Participating Stockholder, if any, with an Original Issue Date
which is more than two years prior to the IPO Effective Time; and (C)
third, shares of Common Stock held by such Participating Stockholder, if
any, with an Original Issue Date which is not more than one year prior to
the IPO Effective Time.
(d) Waiver. To the extent that such waiver is required for such
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purpose, each party hereto hereby waives any provision of the applicable
Stockholders Agreements, or any other agreement or instrument referred to
therein to which such party hereto is a party or which otherwise govern the
terms of or such party's rights or obligations with respect to securities of the
Company held by such party which, absent such waiver, would prevent any
Participating Stockholder from participating in the Proposed Offering on the
basis and terms contemplated hereby, impose any restrictions upon such
participation on such basis or terms. Such waiver shall terminate if this
Agreement terminates in accordance with its terms.
(e) Transfer Restriction. In the event that during the period
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commencing on the date of this Agreement and terminating upon the first to occur
of
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consummation of the Proposed Offering or September 30, 1998, a Participating
Stockholder directly or indirectly sells, pledges, encumbers, assigns, gifts,
hypothecates, exchanges, transfers or otherwise disposes of any shares of
capital stock of the Company (a "Transfer"), such shares and the transferee
thereof (the "Transferee") shall be subject to and bound by the terms of this
Agreement, and such Participating Stockholder covenants and agrees that, in
connection with such Transfer, the Participating Stockholder shall delivery a
copy of this Agreement to the Transferee.
3. Termination. If the Proposed Offering shall not have been consummated
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on or before September 30, 1998, this Agreement shall automatically terminate,
provided, however, that in the event the Proposed Offering shall not have been
consummated on or before September 30, 1998, but the Certificate of Amendment
shall have been filed with the Secretary of State of the State of Delaware on or
before September 30, 1998, the parties shall cooperate and take such actions as
may be reasonably required, including the adoption and filing of an additional
amendment to the Company's certificate of incorporation, to return the capital
structure of the Company to the capital structure in effect on the date of this
Agreement.
4. Representations and Warranties of the Company To Each of the
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Participating Stockholders. The Company represents and warrants to each of the
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Participating Stockholders as follows: (i) the Company has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby,
(ii) the execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action (including all stockholder
approvals and other action), and (iii) this Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
5. Representations and Warranties of each Participating Stockholder.
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Each Participating Stockholder, severally and not jointly, and with respect to
itself only and not with respect to any other Participating Stockholder,
represents and warrants to the Company and each other Participating Stockholder
that (i) this Agreement has been duly executed and delivered by such
Participating Stockholder; (ii) the execution, delivery and performance by such
Participating Stockholder of, and the consummation by such Participating
Stockholder of the transactions contemplated by, this Agreement have been duly
and validly authorized by all necessary partnership action on the part of such
Participating Stockholder, if such Participating Stockholder is a partnership,
or by all necessary corporate action on the part of such Participating
Stockholder, if such Participating Stockholder is a corporation; and (iii) this
Agreement constitutes a legal, valid and binding obligation of such
Participating Stockholder enforceable in
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accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or by principles governing the availability of
equitable remedies).
6. No Joint Obligations of Participating Stockholders and Company. Each
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Participating Stockholder and the Company shall be (i) obligated hereunder only
with respect to those covenants and agreements which by their terms are
applicable to such party, and no such party shall have any liability with
respect to any other party's obligations hereunder and (ii) separately and
independently entitled to rely on the representations and warranties of each
other party made to each party in this Agreement, and to the benefit of all
agreements, covenants, obligations and commitments of each other party made with
or to such party herein. Without limiting the generality of the preceding
sentence, no provision of this Agreement shall be construed as creating any
concept of "group" liability.
7. Miscellaneous.
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(a) Survival of Provisions. The representations and warranties of the
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parties made in or pursuant to this Agreement shall survive the consummation of
any of the transactions contemplated hereby, in each case regardless of any
investigation that may have been or may be made by or on behalf of any other
party.
(b) Communications. All notices and other communications required or
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permitted by this Agreement shall be in writing, and, (i) if to any
Participating Stockholder, addressed to such Participating Stockholder at such
Participating Stockholder's address specified in the Company's books and records
or at such other address as such Participating Stockholder may designate in a
written notice to the Company and (ii) if to the Company, to Pinnacle Holdings
Inc., 0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxxxx 00000 or to such
other address as the Company may designate in a written notice to each
Participating Stockholder. All notices and other communications required or
permitted by this Agreement shall be deemed to have been duly given if
personally delivered to the intended recipient at the proper address determined
pursuant to this Section or sent to such recipient at such address by registered
or certified mail, return receipt requested, Express Mail, Federal Express or
similar overnight delivery service for next business day delivery or by telegram
and will be deemed given, unless earlier received: (1) if sent by certified or
registered mail, return receipt requested, five calendar days after being
deposited in the United States mail, postage prepaid; (2) if sent by Express
Mail, Federal Express or similar overnight delivery service for next Business
Day delivery, the next Business Day after being entrusted to such service, with
delivery charges prepaid or charged to the sender's account; (3) if sent by
telegram, on the date sent; and (4) if delivered by hand, on the date of
delivery.
