EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
By and Among
PINNACLE HOLDINGS INC.,
and
PINNACLE TOWERS INC.,
on the one hand,
and
THE INVESTORS NAMED HEREIN,
on the other hand
Dated as of April 25, 2002
TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF SHARES.............................................................................2
Section 1.1 Issuance and Sale............................................................................2
Section 1.2 The Purchase Price...........................................................................2
ARTICLE II THE CLOSING............................................................................................2
Section 2.1 The Closing..................................................................................2
Section 2.2 Deliveries...................................................................................3
Section 2.3 Preparation of EBITDA, Cash Funding and Assumed Liabilities Calculations.....................3
Section 2.4 Breaching Investor...........................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANIES.......................................................5
Section 3.1 Organization; Subsidiaries...................................................................6
Section 3.2 Due Authorization............................................................................7
Section 3.3 Capitalization...............................................................................8
Section 3.4 SEC Reports..................................................................................8
Section 3.5 Financial Statements.........................................................................9
Section 3.6 Absence of Certain Changes...................................................................9
Section 3.7 Litigation..................................................................................10
Section 3.8 Consents and Approvals......................................................................10
Section 3.9 No Violations...............................................................................11
Section 3.10 FCC/Other Regulatory Matters...............................................................11
Section 3.11 Compliance with Laws.......................................................................12
Section 3.12 Commitments................................................................................13
Section 3.13 Financial Advisory, Legal and Other Fees...................................................13
Section 3.14 ERISA Compliance...........................................................................14
Section 3.15 Intellectual Property; Technology..........................................................15
Section 3.16 Taxes......................................................................................16
Section 3.17 Properties.................................................................................19
Section 3.18 Certain Site and Tower Matters.............................................................21
Section 3.19 Environmental Matters......................................................................21
Section 3.20 Insurance..................................................................................22
Section 3.21 Business Combination and Takeover Statutes.................................................22
Section 3.22 Offering of New Common Shares; Warrants....................................................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.....................................................23
Section 4.1 Investment..................................................................................23
Section 4.2 Rule 144....................................................................................24
Section 4.3 Organization of the Investors...............................................................24
Section 4.4 Authority of the Investors..................................................................24
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Section 4.5 Non-Contravention...........................................................................24
Section 4.6 Brokers and Finders.........................................................................25
Section 4.7 Litigation..................................................................................25
Section 4.8 Consents and Approvals......................................................................25
Section 4.9 Sufficient Available Funds..................................................................25
Section 4.10 Beneficial Ownership.......................................................................26
ARTICLE V COVENANTS OF THE COMPANIES.............................................................................26
Section 5.1 Conduct of Business Pending the Closing.....................................................26
Section 5.2 Financing...................................................................................28
Section 5.3 No Solicitation of Alternative Proposals....................................................29
Section 5.4 Access to Information.......................................................................30
Section 5.5 HSR Approval................................................................................30
Section 5.6 Termination of Rights Agreement.............................................................30
Section 5.7 Use of Proceeds.............................................................................30
Section 5.8 Restructuring...............................................................................30
Section 5.9 Investor Agreement..........................................................................35
Section 5.10 Corporate Governance.......................................................................35
Section 5.11 Delivery of Documents......................................................................35
Section 5.12 Review of Audit............................................................................35
Section 5.13 Releases...................................................................................35
Section 5.14 Investor Compliance With Regulatory Requirements...........................................35
Section 5.15 Payment of Investors' Expenses.............................................................36
Section 5.16 Tax Matters................................................................................36
Section 5.17 Notification of Certain Matters............................................................37
ARTICLE VI COVENANTS OF THE INVESTORS............................................................................37
Section 6.1 Consents....................................................................................37
Section 6.2 Confidentiality.............................................................................37
Section 6.3 Approval of Bankruptcy Plan.................................................................37
ARTICLE VII CONDITIONS...........................................................................................38
Section 7.1 Conditions to Each Party's Obligations......................................................38
Section 7.2 Conditions to the Investors' Obligations....................................................38
Section 7.3 Conditions to the Obligations of Each of the Companies......................................41
ARTICLE VIII TERMINATION.........................................................................................42
Section 8.1 Termination.................................................................................42
Section 8.2 Break-Up Payment............................................................................44
ARTICLE IX NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN COVENANTS; NATURE OF REMEDIES...............45
ARTICLE X MISCELLANEOUS..........................................................................................46
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Section 10.1 Governing Law..............................................................................46
Section 10.2 Jurisdiction; Forum; Service of Process; Waiver of Jury Trial..............................46
Section 10.3 Successors and Assigns.....................................................................46
Section 10.4 Entire Agreement; Amendment................................................................47
Section 10.5 Notices....................................................................................47
Section 10.6 Certain Definitions........................................................................49
Section 10.7 Delays or Omissions........................................................................56
Section 10.8 Counterparts...............................................................................57
Section 10.9 Severability...............................................................................57
Section 10.10 Titles and Subtitles......................................................................57
Section 10.11 No Public Announcement....................................................................57
Section 10.12 Further Actions; Reasonable Efforts.......................................................57
Exhibit A--Investor Agreement
Exhibit B--New Pinnacle Certificate of Incorporation
Exhibit C--New Pinnacle Bylaws
Exhibit D--Form of Opinion
Exhibit E--Commitment Letter
Exhibit F--Employee Stock Option Plan
Exhibit G--Form of Warrant Agreement
Exhibit H--Term Sheet of Bankruptcy Plan
Exhibit I--Break-Up Payment Claim Order
Exhibit J--Break-Up Payment Order
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made as of
April 25, 2002 by and among Pinnacle Holdings Inc., a Delaware corporation
("Pinnacle"), and Pinnacle Towers Inc., a Delaware corporation ("PTI" and
together with Pinnacle, the "Companies"), on the one hand, and Fortress
Registered Investment Trust, a Delaware business trust ("Fortress"), and
Xxxxxxxxx Capital Partners, L.P., a Delaware limited partnership, and its
related partnerships identified on the signature pages hereof (collectively,
"Greenhill"). Fortress and Greenhill and their permitted assignees are
sometimes referred to individually as an "Investor" and collectively as the
"Investors." References to this Agreement herein shall include each of the
Exhibits and Schedules attached hereto. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in Section 10.6.
WHEREAS, the Companies desire to undertake the Restructuring (as
hereinafter defined) to be followed immediately by the merger (the "Merger") of
Pinnacle with and into a newly formed Delaware corporation to be formed by the
Investors solely for purposes of completing the Merger and with no liabilities
that would survive the Merger ("New Pinnacle"), with (i) New Pinnacle being the
surviving entity and the direct parent corporation of PTI and changing its name
to "Pinnacle Holdings Inc." and (ii) each of the New Common Shares (as
hereinafter defined) issued by Pinnacle being converted into a New Common Share
of New Pinnacle and immediately following the effective time of the Merger no
other share of capital stock of New Pinnacle being issued or issuable other
than the Warrant Shares and the Employee Stock Option Shares (as hereinafter
defined);
WHEREAS, in connection with the Restructuring, the Investors desire to
make a significant investment in Pinnacle which, upon completion of the Merger,
will become an investment in New Pinnacle;
WHEREAS, to implement such investment, the Investors desire to
purchase from Pinnacle, and Pinnacle desires to issue and sell to the
Investors, upon the terms and subject to the conditions set forth herein, the
New Common Shares;
WHEREAS, in connection with the sale and purchase of the New Common
Shares, the Investors will have the benefit of the registration rights provided
for in the Investor Agreement being executed at the Closing of the transactions
contemplated hereby in the form attached hereto as Exhibit A (the "Investor
Agreement"); and
WHEREAS, in order to effect the transactions contemplated by this
Agreement, New Pinnacle will adopt a certificate of incorporation and bylaws in
the respective forms attached hereto as Exhibit B and Exhibit C, respectively
(the "New Pinnacle Certificate of Incorporation" and the "New Pinnacle
Bylaws").
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE ONE
PURCHASE AND SALE OF SHARES
Section 1.1 Issuance and Sale. Upon the terms and subject to the
conditions set forth herein, at the Closing Pinnacle shall: (a) issue and sell
to Fortress and Fortress shall purchase from Pinnacle the New Fortress Shares;
and (b) issue and sell to Greenhill and Greenhill shall purchase from Pinnacle
the New Greenhill Shares, determined as set forth in the next sentence. The
number of New Fortress Shares shall be equal to 2/3 of the Required New Share
Amount and the number of New Greenhill Shares shall be equal to 1/3 of the
Required New Share Amount, minus in the case of the New Fortress Shares 2/3 of
the number of New Senior Noteholder Shares (as hereinafter defined) and minus
in the case of the New Greenhill Shares 1/3 of the number of New Senior
Noteholder Shares. The number of New Senior Noteholder Shares shall be equal to
the number of New Common Shares acquired by holders of the Senior Notes
pursuant to the elections described in Section 5.8. The "New Common Shares"
shall mean initially the New Investors Shares and all other shares of
Pinnacle's Common Stock issued pursuant to the Restructuring and, from and
after the Merger, all shares of New Pinnacle's Common Stock issued pursuant to
the Merger.
Section 1.2 The Purchase Price. Greenhill and Fortress shall
each pay to the Companies, in accordance with the Bankruptcy Plan, by wire
transfer of immediately available funds, a purchase price of $10 per New
Investors Share (the "Purchase Price"), in consideration for the New Investors
Shares purchased by such Investor upon the Closing (collectively, the
"Investment").
ARTICLE TWO
THE CLOSING
Section 2.1 The Closing. The closing of the purchase and sale of
the New Common Shares hereunder and the other transactions contemplated hereby
(the "Closing") shall take place at the offices of Holland & Knight LLP, 000
Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000, at a date (the "Closing
Date") and time to be mutually agreed upon by the Companies and the Investors,
which shall be at least three (3) but no more than ten (10) Business Days after
the later of (a) the date following the satisfaction or waiver by each Investor
or the Companies, as appropriate, of all of the conditions set forth in Article
VII (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of those conditions) and
(b) the resolution of any objections to the calculations of EBITDA (as
hereinafter defined), Cash Funding (as hereinafter defined) and Assumed
Liabilities pursuant to Section 2.3; provided, however, that, in the event the
parties are not able mutually to agree on a Closing Date in accordance with the
immediately preceding clause, the parties agree that the Closing Date shall be
on the tenth Business Day following the later of (x) the satisfaction or waiver
of all of the conditions set forth in Article VII (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those
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conditions) and (y) the resolution of any objections to the calculations of
EBITDA, Cash Funding and Assumed Liabilities pursuant to Section 2.3.
Section 2.2 Deliveries.
(a) At the Closing, Pinnacle shall deliver certificates
to (i) Fortress, representing the New Fortress Shares being purchased by
Fortress and registered in the name of Fortress or its nominee or designee in
such amounts as Fortress shall specify to Pinnacle at least three (3) Business
Days prior to the Closing Date and (ii) Greenhill, representing the New
Greenhill Shares being purchased by Greenhill and registered in the name of
Greenhill or its nominee or designee in such amounts as Greenhill shall specify
to Pinnacle at least three (3) Business Days prior to the Closing Date.
Delivery of such certificates to each Investor shall be made against receipt by
Pinnacle of the portion of the Purchase Price payable by such Investor, which
shall be paid by wire transfer of immediately available funds to an account
designated at least three (3) Business Days prior to the Closing Date by
Pinnacle.
(b) Execution and delivery of the Investor Agreement
shall be made at the Closing by Pinnacle and the Investors.
Section 2.3 Preparation of EBITDA, Cash Funding and Assumed
Liabilities Calculations.
(a) Not less than five (5) Business Days prior to the
scheduled Closing Date, the Companies will prepare and deliver to the Investors
a draft schedule in form and substance reasonably satisfactory to the Investors
showing (i) the Initial Cash Funding Calculation, (ii) the calculation of
earnings before interest, taxes, depreciation and amortization of the Companies
and their Subsidiaries on a consolidated basis for the period beginning January
1, 2002 and ending on the last day of the Last Applicable Month, divided by the
number of full months occurring during the period beginning January 1, 2002 and
ending on the last day of the Last Applicable Month (the "Initial EBITDA
Calculation"), and (iii) the calculation of the Assumed Liabilities (the
"Initial Assumed Liabilities Calculation"). The "Last Applicable Month" shall
be either: (i) the month immediately preceding the month in which the Closing
Date is scheduled to occur if the Closing Date is scheduled to occur on any day
after the 15th day of the month in which the Closing Date occurs or (ii) the
month prior to the month immediately preceding the month in which the Closing
Date is scheduled to occur if the Closing Date is scheduled to occur on or
before the 15th day of the month in which the Closing Date occurs. The Initial
Cash Funding Calculation, the Initial EBITDA Calculation and the Initial
Assumed Liabilities Calculation shall be determined in accordance with GAAP
consistently applied, but in the case of the Initial EBITDA Calculation as
required by Section 2.3 adjusted to (i) exclude the effect of, and without
duplication, (A) impairment losses for assets held for sale or assets held for
use as of the date of this Agreement, (B) expenses incurred or reimbursed by
the Companies in connection with the Restructuring and the Restructuring
Transaction, (C) gains or losses on the disposition of fixed assets, (D)
financing costs, including debt restructuring costs and the write-offs of
previously capitalized financing costs, (E) foreign currency translation costs,
(F) costs associated with obtaining title insurance and mortgaging and
perfecting liens on properties previously not mortgaged to the existing senior
bank group, (G) any reserves or write-offs associated with the Companies'
receivable from Motorola or the Companies' receivable from
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Genesis, the Companies' D&O insurance carrier, (H) tax, penalties and interest
associated with any built-in gains of C corporations which the Companies are
ultimately required to pay since January 1, 2002, (I) any increases in the
Companies' insurance premiums occurring after the date of this Agreement not
described in Section 3.20 of the Companies' Disclosure Schedule, (J)
accelerated amortization of prepaid directors' and officers' insurance premiums
resulting from the early termination of the Companies' directors' and officers'
insurance policy, (K) unreimbursed costs or expenses associated with any
potential settlement the Companies entering into in connection with the pending
shareholder lawsuit, (L) unreimbursed costs associated with the settlement of
any lawsuits in an amount not in excess of $2,000,000 in the aggregate, and (M)
expenses incurred by the Companies in connection with any potential transaction
with a potential investor in one or both of the Companies , and (ii) include
the monthly amount, if it would decrease EBITDA on a recurring going-forward
basis, of the reasonably expected impact of any breaches by the Companies of
their representations and warranties in Article III, in each case without
giving effect to any and all materiality exceptions contained therein;
provided, however, that any breach of a representation or warranty that results
in a $1,000 per month effect or less (individually) on EBITDA shall be ignored.
(b) If any of the Investors (or the Committee with
respect to the Initial Cash Funding Calculation) has any objections to the
Initial Cash Funding Calculation, the Initial EBITDA Calculation or the Initial
Assumed Liabilities Calculation, such party will deliver a written statement
describing their objections in reasonable detail to the Companies not less than
five (5) Business Days after the receipt of the Initial Cash Funding
Calculation, the Initial EBITDA Calculation and the Initial Assumed Liabilities
Calculation. The Companies, the Investors and the Committee will use reasonable
efforts to resolve any such objections themselves. If a final resolution of
such objections is not made within five additional Business Days, the
Investors, the Companies and the Committee (as the case may be) will submit the
issue to the Bankruptcy Court for resolution on forty-eight (48) hours' notice.
Any such party may present expert testimony at the hearing, and the resolution
by the Bankruptcy Court will be final and binding as to any adjustments to the
Initial Cash Funding Calculation, the Initial EBITDA Calculation or the Initial
Assumed Liabilities Calculation, as applicable, with no party having the right
to appeal. The Closing shall be delayed until at least three (3) Business Days
but no more than ten (10) Business Days following the Bankruptcy Court's final
determination of the issue, and no party shall incur liability to any other
party for such delay. "EBITDA" shall mean the Initial EBITDA Calculation
provided by the Companies to the Investors pursuant to Section 2.3(a), together
with any revisions thereto pursuant to this Section 2.3(b), and the "Cash
Funding" shall mean the Initial Cash Funding Calculation provided by the
Companies to the Investors pursuant to Section 2.3(a), together with any
revisions thereto pursuant to this Section 2.3(b).
(c) The Companies will make the work papers and back-up
materials used in preparing the Initial Cash Funding Calculation, the Initial
EBITDA Calculation and the Initial Assumed Liabilities Calculation, and the
books, records, and the financial staff of the Companies available to the
Investors and their accountants and other representatives, and to the Committee
and their advisors with respect to the Initial Cash Funding Calculation, at
reasonable times and upon reasonable notice at any time during (i) the review
by the Investors and the Committee of the Initial Cash Funding Calculation, the
Initial EBITDA Calculation and the Initial Assumed Liabilities Calculation, and
(ii) the resolution by the parties of any objections thereto.
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(d) All documents delivered by the Companies to the
Investors pursuant to this Section 2.3 shall contemporaneously be delivered to
the Committee and its counsel and, in the case of the Initial Cash Funding
Calculation, and any adjustments thereto shall be subject to the reasonable
approval of the Committee.
Section 2.4 Breaching Investor. Notwithstanding anything else
contained in this Agreement to the contrary, if each of the conditions of each
party's obligations to this Agreement set forth in Article VII have otherwise
been satisfied or waived and if one of the Investors breaches its obligation to
consummate the transactions contemplated herein (the "Breaching Investor"), the
other Investors (the "Non-Breaching Investors") may elect within thirty (30)
Business Days from such date (or, if earlier, may elect by the date six months
from the date hereof) that, but for the Breaching Investor's failure to close,
would have been the Closing Date, to assume or cause one or more other Persons
to assume all of the rights and obligations of the Breaching Investor (an
"Alternative Investor"); provided, that any such Alternative Investor which is
neither an affiliate of, or an investor in, an Investor as of the date of this
Agreement shall be subject to the reasonable approval of the Companies and the
Committee. In the event that the Non-Breaching Investors determine not to elect
to so assume or cause another Person to assume the Breaching Investor's rights
and obligations under this Agreement, the Companies and the Committee shall
have an additional thirty (30) Business Days (or, if earlier, until the date
six months from the date hereof) to secure an Alternative Investor; provided,
however, that such Alternative Investor shall be (x) required to enter into all
inter-investor agreements on the same terms that the Breaching Investor would
have been subject to had it completed the Investment and (y) subject to the
Non-Breaching Investors' consent, which consent shall not be unreasonably
withheld, it being agreed that it shall not be unreasonable for the
Non-Breaching Investors to fail to give their consent if the reputation,
business approach and industry expertise of such Alternative Investor shall not
be comparable to or superior to those of the Breaching Investor. If the
Non-Breaching Investors elect not to assume or cause another Person to assume
the Breaching Investor's rights and obligations under this Agreement and
neither the Companies nor the Committee secures an Alternative Investor, the
Companies and the Non-Breaching Investors shall each have the right to
terminate this Agreement without any liability (including without limitation
Sections 5.3 and 8.2) to the other and without in any way releasing the
Breaching Investor from any liability for its breach or limiting the Companies'
rights with respect to the Breaching Investor.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
Except as specifically set forth in the disclosure schedule prepared
and signed by each of the Companies (the "Companies' Disclosure Schedule") and
delivered to the Investors simultaneously with the execution hereof, each of
the Companies, jointly and severally, represents and warrants to each of the
Investors that all of the statements contained in this Article III are true and
complete as of the date of this Agreement (or, if made as of a specified date,
as of such date), and will be true and complete in all material respects as of
the Closing Date as though made on the Closing Date. The exceptions,
modifications, descriptions and disclosures in any Schedule attached hereto are
made for all purposes of this Agreement and are exceptions to all
representations and warranties set forth in this Agreement or in any agreement
or instrument
5
delivered pursuant to or in connection with this Agreement. Disclosure of an
item in response to one Section of this Agreement shall constitute disclosure
in response to every Section of this Agreement notwithstanding the fact that no
express cross-reference is made. Disclosure of any items not otherwise required
to be disclosed shall not create any inference of materiality. In the event of
any inconsistency between statements in the body of this Agreement and
statements in the Companies' Disclosure Schedule (excluding exceptions
expressly set forth in the Companies' Disclosure Schedule with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement shall control.
EXCEPT IN THE CASE OF EACH OF THE FOLLOWING CLAUSES FOR THE LIMITED
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE III AND THE
INVESTORS' RELIANCE THEREON: (A) THE INVESTORS ARE ACQUIRING THE NEW INVESTORS
SHARES, AND THE SALE HEREUNDER IS MADE "AS IS" AND "WHERE IS", WITHOUT
REPRESENTATION OR WARRANTY; (B) THE COMPANIES HEREBY SPECIFICALLY DISCLAIM ANY
REPRESENTATION OR WARRANTY, ORAL OR WRITTEN, INCLUDING, BUT NOT LIMITED TO
THOSE CONCERNING (I) THE NATURE AND CONDITION OF ANY ASSETS AND THE SUITABILITY
OF ANY ASSETS FOR ANY AND ALL ACTIVITIES AND USES WHICH ANY INVESTOR MAY ELECT
TO CONDUCT THEREON, (II) THE MANNER, CONSTRUCTION, CONDITION AND STATE OF
REPAIR OR LACK OF REPAIR OF ANY IMPROVEMENTS LOCATED ON ANY ASSETS, AND (III)
THE COMPLIANCE OF ANY ASSET OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES,
OR REGULATIONS OF ANY GOVERNMENT OR OTHER BODY, IT BEING SPECIFICALLY
UNDERSTOOD THAT INVESTORS HAVE HAD FULL OPPORTUNITY TO DETERMINE FOR THEMSELVES
THE CONDITION OF THE COMPANIES AND THEIR ASSETS; (C) THE COMPANIES MAKE NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW,
INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF QUANTITY, QUALITY,
CONDITION, HABITABILITY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE COMPANIES OR ANY OF THEIR ASSETS; (D) THE INVESTORS
ARE PURCHASING THE NEW INVESTORS SHARES BASED SOLELY ON THE INVESTORS' OWN
INDEPENDENT INVESTIGATIONS AND FINDINGS AND NOT IN RELIANCE UPON ANY
INFORMATION PROVIDED BY THE COMPANIES OR THE COMPANIES' REPRESENTATIVES; AND
(E) THE COMPANIES MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR
RELIABILITY OF ANY FORECASTS OR PROJECTIONS OF REVENUES, SALES, EXPENSES OR
PROFITS. IN NO EVENT SHALL EITHER OF THE COMPANIES BE LIABLE FOR DAMAGES
ARISING FROM A BREACH OF A REPRESENTATION OR WARRANTY.
Section 3.1 Organization; Subsidiaries.
(a) The Companies are each corporations duly organized,
validly existing and in good standing under the laws of the State of Delaware
and have the requisite corporate power and corporate authority to carry on
their respective businesses as they are now being conducted or presently
proposed to be conducted. To the Knowledge of the Companies, the Companies are
each duly qualified and licensed as foreign corporations to do business and are
each in good standing (and have paid all relevant franchise or analogous taxes)
in each
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jurisdiction where the character of their assets owned or held under lease or
the nature of their businesses makes such qualification necessary.
(b) Section 3.1(b)(i) of the Companies' Disclosure
Schedule sets forth (i) each corporation, limited liability company,
partnership, business association or other Person in which the Companies own
any direct or indirect equity interest (each a "Subsidiary," and collectively
the "Subsidiaries"), (ii) the ownership interest therein of the Companies or
such other Subsidiary, (iii) if such Subsidiary is not directly or indirectly
wholly-owned by the Companies, to the extent known by the Companies, the
identity and ownership interest of each of the other owners of such Subsidiary,
and (iv) to the Knowledge of the Companies, the United States federal income
tax status of each Subsidiary as a corporation, "Taxable REIT Subsidiary" of
Pinnacle (within the meaning of Section 856(l) of the Code), "Qualified REIT
Subsidiary" of Pinnacle (within the meaning of Section 856(i)(2) of the Code),
partnership, or disregarded entity. Except as set forth on Section 3.1(b)(i) of
the Companies' Disclosure Schedule (i) the Companies own, either directly or
indirectly through one or more Subsidiaries, all of the capital stock or other
equity interests of the Subsidiaries free and clear of all Encumbrances, other
than Permitted Encumbrances, and (ii) there are no outstanding subscription
rights, options, warrants, convertible or exchangeable securities or other
rights of any character whatsoever relating to issued or unissued capital stock
or other equity interests of any Subsidiary, or any Commitments of any
character whatsoever relating to issued or unissued capital stock or other
equity interests of any Subsidiary or pursuant to which any Subsidiary is or
may become bound to issue or grant additional shares of its capital stock or
other equity interests or related subscription rights, options, warrants,
convertible or exchangeable securities or other rights, or to grant preemptive
rights. Section 3.1(b)(i) of the Companies' Disclosure Schedule contains a
complete and accurate organizational chart identifying the equity ownership of
PTI and each of the Subsidiaries.
(c) Except as set forth in Section 3.1(c) of the
Companies' Disclosure Schedule, each Subsidiary is a corporation, limited
liability company, partnership, business association or other Person duly
organized, validly existing and in good standing (in jurisdictions where such
concept is recognized) under the laws of the jurisdiction of its organization
and has the requisite corporate power and authority to carry on its business as
it is now being conducted. To the Knowledge of the Companies, each Subsidiary
of the Companies is duly qualified and licensed as a foreign corporation or
other business entity to do business and is in good standing (and has paid all
relevant franchise or analogous taxes) in each jurisdiction where the character
of its assets owned or held under lease or the nature of its business makes
such qualification necessary.
Section 3.2 Due Authorization. The Companies have all corporate
right, corporate power and corporate authority to enter into this Agreement and
each of the other Transaction Documents to which they are parties, subject to
approval of the Bankruptcy Court, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Companies of
this Agreement and each of the other Transaction Documents to which they are
parties is, and the issuance, sale and delivery of the New Common Shares by
Pinnacle and the compliance by the Companies with each of the provisions of
this Agreement and each of the other Transaction Documents to which they are
parties will, upon the approval of the Bankruptcy Court, be (a) within the
corporate power and authority of the Companies, and (b)
7
have been duly authorized by all requisite corporate action of the Companies.
This Agreement has been, and each of the other Transaction Documents to which
the Companies are parties when executed and delivered by the Companies will be,
duly and validly executed and delivered by the Companies, and this Agreement
constitutes, and each of such other Transaction Documents when executed and
delivered by the Companies and (assuming this Agreement constitutes a valid and
binding obligation of the Investors) will constitute, a valid and binding
agreement of the Companies, enforceable against the Companies in accordance
with its terms, except as such enforcement is limited by bankruptcy,
reorganization, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and limitations imposed by general principles of
equity.
Section 3.3 Capitalization.
(a) Except as set forth in Section 3.3 of the Companies'
Disclosure Schedule and except for the transactions contemplated by this
Agreement and the other Transaction Documents, there are no outstanding
subscription rights, options, warrants, convertible or exchangeable securities
or other rights of any character whatsoever to which either of the Companies
are a party relating to issued or unissued capital stock of the Companies, or
any Commitments of any character whatsoever relating to issued or unissued
capital stock of the Companies or pursuant to which the Companies or any of the
Subsidiaries are or may become bound to issue or grant additional shares of
their capital stock or related subscription rights, options, warrants,
convertible or exchangeable securities or other rights, or to grant preemptive
rights. Except as contemplated by this Agreement and the other Transaction
Documents, (a) the Companies have not agreed to register any securities under
the Securities Act or under any state securities law or granted registration
rights to any Person and (b) there are no voting trusts, stockholders
agreements, proxies or other Commitments or understandings in effect to which
the Companies are a party with respect to the voting or transfer of any of the
outstanding shares of Common Stock.
(b) As of the Closing, after giving effect to the
Investment, the Restructuring and the Merger (assuming they are effected as
contemplated hereby), the authorized capital stock of New Pinnacle shall be as
set forth in the New Pinnacle Certificate of Incorporation and the shares of
capital stock of New Pinnacle either outstanding or subject to issuance
pursuant to outstanding options or other securities shall consist solely of the
New Fortress Shares, the New Xxxxxxxxx Shares, the New Senior Noteholder
Shares, the Employee Stock Option Shares and the Warrant Shares (collectively,
the "New Equity Capitalization").
Section 3.4 SEC Reports. Unless not required during the pendency
of the Bankruptcy Case, and except as set forth in Section 3.4 of the
Companies' Disclosure Schedule, since December 31, 2001, Pinnacle has timely
filed all proxy statements, reports and other documents required to be filed by
it under the Exchange Act. Pinnacle has made available to each Investor
complete copies of all annual reports, quarterly reports, proxy statements and
other reports filed by Pinnacle under the Exchange Act since December 31, 2000,
each as filed with the SEC through the date of the Agreement (collectively, the
"SEC Reports"). To the Knowledge of the Companies, except as set forth in
Section 3.4 of the Companies' Disclosure Schedule, each SEC Report was, on the
date of its filing or as subsequently amended, in compliance in all material
respects with the requirements of its respective report form and the
8
Exchange Act and did not, on the date of filing or as subsequently amended,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Section 3.5 Financial Statements. The consolidated financial
statements of the Companies (including any related schedules and/or notes)
included in the SEC Reports, as subsequently amended, comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, and have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
consistently followed throughout the periods involved (except as may be
indicated in the notes thereto) and fairly present in accordance with GAAP the
consolidated financial condition, results of operations, cash flows and changes
in stockholders' equity of the Companies and the Subsidiaries as of the
respective dates thereof and for the respective periods then ended (in each
case subject, as to interim statements, to the absence of footnotes and as
permitted by Form 10-Q and subject to changes resulting from year-end
adjustments.
Section 3.6 Absence of Certain Changes. Except as set forth in
Section 3.6 of the Companies' Disclosure Schedules or as set forth in the SEC
Reports or as contemplated by this Agreement or any of the other Transaction
Documents, the Bankruptcy Case or the Amended Credit Facility, since December
31, 2001 through the date of this Agreement, neither the Companies nor any
Subsidiary have taken any of the following acts:
(a) incurred any liability or obligation (absolute,
accrued, contingent or otherwise) except items incurred in the Ordinary Course
of Business or which do not in the aggregate exceed $1,000,000, or increased,
or experienced any change in any assumptions underlying or methods of
calculating, any bad debt, contingency or other reserves;
(b) paid, discharged or satisfied any claim, liability
or obligation (whether absolute, accrued, contingent or otherwise) other than
the payment, discharge or satisfaction in the Ordinary Course of Business or
pursuant to the Bankruptcy Plan;
(c) permitted or allowed any of its property or assets
(real, personal or mixed, tangible, or intangible) to be subjected to any Lien
other than Permitted Encumbrances;
(d) written off as uncollectible any notes or accounts
receivable, except for write-offs in the Ordinary Course of Business;
(e) sold, transferred, or otherwise disposed of any of
its properties or assets (real, personal, tangible or intangible) valued at
$1,000,000 individually or $2,500,000 in the aggregate;
(f) granted any general increase in the compensation of
executive officers (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or any increase in the compensation
payable or to become payable to any executive officer;
9
(g) made any single capital expenditure or Commitment in
excess of $250,000 for additions to property, plant, equipment or intangible
capital assets or made aggregate capital expenditures and commitments in excess
of $10,000,000 (on a consolidated basis) for additions to property, plant,
equipment or intangible capital assets;
(h) declared, paid or set aside for payment any dividend
or other distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other securities of the Companies or any Subsidiary;
(i) made any change in any method of accounting or
accounting practice except as required by GAAP;
(j) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal, tangible or
intangible) valued at more than $5,000 individually or $15,000 in the aggregate
to, or entered into any agreement or arrangement with, any of its executive
officers or directors or any Affiliate of any of its executive officers or
directors except for directors' fees and compensation to executive officers who
receive total annual compensation of more than $150,000 at rates not exceeding
the rates of such fees and compensation paid during the year ended December 31,
2001; or
(k) agreed, whether in writing or otherwise, to take any
action described in this Section 3.6.
Section 3.7 Litigation.
(a) Except (i) as set forth in Section 3.7(a) of the
Companies' Disclosure Schedule or (ii) as disclosed in the SEC Reports, there
is no claim, action, suit, investigation or proceeding of any kind or nature
whatsoever ("Litigation") pending or, to the Knowledge of the Companies,
threatened against the Companies or any of the Subsidiaries or involving any of
their respective properties or assets by or before any court, arbitrator or
other Governmental Entity which (x) in any manner challenges or seeks to
prevent, enjoin, alter or delay the transactions contemplated by this Agreement
or any of the other Transaction Documents or (y) if resolved adversely to the
Companies or a Subsidiary would have a Material Adverse Effect. Except as set
forth in Section 3.7(a) of the Companies' Disclosure Schedule, there is no
judgment, decree, injunction, rule, or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against the Companies or any of the Subsidiaries.
(b) To the Knowledge of the Companies, none of the
Companies nor any of the Subsidiaries are in default under or in breach of any
order, judgment or decree of any court, arbitrator or other Governmental
Entity, and neither the Companies nor any of the Subsidiaries are a party or
subject to any order, judgment or decree of any court, arbitrator or other
Governmental Entity, except where such default, breach, order, judgment or
decree would not have a Material Adverse Effect.
Section 3.8 Consents and Approvals. To the Knowledge of the
Companies, no consent, approval, authorization of, declaration, filing, or
registration with, any federal, state, local or foreign government or
regulatory authority, is required to be made or obtained by any of the
Companies or the Subsidiaries in connection with the execution, delivery, and
performance
10
of this Agreement or any of the other Transaction Documents contemplated
hereby, except for (i) the filing of the New Pinnacle Certificate of
Incorporation with the Secretary of State of the State of Delaware, (ii) any
required filings under the HSR Act, the Exchange Act or the Securities Act,
(iii) the Regulatory Approvals, (iv) the Required Consents, (v) the
Confirmation Order, (vi) the Break-Up Payment Order or Allowed Break-Up Payment
Claim Order, as the case may be, and (vii) any consents of third parties
required under any agreement or other instrument to which the Companies or any
of the Subsidiaries are a party or pursuant to which any of them or any of
their assets or properties is subject (the "Third Party Consents"). The items
referred to in clauses (i) through (vi) of this Section 3.8 are hereinafter
referred to as the "Governmental Requirements."
Section 3.9 No Violations. Assuming that the Governmental
Requirements and the Third Party Consents will be satisfied, made or obtained
and will remain in full force and effect and the conditions set forth in
Article VII will be satisfied, neither the execution, delivery or performance
by the Companies of this Agreement or any of the other Transaction Documents to
which the Companies are a party nor the consummation of the Restructuring
Transaction contemplated hereby or thereby will: (a) conflict with, or result
in a breach or a violation of, any provision of the certificate of
incorporation or bylaws or other organizational documents of the Companies or
any of the Subsidiaries; or (b) constitute, with or without notice or the
passage of time or both, a breach, violation or default, create an Encumbrance,
other than Permitted Encumbrances, or give rise to any right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, under (i) any Law or (ii) any provision of any agreement or other
instrument to which the Companies or any of the Subsidiaries are a party or
pursuant to which any of them or any of their assets or properties is subject,
except, for breaches, violations, defaults, Encumbrances, other than Permitted
Encumbrances, or rights of termination, modification, cancellation, prepayment,
suspension, limitation, revocation or acceleration which purport to become
effective upon the occurrence of a Bankruptcy Case, or which, individually or
in the aggregate, are not material and would not materially adversely affect
the ability of the Companies to perform their obligations under this Agreement
or any of the Transaction Documents to which they are a party.
Section 3.10 FCC/Other Regulatory Matters.
(a) Except as set forth in Section 3.10(a) of the
Companies' Disclosure Schedule, to the Knowledge of the Companies, the
Companies have all licenses, permits, certificates, franchises, consents,
waivers, registrations or other regulatory authorizations from each
Governmental Entity that regulates communications site owners or managers in
each applicable domestic or foreign jurisdiction that are required for the
conduct of their businesses as presently conducted, including without
limitation those required by any of the following for the conduct of their
businesses as presently conducted: (i) the appropriate foreign Governmental
Entities (together with any required renewals, extensions, or modifications
thereof and any additions thereto made as of the Closing Date, the "Foreign
Licenses"); (ii) the appropriate municipal Governmental Entities (together with
any required renewals, extensions, or modifications thereof and any additions
thereto made as of the Closing Date, the "Local Authorizations"); (iii) the FCC
(together with any required renewals, extensions or modifications thereof and
any additions thereto made as of the Closing Date, the "FCC Licenses"); and
(iv) the FAA (together with any renewals, extensions or modifications thereof
and any additions thereto made as of the Closing Date, the "FAA Licenses"). The
FCC Licenses, the FAA Licenses,
11
Foreign Licenses and Local Authorizations are hereafter collectively referred
to as the "Communications Licenses."
(b) Except as set forth in Section 3.10(b) of the
Companies' Disclosure Schedule, to the Knowledge of the Companies, each of the
Communications Licenses was duly issued, is valid and in effect, has not been
suspended, canceled, revoked or modified in any materially adverse manner and
is not subject to material conditions or requirements that are not generally
imposed on such authorizations.
(c) Each holder of a Communications License, to the
Knowledge of the Companies, (i) has operated in compliance with all terms
thereof,(ii) is in compliance with, and the conduct of its business has been
and is in compliance with, the Communications Act and any applicable state or
local regulations, and (iii) each such holder has filed all registrations and
reports and paid all required fees, including any renewal applications,
required by the Communications Act, any non-U.S. laws or regulations or any
applicable state or local regulations. There is (x) no pending or, to the
Knowledge of the Companies, threatened action by or before the FCC, the FAA,
any municipal Governmental Entity or any foreign Governmental Entity to revoke,
cancel, suspend, modify or refuse to renew any of the Communications Licenses,
and (y) not now issued, outstanding or, to the Knowledge of the Companies,
threatened, any notice by the FCC, the FAA, any municipal Governmental Entity
or any foreign Governmental Entity of any violation or complaint, or any
application, complaint, or proceeding (other than applications, proceedings, or
complaints that generally affect the Companies' industry as a whole) relating
to the business or operations of the Companies or any Subsidiary.
(d) To the Knowledge of the Companies, no event has
occurred which permits the revocation or termination of any of the
Communications Licenses or the imposition of any restriction thereon, or that
would prevent any of the Communications Licenses from being renewed on a
routine basis or in the ordinary course.
(e) Except as set forth in Section 3.10(e) of the
Companies' Disclosure Schedule, to the Knowledge of the Companies, none of the
execution, delivery or performance of this Agreement or any of the other
Transaction Documents by the Companies, nor the consummation of the
transactions contemplated hereby or thereby will result in any revocation,
cancellation, suspension or material modification of any Communications
Licenses or give rise to the right of any Governmental Entity to take any such
action or to fail to renew any Communications License.
Section 3.11 Compliance with Laws. Except as disclosed in the SEC
Reports or in Section 3.11 of the Companies' Disclosure Schedule, to the
Knowledge of the Companies, the Companies and the Subsidiaries are in
compliance with all Laws in all material respects, and neither the Companies
nor any Subsidiary has received any notice of any alleged violation of Law. In
addition to the Communications Licenses, to the Knowledge of the Companies, the
Companies hold all other licenses, franchise permits, consents, registrations,
certificates, and other governmental or regulatory permits, authorizations or
approvals required for the operation of the business as presently conducted and
for the ownership, lease or operation of the Companies' and their Subsidiaries'
Towers and Sites (collectively, "Licenses"). To the
12
Knowledge of the Companies, all of such Licenses are valid and in effect, the
Companies and the Subsidiaries have duly performed and are in compliance with
all of their obligations under such Licenses and no investigation or review by
any governmental or regulatory body or authority is pending or threatened.
Section 3.12 Commitments. Section 3.12 of the Companies'
Disclosure Schedule discloses or lists as of the date hereof each binding
contract, agreement and commitment of any nature whatsoever, whether written or
oral, including all amendments thereof and supplements thereto ("Commitments")
of the following types to which the Companies or any Subsidiary is a party or
by or to which the Companies or any Subsidiary or any of their properties may
be bound or subject: (a) Commitments containing covenants purporting to limit
the freedom of the Companies or any Subsidiary to compete in any line of
business in any geographic area or to hire any individual or group of
individuals; (b) written Commitments relating to planned or in process capital
expenditures or other purchases or payments in excess of $250,000 individually;
(c) Commitments constituting indentures, mortgages, promissory notes, loan
agreements, guarantees, letters of credit or other financing agreements or
instruments of the Companies or any Subsidiary involving indebtedness in
amounts in excess of $250,000; (d) written Commitments providing for the
acquisition or disposition of any business or the capital stock of any Person
in each case having a purchase price in excess of $250,000 that has not been
consummated; (e) Commitments in respect of any joint venture, partnership or
other similar arrangement, in each case involving a Commitment of future
capital of $250,000 on the part of the Companies; (f) Commitments with any
Governmental Entity (excluding Commitments for occupancy of communications
sites owned or involving reasonably contemplated annual payments by the
Companies or any Subsidiaries not in excess of $250,000); (g) Commitments
relating to Tower and Site maintenance providers involving annual payments in
excess of $250,000; and (h) any other agreement for the purchase of material,
supplies, goods, services, equipment or other assets that provide for either
(i) annual payment of $500,000 or more or (ii) aggregate payments of $1,000,000
or more. To the Knowledge of the Companies, except as set forth in Section 3.12
of the Companies' Disclosure Schedule, neither the Companies nor any of the
Subsidiaries are in breach in any material respect of any Commitment, and no
other party to a Commitment listed in Section 3.12 of the Companies' Disclosure
Schedule is in breach in any material respect thereof.
Section 3.13 Financial Advisory, Legal and Other Fees. No agent,
broker, accounting firm, investment bank, other financial advisor, commercial
bank, other financial institution, law firm, public relations firm or any other
Person is or will be entitled to any fee, commission, expense or other amount
from the Companies or any of the Subsidiaries in connection with any of the
transactions contemplated by this Agreement or the other Transaction Documents
except for (a) the advisors identified in Section 3.13 of the Companies'
Disclosure Schedule, (b) other Persons whose fees, commissions, expenses and
other amounts accrued through the date hereof and paid or payable do not in the
aggregate total more than $100,000 (taking into account any amount saved if any
of the aforementioned advisors are replaced) and (c) other Persons hired by the
Companies after the date of this Agreement in connection with the Bankruptcy
Case or required to be paid by the Companies by the Bankruptcy Code or Rules or
by an order of the Bankruptcy Court.
13
Section 3.14 ERISA Compliance.
(a) Section 3.14(a) of the Companies' Disclosure
Schedule contains a complete and correct list of each Plan. With respect to
each Plan, the Companies have heretofore delivered or made available to the
Investors true and complete copies of the Plan and any amendments thereto (or
if the Plan is not a written Plan, a description thereof), any related trust or
other funding vehicle, any reports or summaries required under ERISA or the
Code and the most recent determination letter received from the Internal
Revenue Service with respect to each Plan intended to qualify under Section 401
of the Code. There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Companies or any of the
Subsidiaries relating to, or change in employee participation or coverage
under, any Plan that would increase materially the expense of maintaining such
Plan above the level or expense incurred in respect thereof for the most recent
fiscal year ended prior to the date hereof.
(b) Each Plan has been administered in accordance with
its terms, and each of the Plans (and any related trust) has been operated and
is in material compliance with the applicable provisions of ERISA, the Code and
all other applicable laws. Each Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been determined by the IRS
to be so qualified. Each Plan which is primarily subject to the laws of a
jurisdiction outside of the United States is in good standing with applicable
regulatory authorities.
(c) Neither the Companies, nor any ERISA Affiliate nor
any of the Subsidiaries has incurred any unsatisfied liability under Title IV
of ERISA or Section 302 of ERISA in connection with any Plan and no condition
exists that presents a material risk to the Companies or the Subsidiaries, any
ERISA Affiliate or any Subsidiary of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due).
(d) No Plan (i) is subject to Title IV of ERISA; (ii) is
a "multiemployer plan" within the meaning of Section 3(37) of ERISA; (iii) is a
"multiple employer plan" within the meaning of Section 413(c) of the Code; or
(iv) is or at any time was funded through a "welfare benefit fund" within the
meaning of Section 419(e) of the Code and no benefits under a Plan are or at
any time have been provided through a voluntary employees' beneficiary
association within the meaning of Section 501(c)(9) of the Code.
(e) None of the Companies or any of the Subsidiaries has
any liability for unpaid contributions with respect to any Plan, each of them
has made all required contributions under each Plan for all prior periods and
proper accruals relating to each Plan have been made and are appropriately
reflected on the books of the Companies.
(f) No Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) with respect to current or
former employees for periods extending after retirement or other termination of
service (other than (x) coverage mandated by statute or (y) benefits the full
cost of which is borne by the current or former employee (or his or her
beneficiary)).
14
(g) Except as expressly contemplated by this Agreement
or as set forth in Section 3.14(g) of the Companies' Disclosure Schedule, and
subject to the limitations provided in Section 7.2(j), the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
will not, either alone or in combination with another event, (i) entitle any
current or former employee, agent, independent contractor or officer of the
Companies or any Subsidiary to severance pay, (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, agent, independent contractor or officer, (iii) constitute a "change
in control" causing an increase or acceleration of benefits under any Plan,
(iv) result in any payment or benefit that will be characterized as an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code or (v)
result in any loss of deduction for federal income tax purposes.
(h) To the Knowledge of the Companies, there is no
pending, threatened or anticipated (i) assessment, complaint, proceeding, or
investigation of any kind in any court or government agency with respect to any
Plan (other than routine claims for benefits) or (ii) litigation relating to
the employment or termination of employment of any current or former employee
of the Companies or any of the Subsidiaries.
(i) To the Knowledge of the Companies, the Companies and
the Subsidiaries are and have been in compliance in all respects with all
applicable federal, state and local laws, rules and regulations (domestic and
foreign) respecting employment, employment practices, labor, terms and
conditions of employment and wages and hours, in each case, with respect to
employees. Neither the Companies nor any of the Subsidiaries is a party to or
bound by any collective bargaining agreement or other labor union contract. No
work stoppage or labor strike by employees is pending or threatened; neither
the Companies nor any of the Subsidiaries is involved in or threatened with any
labor dispute, grievance or litigation relating to labor matters and no
organizational effort or other activity the purpose of which is to achieve
representation of employees has been threatened or is ongoing.
Section 3.15 Intellectual Property; Technology. To the Knowledge
of the Companies, except as set forth in Section 3.15 of the Companies'
Disclosure Schedule, (a) the conduct of the business of the Companies and the
Subsidiaries as currently conducted does not infringe upon or misappropriate
the Intellectual Property rights of any third party, and no claim has been
asserted to the Companies in writing that the conduct of the business of the
Companies and the Subsidiaries as currently conducted infringes upon the
Intellectual Property rights of any third party; (b) with respect to each item
of Intellectual Property licensed to the Companies or the Subsidiaries
("Company Licensed Intellectual Property"), the Companies or the Subsidiaries
have the right to use such Company Licensed Intellectual Property in the
continued operation of their respective businesses pursuant to the terms of the
license agreement governing the use of such Company Licensed Intellectual
Property; (c) the Company Licensed Intellectual Property has not been adjudged
invalid or unenforceable in whole or in part; and (d) neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby
shall adversely affect any of the Companies' rights with respect to the Company
Licensed Intellectual Property. Except as set forth in Section 3.15 of the
Companies' Disclosure Schedule, the companies do not own any Intellectual
Property.
15
Section 3.16 Taxes.
To the Knowledge of the Companies and except as set forth in Section
3.16 of the Companies' Disclosure Schedule:
(a) The Companies have timely filed (or there have been
filed on their behalf) all Tax Returns required to be filed by them under
applicable law, and all such Tax Returns were and are true, complete and
correct in all material respects, except, in each case, for Tax Returns with
respect to which the amount of additional Taxes properly owing would not
exceed, in the aggregate, $20,000. Except to the extent adequately reserved for
in accordance with GAAP and reflected on the most recent balance sheets of the
Companies contained in the SEC Reports, and except for the possible Tax which
may be due with respect to the "built-in gains" in assets acquired directly or
indirectly from any C corporation within the meaning of the Code as identified
on Section 3.16(a) of the Companies' Disclosure Schedule, all Taxes due and
payable by the Companies have been timely paid, except for unpaid taxes which
in the aggregate do not exceed $50,000.
(b) There are no Tax liens upon the assets of the
Companies except liens for Taxes not yet due or Permitted Encumbrances.
(c) The Companies have complied with the provisions of
the Code relating to the withholding of Taxes, as well as similar provisions
under any other laws, and have, within the time and in the manner prescribed by
law, withheld, collected and paid over to the proper governmental authorities
all amounts required.
(d) No audits or other administrative proceedings or
court proceedings are presently pending or, to the Knowledge of the Companies,
asserted with regard to any Taxes or Tax Returns of the Companies, except for
any audits or other proceedings (i) that will result in additional Taxes in an
amount not exceeding $20,000 in the aggregate, or (ii) with respect to which
the Companies have established adequate reserves in accordance with GAAP for
any resultant Taxes, which reserves are reflected on the most recent balance
sheets of the Companies contained in the SEC Reports.
(e) Except for the two rulings dated July 18, 2000 and
December 22, 1995, respectively, as issued by the Internal Revenue Service (the
"IRS") and previously delivered to the Investors by the Companies, the
Companies have not received a written ruling of a taxing authority relating to
Taxes or entered into a written and legally binding agreement relating to Taxes
with any taxing authority.
(f) The Companies have not requested any extension of
time within which to file any Tax Return, which Tax Return has not since been
filed.
(g) The Companies have not agreed to and are not
required to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method of the
Companies, and there is no application pending with any taxing authority
requesting permission for any changes in any accounting method of the
Companies. To the Knowledge of the Companies, the IRS has not proposed any such
adjustment or change in accounting method.
16
(h) Except as set forth on Schedule 3.16(h) of the
Companies' Disclosure Schedule, the Companies do not have any material
liability for Taxes of any Person other than the Subsidiaries (i) under
Treasury Reg. Section 1.1502-6 (or any similar provision of state, local or
foreign law), (ii) by contract, or (iii) otherwise.
(i) The Companies do not have, nor have they ever had,
any income which is includable in computing the taxable income of a United
States person (as determined under Section 7701 of the Code) under Section 951
of the Code. None of the Subsidiaries are or have ever been a "passive foreign
investment company" within the meaning of Section 1297 of the Code. The
Companies are not and never have been "personal holding companies" within the
meaning of Section 542 of the Code. There are no gain recognition agreements,
within the meaning of Treasury Reg. 1.367(a)-8 or any predecessor provision,
between the Companies, on one hand, and a stockholder of the Companies, on the
other. There is no pending or threatened action, proceeding or investigation by
any taxing authority for assessment or collection of Taxes with respect to the
Companies in any jurisdiction where the Companies have not filed a Tax Return.
All dealings and arrangements between and among the Companies and the
Subsidiaries are at arm's length and consistent with arm's length dealings and
arrangements between or among unrelated, uncontrolled taxpayers.
(j) Each Subsidiary which is a partnership, joint
venture or limited liability company has been treated since its formation, and
continues to be treated for federal income tax purposes, as a partnership or as
a disregarded entity, and not as a corporation or as an association taxable as
a corporation.
(k) For purposes of this Section 3.16, all
representations and warranties with respect to the Companies are deemed to
include and to apply to each of the Subsidiaries and predecessors (and the
Subsidiaries of such predecessors).
(l) Except for the possible impact of the failure to
timely elect that certain foreign Subsidiaries be treated as a partnership or a
disregarded entity as identified on Section 3.16(l) of the Companies'
Disclosure Schedule, for each of its taxable years, Pinnacle (and its
predecessor, as applicable) was organized, operated and duly qualified as a
REIT under Section 856 of the Code and the execution or delivery by the
Companies of this Agreement and the consummation by the Companies of the
transactions contemplated hereby, will not adversely affect the qualification
of Pinnacle as a REIT for each taxable year ending prior to or which includes
the Closing Date, except for the possible failure to satisfy the REIT
qualification requirements of either Section 856(a)(5) or Section 856(a)(6) of
the Code as a result of events occurring concurrent with or subsequent to the
Closing.
(m) As used in this Agreement, (i) the term "Taxes"
means any federal, state, county, local or foreign taxes, charges, fees, levies
or other assessments, including all net income, gross income, sales and use, ad
valorem, transfer, gains, profits, excise, franchise, real and personal
property, gross receipt, capital stock, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom duties,
severance or withholding taxes or charges imposed by any Governmental Entity,
and includes any interest and penalties (civil or criminal) on or additions to
any such taxes, and (ii) the term "Tax Return"
17
means a report, return or other information required to be supplied to a
governmental entity with respect to Taxes including, where permitted or
required, combined or consolidated returns.
(n) Each entity identified as a "Taxable REIT
Subsidiary" of Pinnacle (within the meaning of Section 856(l) of the Code) in
Section 3.1(b)(i) of the Companies' Disclosure Schedule, at all times since
January 1, 2001, has satisfied every requirement imposed by Section 856(l) of
the Code. None of such entities (i) operates or manages, has operated or
managed, or will operate or manage prior to the Closing Date a "lodging
facility" or "health care facility" within the meaning of Section 856(1)(4)(A)
and 856(1)(4)(B) of the Code, respectively, or (ii) licenses, has licensed, or
will license prior to the Closing Date, rights to any brand name under which
any such lodging facility or health care facility is operated.
(o) The Companies have not, with regard to any assets or
property held or acquired by any of them, filed a consent to the application of
Section 341(f)(2) of the Code, or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a "subsection (f) asset" (as such term is defined
in Section 341(f)(4) of the Code) owned by the Companies.
(p) No material deficiencies for any Taxes have been
proposed, asserted or assessed against the Companies which have not been paid,
except for any deficiencies (i) that do not exceed $30,000 in the aggregate, or
(ii) with respect to which the Companies have established adequate reserves in
accordance with GAAP, which reserves are reflected on the most recent balance
sheets of the Companies contained in the SEC Reports, and there is no
outstanding waiver of the statute of limitations with respect to any Taxes or
Tax Returns of the Companies.
(q) At the Closing Date, other than a corporation that
is a "Qualified REIT Subsidiary" of Pinnacle within the meaning of Section
856(i)(2) of the Code or a "Taxable REIT Subsidiary" of Pinnacle within the
meaning of Section 856(l) of the Code, Pinnacle will not own (as determined for
purposes of Section 856 of the Code and the Regulations promulgated thereunder,
including Treasury Reg. Section 1.856-3(g) and with the same meaning as when
used in the Investment Company Act of 1940, as amended), directly or indirectly
(i) securities (other than "real estate assets" within the meaning of Section
856(c)(5)(B) of the Code) possessing more than 10% of the total voting power of
any issuer or (ii) securities (other than "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Code) having a value of more than 10% of
the total value of the outstanding securities of any issuer, other than
securities satisfying the straight debt safe harbor of Section 856(c)(7) of the
Code.
(r) At no time on or prior to the Closing Date, have the
Companies provided services to tenants other than services that (i) do not give
rise to "impermissible tenant service income" as defined in Section 856(d)(7)
of the Code or (ii) give rise to impermissible tenant service income with
respect to any property for any taxable year in an amount not in excess of one
percent of all amounts received or accrued by the Companies with respect to
such property during such year.
(s) Pinnacle does not own and has not owned, directly or
indirectly (including through attribution under the Code), stock of any entity
that is treated as a corporation for federal income tax purposes other than a
stock of (i) "Qualified REIT Subsidiaries" within the
18
meaning of Section 856(i)(2) of the Code, (ii) "Taxable REIT Subsidiaries"
within the meaning of Section 856(l) of the Code, or (iii) with respect to
periods prior to March 31, 2001, "preferred stock subsidiaries," the ownership
of which stock satisfied the provisions of Section 856(c)(4)(B) of the Code as
in effect during the term of such ownership.
(t) Except as set forth in Section 3.16(t) of the
Companies' Disclosure Schedule, the Companies do not own and have not owned,
directly or indirectly (including through attribution under the Code), an
interest in a partnership or limited liability company in which Pinnacle was
not the direct or indirect (including through attribution under the Code)
managing member or general partner.
Section 3.17 Properties.
(a) For purposes of this Agreement, "Pinnacle Permitted
Liens" means (i) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar liens arising or incurred in the Ordinary
Course of Business and such Liens as are being contested by the Companies and
the Subsidiaries in good faith, (ii) Liens for current Taxes not yet due or
payable or Taxes being contested in good faith, (iii) any covenants,
conditions, restrictions, reservations, rights, Liens, easements, encumbrances,
encroachments and other matters affecting title which are shown as exceptions
on the Companies' and the Subsidiaries' title insurance policies and/or title
commitments or reports which have been made available to the Investors, (iv)
any Liens, whether monetary or non-monetary, or other covenants, conditions,
restrictions, reservations, rights, easements, encumbrances, encroachments and
other matters affecting title which would not in the aggregate, be reasonably
expected to interfere with the operations of the Companies or their
Subsidiaries or affect their use of the Pinnacle Real Property, (v) any Liens
or Encumbrances approved by the Bankruptcy Court, including, without
limitation, Liens granted pursuant to a cash collateral and/or
debtor-in-possession financing order and Liens granted as adequate protection;
and (vi) Liens and Encumbrances granted pursuant to any forbearance agreements,
or amendments thereto, entered into with respect to the Amended Credit
Facility. "Pinnacle Leases" means the real property leases, subleases, licenses
and use or occupancy agreements pursuant to which the Companies or any of the
Subsidiaries is the lessee, sublessee or licensee, of real property other than
the Pinnacle Owned Real Property, necessary for the conduct of, or otherwise
material to, the business of the Companies and the Subsidiaries as it is
currently conducted. "Pinnacle Leased Real Property" means all interests in
real property pursuant to the Pinnacle Leases. "Pinnacle Owned Real Property"
means the real property owned in fee by the Companies and the Subsidiaries
necessary for the conduct of, or otherwise material to, the business of the
Companies and the Subsidiaries as it is currently conducted. "Pinnacle Real
Property" means, collectively, the Pinnacle Owned Real Property and the
Pinnacle Leased Real Property. Except as disclosed in Section 3.17(a) of the
Companies' Disclosure Schedule, or in the title insurance policies relating to
the Pinnacle Real Property, each of the Companies and the Subsidiaries have
good, valid title to the Pinnacle Real Property free of all Liens, in each case
except Pinnacle Permitted Liens and for Liens which do not materially adversely
affect the Companies' use of such Pinnacle Real Property. Except as set forth
in Section 3.17(a) of the Companies' Disclosure Schedule, there are no
outstanding contracts for the sale of any of the Pinnacle Real Property. Except
as set forth in Section 3.17(a) of the Companies' Disclosure Schedule, to the
Knowledge of the Companies, there are no outstanding consents which have not
yet been obtained by the Companies or the Subsidiaries, as applicable,
19
in connection with the acquisition of any Pinnacle Real Property or the leasing
of any Pinnacle Leased Real Property, except for consents the failure to obtain
would not materially adversely affect the Companies' use of such Pinnacle Real
Property. To the Knowledge of the Companies, except as disclosed on Section
3.17(a) of the Companies' Disclosure Schedule and outstanding Third Party
Consents, (x) the use and operation of the Pinnacle Real Property in the
conduct of the business of the Companies and the Subsidiaries does not violate
any instrument of record or agreement affecting the Pinnacle Real Property and
(y) there are no defaults under any of the Pinnacle Leases which individually,
or in the aggregate, would materially adversely affect the Companies' use of
such Pinnacle Real Property. Valid policies or commitments of title insurance
have been issued insuring the Companies' or, if applicable, the Subsidiaries',
fee simple title to those parcels of Pinnacle Owned Real Property listed on
Section 3.17(a) of the Companies' Disclosure Schedule, subject only to the
matters set forth in such policies or commitments, copies of which have been
made available to the Investors. To the Knowledge of the Companies, except as
listed on Section 3.17(a) of the Companies' Disclosure Schedule, no claim has
been made against any such policy or commitment. Except as provided in Section
3.17(a) of the Companies' Disclosure Schedule, the Companies and the
Subsidiaries have no Knowledge (A) that any certificate, permit or license from
any Governmental Entity having jurisdiction over any of the Pinnacle Real
Property or any agreement, easement or other right which is necessary to permit
the lawful use and operation of the buildings and improvements on any of the
Pinnacle Real Property or which is necessary to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to and
from any of the Pinnacle Real Property has not been obtained and is not in full
force and effect, except for such item which does not materially adversely
affect the Companies' use of such Pinnacle Real Property, or (B) of any written
notice of any violation of any federal, state or municipal law, ordinance,
order, regulation or requirement having a material adverse effect on the use
thereof or the business or operations of the Companies or the Subsidiaries
issued by any Governmental Entity. To the Knowledge of the Companies, except as
set forth on Section 3.17(a) of the Companies' Disclosure Schedule, the
Improvements (as hereinafter defined) are in good operating condition,
reasonable wear and tear excepted. "Pinnacle Space Lease" means each lease or
other right of occupancy affecting or relating to a property in which the
Companies or the Subsidiaries (or an entity in which it directly or indirectly
has an interest) is the landlord, either pursuant to the terms of a lease
agreement or as successor to any prior landlord. To the Knowledge of the
Companies, no default exists under any Pinnacle Space Lease, except for such
defaults which would not be expected to have a Material Adverse Effect.
(b) With respect to those Improvements being constructed
or under development and located on any Pinnacle Real Property that are set
forth in Section 3.17(b) of the Companies' Disclosure Schedule and involve a
cost in excess of $250,000 individually, to the Knowledge of the Companies: (i)
the budget for the construction of the Improvements represents an amount
reasonably expected to develop and construct the Improvements; (ii) any plans
and specifications have, to the extent required, been approved by all
applicable Governmental Entities, for such Improvements; and (iii) the
Companies have used commercially reasonably efforts to pursue the development,
construction and installation of the Improvements to the extent deemed
necessary by the Companies. For the purposes of this Agreement "Improvements"
shall mean all buildings, improvements, structures and fixtures now or on the
Closing Date located on the Pinnacle Real Property.
20
Section 3.18 Certain Site and Tower Matters.
(a) To the Knowledge of the Companies, except as set
forth in Section 3.18(a) of the Companies' Disclosure Schedule, neither the
Companies nor any Subsidiary has received notice of any existing action by
Governmental Entities to terminate or materially reduce the current access from
the Sites to existing highways and roads, or to sewer or other utility services
serving the Sites.
(b) To the Knowledge of the Companies, except as set
forth on Section 3.18(b) of the Companies' Disclosure Schedule, there are no
leases, subleases or other agreements granting to any Person the right of, use,
occupancy or possession of such portion of the Pinnacle Real Property in a
manner that would materially impair the Companies use or operations thereon,
other than the use or occupancy by any of the Companies, their Subsidiaries,
Affiliates, tenants under applicable Pinnacle Space Leases or Persons
performing maintenance, repair or related services. To the Knowledge of the
Companies, except as set forth in Section 3.18(b) of the Companies' Disclosure
Schedule, there are no Persons in possession of such Pinnacle Real Property,
other than the Companies, their Affiliates, tenants under applicable Pinnacle
Space Leases or Persons performing maintenance, repair or related services.
Section 3.19 Environmental Matters.
To the Knowledge of the Companies, except as set forth in Section 3.19
of the Companies' Disclosure Schedule:
(a) The Pinnacle Real Property (the "Pinnacle
Facilities") is presently operated in compliance in all material respects with
all Environmental Laws (as defined below).
(b) There are no Environmental Laws requiring any
material remediation, clean up, repairs, constructions or capital expenditures
(other than normal maintenance) with respect to the Pinnacle Facilities.
(c) There are no (i) notices of any violation or alleged
violation of any Environmental Laws relating to the Pinnacle Facilities or
their uses that have been received by the Companies or the Subsidiaries, or
(ii) notices of writs, injunctions, decrees, orders or judgments outstanding,
or any actions, suits, claims, proceedings or investigations pending that have
been received by the Companies or the Subsidiaries, or, to the Knowledge of the
Companies, threatened, relating to the ownership, use, maintenance or operation
of the Pinnacle Facilities.
(d) There are no past or present actions or plans
relating to the Companies and the Subsidiaries that may interfere with or
prevent compliance or continued compliance with applicable Environmental Laws
or which may give rise to any material liability under the Environmental Laws.