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(c) Binding Effect; Successors and Assigns; Entire Agreement. Except
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as expressly provided in this Agreement, nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon or give any person
other than the parties hereto any remedy or claim under or by reason of this
Agreement or any term, covenant or condition hereof, all of which shall be for
the sole and exclusive benefit of the parties. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors, heirs, executors, legal representatives and
permitted assigns. This Agreement sets forth the entire agreement and
understanding among the parties hereto as to the specific subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them with respect to such subject matter.
(d) Amendments and Waivers. The provisions of this Agreement,
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including the provision of this sentence, may not be amended, modified or
supplemented unless approved in writing by each of the Company and the
Participating Stockholders.
(e) Governing Law. This Agreement will be governed by, and will be
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construed in accordance with, the laws of the state of Delaware, without regard
to conflict or choice of law principles of the state of Delaware which might
otherwise cause the internal laws of any other jurisdiction to be applied.
(f) Interpretation. The headings of the sections contained in this
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Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
(g) No Implied Waivers. No action taken pursuant to this Agreement,
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including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, agreements, covenants,
obligations or commitments contained herein or made pursuant hereto. The waiver
by any party of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any preceding or succeeding breach and no failure by
any party to exercise any right, privilege or remedy hereunder shall be deemed a
waiver of such party's rights, privileges or remedies hereunder or shall be
deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
(h) Counterparts. This instrument may be executed in two or more
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counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
(i) Further Assurances. Each party shall cooperate and take such
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actions as may be reasonably requested by another party in order to carry out
the provisions and purposes of this Agreement and the transactions contemplated
hereby.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as provided herein.
COMPANY:
PINNACLE HOLDINGS INC.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
PARTICIPATING STOCKHOLDERS:
ABRY BROADCAST PARTNERS II, L.P.
By ABRY Capital, L.P.
Its General Partner
By ABRY Holdings, Inc.
Its General Partner
By:_______________________________________
Name:_____________________________________
Title:____________________________________
____________________________________________
Xxxxxx X. Xxxxxx
____________________________________________
Xxxxx X. Dell'Apa
____________________________________________
Xxxxxx Xxx
____________________________________________
Xxxxxxxx X. Day
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____________________________________________
Xxxxx Xxxxxx
____________________________________________
Xxxxxxx Xxxxxx
____________________________________________
Xxxxx Xxxxxxx
____________________________________________
Xxx Xxxxxxx
____________________________________________
Xxxxx Xxxx
____________________________________________
Xxxxxx Xxxxxxx
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SCHEDULE I
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UNPAID
------
YIELD FOR
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CLASS A CLASS A CLASS B CLASS D CLASS E
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COMMON COMMON COMMON COMMON COMMON
------ ------ ------ ------ ------
NAME SHARES SHARES SHARES SHARES SHARES
---- ------ ------ ------ ------ ------
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ABRY Broadcast 200,000 $4,761,122 - - 172,266
Partners II, L.P.
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Xxxxxx X. Xxxxxx - - 4,900 5,900 -
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Pantera, Inc. - - 100 100 -
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Pantera Partnership, Ltd. - - 5,000 5,000 -
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Xxxxx X. Dell'Apa - - 1,500 10,000 2,500
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Xxxxxx Xxx - - 500 1,900 -
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Xxxxxxxx X. Day - - - 1,900 -
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South Creek, Inc. - - - 200 -
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South Creek Partnership, - - - 6,000 -
Ltd.
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Xxxxx Xxxxxx - - - 1,000 -
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Xxxxxxx Xxxxxx - - - 1,000 -
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Xxxxx Xxxxxxx - - - 4,000 -
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Xxx Xxxxxxx - - - 1,000 -
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Xxxxx Xxxx - - - 1,000 -
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Xxxxxx Xxxxxxx - - - 1,000 -
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Other Stockholders 2,500 $ 59,012 - - -
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TOTAL: 202,500 $4,821,134 12,000 40,000 174,766
==================================================================================
SCHEDULE II
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NAME ALLOCATION PERCENTAGE
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Pinnacle Holdings Inc. 86.956%
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ABRY Broadcast Partners II, L.P. 10.751%
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Xxxxxx X. Xxxxxx 0.804%
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Xxxxx X. Dell'Apa 0.584%
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Xxxxxx Xxx 0.2415%
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Xxxxxxxx X. Day 0.2415%
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Xxxxx Xxxxxx 0.047%
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Xxxxxxx Xxxxxx 0.047%
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Xxxxx Xxxxxxx 0.187%
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Xxx Xxxxxxx 0.047%
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Xxxxx Xxxx 0.047%
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Xxxxxx Xxxxxxx 0.047%
==========================================================