(e) For purposes of this Agreement, "Environmental Laws"
mean all applicable statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, demands, approvals, authorizations and similar items of all
governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political
21
subdivisions thereof and all applicable judicial, administrative and regulatory
decrees, judgments and orders relating to the protection of human health, the
environment, or worker or public health and safety as in effect as of the date
hereof, including but not limited to those pertaining to reporting, licensing,
permitting, investigation and remediation of emissions, discharges, releases or
threatened releases of Hazardous Materials, substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, including by way of illustration and not by way of
limitation, (A) the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. xx.xx. 960111 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. xx.xx. 69011 et seq.), the Clean Air Act (42 U.S.C.
xx.xx. 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. xx.xx.
1251), the Safe Drinking Water Act (42 U.S.C. xx.xx. 300f et seq.), the Toxic
Substances Control Act (15 U.S.C. xx.xx. 2601 et seq.), the Endangered Species
Act (16 U.S.C. xx.xx. 1531 et seq.), the Emergency Planning and Community
Right-to-Know Act of 1986 (42 U.S.C. xx.xx. 11001 et seq.) and (B) analogous
state and local provisions.
Section 3.20 Insurance. To the Knowledge of the Companies,
Section 3.20 of the Companies' Disclosure Schedule contains a complete and
correct list and description (including the name of the insurer(s), name of the
insured(s), amount of coverage, type of coverage, deductible amounts and
significant exclusions) of all material insurance policies maintained
(including directors' and officers' liability insurance) by or on behalf of the
Companies and the Subsidiaries, including policies that have expired but have
been renewed by the Companies and in respect of which the Companies have not
yet received a new policy. The Companies have made available to each Investor
complete and correct copies of all such policies together with all material
riders and amendments thereto. To the Knowledge of the Companies, such policies
are valid and in full force and effect, and all premiums due thereon have been
paid. To the Knowledge of the Companies, the Companies and the Subsidiaries
have complied with the terms and provisions of such policies.
Section 3.21 Business Combination and Takeover Statutes.
(a) The Companies' Board of Directors has taken all
actions reasonably necessary or advisable so that the restrictions contained in
Section 203 of the DGCL applicable to a "business combination" (as defined in
such Section) will not apply to the execution, delivery or performance of this
Agreement or any of the other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby.
(b) The execution, delivery and performance of this
Agreement or any of the other Transaction Documents, and the consummation of
the transactions contemplated hereby or thereby, will not cause Section 203 of
the DGCL to be applicable to the Companies.
Section 3.22 Offering of New Common Shares; Warrants. Neither the
Companies nor any Person acting on their behalf has taken any action
(including, without limitation, any offering of any securities of the Companies
under circumstances which would require, under the Securities Act, the
integration of such offering with the offering, issuance and
22
sale of the New Common Shares and Warrants) which might reasonably be expected
to subject the offering, issuance or sale of the New Common Shares and Warrants
to the registration requirements of Section 5 of the Securities Act.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Except as specifically set forth in the disclosure schedule prepared
and signed by each of the Investors (the "Investors' Disclosure Schedule") and
delivered to Pinnacle simultaneously with the execution hereof, each Investor
hereby represents and warrants as to itself to each of the Companies that all
of the statements contained in this Article IV are true and complete as of the
date of this Agreement (or, if made as of a specified date, as of such date),
and will be true and complete as of the Closing Date as though made on the
Closing Date. Each exception set forth in the Investors' Disclosure Schedule is
identified by reference to, or has been grouped under a heading referring to, a
specific individual section of this Agreement and, except as otherwise
specifically stated with respect to such exception, relates to such section.
The exceptions, modifications, descriptions and disclosures in any Schedule
attached hereto are made for all purposes of this Agreement and are exceptions
to all representations and warranties set forth in this Agreement or in any
agreement or instrument delivered pursuant to or in connection with this
Agreement. Disclosure of an item in response to one Section of this Agreement
shall constitute disclosure in response to every Section of this Agreement
notwithstanding the fact that no express cross-reference is made. Disclosure of
any items not otherwise required to be disclosed shall not create any inference
of materiality. In the event of any inconsistency between statements in the
body of this Agreement and statements in the Investors' Disclosure Schedule
(excluding exceptions expressly set forth in the Investors' Disclosure Schedule
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement shall control:
Section 4.1 Investment.
(a) Each Investor is acquiring the New Common Shares for
investment for its own account, and not with a view to any resale or
distribution thereof in violation of the Securities Act. Subject to the terms
of the Investor Agreement, each Investor understands that the New Common Shares
have not and will not be registered under the Securities Act or any state
securities laws by reason of specific exemptions therefrom which depend upon,
among other things, the bona fide nature of the investment intent and the
accuracy of the Investor's representations as expressed herein.
(b) Each Investor's financial condition and investments
are such that it is in a position to hold the New Common Shares for an
indefinite period, bear the economic risks of the investment and withstand the
complete loss of the investment. Each Investor has extensive knowledge and
experience in financial and business matters and has the capability to evaluate
the merits and risks of such New Common Shares. Each Investor qualifies as (i)
an "accredited investor" as such term is defined in Section 2(15) of the
Securities Act and Regulation D promulgated thereunder or (ii) a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act.
23
(c) Each Investor (i) has had a complete opportunity to
conduct a due diligence investigation concerning the Companies' business
operations, financial affairs and prospects; (ii) has received all the
information it considers necessary or appropriate for deciding whether to enter
into the transactions contemplated by this Agreement and the other Transaction
Documents; (iii) has examined and reviewed Pinnacle's most recent proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and any
other Exchange Act reports filed with the Securities and Exchange Commission
since the filing of Pinnacle's most recent Form 10-K; and (iv) has, in
conjunction with its legal counsel and other advisors, evaluated the risk
factors inherent in an investment in the New Common Shares.
Section 4.2 Rule 144. Each Investor acknowledges that the New
Common Shares to be purchased by the Investor must be held indefinitely unless
subsequently registered under the Securities Act and any applicable state
securities laws or unless exemptions from such registrations are available.
Each Investor is aware of and familiar with the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions.
Section 4.3 Organization of the Investors. Each Investor is duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its organization.
Section 4.4 Authority of the Investors.
(a) Each Investor has all right, power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party, to consummate the transactions contemplated hereby and to comply
with the terms, conditions and provisions hereof applicable to such Investor.
(b) The execution, delivery and performance by each
Investor of this Agreement and each of the other Transaction Documents to which
it is a party, the compliance by each Investor with each of the provisions of
this Agreement and each of the Transaction Documents and the consummation of
the transactions contemplated hereby and thereby, are within the power and
authority of each Investor, have been duly authorized and approved by the
requisite actions of each Investor and do not require any further authorization
or consent of any Investor or its beneficial owners. This Agreement is the
legal, valid and binding agreement of each Investor, enforceable against such
Investor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws from time to time affecting the enforcement of creditors'
rights generally.
Section 4.5 Non-Contravention. The execution, delivery and
performance by each Investor of this Agreement and the other Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby, will not (a) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or imposition of any Lien, charge or
encumbrance upon any property or assets of the Investor pursuant to any
agreement, instrument, franchise, license or permit to which the Investor is a
party or by which any of its properties or assets may be bound or (b) violate
or conflict with any judgment, decree, order, statute, rule or regulation of
any court or any public, governmental
24
or regulatory agency or body applicable to the Investor or any of its
properties or assets, other than such breaches, defaults or violations that are
not reasonably expected to impair the ability of the Investor to consummate the
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party. The execution, delivery and performance by each
Investor of this Agreement and the other Transaction Documents to which it is a
party and the consummation of the transactions contemplated hereby and thereby,
do not and will not violate or conflict with any provision of the
organizational documents of the Investor, as currently in effect. Except for
filings under the HSR Act (as defined in Section 7.1(a) herein), no consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any government agency or body applicable to an
Investor is required for the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby.
Section 4.6 Brokers and Finders. No agent, broker, investment
banker, financial advisor or other firm or person engaged by or on behalf of
the Investors is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by the Transaction Documents.
Section 4.7 Litigation. Except as set forth in Section 4.7 of
the Investors' Disclosure Schedule, there is no Litigation pending or, to the
Knowledge of each Investor, threatened against any Investor or involving any of
their respective properties or assets by or before any court, arbitrator or
other Governmental Entity which (i) in any manner challenges or seeks to
prevent, enjoin, alter or delay the transactions contemplated by this Agreement
or any of the other Transaction Documents or (ii) if resolved adversely to any
Investor would reasonably be expected to have a material adverse effect on the
ability of the Investors to fulfill their obligations under this Agreement and
the other Transaction Documents. There is no judgment, decree, injunction,
rule, or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against any Investor that could
reasonably be expected to have a material adverse effect on the ability of the
Investors to fulfill their obligations under this Agreement and the other
Transaction Documents. No Investor is in default under or in breach of any
order, judgment or decree of any court, arbitrator or other Governmental Entity
which would have a material adverse effect on the ability of the Investors
fulfill their obligations under this Agreement and the other Transaction
Documents.
Section 4.8 Consents and Approvals. To the Knowledge of each
Investor, no consent, approval, authorization of, declaration, filing, or
registration with, any federal, state, local or foreign government or
regulatory authority, is required to be made or obtained by either of the
Investors in connection with the execution, delivery, and performance of this
Agreement or any of the other Transaction Documents contemplated hereby, except
for Governmental Requirements.
Section 4.9 Sufficient Available Funds. Each Investor presently
has undrawn capital commitments drawable by it upon ten (10) Business Days'
notice in an amount sufficient to pay the Purchase Price for the New Investor
Shares to be purchased by it, and from the date hereof through and including
the Closing will continue to have, undrawn capital commitments sufficient to
satisfy all of its financial obligations under this Agreement. Each Investor
will promptly notify the Companies of any event or circumstance which at any
time from the date of
25
this Agreement through and including the Closing Date could (i) result in or be
reasonably expected to result in insufficient funds being available to such
Investor or (ii) hinder or reasonably be expected to hinder such Investor's
financial ability to perform its obligations hereunder and each Investor agrees
not to take any action that would reasonably be expected to result in
insufficient funds being available to such Investor or in hindering such
Investor's financial ability to perform its obligations hereunder. The
Commitment Letter, a true and complete copy of which is attached as Exhibit E
hereto, has been executed by each of the parties thereto and is in effect as of
the date of this Agreement, the fee letter referenced therein has been executed
and delivered by each party thereto and any fees required to be paid under such
fee letter through the date of this Agreement have been paid.
Section 4.10 Beneficial Ownership. As of the date of this
Agreement, (a) each Investor is the record or beneficial owner of, or holder of
investment authority over, Senior Notes, Convertible Notes and Old Common Stock
in the aggregate principal amounts or number of shares, as applicable, set
forth as to such Investor in Section 4.10 of the Investors' Disclosure Schedule
and (b) no Investor has record or beneficial ownership, or holds investment
authority over, any other Senior Notes, Convertible Notes or Old Common Stock.
ARTICLE FIVE
COVENANTS OF THE COMPANIES
Each of the Companies hereby, jointly and severally, covenants with
the Investors as follows:
Section 5.1 Conduct of Business Pending the Closing. Except as
set forth in Section 5.1 of the Companies' Disclosure Schedule or as otherwise
expressly contemplated by this Agreement and the Restructuring Transaction or
any of the other Transaction Documents or as consented to by the Investors in
writing (which consent shall not be unreasonably withheld) or as required by
the federal Bankruptcy Code, the Amended Credit Facility or other Commitment
scheduled in Section 3.12 of the Companies' Disclosure Schedule to which either
of the Companies or any of their Subsidiaries is or shall be a party, during
the period from the date of this Agreement through and including the Closing
Date, none of the Companies shall, and each shall not permit any of their
Subsidiaries to:
(a) other than dividends and distributions by a direct
or indirect wholly owned Subsidiary to the Companies or one of their wholly
owned Subsidiaries, (i) declare, set aside or pay any dividends (payable in
cash, stock, property or otherwise) on, make any other distributions in respect
of, or enter into any agreement with respect to the voting of, any of its
capital stock, (ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii) purchase,
redeem or otherwise acquire any capital stock in the Companies or any of the
Subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber
or subject to any Lien any of its shares of capital stock or any other voting
securities or any securities convertible
26
into, exercisable for or exchangeable with, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible securities,
except as contemplated by the Forbearance Agreement, the indenture governing
the Convertible Notes and Permitted Encumbrances;
(c) amend its charter, bylaws or other comparable
organizational documents other than in accordance with this Agreement or amend
or waive any provisions of the Transaction Documents;
(d) acquire any "business", as defined in Rule
3-05(a)(2) of Regulation S-X (whether by merger, consolidation, purchase of
assets or otherwise) or acquire any material equity interest in any person not
an affiliate (whether through a purchase of stock, establishment of a joint
venture or otherwise);
(e) other than the items set forth in Section 5.1(e) of
the Companies' Disclosure Schedule, (i) sell, exchange or license or otherwise
dispose of any of its real properties or other assets, (ii) enter into any new
joint ventures or similar projects, (iii) enter into any new development
projects other than in the ordinary course of business, (iv) enter into any new
leases or other material agreements or understandings other than in the
ordinary course of business, or (v) mortgage any of its real properties or
other assets except for Permitted Encumbrances;
(f) change its methods of accounting, except as required
by changes in GAAP; or change any of its methods of reporting income and
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable years ended
December 31, 2000, except for such matters as are disclosed in Section 5.1(f)
of the Companies' Disclosure Schedule, and except for future amendments of
those Tax Returns to correct immaterial mistakes or as required by changes in
law or regulation or as may be required in connection with the Bankruptcy Case;
(g) other than through the Bankruptcy Case, effect any
settlement or compromise of any pending or threatened proceeding in respect of
which the Companies or the Subsidiaries are or could have been a party, unless
such individual settlement (i) includes an unconditional written release of the
Companies and the Subsidiaries, in form and substance reasonably satisfactory
to the Companies, from all liability on claims that are the subject matter of
such proceeding, (ii) does not include any statement as to any admission of
fault, culpability or failure to act by or on behalf of the Companies and the
Subsidiaries and (iii) involved the payment by the Companies of less than
$2,000,000 (not including any payments made pursuant to or by insurance
policies) individually and, when taken together with all other such individual
settlements, involved payment by the Companies of less than $5,000,000 in the
aggregate (not including any payments made pursuant to or by insurance
policies);
(h) other than the obligations for capital commitments
set forth in Section 5.1(h) of the Companies' Disclosure Schedule, (i) incur
any additional indebtedness, except as contemplated by the Forbearance
Agreement, the Amended Credit Facility or any indebtedness secured by Permitted
Encumbrances, or (ii) make any loans, advances or capital contributions to, or
investments in, any Person (excluding any Subsidiary), except as
27
contemplated by the Forbearance Agreement or the Amended Credit Facility or the
Companies' customary cash management practices;
(i) other than the obligations for capital commitments
set forth in Section 5.1(i) of the Companies' Disclosure Schedule, enter into
any new capital or take out commitments or increase any existing capital or
take out commitments;
(j) except as contemplated by the Amended Credit
Facility, make any interest payments or other distributions on or in respect of
the Public Debt;
(k) except pursuant to agreements or arrangements in
effect on the date hereof or as set forth on Section 5.1(k) of the Companies'
Disclosure Schedule, (i) terminate the employment of any executive officer of
the Companies other than for cause, (ii) enter into any new employment
agreement with any existing director or executive officer without the consent
of the Investors, which consent shall not be unreasonably withheld, (iii) grant
to any current or former director or executive officer of the Companies or the
Subsidiaries any increase in compensation, bonus or other benefits (other than
increases in base salary in the ordinary course of business consistent with
past practice or arising due to a promotion or other change in status and
consistent with generally applicable compensation practices), (iv) grant to any
such current or former director, executive officer or other employee any
increase in severance or termination pay, (v) amend, adopt or terminate any
employment, deferred compensation, severance, termination or indemnification
agreement with any such current or former director, executive officer or
employee, or (vi) amend, adopt or terminate any Plan, except as may be required
to retain qualification of any such plan under Section 401(a) of the Code;
(l) except pursuant to agreements or arrangements set
forth on Section 5.1(l) of the Companies' Disclosure Schedule, or as otherwise
contemplated by this Agreement, pay, loan or advance any amount to, or sell,
transfer or lease any properties or assets (real, personal or mixed, tangible
or intangible) to, or purchase any properties or assets, or enter into any
agreement or arrangement with, any of its executive officers or directors or
any affiliate (other than the Companies or their Subsidiaries) or the immediate
family members or associates of any of its executive officers or directors,
other than payment of compensation at current salary, incentive compensation
and bonuses and other than properly authorized business expenses in the
ordinary course of business, in each case consistent with past practice;
(m) enter into or amend in a manner materially adverse
to the Investors any new agreement which has a non-competition, geographical
restriction or similar covenant;
(n) amend, terminate or otherwise modify, or take any
other action with respect to any Pinnacle Space Lease that results in a
decrease in the Companies' revenue of $100,000 or more per month; or
(o) agree to take, any of the foregoing actions.
Section 5.2 Financing. The Companies shall cooperate with, and
use reasonable efforts to take, or cause to be taken, all such reasonable
further actions and to do, or cause to be done, all things reasonably
necessary, proper and advisable to secure, as soon as practicable, the
financing contemplated by, and substantially on the terms set forth in, the
Commitment Letter.
28
Section 5.3 No Solicitation of Alternative Proposals. (a) Except
as expressly permitted in writing by the Investors, from and after the date of
this Agreement, none of the Companies shall authorize or permit any of their
Subsidiaries or any of the Companies' or the Subsidiaries' directors, officers,
employees, representatives, agents and advisors (including any investment
banker, financial advisor, attorney, accountant or other representative
retained by any of them) (all such parties, "Representatives"), directly or
indirectly, to (i) solicit, initiate, or take any other action designed to
solicit proposals that constitutes, or would be reasonably expected to lead to,
a proposal or offer for a restructuring transaction pursuant to a plan of
reorganization, merger, consolidation, transfer or exchange of shares, debt
refinancing or similar transaction involving the Companies (collectively, an
"Alternative Proposal"), (ii) participate in any substantive discussions or
negotiations regarding any Alternative Proposal, except that discussions or
negotiations may be held with, and non-public information provided to, any
holders of the Senior Notes or other Persons controlled by such holders
concerning an Alternative Proposal, or (iii) enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
related to any Alternative Proposal. Upon execution of this Agreement, each of
the Companies and the Subsidiaries shall immediately cease any existing
activities, discussions or negotiations with any parties heretofore conducted
with respect to any Alternative Proposal. Notwithstanding anything to the
contrary that may be set forth in the foregoing, none of the Companies or any
of their Representatives will be precluded from providing information to, or
discussing and negotiating with, any Person that is considering making, or has
made, an unsolicited bona fide Alternative Proposal. In addition, none of the
Companies or any of their Representatives will be precluded from executing an
agreement providing for an Alternative Proposal or recommending any such
Alternative Proposal to the creditors and stockholders of the Companies, if in
the good faith opinion of Pinnacle's Board of Directors (in consultation with
its financial advisors) such Alternative Proposal provides a higher transaction
value to the Companies than the value of the transaction provided in this
Agreement and that Pinnacle's Board of Directors reasonably determines in good
faith (after consultation with outside legal counsel) that they are required to
authorize such actions by their fiduciary duties or under the Bankruptcy Code.
No Person considering making an Alternative Proposal shall be provided
non-public information by the Companies unless such Person has executed a
confidentiality agreement with terms that are materially no less favorable to
the Companies than those contained in the Confidentiality Agreement between
Fortress and the Companies dated August 21, 2001 (the "Fortress Confidentiality
Agreement") and the Confidentiality Agreement between Xxxxxxxxx and the
Companies dated August 21, 2001 (the "Xxxxxxxxx Confidentiality Agreement,"
and, collectively with the "Fortress Confidentiality Agreement," the
"Confidentiality Agreements").
(b) Each of the Companies shall notify the Investors
immediately (in no event later than 24 hours) after (i) receipt by the
Companies of any written Alternative Proposal by any Person that informs the
Companies that it is considering making, or has made, an Alternative Proposal,
or (ii) the delivery by the Companies of any non-public information in
connection with an Alternative Proposal or the granting of access by the
Companies to the properties, books or records of the Companies by any Person
that informs the Companies that it is considering making, or has made, an
Alternative Proposal. Such notice shall be made orally or in writing and shall
indicate, to the extent not prohibited by the terms of any confidentiality
agreement, the identity of the offeror and shall also indicate all the material
terms and conditions of such proposal, inquiry or contract.
29
(c) Notwithstanding any other provision of this
Agreement, the Companies agree that they will not (i) enter into a definitive
agreement relating to an Alternative Proposal unless such definitive agreement
shall provide for an obligation by the Companies to pay any portion of the
Break-Up Payment or Allowed Break-up Payment Claim, as the case may be, not
theretofore paid to the Investors pursuant to Section 8.2, in each case not
later than consummation of such Alternative Proposal, and (ii) consummate any
Alternative Proposal unless any portion of the Break-Up Payment or Allowed
Break-up Payment Claim, as the case may be, not theretofore paid to the
Investors pursuant to Section 8.2 shall be paid to the Investors not later than
consummation of such Alternative Proposal.
Section 5.4 Access to Information. Each of the Companies shall,
and shall cause the Subsidiaries to, afford to each Investor and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of such Investor, reasonable access during normal business
hours from the date hereof until the Closing to all the properties, books,
contracts, commitments, personnel, reports and records of or relating to the
Companies or the Subsidiaries, and during such period each of the Companies
shall, and shall cause their Subsidiaries to, furnish promptly to the
Investors, any financing source identified by the Investors in connection with
the transactions contemplated hereby and to any other person that the Investors
may reasonably request (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws, (b) such operating reports,
financial reporting packages and other operational and/or financial information
sent to management or the Board of Directors of the Companies or to the banks
with whom the Companies and the Subsidiaries maintain credit facilities or
lines of credit and (c) all other information concerning its business,
properties and personnel as the Investors may reasonably request; provided,
however, that nothing in this Section 5.4 or otherwise shall require the
Companies to furnish to the Investors any materials prepared by the Companies'
financial advisors or legal advisors.
Section 5.5 HSR Approval. Each of the Companies shall cooperate
with each Investor in obtaining as soon as practicable all necessary
governmental consents and approvals, including without limitation, termination
or expiration of the waiting period under the HSR Act.
Section 5.6 Termination of Rights Agreement. Pinnacle shall take
all steps necessary to terminate, effective prior to the Closing Date, the
Rights Agreement between Pinnacle and First Union National Bank, dated as of
December 22, 2000 (the "Rights Plan").
Section 5.7 Use of Proceeds. The proceeds received by the
Companies in respect of the Investment and the New Credit Facility shall be
used by the Companies in accordance with the Bankruptcy Plan.
Section 5.8 Restructuring.
(a) The Companies and the Subsidiaries shall, in
coordination with the Investors, use commercially reasonable efforts to
restructure the capitalization of the Companies and the Subsidiaries pursuant
to the Bankruptcy Plan (the "Restructuring"). In furtherance of and without
limiting the generality of the foregoing, the Companies, Pinnacle Towers III,
Inc. or any such other Subsidiaries as shall be determined pursuant to Section
5.8(g) shall promptly
30
commence a Bankruptcy Case and file the Bankruptcy Plan and related Disclosure
Statement in form and substance reasonably acceptable to the Investors and the
Committee, with the Bankruptcy Court and seek to obtain the Confirmation Order
with respect to the Bankruptcy Plan and the Break-Up Payment Order as
expeditiously as possible in light of all circumstances.
(b) The Bankruptcy Plan will offer each holder of the
Senior Notes its pro rata share, determined in accordance with the fully
accreted value at maturity of the Senior Notes of such holder's Senior Notes as
a portion of the fully accreted value at maturity of all Senior Notes (with
cash amounts rounded down to the nearest cent), of the Senior Note Holders Pool
Amount (as hereinafter defined) (the amount as so determined per $1,000 fully
accreted value of Senior Notes at maturity, the "Senior Note Holder
Consideration"). Subject to Section 5.8(c), the "Senior Note Holders Pool
Amount" shall equal $114,000,000, subject to possible increase under Section
5.8(d). Payments of the Senior Note Holder Consideration shall be made in the
form of either (i) 100% in cash or (ii) at the election of the holder, up to
100% in New Common Shares, with any remainder pursuant to the cash election,
with holders that make no election receiving the cash alternative; provided,
however, that (x) the number of the New Common Shares issued as Senior Note
Holder Consideration (the "Share Pool") shall not exceed 49.9% of the Required
New Share Amount (the "Share Pool Limit"), with any reduction in the amount of
New Common Shares to be received by individual holders needed to maintain the
Share Pool Limit to be applied on a pro rata basis among all holders electing
to receive New Common Shares based on the amounts elected to be received by
them as a portion of the total number of New Common Shares available to be so
allocated, and (y) holders of the Senior Notes who elect to receive 100% of
their consideration in the form of New Common Shares pursuant to Section
5.8(b)(ii) shall collectively have the right to purchase at the Purchase Price
per share up to 50% of any New Common Shares remaining in the Share Pool after
all the holders of the Senior Notes have made their election pursuant to
Section 5.8(b)(ii), with such purchase rights being allocated among such
electing holders based on the amounts elected to be received by them pursuant
to Section 5.8(b)(ii) as a portion of the total number of New Common Shares
available to be so allocated. In the event that there are any Additional Shares
(as defined below), in addition to their right to elect to receive Senior Note
Holder Consideration as set forth above in this Section 5.8(b), holders of the
Senior Notes who elect to receive 100% of their consideration in the form of
New Common Shares pursuant to Section 5.8(b)(ii) shall collectively have the
right to purchase for cash at the Purchase Price per share up to 50% of any
Additional Shares, with such purchase rights being allocated among such
electing holders based on the amounts elected to be received by them pursuant
to Section 5.8(b)(ii) as a portion of the total number of New Common Shares
available to be so allocated and Senior Note holders electing to receive all of
their consideration in the form of New Common Shares. The number of "Additional
Shares" shall be the determined by dividing (i) the amount, if any, by which
the Required New Equity Amount shall exceed $228,000,000 by (ii) the Purchase
Price. Any holder of Senior Notes electing to receive all or part of such
holder's consideration in New Common Shares pursuant to Section 5.8(b)(ii) may
elect, subject to such holder becoming a party to the Investor Agreement and
the transfer restrictions contained therein, to have the benefit of certain
registration, preemptive and other rights, as provided in the Investor
Agreement. An election by a holder of Senior Notes under this Section 5.8(b) to
receive a portion of such holder's consideration in (x) New Common Shares shall
be deemed to be an election to forego the same portion of any cash
consideration allocated to
31
such holder pursuant to Section 5.8(d)). In the event that the Closing shall
occur on a date more than three months from the date of this Agreement, each
holder of Senior Notes electing to receive cash consideration pursuant to this
Section 5.8(b) shall be entitled to receive as additional consideration (rounded
down to the closest cent) an amount equal to the product of (w) the amount of
cash consideration so elected, excluding for such purposes any amount allocated
pursuant to Section 5.8(d), times (x) .05, times (y) the number of days that
occurs after the date that is three months from the date of this Agreement
through the Closing Date, divided by (z) 365; provided, however, that the
aggregate amount of such additional consideration shall be reduced to the extent
needed to cause the Initial Cash Funding not to exceed $415 million, with any
such reduction being allocated among the holders of Senior Notes electing to
receive cash consideration pursuant to this Section 5.8(b) in proportion to
their respective amounts of cash consideration otherwise being received pursuant
to this Section 5.8(b). The Investors, in their sole discretion, may increase,
but not decrease, the consideration offered to the holders of the Senior Notes;
provided, however, if the consideration offered to the holders of the Senior
Notes is increased pursuant to this sentence, such holders may change any
election made pursuant to this Section 5.8(b).
(c) In the event that the Cash Funding exceeds
$415,000,000, the holders of not less than 66-2/3% in aggregate face amount of
the Senior Notes not held by the Investors (the "Requisite Holders") may elect,
on behalf of all holders of the Senior Notes, to reduce the Senior Note Holders
Pool Amount by the amount by which the Cash Funding exceeds $415,000,000 and
thereby cause the condition set forth in Section 7.2(o) to be satisfied. In the
event that as of the Closing Date a Determination shall not have been made as
to the Tax Amount, and subject to the consent of the Investors to be given or
denied in their sole discretion, the Committee may elect, on behalf of all
holders of the Senior Notes, for the Companies to establish an escrow (the "Tax
Escrow") as of the Closing Date into which would be deposited from the funds
that would otherwise fund the Senior Note Holders Pool Amount such amount as
may be agreed between the Committee and the Investors in their mutual sole
discretions.
(d) The Bankruptcy Plan will offer to holders of the
Convertible Notes consideration in the form of (i) $500,000 in cash and (ii)
Warrants to purchase the number of New Common Shares equal to one-half the
Warrant Amount, with such rights and terms as set forth in the Warrant
Agreement attached as Exhibit G hereto, (individually, a "Warrant", and
collectively, the "Warrants"); provided, however, that if the holders of the
Convertible Notes do not vote, as a class, in favor of the Bankruptcy Plan and
provide full and enforceable releases to the Companies, they shall receive no
distributions under the Bankruptcy Plan. In addition to the foregoing, the
Bankruptcy Plan will offer, on behalf of the Companies and their respective
current and former officers, directors and agents, a pool consisting of
$500,000 in cash and Warrants to purchase the number of New Common Shares equal
to one-half the Warrant Amount, which shall be shared pro rata to those holders
of the Convertible Notes who elect to give full and enforceable releases to the
Companies and their respective current and former officers, directors and
agents; provided, that any holder of Convertible Notes who does not
affirmatively decline to provide such release shall be deemed to have elected
to provide such release and no beneficiary of any such release may receive more
consideration than such beneficiary would have received had all holders of
Convertible Notes provided releases. The Bankruptcy Plan will offer to holders
of the Common Stock, together with those parties with claims arising from the
purchase and sale of the Common Stock, consideration in the form of
32
Warrants to purchase the number of New Common Shares equal to one-half of the
Old Common Stock Amount; provided, however, that if the holders of the Common
Stock and such claims do not vote, as a class, in favor of the Bankruptcy Plan
and provide full and enforceable releases to the Companies, they shall receive
no distributions. In addition to the foregoing, the Bankruptcy Plan will offer,
on behalf of the Companies and their respective current and former officers,
directors and agents, a pool consisting of Warrants to purchase the number of
New Common Shares equal to one-half of the Old Common Stock Amount, which shall
be shared pro rata by those holders of the Common Stock, together with those
parties with claims arising from the purchase and sale of the Common Stock, who
elect to give full and enforceable releases to the Companies and their
respective current and former officers, directors and agents; provided, that
any holder of Old Common Stock who does not affirmatively decline to provide
such release shall be deemed to have elected to provide such release and no
beneficiary of any such release may receive more consideration than such
beneficiary would have received had all holders of Common Stock provided
releases. Warrants to purchase a fractional number of New Common Shares shall
not be issued and the number of Warrants to be received by any individual
holder of Convertible Notes or Common Stock shall be adjusted downward to the
closest whole number to satisfy such requirement. If either of the foregoing
classes do not vote to accept the Bankruptcy Plan or if either class does not
receive any distribution pursuant to the "cramdown provisions" of 11 U.S.C.
ss.1129, then the most junior class immediately senior to the unaccepting class
(or the class that did not receive any distribution) shall receive the
distribution which otherwise would have gone to such unaccepting class (or the
class that did not receive any distribution). For purposes of the immediately
preceding sentence, amounts being distributed solely in consideration of the
receipt of releases shall not be deemed distributions. Subject to the approval
of the Companies and the Committee, the Investors may increase, but not
decrease, the consideration offered to each of the holders of the Convertible
Notes and the Common Stock, except to the extent required by the "cramdown
provisions" of 11 U.S.C. ss.1129.
(e) All other claims against and interests in the
Companies shall be treated as set forth in the Bankruptcy Plan.
(f) In connection with and conditioned upon the
consummation of the Bankruptcy Plan, New Pinnacle shall (i) adopt the Employee
Stock Option Plan in the form attached hereto as Exhibit F (the "Employee Stock
Option Plan") with the number of New Common Shares issuable thereunder equal to
the Option Share Amount and (ii) grant options to purchase New Common Shares to
the Companies' employees (the "Employee Stock Option Shares") in accordance
with Section 5.8(f) of the Companies' Disclosure Schedule.
(g) The Companies shall reject, or cause the relevant
Subsidiaries to reject, those of the Companies' executory contracts and leases
(as such terms are used in the Bankruptcy Code) as may be consented to by the
Investors and shall cause each Subsidiary which is a party to such a rejected
executory contract or lease to file a petition for bankruptcy relief in
connection with the Restructuring Transaction. The aggregate amount of
rejection damages required to be paid by the Companies or Subsidiaries to the
parties to such executory contracts or leases, either by agreement with such
parties or by order of the Bankruptcy Court, shall be the "Lease Rejection
Amount," which shall increase the Required New Equity Amount and be funded by
the Investors through the purchase of New Common Shares. The Companies and the
Investors shall mutually agree as to which other Subsidiaries will file
petitions for
33
bankruptcy relief in connection with the Restructuring Transaction. In the
event the parties cannot agree, the decision of the Companies will prevail.
(h) The Companies shall file the Bankruptcy Plan, and
(x) if this Agreement has been terminated prior to the commencement of the
Bankruptcy Case under circumstances in which the Investors are entitled to the
Break-Up Payment, a motion (the "Break-Up Payment Claim Motion") for allowance
as a general unsecured claim in each of the Companies' Bankruptcy Cases of the
Investors' claim for payment of the Break-Up Payment (the "Allowed Break-Up
Payment Claim"), together with all necessary supporting papers and a proposed
Break-Up Payment Claim Order substantially in the form of the order attached
hereto as Exhibit I, or (y) if this Agreement remains in force at the time of
the commencement of the Bankruptcy Case, a motion (the "Break-Up Payment
Motion") for approval of the Break-Up Payment, together with all necessary
supporting papers and a proposed Break-Up Payment Order substantially in the
form of the order attached hereto as Exhibit J. Prior to the termination of
this Agreement, the Companies shall submit to the Investors for their review
and comment all non-ministerial motions, orders, applications and supporting
papers and notices prepared by the Companies (including without limitation,
forms of orders and notices to interested parties) relating in any way to the
Bankruptcy Case, prior to their being filed with the Bankruptcy Court.
(i) Concurrently with the consummation of the Bankruptcy
Plan, Pinnacle shall merge with and into New Pinnacle, with New Pinnacle being
the surviving entity and the direct parent corporation of PTI.
(j) The Investors and the Companies agree that if facts
and circumstances relating to the Investors' ownership of New Common Shares
arise that would result in the loss of the Companies' qualification as a REIT
upon completion of the Closing, neither such facts or circumstances, nor any
action taken by the Investors in their efforts to maintain the Companies'
qualification as a REIT, will in any way affect the receipt or retention, by a
holder of Senior Notes who has elected to receive New Common Shares, of the
full amount of New Common Shares that such holder is otherwise entitled to
receive pursuant to the Restructuring. In the event such facts and
circumstances arise, the Investors may opt to either (i) preserve the
Companies' qualification as a REIT in a manner that does not reduce the amount
of New Common Shares distributed to any holder of Senior Notes who has elected
to receive New Common Shares, or (ii) consummate the transactions contemplated
hereby notwithstanding any termination of Pinnacle's status as a REIT that may
occur. Each of the Investors and each of the Companies hereby agrees to take
any action necessary, including, without limitation, removing the ownership
limitations imposed by Article IV, Part B, and Article IV, Part C of the
Amended and Restated Certificate of Incorporation of Pinnacle and causing the
Board of Directors of New Pinnacle to exempt each holder of Senior Notes who
has elected to receive New Common Shares from the application of the provisions
of Section 2.1(a) of Part D of Article Four of the New Pinnacle Certificate of
Incorporation, to allow each holder of Senior Notes who has elected to receive
New Common Shares in the Restructuring to receive and hold such New Common
Shares without violating any limitations imposed by the organizational
documents of either Company or of New Pinnacle, and appropriately reducing the
Aggregate Stock Ownership Limit in Section 1 of Part D of Article Four of the
New Pinnacle Certificate of Incorporation to account for the exemptions granted
by the Board of Directors of New Pinnacle to the holders of the Senior Notes
who have elected to receive New Common Shares in the Restructuring.
34
Section 5.9 Investor Agreement. At or prior to the Closing,
Pinnacle shall enter into the Investor Agreement for the benefit of the
Investors and any holders of Senior Notes who acquire New Common Shares and
make the election to become a party to the Investor Agreement pursuant to
Section 5.8(b).
Section 5.10 Corporate Governance. Immediately prior to the
Closing, Pinnacle shall cause the resignations of the directors listed in
Section 5.10 of the Companies' Disclosure Schedule. The Board of Directors of
New Pinnacle from and after the Closing through the first annual meeting of
shareholders of New Pinnacle following consummation of the Bankruptcy Plan,
which will be no earlier than May 1, 2003, shall have the following nine
members: (i) Xxxxxx X. Day; (ii) five members designated by the Investors in
their sole discretion; (iii) in the event that Xxxxxx Capital shall acquire New
Common Shares representing at least 10% of the New Common Shares outstanding as
of the Closing Date, Xxxxx Xxxxxx or a designee of Xxxxx Xxxxxx reasonably
acceptable to the Investors; and (iv) two (or, in the event that no director is
appointed pursuant to clause (iii), three) members to be established by the
Investors identifying a number of proposed members equal to one more than the
available slots and the Committee having the right to veto one proposed member.
In the event that Xxxxx Xxxxxx or his designee shall become a director, he or
she shall be assigned to the class of directors whose term will expire at New
Pinnacle's 2005 annual meeting of shareholders. The Investors shall have the
ongoing right to appoint (i) five (5) directors if the Investors hold a number
of shares representing 50% or more of Pinnacle's then outstanding Common Stock;
(ii) four (4) directors if the Investors hold a number of shares representing
between 35% and up to 50% of Pinnacle's then outstanding Common Stock; (iii)
three (3) directors if the Investors hold a number of shares representing
between 20% and up to 35% of Pinnacle's then outstanding Common Stock; and (iv)
two (2) directors if the Investors hold a number of shares representing between
10% and up to 20% of Pinnacle's then outstanding Common Stock.
Section 5.11 Delivery of Documents. The Companies shall promptly
deliver to the Investors copies of all filings by the Companies with the SEC.
Section 5.12 Review of Audit. The Companies shall permit the
accounting representative of the Investors to review the audit (including the
appropriate review of company and auditor work papers) of the Companies'
financial statements for the year ended December 31, 2001.
Section 5.13 Releases. In the event a Bankruptcy Case is
commenced, the Companies shall use commercially reasonable efforts to ensure
that the Confirmation Order shall provide, among other things, that the
directors, officers, advisors, attorneys, investment bankers and agents of the
Companies, each Investor and each holder of Senior Notes and their respective
affiliates, members, managers, shareholders, partners, representatives,
employees, attorneys and agents are released from any and all Litigation
related to the Companies, their business, their governance, their securities
disclosure practices, the purchase or sale of any of the Companies' equity or
debt securities, the Restructuring or the Restructuring Transaction.
Section 5.14 Investor Compliance With Regulatory Requirements. To
the extent that an Investor is required under an applicable law or regulation
(including, but not limited to, the Bank Holding Company Act of 1956, as
amended, and as it may be further
35
amended) to modify the terms of the New Common Shares, or to defer receipt of
certain rights and privileges associated with the New Common Shares including
the right to influence the management or policies of the Companies in order to
conform to the requirements of such law or regulation, the Companies will
cooperate with the Investor to take such steps as may be reasonably necessary
to conform the investment represented by the New Common Shares to the
requirements of such law or regulation; provided, that no such change shall
reduce the Senior Note Holder Consideration without the approval of the
Committee.
Section 5.15 Payment of Investors' Expenses. In the event that
the transactions contemplated by this Agreement are consummated, the Companies
shall pay directly or reimburse the Investors for up to an additional
$1,500,000 (excluding any reimbursement of expenses received prior to the date
hereof) of their out-of-pocket costs and expenses, including the fees and
expenses of advisors, accountants, attorneys, consultants and other parties
whom the Investors have engaged to assist them in connection with a possible
investment in the Companies, incurred by the Investors in connection with the
evaluation, negotiation and consummation of this Agreement, the Restructuring,
the other Transaction Documents and the transactions contemplated hereby and
thereby.
Section 5.16 Tax Matters.
(a) The Companies shall not, and shall not permit any
Subsidiary to, (i) make or rescind any election relating to Taxes if such
action would adversely affect the status of Pinnacle as a REIT or the status of
any Subsidiary that is currently a partnership as a partnership for federal
income tax purposes, (ii) without the written consent of the Investors, which
consent will not be unreasonably withheld, settle or compromise any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes over $100,000 unless such settlement or
compromise results in a change in taxable income or Tax liability that will
reverse in future periods and is therefore, by its nature, a timing difference
or (iii) change in any material respect any of its methods of reporting income
or deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 2000, except as may be required by applicable law or except for
such changes that would reduce consolidated federal taxable income or
alternative minimum taxable income. Notwithstanding any other provision of this
Agreement, in the event that, after the date hereof, the Companies seek a
"Closing Agreement" from the IRS or a definitive ruling or settlement agreement
from the IRS or any state, local or foreign taxing authority on a matter that
is subject to a representation, warranty or covenant set forth in this
Agreement or any of the related transaction documents, then: (A) the Companies
shall, or shall cause such Subsidiary to, keep the Investors informed as to the
status of such agreement and any discussions, negotiations or arrangements
related thereto, and (B) the Companies shall not, and shall cause any such
Subsidiary not to, file or submit any document to any taxing authority in
connection with any such agreement without first providing the Investors with
(1) copies of any such document and (2) an opportunity to review and comment on
any such document prior to such filing or submission.
(b) The Companies hereby agree to take any action at any
time, or from time to time, that in the reasonable judgments of the Companies
and the Investors is legally
36
necessary for Pinnacle to maintain its qualification as a REIT within the
meaning of Sections 856-860 of the Code for all periods through the Closing
Date.
Section 5.17 Notification of Certain Matters. From the date
hereof through the Closing, the Companies shall give prompt notice to the
Investors of the occurrence, or failure to occur, of any event the occurrence
or failure of which caused any of Companies' or Investors' respective
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect; provided, however, that no such
notification shall be deemed for any purpose under this Agreement to permit the
Companies to alter or amend the representations and warranties contained
herein.
ARTICLE SIX
COVENANTS OF THE INVESTORS
Section 6.1 Consents. Each Investor shall use reasonable efforts
to take, or cause to be taken, all such reasonable further actions and to do,
or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and the other Transaction Documents including,
but not limited to, (i) obtaining all Consents from any Governmental Entity and
other Third Party Consents required for the consummation of transactions
contemplated by this Agreement and the other Transaction Documents (ii) timely
making all necessary filings under the HSR Act and (iii) securing as soon as
practicable, the financing contemplated by, and on terms not materially
different from those set forth in, the Commitment Letter. Each Investor will
furnish such information as the Companies may reasonably request in connection
with any Bankruptcy Case and will otherwise reasonably support the Companies'
preparation and presentation of any motion, filing, disclose statement or other
pleading in the Restructuring Transaction consistent with the terms of this
Agreement.
Section 6.2 Confidentiality. The Confidentiality Agreements
shall continue in full force and effect, notwithstanding the execution of this
Agreement or the subsequent Closing pursuant to or termination of this
Agreement; provided, that, nothing shall prevent the Investors from negotiating
with holders of the Senior Notes.
Section 6.3 Approval of Bankruptcy Plan. As long as this
Agreement is in effect, each of the Investors agrees with respect to all of its
Senior Notes, Convertible Notes and Common Stock set forth in Section 4.10 of
the Investors' Disclosure Schedule (a) to vote, or cause to be voted, timely in
favor of the Bankruptcy Plan, with such modifications in terms of the
Bankruptcy Plan that do not deviate from the terms of this Agreement in a
manner that is economically adverse or otherwise materially adverse to the
Investors, (b) not to revoke or withdraw such vote, or permit such vote to be
revoked or withdrawn, so long as the Bankruptcy Plan is not modified from the
terms of this Agreement in a manner that is economically adverse or otherwise
materially adverse to the Investors, (c) as to all Senior Notes held as of the
date hereof, to elect, or cause to be elected, under Section 5.8(b) to receive
Senior Note Holder Consideration solely in the form of New Common Shares and
(d) to forbear, or cause to be forborne, exercising its remedies under the
indenture governing the Senior Notes. Each Investor agrees that this Section
6.3 shall apply notwithstanding any disposition of its Senior Notes,
37
Convertible Notes or Common Stock, and further agrees not to purchase any
additional Senior Notes from the date of this Agreement.
ARTICLE SEVEN
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The
respective obligation of each party to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions:
(a) HSR Approval. The applicable waiting period (and any
extension thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), relating to the transactions contemplated by
the Transaction Documents shall have been terminated or shall have expired.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction (collectively, "Restraints") preventing
consummation of any of the transactions contemplated hereby shall be in effect.
(c) Restructuring. All conditions precedent to the
consummation of the Bankruptcy Plan, including the Merger, shall have been
satisfied or waived by the Companies and the Investors and the consummation of
the Bankruptcy Plan shall be occurring simultaneously with the Closing with
such modifications in the terms as are mutually agreed upon by the Companies
and the Investors in each of their sole and absolute discretions, subject only
to the approval of the Committee, and comply with 11 U.S.C. Sections 1125 &
1127.
Section 7.2 Conditions to the Investors' Obligations. The
obligation of each of the Investors to consummate the transactions contemplated
hereby with respect to the Investment shall be subject to the satisfaction at
or prior to the Closing of each of the following conditions; provided, however,
that the Investors may waive any or all of the following conditions except
7.2(h):
(a) Representations And Warranties. As of the date of
this Agreement and as of the Closing Date, the representations and warranties
of each of the Companies set forth in this Agreement or incorporated herein by
reference shall be true and complete to the extent that all such failures of
such representations and warranties to be true and complete shall not result in
a Material Adverse Effect, and the Investors shall have received a certificate
to such effect signed on the Closing Date on behalf of the Companies by their
respective Chief Executive Officer and Chief Financial Officer in their
corporate (not personal) capacities as such or Treasurer, in form and substance
reasonably satisfactory to the Investors, to the foregoing effect. Said
representations and warranties shall not survive the Closing and the
signatories to any closing certificate shall have no personal liability for any
of the representations and warranties or as a result of signing such
certificate. If the impact of any breaches of any representations and
warranties shall have been to reduce EBITDA pursuant to Section 2.3(a),
38
such breaches shall be disregarded for purposes of determining compliance with
this Section 7.2(a).
(b) Performance of Obligations. Each of the Companies
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing and the
Companies shall have delivered to the Investors at the Closing a certificate
signed by their respective Chief Executive Officer and Chief Financial Officer
or Treasurer, dated the Closing Date, in form and reasonably substance
satisfactory to the Investors, to the foregoing effect. Such signatories having
no personal liability as a result of signing such certificate.
(c) Receipt of Consents. Each of the Companies shall
have obtained the consents contemplated by this Agreement and the other
Transaction Documents and the Restructuring Transaction and a copy of each such
consent or evidence thereof reasonably satisfactory to the Investors shall have
been provided to the Investors at or prior to the Closing, unless the failure
to obtain such consents, when taken together with other events, developments or
circumstances, does not constitute a Material Adverse Effect.
(d) Investor Agreement. The Companies shall have
executed and delivered the Investor Agreement and such agreement shall be in
full force and effect.
(e) Transaction Documents. All of the Transaction
Documents shall be in full force and effect and there shall exist no material
breach of, or default under, any of the Transaction Documents by the Companies,
excluding any breach by such Investor.
(f) Financing. Either (i) an Amended Credit Facility,
with interest rate, term, principal amount, amortization and fees no less
favorable to the Companies than those provided for in the Commitment Letter (as
hereinafter defined) and otherwise in form and substance reasonably acceptable
to the Investors, shall be in full force and effect, there shall exist no
material breach of or default under the Amended Credit Facility, and any and
all fees and expenses paid or payable to any commercial bank or any other
financial institution in connection with any amendments to the Amended Credit
Facility shall be reasonably acceptable to each Investor or (ii) the Companies
shall have entered into definitive agreements with respect to new senior
financing (the "New Credit Facility") on terms not materially different from
those set forth or contemplated by that certain Firm Commitment Letter from
Deutsche Bank Trust Company Americas, Deutsche Bank Securities Inc., Bank of
America, N.A. and Banc of America Securities LLC and attached hereto as Exhibit
E (the "Commitment Letter"), all in such forms as are reasonably acceptable to
the Companies and the Investors.
(g) Capital Structure. Upon the Closing, after giving
effect to the issuance of the New Common Shares, the Employee Stock Option
Shares, and Warrants, the complete capital structure of Pinnacle shall be the
New Equity Capitalization.
(h) Bankruptcy Case. The Bankruptcy Plan, in form and
substance satisfactory to the Companies and Investors, shall have been approved
by the Bankruptcy Court pursuant to the Confirmation Order, and (i) the
Confirmation Order shall be in form and substance reasonably satisfactory to
the Companies and Investors and shall be final and non-appealable, (ii) the
Break-Up Payment Order shall be in a form and substance reasonably satisfactory
to the Investors and shall be final and non-
39
appealable, and (iii) each other substantive order of the Bankruptcy Court in
respect of the Restructuring Transaction which affects the economic or other
interests of the Investors shall be final and non-appealable.
(i) Personnel. Xxxxxx Xxx and Xxxxxxx Xxxxxxx shall
continue to be employed by the Companies as the Chief Executive Officer and
Chief Financial Officer, respectively, and shall not have submitted their
written resignations declaring their intention to leave the Companies.
(j) Benefit Plans. Except as expressly contemplated by
Exhibit F, or as set forth in Section 3.14(g) of the Companies' Disclosure
Schedule, the Companies shall not have made and shall have no obligation to
make any payment, issue any securities or make any distribution of any kind or
nature whatsoever under the Plans in connection with or as a result of the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents (including, without limitation, any severance or other
payment to any person upon termination of such person's employment with the
Companies or the Subsidiary, whether such termination occurs before, upon or
after the Closing) because either such payment, issuance or distribution is not
required by the terms of the Plans, the party entitled to receive such payment,
securities or distribution has waived its rights thereto or the obligation to
make such payment has been terminated by the Confirmation Order; provided,
that, in connection with or as a result of the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, the
Companies and the Subsidiaries shall have the right to make payments under and
pursuant to the Retention Bonus Plan in an amount not to exceed $3,500,000 less
the total aggregate amount of all bonuses and other amounts paid or payable
under and pursuant to the Retention Bonus Plan.
(k) Tax Matters. (i) The Companies have resolved, to the
satisfaction of the Investors, all tax issues related to the failure of the
Companies to make elections under Treasury Regulation Section 301.7701-3 (the
"check-the-box regulations") to treat certain foreign Subsidiaries, including
Pinnacle Towers UK Limited, as partnerships or as disregarded entities for
United States federal income tax purposes and (ii) for all periods from the
formation of Pinnacle (or any predecessor) through the Closing Date, other than
as to the matter described in clause (i), Pinnacle was organized and has
operated in conformity with the requirements for qualification as a REIT under
the Code and (iii) either (A) a Determination shall have been made as to the
Tax Amount and the condition provided for in Section 7.2(o) shall have been
satisfied or waived by the Investors or (B) a Determination shall not have been
made and the Tax Escrow shall have been established pursuant to Section 5.8(c).
(l) Termination of Rights Plan. Pinnacle shall have
terminated the Rights Plan, effective as of immediately prior to the Closing
Date.
(m) Bankruptcy Order regarding New Common Shares. The
Bankruptcy Court shall have entered an order to the effect that all of the New
Common Shares to be outstanding or subject to issuance upon completion of the
Restructuring shall at the time of their issuance be duly authorized and
validly issued and outstanding, fully paid and nonassessable, free and clear of
any Encumbrances, issued in compliance with all federal and
40
state securities laws, not issued in violation of, or subject to any,
preemptive rights or other rights to subscribe for or purchase securities,
other than as contemplated by this Agreement and the other Transaction
Documents.
(n) Minimum EBITDA. EBITDA, as calculated pursuant to
Section 2.3, shall have been not less than the EBITDA Base Level.
(o) Cash Funding. Cash Funding, as calculated pursuant
to Section 2.3, shall not exceed $415,000,000.
(p) Assumed Liabilities. The aggregate principal amount
of Assumed Liabilities, as determined pursuant to Section 2.3, shall not exceed
$65,000,000.
(q) Opinions of Counsel. The Investors shall have
received at the Closing an opinion dated the Closing Date of counsel to the
Companies with respect to the items set forth in Exhibit D.
(r) Ownership Restrictions. After giving effect to
Section 5.8(j), the receipt and ownership of the New Investors Shares by the
Investors or by any holder of Senior Notes electing to acquire New Common
Shares under Section 5.8(b) shall not violate any provision of the
organizational documents of each of the Companies.
(s) Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect on the
Companies and their subsidiaries, taken as a whole, and each of the Companies
shall deliver to the Investors at the Closing a certificate signed by its
respective Chief Executive Officer, dated as of the Closing Date, to the
foregoing effect.
Section 7.3 Conditions to the Obligations of Each of the
Companies. The respective obligation of each of the Companies to consummate the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions:
(a) Representations and Warranties. As of the date of
this Agreement and as of the Closing Date, the representations and warranties
of each of the Investors set forth in this Agreement or incorporated herein by
reference shall be true and complete to the extent that all such failures of
such representations and warranties to be true and complete shall not result in
a Material Adverse Effect on the Investors, taken as a whole, and the Companies
shall have each received a certificate to such effect signed on the Closing
Date on behalf of each Investor by their respective Chief Executive Officer and
Chief Financial Officer or Treasurer, in form and substance reasonably
satisfactory to the Companies, to the foregoing effect. Said representations
and warranties shall not survive the Closing and the signatories to any closing
certificate shall have no personal liability for any of the representations and
warranties or as a result of signing such certificate.
(b) Performance of Obligations. The Investors shall have
performed in all material respects all obligations required to be performed by
any of them under this Agreement at or prior to the Closing and each of the
Investors shall have delivered to the
41
Companies at the Closing a certificate signed by its Chief Executive Officer
and Chief Financial Officer or Treasurer, dated the Closing Date, in form and
substance reasonably satisfactory to the Companies, to the foregoing effect.
(c) Receipt of Consents. Each of the Investors shall
have obtained the consents contemplated by this Agreement and the other
Transaction Documents and the Restructuring Transaction and a copy of each such
consent or evidence thereof reasonably satisfactory to the Companies shall have
been provided to the Companies at or prior to the Closing, unless the failure
to obtain such consents, when taken together with other events, developments or
circumstances, does not constitute a Material Adverse Effect on the Investors,
taken as a whole.
(d) Transaction Documents. All of the Transaction
Documents shall be in full force and effect and there shall exist no material
breach of, or default under, any of the Transaction Documents by the Investors,
excluding any breach by such Investor.
(e) Financing. Either (i) an Amended Credit Facility,
with interest rate, term, principal amount, amortization and fees no less
favorable to the Companies than those provided for in the Commitment Letter and
otherwise in form and substance reasonably acceptable to the Companies and the
Committee, shall be in full force and effect, there shall exist no material
breach of or default under the Amended Credit Facility, and any and all fees
and expenses paid or payable to any commercial bank or any other financial
institution in connection with any amendments to the Amended Credit Facility
shall be reasonably acceptable to the Companies or (ii) the Companies shall
have entered into definitive agreements with respect to the New Credit Facility
on terms not materially different from those set forth or contemplated by the
Commitment Letter, all in such forms as are reasonably acceptable to the
Companies.
(f) Bankruptcy Case. The Bankruptcy Plan, in form and
substance satisfactory to the Companies and the Investors and subject to the
reasonable approval of the Committee, shall have been approved by the
Bankruptcy Court pursuant to the Confirmation Order, and the Confirmation
Order, in form and substance reasonably satisfactory to the Companies and the
Investors and subject to the reasonable approval of the Committee, shall have
been entered by the Bankruptcy Court and be final and non-appealable.
ARTICLE EIGHT
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Closing Date notwithstanding the fact that any requisite authorization and
approval of the transactions contemplated hereby shall have been received and
no party hereto shall have any liability to any other party hereto (provided
that any such termination shall not relieve any party from liability for a
breach of any provision hereof prior to such termination nor shall it terminate
the Companies' obligations under Section 5.3(c) or this Article VIII):
42
(a) by the mutual written consent of the Investors and
the Companies;
(b) by the Investors or any of the Companies if: (i) the
Closing has not occurred within six (6) months from the earlier to occur of (A)
the date of filing of the Bankruptcy Plan and (ii) May 15, 2002; or (ii) there
shall be any law that makes consummation of the purchase of the New Common
Shares hereunder illegal or otherwise prohibited or if any court of competent
jurisdiction or governmental authority shall have issued an order, decree,
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the purchase of the New Common Shares hereunder and such order,
decree, ruling or other action shall have become final and non-appealable;
provided, that any termination by the Companies pursuant to Section 8.1(b)(i)
shall be subject to the reasonable approval of the Committee and provided
further that, notwithstanding clause (i) above or any other provision of this
Agreement to the contrary, the Companies and the Investors may amend this
Agreement without the approval of the Committee to extend the termination date
provided for in clause (i) above for an additional month if at the time of such
amendment the Confirmation Order shall have been obtained and the Companies and
the Investors are continuing to work diligently to satisfy any remaining
conditions in Article VII, it being understood that thereafter the Senior Note
holders may withdraw their votes in approval of the Bankruptcy Plan;
(c) by the Investors, (i) if the Board of Directors of
the Companies withdraws or changes its recommendation of this Agreement in a
manner materially adverse to the Investors, (ii) if the Board of Directors of
the Companies recommends an Alternative Proposal, (iii) if the Companies enter
into a written agreement providing for any Alternative Proposal, or (iv) the
holders of the Senior Notes shall fail to provide the requisite vote in favor
of the Bankruptcy Plan for it to be confirmed notwithstanding the Investors
having voted their Senior Notes in favor of the Bankruptcy Plan;
(d) (i) by the Investors, if any of the conditions to
the obligations of such Investor set forth in Section 7.1 or Section 7.2 are
not satisfied at or prior to the Closing, and such failure cannot be or has not
been cured within 30 days after the giving of written notice to the Companies,
the Committee and the other Investor; and (ii) by the Companies (subject to the
reasonable approval of the Committee if the Investors shall have indicated
their willingness to complete the Closing), if any of the conditions to the
obligations of the Companies set forth in Section 7.1 or Section 7.3 are not
satisfied at or prior to the Closing, and such failure cannot be or has not
been cured within twenty (20) Business Days after the giving of written notice
to the Investors;
(e) by the Investors, if the Companies have not complied
with their obligations under Section 8.2 relating to seeking Bankruptcy Court
approval of their obligations to pay the Break-Up Payment (including the timing
of the filing of a motion and proposed order related thereto that is reasonably
acceptable to the Investors in all respects) or if the Bankruptcy Court has not
issued an order approving such obligations, in form and substance reasonably
satisfactory to the Investors, within 45 days following commencement of the
Bankruptcy Case;
(f) by the Companies, if (i) the Board of Directors of
Pinnacle determines in good faith after consultation with the Committee and
after giving due regard to the preferences expressed by the Requisite Holders
that termination of this Agreement is necessary
43
in order for the Companies to accept any Alternative Proposal, or (ii) the
Bankruptcy Court has ordered the Companies to terminate this Agreement in order
to accept any Alternative Proposal; provided, that, the Companies shall have
the right to terminate this Agreement pursuant to clause (i) above only if they
have complied with all of the provisions of Section 5.3, including the notice
provisions thereof, and shall comply with the requirements of Section 8.2
relating to any required payment (including the timing of any payment) of the
Break-Up Payment or Allowed Break-up Payment Claim, as the case may be, prior
to termination of this Agreement pursuant to this Section 8.1(f);
(g) by the Companies, if any of the Investors shall have
breached in any material respect any of its representations, warranties,
covenants or other agreements contained herein which has not been cured or is
not upon advice of counsel, curable within twenty (20) Business Days after the
Companies giving of written notice to the breaching Investor;
(h) by the Investors, (i) in the event of a material
breach by the Companies or any Subsidiary of any covenant or other agreement
contained herein which has not been cured or is not curable within twenty (20)
Business Days after the Investors giving of written notice to the Companies or
(ii) for twenty (20) Business Days following delivery of any MAE Notice by the
Companies; provided, however, that the failure of the Investors to terminate
this Agreement based on the facts described in a MAE Notice shall not preclude
the Investors from thereafter terminating this Agreement or exercising its
right not to complete the transactions contemplated by this Agreement under
Section 7.2(a) or 7.2(s) if other events, developments or circumstances when,
considered in the aggregate with the facts described in one or more MAE
Notices, in the aggregate constitute a Material Adverse Effect.;
(i) by the Companies or the Non-Breaching Investor
pursuant to Section 2.4; or
(j) by the Investors or the Companies (subject to the
reasonable approval of the Committee if the Investors have indicated their
willingness to complete the Closing), in the event the Commitment Letter is
terminated by the lenders thereunder or expires and either (i) within twenty
(20) Business Days after such termination, the Companies do not secure
alternative committed financing that would satisfy Section 7.2(f)(i) (the
"Alternative Financing") or (ii) the lenders proposing to provide the
Alternative Financing terminate their commitment thereunder.
Section 8.2 Break-Up Payment.
(a) The Investors shall be entitled to receive from the
Companies a payment (the "Break-Up Payment") in an aggregate amount equal to
$12,000,000 if at the time of termination of this Agreement the Investors are
not in breach of any of their obligations hereunder, the Commitment Letter or a
commitment from lenders to provide the Alternative Financing remains in effect
and either or both of the following occurs: (i) the Investors terminate this
Agreement pursuant to Section 8.1(c) or the Companies terminate this Agreement
pursuant to Section 8.1(f): or (ii) this Agreement is terminated by the
Companies pursuant to Section 8.1(b) while in breach of this Agreement (it
being understood that a breach by the Company of its representations and
warranties under Article III shall not be deemed to be a breach for
44
purposes of this clause (ii)) and within three months following such
termination the Companies enter into an agreement contemplating an Alternative
Proposal (other than a "stand alone" plan) providing a higher transaction value
to the Companies than the transaction provided by this Agreement.
(b) If this Agreement has been terminated prior to the
commencement of the Bankruptcy Case, then any distributions to be made on
account of the Allowed Break-Up Payment Claim shall be made (x) pursuant to the
terms of any plan(s) of reorganization confirmed for the debtors in the
Bankruptcy Case, or (y) as otherwise ordered by the Bankruptcy Court, or (ii)
if this Agreement remains in force at the time of the commencement of the
Bankruptcy Case, then any payment of the Break-Up Payment, in same day funds,
to the Investors shall occur (x) upon the closing of the first Alternative
Proposal completed following termination of this Agreement, or (y) as otherwise
prescribed in the Break-Up Payment Order if it shall have been entered by the
Bankruptcy Court.
(c) In the event a Bankruptcy Case is commenced, the
Companies shall promptly, but in no event later than three (3) Business Days
after commencement of such Bankruptcy Case, take all action reasonably
necessary, including filing any motion, proposed order and supporting
documents, to seek (i) if this Agreement has been terminated prior to the
commencement of the Bankruptcy Case, allowance of the Break-Up Payment as a
general unsecured claim in each of the Companies' Bankruptcy Cases, or (ii) if
this Agreement remains in force at the time of the commencement of the
Bankruptcy Case, approval from the Bankruptcy Court of the Companies'
obligation to pay the Break-Up Payment to each Investor as administrative
expenses in each of the Companies' Bankruptcy Cases. Any and all motions and
other documents filed by the Companies in connection with their obligations
under this Section 8.2 must be reasonably acceptable to each Investor.
(d) The Companies acknowledge and agree that (i) the
payment of the Break-Up Payment is an integral part of the transactions
contemplated by this Agreement, (ii) in the absence of the Companies'
obligations to make this payment, neither Investor would have entered into this
Agreement and (iii) time is of the essence with respect to the payment of the
Break-Up Payment.
(e) Notwithstanding any other provision of this Section
8.2, neither Investor shall be entitled to any Break-Up Payment or any other
claim against or recovery from the Companies upon any termination of this
Agreement if any Investor caused such termination by breaching any of its
representations, warranties or covenants and such Investor fails to cure its
breach after thirty (30) days' written notice thereof.
ARTICLE NINE
NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN COVENANTS;
NATURE OF REMEDIES
None of the representations and warranties of the Companies and the
Investors contained in Articles III and IV, including the Companies' Disclosure
Schedule and the Investors'
45
Disclosure Schedule, or any certificate or instrument delivered in connection
herewith at or prior to the Closing, and none of the covenants contained in
Articles V and VI (other than Sections 5.10 and 5.15) shall survive the
Closing. Sections 5.10 and 5.15 and the parties' other respective covenants and
agreements set forth herein that by their specific terms contemplate
performance after Closing shall survive the Closing indefinitely unless
otherwise set forth therein or herein. The Investors' sole remedy for (x) a
breach of the Companies' representations or warranties or (y) a failure of any
of the conditions to the Investors' obligation to consummate the transactions
contemplated hereby to be satisfied other than by reason of an intentional
breach of an agreement of the Companies contained in this Agreement shall be to
terminate this Agreement, subject to any rights it may have under Section 8.2.
ARTICLE TEN
MISCELLANEOUS
Section 10.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL AND SUBSTANTIVE LAWS OF THE
STATE OF DELAWARE WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF.
Section 10.2 Jurisdiction; Forum; Service of Process; Waiver of
Jury Trial. With respect to any suit, action or proceeding ("Proceeding")
arising out of or relating to this agreement each of the Companies and the
Investors hereby irrevocably:
(a) submits to the exclusive jurisdiction of the courts
of the State of Delaware and of the United States of America, in each case
located in New Castle County (the "Selected Courts"), including the federal
bankruptcy court located there, for any Litigation arising out of or relating
to this Agreement or the other Transaction Documents and the transactions
contemplated hereby and thereby (and agrees not to commence any Litigation
relating hereto or thereto except in such courts) and waives any objection to
venue being laid in the Selected Courts whether based on the grounds of forum
non conveniens or otherwise;
(b) consents to service of process in any Proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
or by recognized international express carrier or delivery service, to the
Companies or the Investors at their respective addresses referred to in Section
10.5 hereof; provided, however, that nothing herein shall affect the right of
any party hereto to serve process in any other manner permitted by law; and
(c) waives, to the fullest extent permitted by law, any
right it may have to a trial by jury in any action, proceeding or Litigation
directly or indirectly arising out of, under or in connection with this
agreement or the other Transaction Documents.
Section 10.3 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors by operation of law and permitted assigns of the parties
hereto. No assignment of this Agreement may be made by any party at any time,
whether or not by operation of law, without the other parties'
46
prior written consent; provided, that, any (i) transfer of New Common Shares
permitted hereunder (other than transfers between and among the Investors or
their respective Affiliates) shall not entitle the transferee to the rights of
the transferring Investor under this Agreement but may at the election of the
transferring Investor transfer rights pursuant to the Investor Agreement and
(ii) any Investor shall be permitted to assign it rights and obligations under
this Agreement to another Investor or any of their respective Affiliates, in
each case without the consent of any other party hereto. Only the parties to
this Agreement or their permitted assigns shall have rights under this
Agreement, except that the Committee shall have third party beneficiary rights
to enforce its right of approval where provided under this Agreement.
Section 10.4 Entire Agreement; Amendment. This Agreement and the
other Transaction Documents constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and supercedes
all prior agreements relating to the subject matter hereof including without
limitation the Confidentiality Agreements. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the Companies and by
the Investors. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether
or not similar). No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof.
Section 10.5 Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) if to the Companies to:
Pinnacle Holdings Inc.
000 Xxxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (941) 364 - 8761
Attn: Xxxxxx X. Day
Xxxxxxx X. Xxxxxxx
with a copy to:
Holland & Knight LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, XX 00000-0000
Fax: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxx III, Esq.
Xxxxxxx X. Xxxxxxxxx, Esq.
and
47
Holland & Knight LLP
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxxx, Esq.
(ii) if to Fortress Registered Investment Trust, to:
c/o Fortress Investment Group, LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
(iii) if to Xxxxxxxxx Capital Partners, L.P., to:
Xxxxxxxxx Capital Partners, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
(iv) if to the Committee, to:
Farallon Capital Management, LLC
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esq.
48
And
Xxxxxx Capital, LLC
000 Xxxxxxxx Xxxxxx, Xxxxx 0
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxx
With copies to
Xxxxx X. Xxxxxxxx, Esq.
New York, NY
Fax: (000) 000-0000
And
Xxxxxx Xxxxx Xxxxx, Esq.
Xxxxxx, Xxxxx Naftalis & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
All such notices, requests, consents and other communications shall be deemed
to have been given or made if and when delivered personally or by overnight
courier to the parties at the above addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
above (or at such other address or telecopy number for a party as shall be
specified by like notice). Any notice delivered by any party hereto to any
other party hereto shall also be delivered to each other party hereto
simultaneously with delivery to the first party receiving such notice. The
Companies and the Investors agree that any notices delivered by them pursuant
to this Agreement shall also be provided to the Committee and its counsel.
Section 10.6 Certain Definitions. As used herein, the following
terms shall have the meanings set forth below:
"Affiliate" and "associate" shall have the meanings ascribed to them
in Rule 12b-2 promulgated under the Exchange Act. "Affiliates" of either
Investor shall be deemed to include limited partners in, and other direct or
indirect owners of such Investor, together with entities owned, controlled or
managed by any or all of such persons.
"Amended Credit Facility" shall mean the Fifth Amended And Restated
Credit Agreement among PTI and Bank Of America, N.A. and certain other agents
and lenders, dated as of September 17, 1999, as amended at any time, and all
documents related thereto, including without limitation (a) the Forbearance
Agreement, any extension agreement or amendment thereof, (b) any asset sale
consent agreement, and (c) any cash collateral or debtor-in-possession
financing.
49
"approval of the Committee" (or phrases of similar import) as to any
particular matter shall mean either (i) a written approval as to such matter
executed by members of the Committee holding a majority in face amount of the
Senior Notes not held by the Investors and delivered to the Companies and the
Investors or (ii) a failure of members of the Committee holding a majority in
face amount of the Senior Notes not held by the Investors to object in writing
to such matter and deliver such written objection to the Companies and the
Investors within five (5) Business Days following the delivery of the request
for such approval to the Committee.
"Assumed Liabilities" shall mean the Initial Assumed Liabilities
Calculation provided by the Companies to the Investors pursuant to Section
2.3(a), together with any revision thereto pursuant to Section 2.3(b) and shall
include, for purposes of any calculation, all liabilities of the Companies
existing as of the Closing Date of a nature required by GAAP to be reflected on
a balance sheet and being assumed rather than discharged under the Bankruptcy
Plan, other than the Seller Notes; provided, that any such liabilities
(including without limitation under the Companies' existing swap arrangements)
as to which the Bankruptcy Plan requires payment prior to the time at which
such liabilities would have been paid in the ordinary course shall not be
deemed to be assumed for purposes of the definition of "Assumed Liabilities"
but shall instead be deemed to be claims as to which there is a funding
obligation for purposes of the definitions of "Cash Funding" and the "Initial
Cash Funding Calculation". A hypothetical Assumed Liabilities Calculation is
attached as Section 10.6 of the Companies' Disclosure Schedule.
"Bankruptcy Case" shall mean all legal proceedings, if any, instituted
in a United States Bankruptcy Court in connection with the Restructuring
Transaction or otherwise involving the Companies, and any of their Subsidiaries
or Affiliates, as debtor.
"Bankruptcy Code" shall mean Title 11 of the United States Code, 11
U.S.C. ss.101, et seq., as now in effect or hereafter amended.
"Bankruptcy Court" shall mean the United States Bankruptcy Court or
other U.S. federal court of competent jurisdiction in which the Bankruptcy Case
is pending.
"Bankruptcy Plan" shall mean the pre-negotiated plan in a form
reasonably acceptable to the Companies and the Investors and embodying the
terms set forth in the Term Sheet attached hereto as Exhibit H, with such
changes as may be agreed among the Companies and the Investors.
"Board of Directors" shall mean the Board of Directors of the
Companies.
"Break-Up Payment Order" shall mean an order of the Bankruptcy Court
approving the Break-Up Payment as an administrative expense of each of the
Companies' Chapter 11 Estates.
"Business Day" shall have the meaning provided in the Bankruptcy Code.
"Claim" shall mean any claim, demand, action, suit, lawsuit,
litigation, hearing, arbitration, proceeding or appeal, whether civil or
criminal, administrative or otherwise, by or before any Governmental Authority
or arbitrator.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
50
"Committee" shall mean (i) Farallon Capital Management LLC and/or
Xxxxxx Capital, LLC for so long as at least one of them is willing to serve on
the Committee, (ii) if neither Farallon Capital Management LLC nor Xxxxxx
Capital, LLC is willing to serve on the Committee, beneficial holders of Senior
Notes willing to serve on the Committee and holding at least 40% of the Senior
Notes not held by the Investors or (iii) if the Committee cannot be constituted
consistent with clause (i) or clause (ii), there shall be no Committee and all
rights of approval or other rights of the Committee pursuant to this Agreement
shall be void.
"Common Stock" shall mean all common stock now or hereafter authorized
to be issued and any and all securities of any kind whatsoever of Pinnacle
which may be exchanged for or converted into Common Stock, and any and all
securities of any kind whatsoever of Pinnacle which may be issued on or after
the date hereof in respect of, in exchange for, or upon conversion of shares of
Common Stock pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of Pinnacle or otherwise.
"Communications Act" shall mean the Communications Act of 1934, as
amended, and the rules and regulations (including those issued by the FCC)
promulgated thereunder.
"Confirmation Order" shall mean the order entered by the Bankruptcy
Court in the Bankruptcy Case confirming the Bankruptcy Plan pursuant to Section
1129 of the Bankruptcy Code. The Confirmation Order shall provide, among other
things, that (i) the sale of the New Common Shares and Warrants pursuant to
this Agreement shall be free and clear of all liens, claims, interests, rights
of others or encumbrances of any kind, (ii) an express finding that the parties
to the Bankruptcy Case and each Investor have acted in good faith, and (iii)
the issuance of the New Common Shares to creditors under the Bankruptcy Plan is
exempt from registration under the Securities Act.
"Convertible Notes" shall mean Pinnacle's 5 1/2% Convertible
Subordinated Notes Due 2007.
"Determination" shall mean either (i) any written determination by the
IRS concerning the amount of any existing obligation by the Companies and their
Subsidiaries for the payment of any Taxes, penalties or interest related to tax
on any "built-in gains" in assets of Companies and their Subsidiaries acquired
or inherited, directly or indirectly, from any C corporation, (ii) a final,
nonappealable order or ruling of the Bankruptcy Court as to the amount of such
Taxes (including penalties or interest) due or (iii) the discharge under the
Bankruptcy Case of any and all obligation of the Companies for such Taxes
(including penalties or interest).
"Disclosure Statement" shall mean the disclosure statement filed in
connection with the Bankruptcy Plan in the Bankruptcy Case.
"DGCL" shall mean the Delaware General Corporation Law.
"EBITDA Base Level" shall mean $5,800,000.
"Encumbrance" shall mean, with respect to any Person, any mortgage,
lien, pledge, charge, claim, option, proxy, voting trust, security interest or
other encumbrance, or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any
51
conditional sale or other title retention agreement or capital lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that together with the Companies, would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning ascribed thereto in Section 5.15.
"FAA" shall mean the Federal Aviation Administration and any successor
Governmental Entity.
"FCC" shall mean the Federal Communications Commission and any
successor Governmental Entity.
"Firm Commitment Letter" shall mean the Commitment Letter modified to
delete the "due diligence" condition, it being agreed that the inclusion in
such modified Commitment Letter of "material adverse change" and other
customary conditions and terms will not be treated as "due diligence"
conditions.
"Forbearance Agreement" shall mean that certain Amended Forbearance
Agreement, by and between the Companies, the lenders under the Amended Credit
Facility and certain Subsidiaries of Pinnacle, dated December 14, 2001, as
amended or extended from time to time
"Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Hazardous Materials" shall mean any substance or material that is
classified or regulated as "hazardous" or "toxic" or similar designation
pursuant to any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls, petroleum and urea-formaldehyde insulation.
"Initial Cash Funding Calculation" shall mean, without duplication,
(x) the aggregate amount of cash needed to meet the funding obligations
(including without limitation in respect of principal, accrued but previously
unpaid interest and any other previously unpaid amount due in connection
therewith) for (i) the Amended Credit Facility, (ii) the Seller Notes, (iii)
any other indebtedness for borrowed money of the Companies, (iv) any Taxes due
with respect to "built-in gains" in assets acquired directly or indirectly from
any C corporation within the meaning of the Code, (v) the aggregate amount of
any additional consideration payable pursuant to the penultimate sentence of
Section 5.8(b) and (vi) any other claims required to be funded with cash under
the Bankruptcy Plan (other than in respect of the Senior Notes and the
Convertible Notes), plus (y) without duplication for any item covered by clause
(x), the aggregate amount not paid
52
prior to the Closing Date of all expenses payable or reimbursable by the
Companies to the advisors set forth in Section 3.13 of the Companies'
Disclosure Schedule and any other fees with respect to the transactions
contemplated hereunder (including the Restructuring) or the Bankruptcy Case,
including not more than an additional $1,500,000 (excluding any reimbursement
of expenses received prior to the date hereof) in fees and expenses of the
Investors minus (z) the aggregate amount of cash, including restricted cash, of
the Companies as of the Measurement Date (except that the amount of any
"restricted" cash that is earmarked to be used to settle or secure an
obligation that is not included within clause (x) or (y) above shall not be
deducted under this clause (z)) before giving effect to the proceeds of any
financing being provided in connection with consummation of the Plan, including
without limitation the Purchase Price. For purposes of this definition, (a) any
cash deposits established pursuant to requests for adequate assurance by the
Companies' and their Subsidiaries' utility providers shall be treated as cash
to the extent that in the aggregate they do not exceed $1,000,000, and (b) the
Lease Rejection Amount shall be deemed not to give rise to a "funding
obligation" under clause (x) of the immediately preceding sentence or be an
"expense" under clause (y) of the immediately preceding sentence.
Notwithstanding the foregoing, the Initial Cash Funding Calculation shall be
reduced dollar-for-dollar to the extent that the Senior Note Holders Pool
Amount is less than $114,000,000. A hypothetical Initial Cash Funding
Calculation is attached as Section 10.6 of the Companies' Disclosure Schedule.
"Intellectual Property" shall mean any of the following to the extent
identified in Section 3.15 of the Companies' Disclosure Schedule: the United
States and foreign trademarks, service marks, trade names, trade dress, domain
names, logos, business and product names, and slogans including registrations
and applications to register or renew the registration of any of the foregoing;
copyrights and registrations or renewals thereof; United States and foreign
letters patent and patent applications, including all reissues, continuations,
divisions, continuations-in-part or renewals or extensions thereof; inventions,
processes, designs, formulae, trade secrets, know-how, confidential business
and technical information; software and computer programs of any kind
whatsoever (including without limitation all modeling software in both source
code and object code versions) and all documentation relating thereto; Internet
Web sites; mask works and other semiconductor chip rights and registrations or
renewals thereof; and all other intellectual property and proprietary rights,
tangible embodiments of any of the foregoing (in any form or medium including
electronic media), and licenses of any of the foregoing.
"Knowledge" of a party hereto shall mean the actual knowledge of any
director or executive officer after due inquiry.
"Laws" shall mean all foreign, federal, state, and local laws,
statutes, ordinances, rules, regulations, orders, judgments, decrees and bodies
of law.
"Lien" shall mean with respect to any asset or right, any mortgage,
deed of trust, lien (statutory or other), pledge, hypothecation, assignment,
claim, charge, security interest, conditional sale agreement, title, exception,
or encumbrance, option, right of first offer or refusal, easement, servitude,
voting or transfer restriction, or any other right of another to or adverse
claim or any kind in respect of such asset or right.
53
"MAE Notice" shall mean any written notice given by the Companies to
the effect that there shall have occurred any event, development or
circumstance that, in the Companies' reasonable judgment, constitutes a
material breach of the representations and warranties set forth in Article III
or a Material Adverse Effect.
"Material Adverse Effect" shall mean, when used in connection with any
of the Companies, any change, effect, event, occurrence or development that is,
or is reasonably likely to be, materially adverse to the business, results of
operations or financial condition of the Companies and the Subsidiaries, taken
as a whole, other than any change, effect, event or occurrence relating to or
arising out of (a) the economy or securities markets in general, (b) this
Agreement or the transactions contemplated hereby or the announcement thereof,
(c) the Companies' financial condition as of date of this Agreement, (d) the
filing of the Bankruptcy Case or (e) the Companies' industry generally.
"Measurement Date" shall mean (i) if the Closing shall occur during
the first seven days of any calendar month, the last calendar day of the
immediately preceding calendar month and (ii) if the Closing shall occur on a
day other than as specified in clause (i), the calendar day immediately
preceding the Closing Date.
"Motorola" shall mean Motorola, Inc., a Delaware corporation.
"New Investor Shares" shall mean, collectively, the New Fortress
Shares and the New Greenhill Shares.
"New Senior Noteholder Shares" shall mean the New Common Shares issued
to the holders of the Senior Notes pursuant to the elections described in
Section 5.8.
"Old Common Stock Amount" shall mean 1% of the amount (rounded to the
nearest whole number) determined by dividing (i) the Required New Equity Amount
as determined without giving effect to any adjustment pursuant to clause (y) of
the definition thereof by (ii) the Purchase Price.
"Option Share Amount" shall mean 10% of the amount (rounded to the
nearest whole number) determined by dividing (i) the Required New Equity Amount
as determined without giving effect to any adjustment pursuant to clause (y) of
the definition thereof by (ii) the Purchase Price.
"Ordinary Course of Business" shall mean the ordinary course of
business of the Companies taking into account the Companies' lack of liquidity,
high degree of financial leverage, and the deterioration of and changes in the
Companies' financial condition and operations during the 18 months prior to the
date of this Agreement.
"Permitted Encumbrances" shall mean: any Encumbrance or Lien (i)
permitted under the Amended Credit Facility; (ii) permitted under the New
Credit Facility ranking pari passu with the Amended Credit Facility or the New
Credit Facility; (iii) approved by the Bankruptcy Court, including, without
limitation, Liens granted pursuant to a cash collateral and/or
Debtor-in-Possession financing order and Liens granted as adequate protection;
(iv) granted pursuant to any forbearance agreements, or amendments thereto,
entered into with respect to the Amended Credit
54
Facility; (v) mechanic's, materialmen's, and similar Liens; (vi) Liens for
taxes not yet due and payable or for taxes that the taxpayer is contesting
through appropriate proceedings; (vii) purchase money Liens and Liens securing
rental payments under capital lease arrangements; and (viii) other Liens or
Encumbrances either (I) arising in the Ordinary and Usual Course of Business
that are not incurred in connection with the borrowing of money or (II) that
would not materially interfere with the conduct of the Companies' business.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Plan" shall mean each deferred compensation and each bonus or other
incentive compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; each severance, retention
or termination pay, medical, surgical, hospitalization, life insurance and
other "welfare" plan, fund or program (within the meaning of Section 3(1) of
ERISA); each profit-sharing, stock bonus or other "pension" plan, fund or
program (within the meaning of Section 3(2) of ERISA); each employment,
termination, retention or severance agreement; and each other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by the Companies
or any ERISA Affiliate, or to which the Companies or any ERISA Affiliate is
party, whether written or oral, for the benefit of any current employees,
officers, independent contractors, or directors of the Companies or any of
their Subsidiaries, including without limitation, the Retention Bonus Plan and
all other plans, agreements, arrangements and understandings set forth in
Section 3.14 of the Companies' Disclosure Schedule.
"Public Debt" shall mean Pinnacle's Senior Notes and Convertible
Notes.
"Regulatory Approvals" shall mean all approvals, consents (including
consents to assignments of permits and rights of way), waivers, certificates,
and other authorizations reasonably required to be obtained from the FCC, the
FAA, any State PUCs or any other federal, state, foreign or municipal
communications regulatory agency having jurisdiction over the Companies or
either Investor's business in order to consummate the transactions contemplated
by this Agreement and the other Transaction Documents.
"Required Consents" shall mean such consents or agreements of
creditors and security holders as shall be required to effectuate the
Restructuring Transaction.
"Required New Equity Amount" shall mean (x) $205,000,000, plus (y) the
Lease Rejection Amount, minus (z) the amount, if any, by which the Cash Funding
is less than $415,000,000.
"Required New Share Amount" shall mean the Required New Equity Amount
divided by the Purchase Price.
"Restructuring Transaction" shall mean any transaction, filing, case,
action or event; or other series of transactions, filings, cases, actions or
events (including, without limitation, a consent solicitation, a pre-negotiated
plan or any other Bankruptcy Case), whereby the
55
completion of which, as evidenced by a final order, if applicable, the
Companies, in all material respects, shall have effectuated the Restructuring.
"Retention Bonus Plan" shall mean the Pinnacle Towers Inc. Retention
and Completion Incentive Plan dated as of December 28, 2001.
"SEC" shall mean the United States Securities and Exchange Commission
and any successor Governmental Entity.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Seller Notes" shall mean the debt obligations of the Companies
identified as "Seller Notes" on Section 10.6 of the Companies' Disclosure
Schedule.
"Senior Notes" shall mean Pinnacle's 10% Senior Discount Notes due
2008.
"Sites" shall mean the physical locations of the Companies' towers.
"Tax Amount" shall mean the excess, if any, of (i) the aggregate
amount of Taxes determined to be due pursuant to the Determination over (ii)
the amount of such Taxes, if any, that can be included in the Cash Funding
without increasing the Cash Funding above $415,000,000.
"Term Sheet" shall mean the Term Sheet of the material provisions of
the Bankruptcy Plan in the form attached hereto as Exhibit H.
"Towers" shall mean the communications towers owned, leased or managed
by the Companies, including the attached guy wires located at the Companies'
Sites.
"Transaction Documents" shall mean this Agreement, the New Pinnacle
Certificate of Incorporation, the New Pinnacle Bylaws, the Investor Agreement,
the Warrant Agreement, the Employee Stock Option Plan, the term sheet for a
Bankruptcy Plan, and all other contracts, agreements, schedules, certificates,
orders and other documents being delivered pursuant to or in connection with
this Agreement.
"Warrant Amount" shall mean 2% of the amount (rounded to the nearest
whole number) determined by dividing (i) the Required New Equity Amount as
determined without giving effect to any adjustment pursuant to clause (y) of
the definition thereof by (ii) the Purchase Price.
"Warrant Shares" shall mean the New Common Shares issued upon exercise
of the Warrants.
Section 10.7 Delays or Omissions. Except as expressly provided
herein, no delay or omission to exercise any right, power or remedy accruing to
the Companies or the Investors upon any breach or default of any party under
this Agreement, shall impair any such
56
right, power or remedy of the Companies or the Investors nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of the
Companies or the Investors of any breach or default under this Agreement, or
any waiver on the part of any such party of any provisions or conditions of
this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to the Companies or the Investors
shall be cumulative and not alternative.
Section 10.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by only one of the
parties hereto, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.
Section 10.9 Severability. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provisions; provided, that, no such severability shall
be effective if it materially changes the economic benefit of this Agreement to
any party.
Section 10.10 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 10.11 No Public Announcement. None of the Companies, the
Subsidiaries or the Investors shall make any press release, public announcement
or filing with any Governmental Entity concerning the transactions contemplated
by the Transaction Documents, except as and to the extent that any such party
shall be obligated to make any such disclosure by this Agreement or by law, and
then only after consultation with the other regarding the basis of such
obligation and the content of such press release, public announcement or filing
or as the parties shall mutually agree. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by the
Transaction Documents shall be in the form heretofore agreed to by the parties.
Section 10.12 Further Actions; Reasonable Efforts.
(a) Without waving any right to terminate this Agreement
under Section 8.1 above, upon the terms and subject to the conditions hereof,
each of the parties agrees to use its reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by the Transaction Documents,
including without limitation (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from governmental or regulatory
entities and the making of all necessary registrations and filings and the
taking of all steps as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals
57
or waivers from third parties, (iii) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging any of the
Transaction Documents or the consummation of the transactions contemplated
thereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity or any Restraint vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, the Transaction Documents.
(b) In connection with and without limiting the
foregoing, the parties shall use reasonable efforts (i) to take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Transaction Documents or any of the
other transactions contemplated hereby or thereby and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Transaction Documents or any other transaction contemplated thereby, to take
all action necessary to ensure that the transactions contemplated by the
Transaction Documents may be consummated as promptly as practicable on the
terms contemplated thereby and otherwise to minimize the effect of such statute
or regulation on the transactions contemplated by the Transaction Documents.
[SIGNATURE PAGES TO FOLLOW]
58
IN WITNESS WHEREOF, each of the undersigned has caused the foregoing
Agreement to be executed as of the date first above written.
COMPANIES:
PINNACLE HOLDINGS INC.
By:
----------------------------------------
Name:
Title:
PINNACLE TOWERS INC.
By:
----------------------------------------
Name:
Title:
INVESTORS:
FORTRESS REGISTERED INVESTMENT TRUST
By:
----------------------------------------
Name:
Title:
XXXXXXXXX CAPITAL PARTNERS L.P.
By its general partner, GCP, L.P.
By its general partner, GCP, LLC
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Member
59
XXXXXXXXX CAPITAL PARTNERS
(CAYMAN) L.P.
By its general partner, GCP, L.P.
By its general partner, GCP, LLC
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Member
XXXXXXXXX CAPITAL PARTNERS
(EXECUTIVES) L.P.
By its general partner, GCP, L.P.
By its general partner, GCP, LLC
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Member
GREENHILL CAPITAL L.P.
By its general partner, GCP, L.P.
By its general partner, GCP, LLC
By:
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Member
60
COMPANIES' DISCLOSURE SCHEDULE
61
EXHIBIT A
PINNACLE HOLDINGS INC.
--------------
INVESTOR AGREEMENT
--------------
Dated as of [Closing Date], 2002(1)
---------
(1) The Closing Date under the Securities Purchase Agreement.
INVESTOR AGREEMENT
OF
PINNACLE HOLDINGS INC.
--------------
THIS INVESTOR AGREEMENT (this "Agreement") is made as of
[Closing Date](2), 2002, by and among (a) Pinnacle Holdings Inc., a Delaware
corporation (the "Company"), (b) Fortress Registered Investment Trust, a
Delaware business trust ("Fortress"), and Xxxxxxxxx Capital Partners L.P., a
Delaware limited partnership, and its related partnerships identified on the
signature pages hereto (collectively, "Greenhill") [and any other parties
identified on the signature pages hereof as "Investors"](3), and [(c) the
parties identified on the signature pages hereof as "Electing Noteholders"](4).
Fortress, Greenhill [and any such other parties](5), including without
limitation any "Electing Noteholders, are referred to herein individually as an
"Investor" and collectively referred to herein as the "Investors". The Company
is not a party to Articles VI and VII of this Agreement. Certain capitalized
terms used in this Agreement are defined in Article I hereof and those
capitalized terms not otherwise defined shall have the meanings ascribed to
such terms in the Securities Purchase Agreement (as hereinafter defined).
References to sections shall be to sections of this Agreement.
WHEREAS, pursuant to a plan of reorganization contemplated by
the Securities Purchase Agreement, as of the date of this Agreement, the
Company is issuing to the Investors shares of new common stock of the Company,
par value $0.01 per share (the "Common Stock"); and
WHEREAS, in order to induce the Investors to complete the
transactions contemplated by the Securities Purchase Agreement, the corporate
predecessor of Pinnacle agreed to grant to the Investors registration,
preemptive, governance and certain other rights on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements set forth herein and for good and valuable
consideration, the
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(2) The Closing Date under the Securities Purchase Agreement.
(3) To be inserted if there are any assignees of Fortress or Greenhill
that become Investors.
(4) To be inserted if there are any Electing Noteholders.
(5) To be inserted if there are any parties other than Fortress and
Greenhill that become Investors.
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the terms defined other than
in this Article I shall have the meanings indicated and the following terms
shall have the following meanings:
(a) "Affiliate" shall have the meaning set
forth in Rule 12b-2 promulgated under the Exchange Act; provided that no
Stockholder shall be deemed an Affiliate of any other Stockholder solely by
reason of any investment in the Company.
(b) "Associate" shall have the meaning set
forth in Rule 12b-2 promulgated under the Exchange Act; provided that no
Stockholder shall be deemed an Associate of any other Stockholder solely by
reason of any investment in the Company.
(c) "Board" shall mean the board of directors
of the Company.
(d) "Capital Stock" shall mean and include (i)
any and all shares, interests, participations or other equivalents of or
interests in (however designated) corporate stock of any Person, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company and (iv) all equity or ownership
interests in any Person of any other type.
(e) "Commission" shall mean the United States
Securities and Exchange Commission or any successor agency.
(f) "Distribution in Kind" shall mean a
Transfer of shares of Common Stock to certain Permitted Transferees of an
Investor pursuant to a distribution that is made pro rata to such Permitted
Transferees in accordance with the respective partnership or limited liability
company agreement of such Investor without payment of additional consideration
therefor by such Permitted Transferees.
(g) "Effective Date" shall mean the date of
issuance of securities pursuant to the Bankruptcy Plan.
(h) "Electing Noteholder" shall mean any party
to this Agreement identified as an "Electing Noteholder" on the signature pages
of this Agreement.
(i) "Employee Stock Option Plan" shall mean the
Employee Stock Option Plan in the form attached to the Securities Purchase
Agreement as Exhibit F; provided that no amendment thereof shall have been made
in a manner that is adverse
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in any economic respect to the rights of Electing Noteholders as set forth in
the form of this Agreement attached as Exhibit A to the Securities Purchase
Agreement as originally executed.
(j) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
(k) "Largest Holder" shall mean at any given
date (i) whichever, if either, of Fortress or Greenhill (in each case when
aggregated with their respective Permitted Transferees who are parties to this
Agreement) shall hold at such date in excess of 55% of the shares of Common
Stock held by them together or (ii) if clause (i) shall not apply, Fortress and
Greenhill acting jointly.
(l) "Permitted Transferee" shall mean, with
respect to each Stockholder, (A) any other Stockholder, (B) such Stockholder's
Affiliates and (C) in the case of any Stockholder, (i) any general or limited
partner of such Stockholder, (ii) any corporation, partnership, limited
liability company or other entity that is an Affiliate of such Stockholder or
any general or limited partner of such Stockholder (collectively, "Stockholder
Affiliates"), (iii) any investment funds managed directly or indirectly by such
Stockholder or any Stockholder Affiliates (a "Stockholder Fund"), (iv) any
general or limited partner of any Stockholder Fund, (v) any managing director,
general partner, director, limited partner, officer or employee of any
Stockholder Affiliate, or any spouse, lineal descendant, sibling, parent, heir,
executor, administrator, testamentary trustee, legatee or beneficiary of any of
the foregoing persons described in this clause (v) (collectively, "Stockholder
Associates") or (vi) any trust, the beneficiaries of which, or any corporation,
limited liability company or partnership, the stockholders, members or general
or limited partners of which consist solely of any one or more of such
Stockholder, any general or limited partner of such Stockholder, any
Stockholder Affiliates, any Stockholder Fund, any Stockholder Associates, their
spouses or their lineal descendants.
(m) "Person" shall mean any individual, firm,
corporation, partnership, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(n) "Pro Rata Portion" shall mean, with
reference to any Stockholder at any time, a fraction, the numerator of which is
the number shares represented by the Registrable Securities then issued and
outstanding and held by such Stockholder, and the denominator of which is the
aggregate number of shares represented by the Registrable Securities then
issued and outstanding and held by the Stockholders taken together.
(o) "Public Offering" shall mean a public
offering of equity securities of the Company pursuant to an effective
registration statement under the Securities Act, including a public offering in
which Investors are entitled to sell Common Stock pursuant to the terms of this
Agreement.
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(p) "Registrable Amount" shall mean 5% of the
then outstanding Registrable Securities.
(q) "Registrable Securities" shall mean (i) any
Common Stock issued to the Stockholders pursuant to the Plan, (ii) any Common
Stock issued upon exercise of the Warrants distributed pursuant to the Plan and
(iii) any Common Stock otherwise acquired by Stockholders. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (x) a registration statement registering such securities under
the Securities Act has been declared effective and such have been sold or
otherwise transferred by the holder thereof pursuant to such effective
registration statement, or (y) such securities are sold in accordance with Rule
144 (or any successor provision) promulgated under the Securities Act. Any
provision of this Agreement measuring ownership of a percentage of the
Registrable Securities of any Stockholder shall be deemed to include in the
numerator the Common Stock issuable upon exercise of the Warrants owned by such
Stockholder and in the denominator the Common Stock issuable upon exercise of
all then outstanding Warrants.
(r) "Securities Act" shall mean the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(s) "Securities Purchase Agreement" shall mean
the securities purchase agreement, dated as of April 25, 2002, by and among
Fortress, Xxxxxxxxx, the corporate predecessor of the Company and Pinnacle
Towers, Inc; provided, that no amendment thereof shall have been made in a
manner that is adverse in any economic respect to the rights of Electing
Noteholders as set forth in the form of this Agreement attached as Exhibit A to
the Securities Purchase Agreement as originally executed.
(t) "Stockholders" shall mean (i) the Investors
named on the signature pages hereto and (ii) each Permitted Transferee or Third
Party Transferee who becomes a party to or bound by the provisions of this
Agreement in accordance with the terms hereof, in the case of each Third Party
Transferee for so long as such person, together with its Permitted Transferees,
continues to hold at least 5% of the issued and outstanding shares of
Registrable Securities.
(u) "Transfer" means, with respect to any
Registrable Securities, (i) when used as a verb, to sell, assign, dispose of,
exchange, pledge, encumber, hypothecate or otherwise transfer such Registrable
Securities or any participation or interest therein, whether directly or
indirectly, or agree or commit to do any of the foregoing and (iii) when used
as a noun, a direct or indirect sale, assignment, disposition, exchange,
pledge, encumbrance, hypothecation, or other transfer of such Registrable
Securities or any participation or interest therein or any agreement or
commitment to do any of the foregoing.
(v) "Underwritten Offering" shall mean a sale
of securities of the Company to an underwriter or underwriters for reoffering
to the public.
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(w) "Voting Stock" shall mean common stock of
any class or classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote in the election of directors (or Persons
performing similar functions).
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
(a) Registration. At any time after the
Effective Date, each Stockholder (a "Requesting Stockholder") shall be entitled
to make a written request of the Company (a "Demand") for registration under
the Securities Act of an amount equal to or greater than the Registrable Amount
(a "Demand Registration") and thereupon the Company will, subject to the terms
of this Agreement, use its commercially reasonable efforts to effect the
registration under the Securities Act of:
(i) the Registrable Securities which
the Company has been so requested to register by the Requesting Stockholders
for disposition in accordance with the intended method of disposition stated in
such request;
(ii) all other Registrable Securities
which the Company has been requested to register pursuant to Section 2.1(b);
and
(iii) all shares of Common Stock which
the Company may elect to register in connection with any offering of
Registrable Securities pursuant to this Section 2.1, but subject to Section
2.1(g);
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof) of the Registrable Securities and the additional
Common Stock, if any, to be so registered.
(b) Demands. A Demand shall specify: (i) the
aggregate number of Registrable Securities requested to be registered in such
Demand Registration, (ii) the intended method of disposition in connection with
such Demand Registration, to the extent then known, and (iii) the identity of
the Requesting Stockholder or Stockholders. Within five days after receipt of a
Demand, the Company shall give written notice of such Demand to each other
Stockholder. Subject to Section 2.1(h), the Company shall include in such
registration all Registrable Securities with respect to which the Company has
received a written request for inclusion therein within ten days after the
Company's notice required by this paragraph has been given. Such written notice
shall comply with the requirements of a Demand as set forth in this Section
2.1(b).
(c) Number of Demands. Each Stockholder shall
be entitled to unlimited Demand Registrations for so long as it holds a
Registrable Amount.
(d) Effective Registration Statement. A Demand
Registration shall not be deemed to have been effected and shall not count as a
Demand (i) unless a
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registration statement with respect thereto has become effective and has
remained effective for a period of at least 60 days (or such shorter period in
which all Registrable Securities included in such registration have actually
been sold thereunder), (ii) if, after it has become effective, such
registration becomes subject to any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, or (iii) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied, other than by reason of some act or omission by
such Requesting Stockholders.
(e) Registration Statement Form. Demand
Registrations shall be on such appropriate registration form of the Commission
as shall be selected by the Requesting Stockholders and shall be reasonably
acceptable to the Company.
(f) Restrictions on Demand Registrations. The
Company shall not be obligated to (i) maintain the effectiveness of a
registration statement under the Securities Act, filed pursuant to a Demand
Registration, for a period longer than 60 days, or (ii) effect any Demand
Registration (A) within six months of a "firm commitment" underwritten
registration in which all Stockholder holding a Registrable Amount were given
"piggyback" rights pursuant to Section 2.2 (subject to Section 2.1(g) and at
least 50% of the number of Registrable Securities requested by such
Stockholders to be included in such registration were included, (B) within six
months of any other Demand Registration, or (C) if, in the Company's reasonable
judgment, it is not feasible for the Company to proceed with the Demand
Registration because of the unavailability of audited financial statements. In
addition, the Company shall be entitled to postpone (upon written notice to all
Stockholders) for up to 120 days the filing or the effectiveness of a
registration statement for a Demand Registration (but no more than twice in any
period of 12 consecutive months) if the Board determines in good faith and in
its reasonable judgment that the Demand Registration or the disclosure of
material, non-public information that the Company has a bona fide business
purpose for preserving as confidential. In the event of a postponement by the
Company of the filing or effectiveness of a registration statement for a Demand
Registration, the holders of a majority of Registrable Securities held by the
Requesting Stockholder(s) shall have the right to withdraw such Demand in
accordance with Section 2.4.
(g) Participation in Demand Registrations. The
Company shall not include any securities other than Registrable Securities in a
Demand Registration, except with the written consent of Stockholders
participating in such Demand Registration that hold a majority of the
Registrable Securities included in such Demand Registration. If, in connection
with a Demand Registration, any managing underwriter (or, if such Demand
Registration is not an underwritten offering, a nationally recognized
independent underwriter selected by Fortress and Xxxxxxxxx, reasonably
acceptable to the Company, and whose fees and expenses shall be borne solely by
the Company) advises the Company, in writing, that, in its opinion, the
inclusion of all of the securities, including securities of the Company that
are not Registrable Securities, sought to be registered in connection with such
Demand Registration would adversely affect the marketability of the Registrable
Securities sought to be sold pursuant thereto, then the Company shall include
in such registration statement only such securities as the
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Company is advised by such underwriter can be sold without such adverse effect
(the "Maximum Demand Number") as follows and in the following order of
priority: (i) first, up to the number of Registrable Securities requested to be
included in such registration by the Stockholders, which, in the opinion of the
underwriter can be sold without adversely affecting the marketability of the
offering, pro rata among such Stockholders requesting such registration on the
basis of the number of such securities requested to be included by such
Stockholders; (ii) second, securities the Company proposes to sell; and (iii)
third, all other securities of the Company duly requested to be included in
such registration statement, pro rata on the basis of the amount of such other
securities requested to be included or such other method determined by the
Company.
(h) Selection of Underwriters. At any time and
from time to time, the Investors may elect to have Registrable Securities sold
in an underwritten offering. Anytime that a Demand Registration involves an
underwritten offering, Fortress and Xxxxxxxxx may select the investment banker
or investment bankers and managers that will serve as lead and co-managing
underwriters with respect to the offering of such Registrable Securities,
subject to the consent of the Company, which shall not be unreasonably
withheld.
Section 2.2 Piggyback Registrations.
(a) Right to Piggyback. Subject to the terms
and conditions hereof, whenever the Company proposes to register any of its
securities under the Securities Act (other than a registration by the Company
on a registration statement on Form S-4 or a registration statement on Form S-8
or any successor form) (a "Piggyback Registration"), the Company shall give the
Stockholders prompt written notice thereof (but not less than ten Business Days
prior to the filing by the Company with the Commission of any registration
statement with respect thereto). Such notice (a "Piggyback Notice") shall
specify, at a minimum, the number of securities proposed to be registered, the
proposed date of filing of such registration statement with the Commission, the
proposed means of distribution, the proposed managing underwriter or
underwriters (if any and if known), and a good faith estimate by the Company of
the proposed minimum offering price of such securities. Upon the written
request of a Stockholder (a "Piggyback Seller") (which written request shall
specify the number of Registrable Securities then presently intended to be
disposed of by such Stockholder) given within ten days after such Piggyback
Notice is sent to such Stockholder, the Company, subject to the terms and
conditions of this Agreement, shall use its reasonable best efforts to cause
all such Registrable Securities held by Stockholders with respect to which the
Company has received such written requests for inclusion to be included in such
Piggyback Registration on the same terms and conditions as the Company's
securities being sold in such Piggyback Registration.
(b) Priority on Piggyback Registrations. If, in
connection with a Piggyback Registration, any managing underwriter (or, if such
Piggyback Registration is not an underwritten offering, a nationally recognized
independent underwriter selected by Fortress and Xxxxxxxxx, reasonably
acceptable to the Company, and whose fees and expenses shall be borne solely by
the Company) advises the Company, in writing, that, in
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its opinion, the inclusion of all the securities sought to be included in such
Piggyback Registration by the Company, by others who have sought to have shares
registered thereunder pursuant to rights to demand (other than pursuant to
so-called "piggyback" or other incidental or participation registration rights)
such registration (such demand rights being "Other Demand Rights" and such
Persons being "Other Demanding Sellers"), by the Piggyback Sellers and by any
other proposed sellers, as the case may be, would adversely affect the
marketability of the securities sought to be sold pursuant thereto, then the
Company shall include in the registration statement applicable to such
Piggyback Registration only such securities as the Company is so advised by
such underwriter can be sold without such an effect (the "Maximum Piggyback
Number"), as follows and in the following order of priority:
(i) if the Piggyback Registration
relates to an offering for the Company's own account, then (A) first, such
number of securities to be sold by the Company as the Company, in its
reasonable judgment and acting in good faith and in accordance with sound
financial practice, shall have determined, (B) second, Registrable Securities
of Piggyback Sellers, pro rata on the basis of the amount of such Registrable
Securities held by such Piggyback Sellers, and (C) third, other Common Stock
held by any other proposed sellers;
(ii) if the Piggyback Registration
relates to an offering other than for the Company's own account, then (A)
first, such number of securities sought to be registered by each Other
Demanding Seller, pro rata in proportion to the number of securities sought to
be registered by all such Other Demanding Sellers, (B) second, Registrable
Securities of Piggyback Sellers pro rata on the basis of the amount of such
Registrable Securities held by such Piggyback Sellers, and (C) third, other
Common Stock held by any other proposed sellers or to be sold by the Company.
(c) Terms of Underwriting. In connection with
any offering under this Section 2.2 involving an underwriting for the Company's
account, the Company shall not be required to include a holder's Registrable
Securities in the underwritten offering unless such holder accepts the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by the Company, provided that any such underwriting agreement includes
only customary terms and conditions.
(d) Withdrawal by the Company. If, at any time
after giving written notice of its intention to register any of its securities
as set forth in this Section 2.2 and prior to the time the registration
statement filed in connection with such registration is declared effective, the
Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to each
Stockholder and thereupon shall be relieved of its obligation to register any
Registrable Securities in connection with such particular withdrawn or
abandoned registration (but not from its obligation to pay the Registration
Expenses in connection therewith as provided herein); provided that
Stockholders may continue the registration as a Demand Registration pursuant to
the terms of Section 2.1.
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Section 2.3 Shelf Registration.
(a) Subject to Section 2.3(d), and further
subject to the availability of a Registration Statement on Form S-3 ("Form
S-3") to the Company, at any time after the Effective Date each of Fortress and
Xxxxxxxxx or any of their respective Permitted Transferees may by written
notice delivered to the Company (the "Shelf Notice") require the Company to
file as soon as practicable (but no later than 60 days after the date the Shelf
Notice is delivered), and to use commercially reasonable efforts to cause to be
declared effective by the SEC (within 90 days after such filing date), a Form
S-3 providing for an offering to be made on a continuous basis pursuant to Rule
415 under the Securities Act relating to the offer and sale, from time to time,
of the Registrable Securities beneficially owned by such Investor and the other
Stockholders holding a Registrable Amount who elect to participate therein as
provided in Section 2.3(b) in accordance with the plan and method of
distribution set forth in the prospectus included in such Form S-3 (the "Shelf
Registration Statement").
(b) Within five Business Days after receipt of
a Shelf Notice pursuant to Section 2.3(a), the Company will deliver written
notice thereof to each Stockholder. Each Stockholder may elect to participate
in the Shelf Registration Statement by delivering to the Company a written
request to so participate within ten days after the Shelf Notice is given to
any such Stockholders.
(c) Subject to Section 2.3(d), the Company will
use commercially reasonable efforts to keep the Shelf Registration Statement
continuously effective until the earlier of (i) one year after the Shelf
Registration Statement has been declared effective; and (ii) the date on which
all Registrable Securities covered by the Shelf Registration Statement have
been sold thereunder in accordance with the plan and method of distribution
disclosed in the prospectus included in the Shelf Registration Statement, or
otherwise.
(d) Notwithstanding anything to the contrary
contained in this Agreement, the Company shall be entitled, from time to time,
by providing written notice to the Stockholders who elected to participate in
the Shelf Registration Statement, to require such Stockholders to suspend the
use of the prospectus for sales of Registrable Securities under the Shelf
Registration Statement for a reasonable period of time not to exceed 60 days in
succession or 90 days in the aggregate in any 12 month period (a "Suspension
Period") if the Company shall determine that it is required to disclose in the
Shelf Registration Statement a financing, acquisition, corporate reorganization
or other similar corporate transaction or other material event or circumstance
affecting the Company or its securities, and that the disclosure of such
information at such time would be detrimental to the Company or its
stockholders. Immediately upon receipt of such notice, the Stockholders covered
by the Shelf Registration Statement shall suspend the use of the prospectus
until the requisite changes to the prospectus have been made as required below.
Any Suspension Period shall terminate at such time as the public disclosure of
such information is made. After the expiration of any Suspension Period and
without any further request from a Stockholder, the Company shall as promptly
as reasonably practicable prepare a post-effective amendment or supplement to
the Shelf Registration Statement or the prospectus, or any document
incorporated therein by reference, or file any other required document so that,
as thereafter delivered to
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purchasers of the Registrable Securities included therein, the prospectus will
not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Section 2.4 Withdrawal Rights. Any Stockholder having
notified or directed the Company to include any or all of its Registrable
Securities in a registration statement under the Securities Act shall have the
right to withdraw any such notice or direction with respect to any or all of
the Registrable Securities designated by it for registration by giving written
notice to such effect to the Company prior to the effective date of such
registration statement. In the event of any such withdrawal, the Company shall
not include such Registrable Securities in the applicable registration and such
Registrable Securities shall continue to be Registrable Securities for all
purposes of this Agreement. No such withdrawal shall affect the obligations of
the Company with respect to the Registrable Securities not so withdrawn;
provided, that, in the case of a Demand Registration, if such withdrawal shall
reduce the number of Registrable Securities sought to be included in such
registration below the Registrable Amount, then the Company shall as promptly
as practicable give each holder of Registrable Securities sought to be
registered notice to such effect and, within ten days following the mailing of
such notice, such holder of Registrable Securities still seeking registration
shall, by written notice to the Company, elect to register additional
Registrable Securities to satisfy the Registrable Amount or elect that such
registration statement not be filed or, if theretofore filed, be withdrawn.
During such ten day period, the Company shall not file such registration
statement if not theretofore filed or, if such registration statement has been
theretofore filed, the Company shall not seek, and shall use commercially
reasonable efforts to prevent, the effectiveness thereof. Any registration
statement withdrawn or not filed (a) in accordance with an election by the
Company, (b) in accordance with an election by the Requesting Stockholders in
the case of a Demand Registration or by Fortress or Xxxxxxxxx or their
respective Permitted Transferees with respect to a Shelf Registration
Statement, or (c) in accordance with an election by the Company subsequent to
the effectiveness of the applicable Demand registration statement because any
post-effective amendment or supplement to the applicable Demand registration
statement contains information regarding the Company which the Company deems
adverse to the Company, shall not be counted as a Demand.
Section 2.5 Holdback Agreements. Each Stockholder
agrees not to effect any public sale or distribution (including sales pursuant
to Rule 144) of equity securities of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, during the ten day
period prior to and the 120 day period following the date on which the Company
has notified the Stockholders that it, or in the case of a Demand Registration,
the Requesting Stockholders, intend to commence a public offering, Demand
Registration or Piggyback Registration (in each case, except as part of such
registration), or, in each case, a later date required by any underwriting
agreement with respect thereto.
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Section 2.6 Registration Procedures.
(a) Registration. If and whenever the Company
is required to use commercially reasonable efforts to effect the registration
of any Registrable Securities under the Securities Act as provided in Sections
2.1, 2.2, and 2.3 the Company shall as expeditiously as reasonably possible:
(i) prepare and file with the
Commission a registration statement to effect such registration and thereafter
use commercially reasonable efforts to cause such registration statement to
become and remain effective, pursuant to the terms of this agreement; provided
however that the Company may discontinue any registration of its securities
which are not Registrable Securities at any time prior to the effective date of
the registration statement relating thereto; provided further that before
filing such registration statement or any amendments thereto, the Company will
furnish to the counsel selected by the holders of Registrable Securities which
are to be included in such registration ("Selling Holders") copies of all such
documents proposed to be filed, which documents will be subject to the review
of such counsel, and such review to be conducted with reasonable promptness;
(ii) prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or (i) in the case of a registration pursuant to Section 2.1, the
expiration of 60 days after such registration statement becomes effective, or
(ii) in the case of a registration pursuant to Section 2.2, the expiration of
60 days after such registration statement becomes effective or (iii) in the
case of a registration pursuant to Section 2.3, the expiration of one year
after such registration statement becomes effective;
(iii) furnish to each Selling Holder and
each underwriter, if any, of the securities being sold by such Selling Holder
such number of conformed copies of such registration statement and of each
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents as such
Selling Holder and underwriter, if any, may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities
owned by such seller;
(iv) use commercially reasonable
efforts to register or qualify such Registrable Securities covered by such
registration statement under such other securities laws or blue sky laws of
such jurisdictions as any Selling Holder and any underwriter of the securities
being sold by such Selling Holder shall reasonably request, and take any other
action which may be reasonably necessary or advisable to enable such Selling
Holder and underwriter to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such Selling Holder, except that the
Company shall not
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for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction or to file a general
consent to service of process in any such jurisdiction;
(v) use commercially reasonable
efforts to cause such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if no such securities are so listed, use commercially reasonable efforts to
cause such Registrable Securities to be listed on the New York Stock Exchange,
the American Stock Exchange or the Nasdaq Stock Market ("Nasdaq");
(vi) use commercially reasonable
efforts to cause such Registrable Securities covered by such registration
statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the Selling Holder(s) thereof to
consummate the disposition of such Registrable Securities;
(vii) in connection with an underwritten
offering, obtain for each Selling Holder and underwriter:
(1) an opinion of counsel for
the Company, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such Selling Holder and underwriters, and
(2) a "comfort" letter (or,
in the case of any such Person which does not satisfy the conditions
for receipt of a "comfort" letter specified in Statement on Auditing
Standards No. 72, an "agreed upon procedures" letter) signed by the
independent public accountants who have certified the Company's
financial statements included in such registration statement;
(viii) promptly notify, in writing, each
Selling Holder and the underwriters, if any, of the following events:
(1) the filing of the
registration statement, the prospectus or any prospectus supplement
related thereto or post-effective amendment to the registration
statement, and, with respect to the registration statement or any
post-effective amendment thereto, when the same has become effective;
(2) any request by the
Commission for amendments or supplements to the registration statement
or the prospectus or for additional information;
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(3) the issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings by any
Person for that purpose; and
(4) the receipt by the
Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the
securities or blue sky laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose;
(ix) notify each Selling Holder, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and, at the request of any such seller, promptly prepare and furnish
to such seller a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing;
(x) make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
registration statement;
(xi) otherwise use commercially
reasonable efforts to comply with all applicable rules and regulations of the
Commission, and make available to Selling Holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
months, but not more than eighteen months, beginning with the first day of the
Company's first full quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;
(xii) use its reasonable best efforts to
assist Stockholders who made a request of the Company to provide for a third
party "market maker" for the Common Stock; provided, however, that the Company
shall not be required to serve as such "market maker"; and
(xiii) have appropriate officers of the
Company prepare and make presentations at any "road shows" and before analysts
and rating agencies, as the case may be, take other actions to obtain ratings
for any Registrable Securities (if they are eligible to be rated) and otherwise
use its reasonable best efforts to cooperate as reasonably requested by the
underwriters in the offering, marketing or selling of the Registrable
Securities.
The Company may require each Selling Holder and each
underwriter, if any, to furnish the Company in writing such information
regarding each Selling Holder or
13
underwriter and the distribution of such Registrable Securities as the Company
may from time to time reasonably request to complete or amend the information
required by the registration statement.
(b) Underwriting. Without limiting any of the
foregoing, in the event that the offering of Registrable Securities is to be
made by or through an underwriter, the Company shall enter into an underwriting
agreement with a managing underwriter or underwriters containing
representations, warranties, indemnities and agreements customarily included
(but not inconsistent with the agreements contained herein) by an issuer of
common stock in underwriting agreements with respect to offerings of common
stock for the account of, or on behalf of, such issuers. In connection with any
offering of Registrable Securities registered pursuant to this Agreement, the
Company shall (i) furnish to the underwriter, if any (or, if no underwriter,
the sellers of such Registrable Securities), unlegended certificates
representing ownership of the Registrable Securities being sold, in such
denominations as requested and (ii) instruct any transfer agent and registrar
of the Registrable Securities to release any stop transfer order with respect
thereto.
(c) Return of Prospectuses. Each Selling Holder
agrees that upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 2.6(a)(ix), such Selling Holder shall
forthwith discontinue such Selling Holder 's disposition of Registrable
Securities pursuant to the applicable registration statement and prospectus
relating thereto until such Selling Holder 's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.6(a)(ix) and, if
so directed by the Company, deliver to the Company, at the Company's expense,
all copies, other than permanent file copies, then in such Selling Holder 's
possession of the prospectus current at the time of receipt of such notice
relating to such Registrable Securities. In the event the Company shall give
such notice, any applicable 60 day period during which such registration
statement must remain effective pursuant to this Agreement shall be extended by
the number of days during the period from the date of giving of a notice
regarding the happening of an event of the kind described in Section 2.6(a)(ix)
to the date when all such Selling Holders shall receive such a supplemented or
amended prospectus and such prospectus shall have been filed with the
Commission.
Section 2.7 Registration Expenses. All expenses
incident to the Company's performance of, or compliance with, its obligations
under this Agreement including, without limitation, all registration and filing
fees, all fees and expenses of compliance with securities and "blue sky" laws,
all printing and copying expenses, all messenger and delivery expenses, all
fees and expenses of the Company's independent certified public accountants and
counsel (including, without limitation, with respect to "comfort" letters and
opinions) (collectively, the "Registration Expenses") shall be borne by the
Company. The Company will pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties, the expense of any annual audit and the expense of
any liability insurance) (collectively, "Internal Expenses") and the expenses
and fees for listing the securities to be registered on each securities
exchange and included in each established over-the-counter market on which
similar securities issued by the Company are then
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listed or traded. Each Selling Holder shall pay its portion of all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale of
such Selling Holder 's Registrable Securities pursuant to any registration.
Section 2.8 Indemnification.
(a) By the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each
Selling Holder, its officers, directors, employees, managers, partners and
agents and each Person who controls (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act) such Selling Holder or such
other indemnified Person from and against all losses, claims, damages,
liabilities and expenses (including reasonable expenses of investigation and
reasonable attorneys' fees and expenses) (collectively, the "Losses") caused
by, resulting from or relating to any untrue statement of a material fact
contained in any registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or any omission of a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
except insofar as the same are caused by any information furnished in writing
to the Company by such Selling Holder expressly for use therein or by such
Selling Holder 's failure to deliver a copy of a current prospectus or any
amendments or supplements thereto (which does not contain any such material
misstatements or omissions) after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering and without limiting any of the Company's other obligations under this
Agreement, the Company shall also indemnify such underwriters, their officers,
directors, employees and agents and each Person who controls (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act)
such underwriters or such other indemnified Person to the same extent as
provided above with respect to the indemnification (and exceptions thereto) of
the holders of Registrable Securities being sold.
(b) By the Selling Holders. In connection with
any registration statement in which a holder of Registrable Securities is
participating, each such Selling Holder will furnish to the Company in writing
information regarding such Selling Holder's ownership of Registrable Securities
and its intended method of distribution thereof and, to the extent permitted by
law, shall, severally and not jointly, indemnify the Company, its directors,
officers, employees and agents and each Person who controls (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act) the
Company or such other indemnified Person against all Losses caused by any
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that such untrue
statement or omission is caused by and contained in such information so
furnished in writing by such Selling Holder expressly for use therein;
provided, however, that each Selling Holder 's obligation to indemnify the
Company hereunder shall, to the extent more than one Selling Holder is subject
to the same indemnification obligation, be apportioned between each Selling
Holder based upon the
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net amount received by each Selling Holder from the sale of Registrable
Securities, as compared to the total net amount received by all of the Selling
Holders of Registrable Securities sold pursuant to such registration statement.
Notwithstanding the foregoing, no Selling Holder shall be liable to the Company
for amounts in excess of the lesser of (i) such apportionment and (ii) the
amount received by such holder in the offering giving rise to such liability.
(c) Notice. Any Person entitled to
indemnification hereunder shall give prompt written notice to the indemnifying
party of any claim with respect to which it seeks indemnification; provided,
however, the failure to give such notice shall not release the indemnifying
party from its obligation, except to the extent that the indemnifying party has
been materially prejudiced by such failure to provide such notice on a timely
basis.
(d) Defense of Actions. In any case in which
any such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not (so
long as it shall continue to have the right to defend, contest, litigate and
settle the matter in question in accordance with this paragraph) be liable to
such indemnified party hereunder for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation, supervision and monitoring (unless (i)
such indemnified party reasonably objects to such assumption on the grounds
that there may be defenses available to it which are different from or in
addition to the defenses available to such indemnifying party or (ii) the
indemnifying party shall have failed within a reasonable period of time to
assume such defense and the indemnified party is or is reasonably likely to be
prejudiced by such delay, in either event the indemnified party shall be
promptly reimbursed by the indemnifying party for the expenses incurred in
connection with retaining separate legal counsel). An indemnifying party shall
not be liable for any settlement of an action or claim effected without its
consent. The indemnifying party shall lose its right to defend, contest,
litigate and settle a matter if it shall fail to diligently contest such matter
(except to the extent settled in accordance with the next following sentence).
No matter shall be settled by an indemnifying party without the consent of the
indemnified party (which consent shall not be unreasonably withheld, it being
understood that the indemnified party shall not be deemed to be unreasonable in
withholding its consent if the proposed settlement imposes any obligation on
the indemnified party other than the payment of money).
(e) Survival. The indemnification provided for
under this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified Person and will survive
the transfer of the Registrable Securities and the termination of this
Agreement.
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(f) Contribution. If recovery is not available
under the foregoing indemnification provisions for any reason or reasons other
than as specified therein, any Person who would otherwise be entitled to
indemnification by the terms thereof shall nevertheless be entitled to
contribution with respect to any Losses with respect to which such Person would
be entitled to such indemnification but for such reason or reasons. In
determining the amount of contribution to which the respective Persons are
entitled, there shall be considered the Persons' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission, and
other equitable considerations appropriate under the circumstances. It is
hereby agreed that it would not necessarily be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation. Notwithstanding the
foregoing, no Investor shall be required to make a contribution in excess of
the net amount received by such holder from its sale of Registrable Securities
in connection with the offering that gave rise to the contribution obligation.
(g) Not less than five Business Days before the
expected filing date of each registration statement pursuant to this Agreement,
the Company shall notify each Stockholder who has timely provided the requisite
notice hereunder entitling the Stockholder to register Registrable Securities
in such registration statement of the information, documents and instruments
from such Stockholder that the Company or any underwriter reasonably requests
in connection with such registration statement, including, but not limited to a
questionnaire, custody agreement, power of attorney, lock-up letter and
underwriting agreement (the "Requested Information"). If the Company has not
received, on or before the second day before the expected filing date, the
Requested Information from such Stockholder, the Company may file the
Registration Statement without including Registrable Securities of such
Stockholder. The failure to so include in any registration statement the
Registrable Securities of a Stockholder (with regard to that registration
statement) shall not in and of itself result in any liability on the part of
the Company to such Stockholder.
ARTICLE III
PREEMPTIVE RIGHTS
Section 3.1 Preemptive Rights.
(a) Each of the Stockholders shall, until the
fifth anniversary of the Closing Date but only for so long as such Stockholder
owns at least 10% of the outstanding Registrable Securities (each a "Qualified
Stockholder"), have the right to purchase additional shares of Common Stock, or
securities convertible into or exchangeable for shares of Common Stock
(including without limitation, warrants, options or convertible stock or
debt)(any such securities so issued, "New Securities"), in a pro-rata amount
and on the same terms and conditions as are called for by each future issuance
(or as nearly as may be practicable in the event the Qualified Stockholders
17
cannot comply with such terms and conditions), in any issuance of securities by
the Company other than (i) issuances of securities described in Section 5.8 of
the Securities Purchase Agreement (including without limitation pursuant to the
Employee Stock Option Plan) or other securities issued to an employee, director
or bona fide consultant to the Company as compensation pursuant to a plan or
agreement that is approved by holders of a majority of the outstanding shares
of Common Stock, (ii) securities issued as consideration for a bona fide
business combination or acquisition of securities or other property, or (iii)
securities issued upon a conversion of or in exchange for securities issued by
the Company in full compliance with the preemptive rights of the Stockholders
set forth in this Section 3.1; provided, that such conversion occurred at the
sole option of the holder. For the purposes of this Section 3.1, the term
"pro-rata amount" shall mean such amount as will allow each Qualified
Stockholder to maintain its then existing percentage ownership of the Common
Stock on a fully diluted basis.
(b) The Company shall give each Qualified
Stockholder notice (an "Issuance Notice") of any proposed issuance by the
Company of any New Securities at least 10 days prior to the proposed issuance
date. The Issuance Notice shall specify the price at which such New Securities
are to be issued and the other material terms of the issuance. A Qualified
Stockholder may exercise its rights under this Section 3.1 by delivering notice
of its election to purchase New Securities to the Company within five Business
Days of receipt of the Issuance Notice. A delivery of such notice (which notice
shall specify the number (or amount) of shares of New Securities to be
purchased by the Stockholder submitting such notice, up to such Qualified
Stockholder's pro rata amount) by such Qualified Stockholder shall constitute a
binding agreement of such Stockholder to purchase, at the price and on the
terms specified in the Issuance Notice, the number of shares (or amount) of New
Securities specified in such Stockholder's notice. If, at the termination of
such five day-period, any Qualified Stockholder shall not have exercised its
rights to purchase any of such Stockholder's pro rata amount of such New
Securities, such Qualified Stockholder shall be deemed to have waived all of
its rights under this Section 3.1 with respect to the purchase of such New
Securities.
(c) The Company shall have 90 days from the
date of the Issuance Notice to consummate the proposed issuance of any or all
of such New Securities that the Qualified Stockholders have elected not to
purchase at the price and upon terms that are not materially less favorable to
the Company than those specified in the Issuance Notice, provided, that, if
such issuance is subject to regulatory approval, such 90 day period shall be
extended until the expiration of five Business Days after all such approvals
have been received, but in no event later than 180 days from the date of the
Issuance Notice. At the consummation of such issuance, the Company shall issue
certificates representing the New Securities to be purchased by each
Stockholder exercising preemptive rights pursuant to this Section 3.1
registered in the name of such Stockholder, against payment by such Stockholder
of the purchase price for such New Securities. If the Company proposes to issue
any class of New Securities after the time periods set forth herein, it shall
again comply with the procedures set forth in this Section 3.1.
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ARTICLE IV
MONITORING FEES
Section 4.1 Monitoring Fees. The Company shall pay to
Fortress and Xxxxxxxxx (on a pro-rata basis based on its initial share of the
Investment) an annual monitoring fee of $2.0 million (the "Monitoring Fee"), to
be paid quarterly in advance or as soon thereafter as permitted in accordance
with the next sentence hereof, for the period from the Closing Date until the
first anniversary thereof. In no event shall such monitoring fee be paid within
45 days before or after any dividend payment by the Company. The Monitoring Fee
shall constitute compensation for consulting and management advisory services
and analysis, as reasonably requested by the Company and provided by the
Investors with respect to (i) financial matters (including the raising of debt
or equity capital in private or public transactions), (ii) transaction
structures, (iii) acquisitions and dispositions of assets and subsidiaries,
(iv) mergers and other strategic alliances and decisions, and (v) the Company's
personnel, systems, and budgets. The Monitoring Fee and the provision of
services in connection therewith shall be renewable on an annual basis by the
vote of a majority of the Board that includes the vote of at least one director
who is not a Board designee of either Fortress or Xxxxxxxxx or an Affiliate or
Associate thereof or a member of the Company's management and who is not,
directly or indirectly, receiving compensation for such vote.
ARTICLE V
BOARD OF DIRECTORS
Section 5.1 Board.
(a) For so long as this Agreement is in effect,
each of the Stockholders shall vote all of the Voting Stock of the Company
owned or held of record by such Stockholder and take all other necessary action
so as to elect to the Board, and to continue in office, (i) the directors
designated by the Investors as set forth in Section 5.10 of the Securities
Purchase Agreement from immediately after the Closing until the first annual
meeting of shareholders of the Company following consummation of the Bankruptcy
Plan, which will be no earlier than May 1, 2003, and (ii) not more than nine
directors thereafter, which shall include those directors designated by the
Investors as set forth in Section 5.10 of the Securities Purchase Agreement.
The Company shall take all necessary or desirable action within its control to
give effect to the provisions of this Article V.
(b) Upon the Closing, Fortress shall be
entitled to designate three directors and Xxxxxxxxx shall be entitled to
designate two directors who will serve on the Board until the first annual
meeting of shareholders of the Company and whose names and titles are set forth
on Annex A hereto. Subsequently, so long as Fortress and
19
Xxxxxxxxx each remain an Investor under this Agreement, at the time of any
election of directors:
(i) in the case that the number of
directors that Fortress and Xxxxxxxxx are entitled to designate pursuant to
Section 5.10 of the Securities Purchase Agreement is an even number, each of
Fortress and Xxxxxxxxx shall be entitled to appoint the number of directors
equal to one half of such even number; and
(ii) in the case that the number of
directors that Fortress and Xxxxxxxxx are entitled to designate pursuant to
Section 5.10 of the Securities Purchase Agreement is an odd number, the
Investor holding the majority of the Common Stock held by Fortress and
Xxxxxxxxx collectively shall be entitled to appoint the number of directors
equal to one half of the next highest whole integer from such odd number and
the other Investor shall be entitled to elect the remaining number of
directors; provided, however, that in the event that neither Fortress nor
Xxxxxxxxx is the sole Largest Holder, they will each be entitled to appoint the
number of directors equal to one half of the next lowest whole integer from
such odd number and together be entitled to appoint an additional director
mutually agreed upon by both Investors.
(c) If an Investor notifies the other
Stockholders of its desire to remove, with or without cause, any director
previously designated by it, each Stockholder shall vote all of the shares of
Voting Stock of the Company owned or held by such Stockholder and take all
other necessary actions to cause the removal of any director designated by such
Investor pursuant to Section 5.1(a).
(d) In the event that any designee of any
Investor shall for any reason cease to serve as a member of the Board during
his term of office, the resulting vacancy on the Board will be filled by an
individual designated by such Investor.
Section 5.2 Actions. In addition to any other approval
requirements, the Company shall not, and shall not permit any of its
subsidiaries to, take any of the following actions after the date hereof
without first obtaining the unanimous approval of Fortress and Xxxxxxxxx:
(a) the approval and any modification of the
Company's annual budget;
(b) the hiring or termination of, and the
entering into or modification of any compensation arrangements or employment
agreement with an officer holding or prospectively holding either the chief
executive officer, the chief financial officer or the chief operating officer
positions;
(c) the sale, exchange, license or other
disposition of any of its real properties or other assets, other than in the
ordinary course of business or as contemplated in the annual budget approved in
accordance with 5.2(a);
20
(d) entering into any new joint ventures or
similar projects, other than in the ordinary course of business or as
contemplated in the annual budget approved in accordance with 5.2(a);
(e) entering into any new development projects,
other than in the ordinary course of business or as contemplated in the annual
budget approved in accordance with 5.2(a);
(f) the mortgage of any of its real properties
or other assets, other than in the ordinary course of business or as set forth
in the annual budget approved in accordance with Section 5.2(a); and
(g) entering into new capital or take out
commitments or increase in any existing capital or take out commitments, other
than as set forth in the annual budget approved in accordance with Section
5.2(a).
Any transactions between the Company and an Investor or an
Affiliate of an Investor shall, in addition to any other approval requirements,
require the approval of a majority of the directors other than directors
appointed by such Investor.
ARTICLE VI
RESTRICTIONS ON TRANSFER
Section 6.1 Restrictions on Transfer. Each Stockholder
agrees that it shall Transfer Registrable Securities only in compliance with,
and to the extent permitted by, Articles VI and VII and Sections 8.18 and 8.19.
Section 6.2 Exceptions to Restrictions. No Stockholder
shall Transfer any Registrable Securities for a period of two years following
the date of this Agreement, except as follows:
(a) any Transfer made with the consent of each
of Fortress and Xxxxxxxxx, which consent shall not be unreasonably withheld;
(b) any Transfer among Fortress, Xxxxxxxxx and
their respective Permitted Transferees;
(c) any Transfer from any Stockholder to one or
more of its respective Permitted Transferees;
(d) any Transfer of Registrable Securities in
accordance with Article VII hereof provided that, for the avoidance of doubt,
the exception referred to in this sub-section (d) shall not apply to the
Tag-Along Sale, Drag-Along Sale or Proposed Transfer itself;
21
(e) any bona fide pledge of the Registrable
Securities to a bank, financial institution or other lender;
(f) any transfer pursuant to Rule 144; or
(g) any transfer pursuant to a public offering.
The exceptions in clauses (a), (b), (c), (d) or (e) above are
subject to the condition that any transferee pursuant to such sub-sections
which is a Permitted Transferee, except with respect to a Distribution in Kind,
and any other transferee pursuant to such sub-section which upon completion of
such transfer will own at least 5% of the then outstanding shares of
Registrable Securities (each such transferee (other than a Permitted
Transferee) a "Third Party Transferee"), execute (or, in the case of clause (e)
above, that the pledging Stockholder use its reasonable efforts to cause the
pledgee to execute prior to any foreclosure of the shares so pledged) the
agreement referred to in Section 6.3. The provisions of this Agreement shall be
applied to the shares of Common Stock acquired by any Permitted Transferee or
Third Party Transferee of a Stockholder in the same manner and to the same
extent as such provisions were applicable to such shares of Common Stock in the
hands of such Stockholder. Any reference in this Agreement to the Stockholders
shall be deemed to include each Stockholder and its respective Permitted
Transferees and Third Party Transferees.
Each Stockholder agrees that it will not, directly or
indirectly, transfer any shares of Common Stock unless such transfer is made
(i) pursuant to an effective registration statement under the Securities Act
and is qualified under applicable state securities or blue sky laws or (ii)
without registration under the Securities Act and qualification under
applicable state securities or blue sky laws, as a result of the availability
of an exemption from registration and qualification under such laws, and such
Stockholder shall have furnished to the other Stockholders, with a copy to the
Company, a certificate to that effect; provided, however, that no certificate
or opinion of counsel is required to be delivered in connection with a transfer
of shares of Common Stock pursuant to Section 7.1 or 7.2.
Section 6.3 Binding Effect on Transferees. Prior to the
Transfer by a Stockholder of Registrable Securities to a Permitted Transferee
(other than a Distribution in Kind) or a Third Party Transferee, the
transferring Stockholder shall cause the transferee to execute (or, in the case
of an execution of a pledge, the pledging Stockholder shall use its reasonable
efforts to cause the pledgee to execute prior to any foreclosure of the shares
so pledged) an agreement on the same terms and conditions set forth herein,
providing that such transferee shall be bound by and shall fully comply with
the terms of this Agreement.
Section 6.4 Notifications Regarding Transfers. To the
extent that any Stockholder proposes a Transfer pursuant to Section 6.2, such
Stockholder shall provide notice ("Transfer Notification") to each of Fortress
and Greenhill at least ten Business Days prior to the proposed transfer date of
the number of shares of Common Stock proposed to be Transferred. In the event
that a proposed Transfer requires the approval
22
of Fortress and Greenhill pursuant to Section 6.2(a), Fortress and Greenhill
shall notify such Stockholder of whether the Transfer has been approved within
eight Business Days of receipt of a Transfer Notification; provided, however,
that Fortress and Greenhill shall be deemed to have approved such proposed
Transfer if they fail to notify such Stockholder by such date.
Section 6.5 Additional Purchases. Any Registrable
Securities, and shares of Common Stock generally, owned by a Stockholder on or
after the date of this Agreement shall be subject to terms and conditions of
this Agreement, including, without limitation Articles V, VI and VII and
Sections 8.18 and 8.19, to the extent applicable.
ARTICLE VII
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; RIGHT OF FIRST OFFER
Section 7.1 Tag-Along Rights.
(a) Notwithstanding anything in this Agreement
to the contrary, except in the case of (i) Transfers by a Stockholder to a
Permitted Transferee of such Stockholder, (ii) Transfers among Fortress,
Greenhill and their respective Permitted Transferees, (iii) Transfers where
rights are exercised pursuant to Section 7.2 or Section 7.4 and (iii) Transfers
pursuant to Article II or in connection with a sale pursuant to Rule 144 under
the Securities Act, each Stockholder shall refrain from effecting any Transfer
of Registrable Securities (a "Tag-Along Sale") unless, prior to the
consummation thereof, the other Stockholders who shall own at least the
Registrable Amount shall have been afforded the opportunity to join in such
Transfer on a pro rata basis, as provided in this Section 4.1 (each such
Stockholder, a "Tag-Along Person").
(b) Prior to consummation of such proposed
Transfer, the Stockholder proposing a transfer (the "Tag-Along Seller") shall
cause the person or group that proposes to acquire such shares (the "Proposed
Purchaser") to offer in writing (the "Tag-Along Offer") to purchase Registrable
Securities owned by the Tag-Along Person(s), such that the number of
Registrable Securities so offered to be purchased from the Tag-Along Person
shall be equal to the product obtained by multiplying the aggregate number of
Registrable Securities proposed to be purchased by the Proposed Purchaser by
such Tag-Along Person's Pro Rata Portion. In addition, the Tag-Along Offer
shall set forth the consideration for which the Tag-Along Sale is proposed to
be made and all other material terms and conditions of the Tag-Along Sale. If
the Tag-Along Offer is accepted by any Tag-Along Person, then the number of
Registrable Securities to be sold to the Proposed Purchaser by the Tag-Along
Seller shall be reduced by the aggregate number of Registrable Securities to be
purchased by the Proposed Purchaser from such Tag-Along Person(s) pursuant
thereto. The purchase from the Tag-Along Person(s) shall be made on the same
terms and conditions (including timing of receipt of consideration and choice
of consideration, if any) as the Proposed Purchaser shall have offered to
purchase Registrable Securities to be sold by the Tag-Along Seller.
23
(c) The Tag-Along Person(s) shall have five
Business Days from the date of receipt of the Tag-Along Offer (the "Tag-Along
Notice Period") during which to accept such Tag-Along Offer by written notice
to the Tag-Along Seller or a representative of the Tag-Along Seller designated
in the Tag-Along Offer, and the closing of such purchase shall occur within ten
days after such acceptance by all Tag-Along Person(s) or the expiration of the
Tag-Along Notice Period, which ever is sooner, or at such other time as the
Tag-Along Person(s), the Tag-Along Seller and the Proposed Purchaser may agree;
provided, however, that if any of the transactions contemplated by the
Tag-Along Offer are subject to regulatory approval such ten day period shall be
extended until the expiration of five Business Days after all such approvals
have been received, but in no event later than 180 days after delivery of the
Tag-Along Offer. Delivery of an acceptance of the Tag-Along Offer shall be
accompanied by the certificate(s) representing the Registrable Securities to be
included in the Tag-Along Sale, duly endorsed, together with all other
documents required to be executed in connection with such Tag-Along Sale, or if
such delivery is not permitted by applicable law, an unconditional agreement to
deliver such certificates pursuant to this Section 7.1 at the closing for such
Tag-Along Sale against delivery to such Stockholder of the consideration
therefor.
(d) Any Tag-Along Person which fails to accept
the purchase offer within the Tag-Along Notice Period shall be deemed to have
waived its rights under Section 7.1 with respect to the transfer of its
Registrable Securities pursuant to such Tag-Along Sale.
(e) Concurrently with the consummation of the
Tag-Along Sale, the Tag-Along Seller shall give notice thereof to the Tag-Along
Persons, shall remit to each of the Tag-Along Persons the total consideration
for the Registrable Securities of such Tag-Along Person transferred pursuant
thereto, with the cash portion of the purchase price paid by bank or certified
check and any non-cash portion to be delivered as promptly as possible and
promptly after the consummation of such Tag-Along Sale, furnish such other
evidence of the completion and time of completion of such transfer and the
terms thereof as may be reasonably requested by the Tag-Along Persons.
(f) Notwithstanding anything contained in this
Section 7.1, there shall be no liability on the part of the Tag-Along Seller to
the Tag-Along Persons (other than the obligation to return any certificates
evidencing Registrable Securities and any other documents required to be
executed in connection with such Tag-Along Sale) if the Tag-Along Sale is not
consummated for whatever reason. Whether to effect a Tag-Along Sale is in the
sole and absolute discretion of the Tag-Along Seller.
Section 7.2 Drag-Along Rights.
(a) If the Largest Holder (the "Drag-Along
Seller") proposes a Transfer of all Registrable Securities held by it,
including in connection with a sale or exchange, whether directly or pursuant
to a merger, consolidation or otherwise (a "Drag-Along Sale"), such Drag-Along
Seller may require all other Stockholders (the "Drag-Along Stockholders") to
sell all Registrable Securities ("Drag-Along Rights") then held
24
by such Stockholder, for the same consideration and otherwise on the same terms
and conditions (including timing of receipt of consideration and choice of
consideration, if any) as the sale by such Drag-Along Seller.
(b) The Drag-Along Seller shall provide written
notice of such Drag-Along Sale to the Drag-Along Stockholders (a "Drag-Along
Notice") not later than the 15th day prior to the proposed Drag-Along Sale. The
Drag-Along Notice shall identify the transferee, the consideration for which a
transfer is proposed to be made (the "Drag-Along Sale Price") and all other
material terms and conditions of the Drag-Along Sale. Subject to Section 7.2(d)
and Section 7.3, each Drag-Along Stockholder shall be required to participate
in the Drag-Along Sale on the terms and conditions set forth in the Drag-Along
Notice and to tender all its Registrable Securities as set forth below. The
price(s) payable in such transfer shall be the Drag-Along Sale Price. Not later
than the tenth Business Day following the date of the Drag-Along Notice (the
"Drag-Along Notice Period"), each of the Stockholders shall deliver to a
representative of the Drag-Along Seller designated in the Drag-Along Notice
certificates representing all the Registrable Securities beneficially owned and
held by such Stockholder, duly endorsed, together with all other documents
required to be executed in connection with such Drag-Along Sale, or if such
delivery is not permitted by applicable law, an unconditional agreement to
deliver such certificates pursuant to this Section 7.2 at the closing for such
Drag-Along Sale against delivery to such Stockholder of the consideration
therefor.
(c) The Drag-Along Seller shall have a period
of 90 days from the date of receipt of the Drag-Along Notice to consummate the
Drag-Along Sale on the terms and conditions set forth in such Drag-Along
Notice; provided, that if such Drag-Along Sale is subject to regulatory
approval, such 90 day period shall be extended until the expiration of five
Business Days after all such approvals have been received, but in no event
later than 180 days following the delivery of the Drag-Along Notice. If the
Drag-Along Sale shall not have been consummated during such period, the
Drag-Along Seller shall return to each of the Stockholders all certificates or
other evidence of title and ownership representing Registrable Securities that
such Stockholders delivered for transfer pursuant hereto, together with any
documents in the possession of the Drag-Along Seller executed by the other
Stockholders in connection with such proposed Transfer, and all the
restrictions on transfer contained in this Agreement or otherwise applicable at
such time with respect to Registrable Securities owned by the Stockholders
shall again be in effect.
(d) Concurrently with the consummation of the
Transfer of shares pursuant to this Section 7.2, the Drag-Along Seller shall
give notice thereof to all Stockholders, shall remit to each of the
Stockholders who have surrendered their certificates or other evidence of title
and ownership the total consideration (with the cash portion of the purchase
price paid by bank or certified check and any non-cash portion to be delivered
as promptly as possible and promptly after the consummation of such Drag-Along
Sale) for the Registrable Securities transferred pursuant hereto and promptly
after consummation of the Drag-Along Sale shall furnish such other evidence of
the completion and time of completion of such transfer and the terms thereof as
may be reasonably requested by such Stockholders.
25
Section 7.3 Additional Conditions to Tag-Along Sales and
Drag-Along Sales. Notwithstanding anything contained in Sections 7.1 or 7.2, the
rights and obligations of the Tag-Along Person or the Drag-Along Stockholders
(each an "Other Stockholder") to participate in a Tag-Along Sale pursuant to
Section 7.1 or a Drag-Along Sale pursuant to Section 7.2, are subject to the
following conditions:
(a) no Other Stockholder shall be obligated to
pay any expenses incurred in connection with any unconsummated Tag-Along Sale or
any consummated or unconsummated Drag-Along Sale, and each Tag-Along Person
shall be obligated to pay only its pro rata share (based on the number of shares
of Common Stock (including for such purposes the shares of Common Stock issuable
upon exercise of Registrable Securities) transferred) of expenses incurred in
connection with a consummated Tag-Along Sale to the extent such expenses are
incurred for the benefit of all Stockholders and are not otherwise paid by the
Company or another Person; and
(b) each Other Stockholder shall (i) make such
representations, warranties and covenants and enter into such definitive
agreements as are customary for transactions of the nature of the proposed
Transfer; provided that no Other Stockholder shall be required to provide any
representations or indemnities in connection with any Tag-Along Sale or
Drag-Along Sale other than representations and indemnities concerning such Other
Stockholder's title to the Registrable Securities free and clear of any
encumbrances, including actual or pending litigation, and its existence, power
and due authorization to enter into and consummate the Transfer without
contravention of any law or material agreement; provided further that any such
indemnity shall (as to such Other Stockholders) be expressly stated to be
several but not joint, (ii) benefit from all of the same provisions of the
definitive agreements as the Tag-Along Seller or Drag-Along Seller, as the case
may be, and (iii) be required to bear its proportionate share of any escrows,
holdbacks or adjustments in purchase price.
Section 7.4 Rights of First Offer.
(a) If any Stockholder (a "Proposing
Stockholder") proposes to transfer (each, a "Proposed Transfer") any of its
Registrable Securities (the "Offered Securities") to any Person, other than to a
Permitted Transferee or in a public offering or in a transfer in reliance on
Rule 144 (each, a "Third Party"), such Stockholder shall submit a written notice
(a "Notice of Proposed Transfer") to the other Stockholders holding more than
10% of the issued and outstanding Registrable Securities at that time (the
"Remaining Stockholders") describing the material terms and conditions of the
Proposed Transfer in reasonable detail, including, without limitation, the
proposed purchase price (the "Offer Price").
(b) Upon receipt of the Notice of Proposed
Transfer, each of the Remaining Stockholders shall have the primary right, but
not the obligation, for a period of three Business Days following receipt of the
Notice of Proposed Transfer (the "Primary Option Period"), to elect to purchase
at the Offer Price a portion of the Offered Securities equal to such Remaining
Stockholder's Pro Rata Portion (provided that, for the purposes of this Section
7.4(b), the denominator of the Pro Rata Portion shall be net of
26
the Registrable Securities held by the Proposing Stockholder), on the same terms
and conditions as are set forth in the Notice of Proposed Transfer. Within two
Business Days of the end of the Primary Option Period, the Proposing Stockholder
shall notify the Remaining Stockholders who exercised their rights during the
Primary Option Period (the "Second Round Notice") whether the Remaining
Stockholders have accepted all of the Offered Securities and, if not, shall set
forth the remaining number of shares of Offered Securities (the "Remaining
Securities"). Each Remaining Stockholder exercising its primary right shall also
have a secondary right, on the same terms as are set forth in the Notice of
Proposed Transfer, for a period of three Business Days from the receipt of the
Second Round Notice (the "Secondary Option Period"), to purchase any or all of
the Remaining Securities. If, however, there is more than one Remaining
Stockholder desiring to exercise secondary rights to purchase the Remaining
Securities and such Remaining Stockholders do not agree on the number of such
Remaining Securities to be purchased by each such Remaining Stockholder, then
each such Remaining Stockholder shall be entitled to purchase that proportion of
the Remaining Securities equal to the number of Registrable Securities owned by
such Remaining Stockholder divided by the total of all Registrable Securities
held by all of the Stockholders who exercised their rights during the Primary
Option Period. The primary and secondary rights of the Remaining Stockholders
set forth herein are exercisable in each case by delivery of a notice to the
Proposing Stockholder within the time periods specified herein.
(c) In the event that the Remaining Stockholders
exercise their rights to purchase all but not less than all of the Offered
Securities in accordance with Section 7.3(b), then the Proposing Stockholder
must sell the Offered Securities to the Remaining Stockholders. The Proposing
Stockholder shall notify such Remaining Stockholders of the portion of Offered
Securities to be sold to each such Remaining Stockholder (the "Allocation
Notice") within two Business Days of the end of the Secondary Option Period. The
Proposing Stockholder shall, and hereby covenants to, transfer the Offered
Securities to such Remaining Stockholders free and clear of any and all liens,
mortgages, pledges, security interests or other restrictions or encumbrances
against payment of the Offer Price. Each Remaining Stockholder which has
accepted Offered Securities shall purchase and pay, by bank of certified check
(in immediately available funds), for the Offered Securities set forth in the
Allocation Notice within 20 Business Days after the date of receipt of the
Allocation Notice; provided that if the Transfer of such Offered Securities is
subject to any prior regulatory approval, subject to Section 7.4(d), the time
period during which such transfer may be consummated shall be extended until the
expiration of five Business Days after all such approvals have been received.
(d) Upon the earlier to occur of (i) full
rejection of the Offered Stock by all Remaining Stockholders, (ii) the
expiration of the Primary Option Period and the Secondary Option Period without
Remaining Stockholders electing to purchase all of the Offered Stock following
the proper delivery of the Notice of Proposed Transfer and the Second Round
Notice or (iii) the failure to obtain any required consent or regulatory
approval for the purchase of all of the Offered Stock by the Remaining
Stockholders within 90 days of full acceptance of the Offered Stock, the Seller
shall have a 60 day period during which to effect a transfer of any or all of
the Offered Stock, subject to
27
Article VII and Section 7.1 hereof, on substantially the same or more favorable
(as to the Seller) terms and conditions as were set forth in the Offer Notice at
a price not less than 95% of the Offer Price, provided that, if the Transfer is
subject to regulatory approval, such 60 day period shall be extended until the
expiration of five Business Days after all such approvals shall have been
received, but in no event longer than 180 days following the Notice of Proposed
Transfer. If the Proposing Stockholder does not consummate the transfer of the
Offered Stock in accordance with the foregoing time limitations, then the right
of the Proposing Stockholder to effect the transfer of such Offered Stock
pursuant to Section 7.4 shall terminate and the Proposing Stockholder shall
again comply with the procedures set forth in this Section 7.4 with respect to
any proposed transfer of Common Stock to a Third Party.
(e) If any Stockholder does not purchase any of
the Offered Stock under Section 7.3 but wishes to sell shares of Common Stock
under Section 7.1 in the event that the Proposing Stockholder has made a
Tag-Along Offer, such Stockholder must deliver an acceptance of a Tag-Along
Offer pursuant to Section 7.1(b) simultaneously with declining such
Stockholder's right to purchase under this Section 7.3.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Headings. The heading in this Agreement are
for convenience of reference only and shall not control or effect the meaning or
construction of any provisions hereof.
Section 8.2 Entire Agreement. This Agreement constitutes
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, conditions or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof.
Section 8.3 Further Actions; Cooperation. Each of the
Stockholders agrees to use its reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable in connection
with the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, each of the Stockholders (i) acknowledges that the
Stockholders will prepare and file with the Commission filings under the
Exchange Act, including under Section 13(d) of the Exchange Act, relating to
their beneficial ownership of the Common Stock and (ii) agrees to use its
reasonable efforts to assist and cooperate with the other parties in promptly
preparing, reviewing and executing any such filings under the Exchange Act,
including any amendments thereto.
28
Section 8.4 Termination of Certain Rights. The rights
and obligations hereunder of each Stockholder will terminate with respect to
such Stockholder at such time when it no longer meets the definition of a
Stockholder under this Agreement; provided, however, that the provisions of
Section 2.8, the rights of any Investor with respect to breach of any provision
hereof, and any obligation accrued as of the date of termination shall survive
termination of this Agreement.
Section 8.5 Rule 144. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
(or, if it is not required to file such reports, it will, upon the request of
any holder of Registrable Securities, make publicly available other information
so long as necessary to permit sales pursuant to Rule 144 under the Securities
Act), and it will take such further reasonable action, to the extent required
from time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the reasonable request of any holder of Registrable Securities,
the Company will deliver to such holder a written statement as to whether it has
complied with such information and filing requirements.
Section 8.6 Notices. All notices, requests, consents and
other communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated on
the signature pages of this Agreement or in writing by such party to the other
parties:
If to the Company to:
Pinnacle Holdings Inc.
000 Xxxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Chief Executive Officer
If to Fortress Registered Investment Trust, to:
c/o Fortress Investment Group, LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
with a copy to:
29
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxx
If to Greenhill:
c/o Greenhill Capital Partners, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx
[Contact information of any other Investor]
All such notices, requests, consents and other communications shall be deemed to
have been given or made if and when delivered personally (including by overnight
courier) to the parties at the above addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
above (or at such other address or telecopy number for a party as shall be
specified by like notice). Any notice delivered by any party hereto to any other
party hereto shall also be delivered to each other party hereto simultaneously
with delivery to the first party receiving such notice.
Section 8.7 Applicable Law. The substantive laws of the
State of Delaware shall govern the interpretation, validity and performance of
the terms of this Agreement, without regard to conflicts of law doctrines. THE
PARTIES HERETO WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO DISPUTES
HEREUNDER.
Section 8.8 Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement, including any such provisions, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
30
Section 8.9 Successors and Assigns. Except as otherwise
provided herein, all the terms and provisions of this Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the respective
successors and assigns of the parties hereto. No Stockholder may assign any of
its rights hereunder to any Person other than a transferee that has complied in
all respects with the requirements of this Agreement (including, without
limitation, Section 6.3). If any transferee of any Stockholder shall acquire a
Registrable Amount of Registrable Securities, in any manner, other than pursuant
to a distribution in kind, a public sale or in a sale pursuant to Rule 144,
whether by operation of law or otherwise, such shares shall be held subject to
all of the terms of this Agreement, and by taking and holding such shares such
Person shall be entitled to receive the benefits of and be conclusively deemed
to have agreed to be bound by and to comply with all of the terms and provisions
of this Agreement.
Section 8.10 Amendments. This Agreement may not be
amended, modified or supplemented unless such amendment, modification or
supplement is in writing and signed by the Company and Stockholders holding a
majority of the Registrable Securities; provided, that, unless such amendment
shall have been requested by the lead managing underwriter in connection with a
registered public offering of the Common Stock, no amendment may adversely
affect the rights of any Stockholder that is not a party to such amendment.
Section 8.11 Waiver. Any waiver (express or implied) of
any default or breach of this Agreement shall not constitute a waiver of any
other or subsequent default or breach.
Section 8.12 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same Agreement.
Section 8.13 SUBMISSION TO JURISDICTION. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF DELAWARE AND OF THE UNITED STATES OF AMERICA IN EACH CASE IN NEW CASTLE
COUNTY, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS
FROM ANY THEREOF. EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF TO SUCH PARTY BY REGISTERED OR CERTIFIED MAIL
TO SUCH PARTY AT ITS ADDRESS SPECIFIED IN THIS ARTICLE VIII. THE PARITIES HERETO
HEREBY IRREVOCABLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENT, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
31
Section 8.14 Injunctive Relief. The Stockholders
acknowledge and agree that a violation of any of the terms of this Agreement
will cause the Stockholders irreparable injury for which an adequate remedy at
law is not available. Therefore, the Stockholders agree that each Stockholder
shall be entitled to, an injunction, restraining order or other equitable relief
from any court of competent jurisdiction, restraining any Stockholder from
committing any violations of the provisions of this Agreement. Notwithstanding
the foregoing or anything else to the contrary contained herein, the
Stockholders acknowledge and agree that specific performance or an injunction,
restraining order or similar equitable relief shall be available in connection
with a violation of any restriction on the Transfer of Registrable Securities,
including, without limitation, restrictions contained in Articles VI and VII,
only insofar as such equitable relief causes or enforces a Transfer of
Registrable Securities, and does not result in an enjoinder or rescission of an
otherwise effective transfer, and that any relief beyond such equitable relief
shall consist only of monetary damages. The Stockholders acknowledge that the
preceding sentence is intended to ensure compliance with the requirement of
Section 856(a)(2) of the Internal Revenue Code of 1986, as amended, that the
shares of stock of a real estate investment trust be transferable.
Section 8.15 Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 8.16 Recapitalizations, Exchanges, Etc. Affecting
the shares of Common Stock; New Issuances. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to Registrable
Securities and to any and all equity or debt securities of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets, or otherwise) which may be issued in respect of, in exchange for, or in
substitution of, such Registrable Securities and shall be appropriately adjusted
for any stock dividends, splits, reverse splits, combinations,
reclassifications, recapitalizations, reorganizations and the like occurring
after the date hereof.
Section 8.17 Termination. Upon the mutual consent of all
of the parties hereto or at such earlier time as each of the Stockholders and
their respective Permitted Transferees ceases to collectively beneficially own
at least 5% of the issued and outstanding Registrable Securities, the terms of
this Agreement (except for Section 2.8, Section 8.5 and this Section 8.17),
shall terminate, and be of no further force and effect.
Section 8.18 Legends.
(a) In addition to any other legend that may be
required, each certificate for Common Stock issued to any Stockholder shall bear
a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY FOREIGN OR STATE SECURITIES LAWS
AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH.
THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
32
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE INVESTOR
AGREEMENT DATED AS OF [DATE], 2002, COPIES OF WHICH MAY BE
OBTAINED UPON REQUEST FROM PINNACLE HOLDINGS INC. OR ANY
SUCCESSOR THERETO.
(b) If any shares of Common Stock are registered
under the Securities Act, then the Company, upon the written request of the
holder thereof, shall issue to such holder a new certificate evidencing such
shares of Common Stock without the first sentence of the legend set forth above
endorsed thereon. If any shares of Common Stock cease to be subject to any and
all restrictions on transfer set forth in this Agreement, the Company, upon the
request of the written holder thereof, shall issue to such holder a new
certificate evidencing such shares of Common Stock without the second sentence
of the legend set forth above endorsed thereon.
Section 8.19 Record of Registrable Securities Ownership.
In order to properly give effect to the provisions of this Agreement, the
Company shall, and shall cause any transfer agent to, maintain a record of
transfers of Registrable Securities and shares of Common Stock generally to
Permitted Transferees and Third Party Transferees, so that the Company is able
to identify the Stockholders and the number of Registrable Securities, and
shares of Common Stock generally, held of record by each such Stockholder at any
time. This information shall be made available to any Stockholder as promptly as
possible following receipt by the Company of a written request by such
Stockholder.
33
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly as of the
date first above written.
COMPANY:
PINNACLE HOLDINGS INC.
By:
----------------------------------------
Name:
Title:
INVESTORS:
FORTRESS REGISTERED INVESTMENT TRUST
By:
----------------------------------------
Name:
Title:
XXXXXXXXX CAPITAL PARTNERS L.P.
By:
----------------------------------------
Name:
Title:
XXXXXXXXX CAPITAL PARTNERS
(CAYMAN) L.P.
By:
----------------------------------------
Name:
Title:
34
XXXXXXXXX CAPITAL PARTNERS
(EXECUTIVES) L.P.
By:
----------------------------------------
Name:
Title:
GREENHILL CAPITAL L.P.
By:
----------------------------------------
Name:
Title:
[OTHER INVESTORS](6)
By:
----------------------------------------
Name:
Title:
[ELECTING NOTEHOLDERS](7)
By:
----------------------------------------
Name:
Title:
--------------
(6) To be inserted if there are any other Investors (other than Electing
Noteholders).
(7) To be inserted if there are any Electing Noteholders.
35
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
PINNACLE MERGER CORP
ARTICLE ONE
The name of the Corporation is Pinnacle Merger Corp
ARTICLE TWO
The address of the Corporation's registered office in the State of Delaware is
1013 Centre Road, in the City of Xxxxxxxxxx, Xxxxxx xx Xxx Xxxxxx 00000. The
name of its registered agent at such address is The Xxxxxxxx-Xxxx Corporation
System, Inc.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware ("Delaware Corporation Law").
ARTICLE FOUR
PART A. AUTHORIZED SHARES
1. NUMBER OF AUTHORIZED SHARES. The total number of
shares of capital stock which the Corporation has authority to issue is
50,000,000 shares, consisting of:
a. 45,000,000 shares of Common Stock, par value
$0.01 per share (the "Common Stock"); and
b. 5,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Preferred Stock").
Shares of Common Stock will have the rights, preferences and limitations
separately set forth below.
PART B. PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more series.
Subject to the Bankruptcy Code limitations described in Part C.1 of this Article
IV, the Board of Directors of the Corporation is hereby authorized to determine
and alter all rights, preferences, privileges, qualifications, limitations and
restrictions of any such series including, without limitation, voting rights
granted to or imposed upon any wholly unissued
series of Preferred Stock and the number of shares constituting any such series
and the designation thereof, and to increase or decrease (but not below the
number of shares of such series then outstanding) the number of shares of any
series after the issuance of shares of that series. If the number of shares of
any series is so decreased, then the shares constituting such reduction will
resume the status which such shares had prior to the adoption of the resolution
originally fixing the number of shares of such series.
PART C. COMMON STOCK
Except as otherwise provided in this Article FOUR or as otherwise required by
applicable law, all shares of Common Stock will be identical in all respects and
will entitle the holders of such shares to the same rights and privileges,
subject to the same qualifications, limitations and restrictions.
1. VOTING RIGHTS. The holders of Common Stock will be
entitled to vote in the election of directors and on all other matters submitted
to a vote of the Corporation's stockholders, with each holder of Common Stock
being entitled to one vote for each share of Common Stock held by such holder.
Pursuant to Chapter 11 of Title 11 of the United States Code, 11 U.S.C. xx.xx.
101-1330, as amended (the "Bankruptcy Code"), the Corporation shall not issue
any nonvoting equity securities to the extent prohibited by section 1123 of the
Bankruptcy Code as in effect on the effective date of the Reorganization Plan
dated [ ], 2002, as such Plan may be amended, supplemented or modified, from
time to time (the "Reorganization Plan"), and shall, at all times, provide, as
to the several classes of securities from time-to-time posessing voting power,
an appropriate distribution of power among such classes, including, in the case
of any class of equity securities having a preference over another class of
equity securities with respect to dividends, adequate provisions for the
election of directors representing such preferred class in the event of default
in the payment of such dividends consistent with the requirements of section
1123(a)(6) of the Bankruptcy Code; provided, however, that this Section 1 of
Part C (a) will have no further force and effect beyond that required under
section 1123 of the Bankruptcy Code, (b) will have such force and effect, if
any, only for so long as such section of the Bankruptcy Code is in effect and
applicable to the Corporation, and (c) in all events may be amended or
eliminated in accordance with such applicable law as from time to time may be in
effect.
2. REGISTRATION OF TRANSFERS. The Corporation will keep
at its principal office (or such other place as the Corporation reasonably
designates) a register for the registration of shares of Common Stock. Upon the
surrender at such place of any certificate representing shares of any class of
Common Stock with respect to all of which a transfer would satisfy all
requirements of Part D of Article FOUR, the Corporation will, at the request of
the registered holder of such certificate, execute and deliver a new certificate
or certificates in exchange therefor representing in the aggregate the number of
shares of the class represented by the surrendered certificate, and the
Corporation forthwith will cancel such surrendered certificate. Each such new
certificate will be registered in such name and will represent such number of
shares of such class as is requested by the holder
Ex. B-2
of the surrendered certificate (so long as the requirements of Part D of Article
FOUR are otherwise satisfied with respect to the Common Stock represented by
such certificate) and will be substantially identical in form to the surrendered
certificate. The issuance of new certificates will be made without charge to the
holders of the surrendered certificates for any issuance tax in respect thereof
or other cost incurred by the Corporation in connection with such issuance.
3. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder being
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of any class of Common Stock, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the holder is a
financial institution or other institutional investor then its own agreement
will be satisfactory) or, in the case of any such mutilation upon surrender of
such certificate, the Corporation will (at its expense) execute and deliver in
lieu of such certificate a new certificate of like kind representing the number
of shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
PART D. RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES
1. Definitions. For the purpose of this Part D of
Article FOUR and Article TWELVE, the following terms shall have the following
meanings (references to sections shall be to sections of this Part D of Article
FOUR):
"Aggregate Stock Ownership Limit" means not more than 9.9
percent of the aggregate value of the outstanding shares of any class
or series of Capital Stock of the Corporation. In applying this Part D
of Article FOUR, any questions as to value shall be resolved by the
Board of Directors of the Corporation in good faith, which
determination shall be conclusive for all purposes hereof.
"Beneficial Ownership" means ownership of Capital Stock by a
Person, whether the interest in the shares of Capital Stock is held
directly or indirectly (including indirect ownership through a
nominee), and shall include interests that would be treated as owned
through the application of Section 544 of the Code, as modified by
Section 856(h) of the Code. The terms "Beneficial Owner," "Beneficially
Owns" and "Beneficially Owned" shall have the correlative meanings.
"Business Day" means any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions
in New York City are authorized or required by law, regulation or
executive order to close.
"Capital Stock" means all classes or series of stock of the
Corporation, including, without limitation, Common Stock and Preferred
Stock.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Corporation, as amended, as that term is defined
in Section 104 of the DGCL.
"Charitable Beneficiary" means one or more beneficiaries of a
Trust as
Ex. B-3
determined pursuant to Section 3, provided that each such organization
must be described in Section 501(c)(3) of the Code and contributions to
each such organization must be eligible for deduction under each of
Sections 170(b)(1)(A), 2055 and 2522 of the Code.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time. References herein to particular sections of the Code
shall be deemed to include applicable successor provisions to such
sections.
"Constructive Ownership" means ownership of Capital Stock by a
Person, whether the interest in the shares of Capital Stock is held
directly or indirectly (including indirect ownership through a
nominee), and shall include interests that would be treated as owned
through the application of Section 318(a) of the Code, as modified by
Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
"Excepted Holder" means any Beneficial Owner or Constructive
Owner of the Corporation for whom an Excepted Holder Limit is created
by the Board of Directors pursuant to Section 2.7.
"Excepted Holder Limit" means, with respect to an Excepted
Holder, and provided that the affected Excepted Holder agrees to and
does comply with the requirements established by the Board of Directors
pursuant to Section 2.7, the percentage limit or limits established by
the Board of Directors for such Excepted Holder pursuant to Section
2.7.
"Initial Date" means the date upon which the Certificate of
Incorporation containing this Part D of Article FOUR becomes effective
in accordance with Delaware law.
"Market Price" on any date means, with respect to any class or
series of outstanding shares of Capital Stock, the Closing Price for
such Capital Stock on such date. The "Closing Price" means the last
sale price for such Capital Stock, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, for such Capital Stock, in either case as reported
in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NYSE or, if such
Capital Stock is not listed or admitted to trading on the NYSE, as
reported on the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which such Capital Stock is listed or admitted to trading
or, if such Capital Stock is not listed or admitted or trading on any
national securities exchange, the last quoted price, or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system
is no longer in use, the principal other automated quotation system
that may then be in use or, if such Capital Stock is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such
Capital Stock selected by the Board of Directors of
Ex. B-4
the Corporation or, in the event that no trading price is available for
such Capital Stock, the fair market value of the Capital Stock, as
determined in good faith by the Board of Directors of the Corporation.
"NYSE" means the New York Stock Exchange.
"Ownership Change" means an "ownership change" with respect to
the Corporation, as that term is used in Section 382(g) of the Code and
Treasury Regulations Section 1.382-2T(a)(1).
"Person" means an individual, corporation, partnership,
limited liability company, estate, trust (including a trust qualified
under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust
permanently set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, an association private
foundation within the meaning of Section 509(a) of the Code, joint
stock company or other entity, and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended.
"Prohibited Owner" means, with respect to any purported
Transfer, any Person who, but for the provisions of Section 2.1, would
directly or indirectly own, or Beneficially or Constructively Own,
shares of Capital Stock.
"REIT" means a real estate investment trust within the meaning
of Section 856 of the Code.
"Restriction Termination Date" means the first day after the
Initial Date on which the Board of Directors determines pursuant to
Article TWELVE of this Certificate of Incorporation that it is no
longer in the best interests of the Corporation to attempt to, or
continue to, qualify as a REIT, or that compliance with each of the
restrictions and limitations on Beneficial Ownership, Constructive
Ownership and Transfers of shares of Capital Stock as set forth herein
is no longer required.
"Section 382 Limit" means the ownership of any direct or
indirect interest in Capital Stock that would cause a Person to be a
"5-percent shareholder" of the Corporation within the meaning of
Treasury Regulations Section 1.382-2T(g)(1)(i) or (ii). For this
purpose, whether a Person would be a "5-percent shareholder" shall be
determined (v) without giving effect to the following provisions:
Treasury Regulations Sections 1.382-2T(g)(2), 1.382-2T(g)(3),
1.382-2T(h)(2)(iii) and 1.382-2T(h)(6)(iii), (w) by treating every
Person which owns Capital Stock, whether directly or by attribution, as
directly owning such Capital Stock notwithstanding any further
attribution of such Capital Stock to other Persons and notwithstanding
Treasury Regulations Section 1.382-2T(h)(2)(i)(A), (x) by substituting
the term "Person" in place of "individual" in Treasury Regulations
Section 1.382-2T(g)(1)(i), (y) by taking into account ownership of
Stock at any time during the "testing period" as defined in Treasury
Regulations Section 1.382-2T(d)(1), and (z) by treating each day during
the testing period as if it were a "testing date" as defined in
Treasury Regulations Section 1.382-2(a)(4).
Ex. B-5
"Transfer" means any issuance, redemption, sale, distribution,
transfer, gift, assignment, devise or other disposition, as well as any
other event that causes any Person to acquire Beneficial Ownership or
Constructive Ownership, or a direct or indirect interest in any shares,
or any agreement to take any such actions or cause any such events, of
Capital Stock or the right to vote or receive dividends on Capital
Stock including (a) the granting or exercise of any option (or any
disposition of any option), (b) any disposition of any securities or
rights convertible into or exchangeable for Capital Stock or any
interest in Capital Stock or any exercise of any such conversion or
exchange right, and (c) Transfers of interests in other entities that
result in changes in Beneficial or Constructive Ownership or direct or
indirect ownership of Capital Stock, in each case, whether voluntary or
involuntary, whether owned of record, Constructively Owned or
Beneficially Owned and whether by operation of law or otherwise. The
terms "Transferring" and "Transferred" shall have the correlative
meanings.
"Treasury Regulations" means the regulations promulgated by
the Secretary of the Treasury under the Code. Any reference to a
particular Treasury Regulation or section or provision thereof shall be
deemed to also refer to any successor Regulation or section or
provision having similar effect.
"Trust" means any trust provided for in Part D of Article
FOUR.
"Trustee" means a Person unaffiliated with the Corporation and
a Prohibited Owner, that is appointed by the Corporation to serve as
trustee of a Trust.
2. RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK.
2.1 Ownership Limitations. During the period
commencing on the Initial Date and ending upon the Restriction
Termination Date:
a. Basic Restrictions.
(1) (A) No Person, other than an Excepted
Holder, shall Beneficially Own or directly or indirectly own shares of
Capital Stock equal to or in excess of either the Aggregate Stock
Ownership Limit or the Section 382 Limit, and (B) no Excepted Holder
shall Beneficially Own or directly or indirectly own shares of Capital
Stock in excess of any applicable Excepted Holder Limit for such
Excepted Holder.
(2) No Person shall Beneficially Own shares of
Capital Stock to the extent that such Beneficial Ownership of Capital
Stock would result in the Corporation being "closely held" within the
meaning of Section 856(h) of the Code (without regard to whether the
ownership interest is held during the last half of a taxable year), or
otherwise failing to qualify as a REIT.
(3) No Person shall Constructively Own shares of
Capital Stock to the extent that such Constructive Ownership would
result in the Corporation owning (actually or Constructively) an
interest in a tenant that
Ex. B-6
is described in Section 856(d)(2)(B) of the Code if the income derived
by the Corporation from such tenant would cause the Corporation to fail
to satisfy any of the gross income requirements of Section 856(c) of
the Code.
(4) No Person shall Transfer any Beneficial
Ownership or Constructive Ownership of, or any direct or indirect
interest in Capital Stock if, as a result of such Transfer, the Capital
Stock would be beneficially owned by less than 100 Persons (determined
under the principles of Section 856(a)(5) of the Code).
(5) No Person shall Transfer any Beneficial
Ownership or Constructive Ownership of, or any direct or indirect
interest in Capital Stock if, as a result of such Transfer, the
Corporation would undergo an Ownership Change.
b. Transfer in Trust.
(1) If any Transfer of shares of Capital Stock
(whether or not such Transfer is the result of a transaction entered
into through the facilities of the NYSE or any other national
securities exchange or automated inter-dealer quotation system) occurs
which, if effective, would result in any Person Beneficially Owning or
Constructively Owning, or otherwise having any direct or indirect
interest in shares of Capital Stock in violation of any provision of
Section 2.1(a): (i) then that number of shares of Capital Stock the
Beneficial or Constructive Ownership of, or direct or indirect interest
in, would otherwise cause such violation (rounded to the nearest whole
share) shall be automatically transferred to one or more Trusts for the
benefit of a Charitable Beneficiary, as described in Section 3,
effective as of the close of business on the Business Day prior to the
date of such Transfer, and such Person shall acquire no rights in such
shares; or (ii) if the transfer to the Trust or Trusts described in
paragraph 1 above would not be effective for any reason to prevent the
violation of Section 2.1(a), then the Transfer of that number of shares
of Capital Stock that otherwise would cause a violation of any
provision of Section 2.1(a) shall be void ab initio, and the intended
transferee shall acquire no rights in such shares of Capital Stock.
(2) In determining which shares of Capital Stock
are to be transferred to a Trust in accordance with this Section 2.1(b)
and Section 3, shares shall be so transferred to a Trust in such manner
as minimizes the aggregate value of the shares that are transferred to
the Trust (except to the extent that the Board of Directors determines
that the shares transferred to the Trust shall be those directly or
indirectly held or Beneficially Owned or Constructively Owned by a
Person or Persons that caused or contributed to the application of this
Section 2.1(b)), and to the extent not inconsistent therewith, on a pro
rata basis.
(3) To the extent that, upon a transfer of
shares of Capital Stock pursuant to this Section 2.1(b), a violation of
any provision of Section 2.1(a) would nonetheless be continuing (for
example where the ownership of
Ex. B-7
shares of Capital Stock by a single Trust would exceed the Section 382
Limit), then shares of Capital Stock shall be transferred to that
number of Trusts, each having a distinct Trustee and a Charitable
Beneficiary or Beneficiaries that are distinct from those of each other
Trust, such that there is no violation of any provision of Section
2.1(a).
2.2 Remedies for Breach. If the Board of
Directors of the Corporation or any duly authorized committee thereof
shall at any time determine in good faith that a Transfer or other
event has taken place that results in a violation of Section 2.1 or
that a Person intends to acquire or has attempted to acquire Beneficial
or Constructive Ownership of, or any direct or indirect interest in,
any shares of Capital Stock in violation of Section 2.1(a) (whether or
not such violation is intended), the Board of Directors or a committee
thereof shall take such action as it deems advisable to refuse to give
effect to or to prevent such Transfer or other event, including,
without limitation, causing the Corporation to redeem shares, refusing
to give effect to such Transfer on the books of the Corporation or
instituting proceedings to enjoin such Transfer or other event;
provided, however, that any Transfer or attempted Transfer or other
event in violation of Section 2.1(a) shall automatically result in the
transfer to the Trust described above, and, where applicable, such
Transfer (or other event) shall be void ab initio as provided above
irrespective of any action (or non-action) by the Board of Directors or
a committee thereof.
2.3 Notice of Restricted Transfer. Any Person
who acquires or attempts or intends to acquire Beneficial Ownership or
Constructive Ownership of, or any direct or indirect interest in any
shares of Capital Stock that will or may violate Section 2.1(a), and
any Person who would have owned shares of Capital Stock that resulted
in a transfer to the Trust pursuant to the provisions of Section
2.1(b), shall in each such case immediately give written notice to the
Corporation of such event, or in the case of such a proposed or
attempted transaction, give at least 15 days' prior written notice, and
shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of
such Transfer on the Corporation's status as a REIT.
2.4 Owners Required to Provide Information. From
the Initial Date and prior to the Restriction Termination Date:
a. every owner of more than five percent (or
such lower percentage as required by the Code or the Treasury
Regulations) of the outstanding shares of Capital Stock, within 30 days
after the end of each taxable year, shall give written notice to the
Corporation stating the name and address of such owner, the number of
shares of Capital Stock Beneficially Owned and a description of the
manner in which such shares are held. Each such owner shall provide to
the Corporation such additional information as the Corporation may
request in order to determine the effect, if any, of such Beneficial
Ownership on the Corporation's status as a REIT and to ensure
compliance with the Aggregate Stock Ownership Limit, and
Ex. B-8
b. each Person who is a Beneficial or
Constructive Owner of Capital Stock and each Person (including the
stockholder of record) who is holding Capital Stock for a Beneficial or
Constructive Owner shall provide to the Corporation such information as
the Corporation may request, in good faith, in order to determine the
Corporation's status as a REIT or for other tax or compliance reasons.
2.5 Remedies Not Limited. Subject to Article
TWELVE of this Certificate of Incorporation, nothing contained in this
Section 2 shall limit the authority of the Board of Directors of the
Corporation to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its
stockholders in preserving the Corporation's status as a REIT.
2.6 Ambiguity. In the case of an ambiguity in
the interpretation of any of the provisions of this Section 2, the
Board of Directors of the Corporation shall have the power to determine
the application of the provisions of this Part D with respect to any
situation based on the facts known to it. In the event that this Part D
requires an action by the Board of Directors and the Certificate of
Incorporation fails to provide specific guidance with respect to such
action, the Board of Directors shall have the power to determine the
action to be taken. Any references contained in this Part D to the
Corporation's Board of Directors shall include any duly authorized
committee thereof.
2.7 Exceptions.
a. The Board of Directors of the Corporation
may, subject to such terms, conditions, representations and
undertakings as it shall determine in its sole discretion, exempt a
Person from the application of any one or more of the provisions of
Section 2.1(a). Any violation or deemed violation of such
representations or undertakings (or other action which is contrary the
restrictions contained in Sections 2.1 through 2.6) will result in such
Person, and any Capital Stock that such person may Beneficially or
Constructively Own, or in which it may otherwise hold any direct or
indirect interest, being subject to the provisions of Section 2.1(b).
b. Prior to granting any exception pursuant to
Section 2.7(a), the Board of Directors of the Corporation may require a
ruling from the Internal Revenue Service, or an opinion of counsel, in
either case in form and substance satisfactory to the Board of
Directors in its sole discretion, as it may deem necessary or
advisable.
c. The Board of Directors may only reduce the
Excepted Holder Limit for an Excepted Holder (1) with the written
consent of such Excepted Holder at any time, or (2) pursuant to the
terms and conditions of the agreements and undertakings entered into
with such Excepted Holder in connection with the establishment of the
Excepted Holder Limit for that Excepted Holder. No Excepted Holder
Limit with respect to a class or series of Capital Stock shall be
reduced to a percentage equal to or less than the Aggregate Stock
Ownership Limit, or the Section 382 Limit, as applicable.
Ex. B-9
2.8 Legend. Except as provided below, each
certificate issued after the Initial Date for shares of Capital Stock
shall bear substantially the following legend:
The shares represented by this certificate
are subject to certain ownership limitations
and restrictions on transfer, as provided in
the Corporation's Certificate of
Incorporation, and subject to such terms,
conditions and exceptions as set forth
therein. A copy of the Certificate of
Incorporation may be obtained from the
Corporation without charge. A violation of
these provisions could result in the shares
represented hereby being transferred to a
trust for the benefit of a charitable
beneficiary, or in a purported sale or other
transfer of these shares being void.
Instead of the foregoing legend, the certificate may state
that the Corporation will furnish a full statement about certain
restrictions on transferability to a stockholder on request and without
charge.
3. TRANSFER OF CAPITAL STOCK IN TRUST.
3.1 Ownership in Trust. Upon any purported
Transfer or other event described in Section 2.1(b) that would result
in a transfer of shares of Capital Stock to a Trust, such shares of
Capital Stock shall be deemed to have been transferred to a Trustee as
trustee of such Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be deemed
to be effective as of the close of business on the Business Day prior
to the purported Transfer or other event that results in the transfer
to the Trust pursuant to Section 2.1(b). The Trustee shall be appointed
by the Board of Directors of the Corporation and shall be a Person
unaffiliated with the Corporation and any Prohibited Owner. Each
Charitable Beneficiary shall be designated by the Board of Directors to
the Corporation as provided in Section 3.6.
3.2 Status of Shares Held by the Trustee. Shares
of Capital Stock held by the Trustee shall be issued and outstanding
shares of Capital Stock of the Company. The Prohibited Owner shall have
no rights in the shares held by the Trustee. Except to the extent
expressly provided herein, the Prohibited Owner shall not benefit
economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends or other distributions, and shall not
possess any rights to vote or other rights attributable to the shares
held in the Trust.
3.3 Dividend and Voting Rights. The Trustee
shall have all voting rights and rights to dividends or other
distributions with respect to shares of Capital Stock held in the
Trust, which rights shall be exercised for the exclusive benefit of the
Charitable Beneficiary. Any dividend or other distribution paid prior
to the discovery by the Corporation that the shares of Capital Stock
have been transferred to the Trustee shall be paid by the recipient of
such dividend or distribution to the Trustee upon demand and any
dividend or other distribution authorized but unpaid shall be paid when
due to the Trustee. Any dividend or distribution so paid to the Trustee
shall be held in trust for the Charitable Beneficiary. The Prohibited
Owner
Ex. B-10
shall have no voting rights with respect to shares held in the Trust
and, subject to Delaware law, effective as of the date that the shares
of Capital Stock have been transferred to the Trustee, the Trustee
shall have the authority (at the Trustee's sole discretion) (i) to
rescind as void any vote cast by a Prohibited Owner prior to the
discovery by the Corporation that the shares of Capital Stock have been
for the benefit of the Charitable Beneficiary; provided, however, that
if the Corporation has already taken irreversible corporate action,
then the Trustee shall not have the authority to rescind and recast
such vote. Notwithstanding the provisions of this Part D, until the
Corporation has received notification that shares of Capital Stock have
been transferred into a Trust, the Corporation shall be entitled to
rely on its share transfer and other stockholder records for purposes
of preparing lists of stockholders entitled to vote at meetings,
determining the validity and authority of proxies and otherwise
conducting votes of stockholders.
3.4 Sale of Shares by Trustee. Within 90 days of
receiving notice from the Corporation that shares of Capital Stock have
been transferred to the Trust, the Trustee of the Trust shall sell the
shares held in the Trust to a person, designated by the Trustee, whose
ownership of the shares will not violate any of the ownership
restrictions set forth in Section 2.1(a). Upon such sale, the interest
of the Charitable Beneficiary in the shares sold shall terminate and
the Trustee shall distribute the net proceeds of the sale to the
Prohibited Owner and to the Charitable Beneficiary as provided in this
Section 3.4. The Prohibited Owner shall receive the lesser of (1) the
price paid by the Prohibited Owner for the shares or, if the Prohibited
Owner did not give value for the shares in connection with the event
causing the shares to be held in a Trust (e.g., in the case of a gift,
devise or other such transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2)
the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any net sales proceeds in
excess of the amount payable to the Prohibited Owner shall be
immediately paid to the Charitable Beneficiary. If, prior to the
discovery by the Corporation that shares of Capital Stock have been
transferred to the Trustee, such shares are sold by a Prohibited Owner,
then (i) such shares shall be deemed to have been sold on behalf of the
Trust and (ii) to the extent that the Prohibited Owner received an
amount for such shares that exceeds the amount that such Prohibited
Owner was entitled to receive pursuant to this Section 3.4, such excess
shall be paid to the Trustee upon demand.
3.5 Purchase Right in Stock Transferred to the
Trustee. Shares of Capital Stock transferred to the Trustee shall be
deemed to have been offered for sale to the Corporation, or its
designee, at a price per share equal to the lesser of (i) the price per
share in the transaction that resulted in such transfer to the Trust
(or, in the case of a devise or gift, the Market Price at the time of
such devise or gift) and (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall
have the right to accept such offer until the Trustee has sold the
shares held in the Trust pursuant to Section 3.4. Upon such a sale to
the Corporation, the interest of the Charitable Beneficiary in the
shares sold shall terminate and the Trustee shall distribute the net
proceeds of the sale to the Prohibited Owner.
Ex. B-11
3.6 Designation of Charitable Beneficiaries. By
written notice to the Trustee, the Corporation shall designate one or
more nonprofit organizations to be the Charitable Beneficiary of the
interest in any Trust created pursuant to this Section 3 such that (i)
the shares of Capital Stock held in the Trust would not violate the
restrictions set forth in Section 2.1(a) in the hands of such
Charitable Beneficiary, and (ii) each such organization must be
described in Section 501(c)(3) of the Code and Sections 170(b)(1)(A),
2055 and 2522 of the Code.
4. NYSE TRANSACTIONS. Nothing in this Part D shall
preclude the settlement of any transaction entered into through the facilities
of the NYSE or any other national securities exchange or automated inter-dealer
quotation system. The fact that the settlement of any transaction is so
permitted shall not negate the effect of any other provision of this Part D and
any transferee in such a transaction shall be subject to all of the provisions
and limitations set forth in this Part D.
5. ENFORCEMENT. The Corporation is authorized
specifically to seek equitable relief, including injunctive relief, to enforce
the provisions of this Part D.
6. NON-WAIVER. No delay or failure on the part of the
Corporation or the Board of Directors in exercising any right hereunder shall
operate as a waiver of any right of the Corporation or the Board of Directors,
as the case may be, except to the extent specifically waived in writing.
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, alter or repeal the Bylaws of the Corporation.
ARTICLE SEVEN
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. Unless otherwise
required by law, special meetings of stockholders, for any purpose or purposes,
may be called by either (a) the Chairman of the Board of Directors, if there is
one, (b) the Chief Executive Officer, if there is one, (c) the President or (d)
the Board of Directors. The books of the Corporation may be kept outside the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the Bylaws of the Corporation.
ARTICLE EIGHT
No director shall be personally liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) pursuant
to Section 174 of the Delaware Corporation Law or (d) for any
Ex. B-12
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article EIGHT by the stockholders of the
Corporation shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
ARTICLE NINE
The Corporation shall, to the fullest extent permitted by Section 145
of the Delaware Corporation Law, as the same may be amended and supplemented, or
by any successor thereto, indemnify any and all persons whom it shall have the
power to indemnify under such section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by such
section. The Corporation shall advance expenses to the fullest extent permitted
by said section. Such right to indemnification and advancement of expenses shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person. The indemnification and advancement of expenses provided for
herein shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise.
ARTICLE TEN
The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a director,
officer, employee, or agent of the Corporation against any liability asserted
against him or her and incurred by him or her or on his or her behalf in such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability.
ARTICLE ELEVEN
The number of directors which shall constitute the whole Board of
Directors of the Corporation shall initially be nine (9). The number of
directors which shall constitute the whole Board of Directors shall be
determined from time to time by resolution of the Board of Directors. The
directors shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors. The
initial Board of Directors of the Corporation shall consist of the following
individuals:
Class I Class II Class III
--------------------------------------- ---------------------------------- ----------------------------
Ex. B-13
The term of the initial Class I directors shall terminate on the date of the
[2003] annual meeting; the term of the initial Class II directors shall
terminate on the date of the [2004] annual meeting; and the term of the initial
Class III directors shall terminate on the date of the [2005] annual meeting. At
each succeeding annual meeting of stockholders beginning in [2003], successors
to the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. Directors need not be
stockholders. The directors shall be elected at the annual meeting of the
stockholders, except as otherwise provided in the Bylaws, each director elected
shall hold office until the third succeeding meeting next after his election and
until his successor is duly elected and qualified, or until his death or
retirement or until he resigns or is removed in the manner hereinafter provided.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of directors
at any annual or special meeting of stockholders. Such election shall be by
written ballot.
ARTICLE TWELVE
The Corporation shall seek to elect and maintain status as a REIT under
Sections 856-860 of the Code (as defined in Part D of Article FOUR). The Board
of Directors shall use its reasonable best efforts to cause the Corporation to
satisfy the requirements for qualification as a REIT under the Code, including,
but not limited to, the ownership of this outstanding stock, the nature of its
assets, the sources of its income, and the amount and timing of its
distributions to its stockholders; however, if the Board of Directors determines
that it is no longer in the best interests of the Corporation to continue to be
qualified as a REIT, the Board of Directors may revoke or otherwise terminate
the Corporation's REIT election pursuant to Section 856(g) of the Code. The
Board of Directors also may determine that compliance with any restriction or
limitation on stock ownership and transfers set forth in Part D of Article FOUR
is no longer required for REIT qualification.
ARTICLE THIRTEEN
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders, of this Corporation, as the case may
be, to be summoned in such manner as such court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders, or this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as a consequence of such compromise or arrangement, such
compromise or arrangement and
Ex. B-14
such reorganization shall, if sanctioned by the court to which such application
has been made, be binding upon all the stockholders or class of stockholders, of
this Corporation, as the case may be, and also upon all the creditors or class
of creditors, and/or upon this Corporation.
ARTICLE FOURTEEN
The Corporation expressly elects not to be governed by Section 203 of
the Delaware Corporation Law.
ARTICLE FIFTEEN
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
Ex. B-15
IN WITNESS WHEREOF, Pinnacle Merger Corp has caused this Certificate of
Incorporation to be signed by [ ], its [ ], this [ ] day of [ ], 2002.
PINNACLE MERGER CORP
By:
----------------------------
Ex. B-16
EXHIBIT C
BYLAWS
OF
PINNACLE MERGER CORP
(A DELAWARE CORPORATION)
TABLE OF CONTENTS
ARTICLE I OFFICES
Section 1. Registered Office......................................................................1
Section 2. Other Offices..........................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings.............................................................1
Section 2. Annual Meetings........................................................................1
Section 3. Notice of Annual Meetings..............................................................1
Section 4. Special Meetings.......................................................................1
Section 5. Notice of Special Meetings.............................................................1
Section 6. Nature of Business at Meetings of Stockholders.........................................1
Section 7. Quorum.................................................................................2
Section 8. Organization...........................................................................3
Section 9. Voting.................................................................................3
Section 10. No Action By Written Consent...........................................................3
Section 11. List of Stockholders...................................................................4
Section 12. Inspectors of Votes....................................................................4
ARTICLE III BOARD OF DIRECTORS
Section 1. Powers.................................................................................5
Section 2. Number, Qualification, and Term of Office..............................................5
Section 3. Resignations...........................................................................5
Section 4. Nomination of Directors................................................................5
Section 5. Removal of Directors...................................................................7
Section 6. Vacancies..............................................................................7
ARTICLE IV MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Place of Meetings......................................................................7
Section 2. Annual Meetings........................................................................7
Section 3. Regular Meetings.......................................................................7
Section 4. Special Meetings; Notice...............................................................7
Section 5. Quorum and Manner of Acting............................................................8
Section 6. Remuneration...........................................................................8
ARTICLE V COMMITTEES OF DIRECTORS
Section 1. Executive Committee; How Constituted and Powers........................................8
Section 2. Organization...........................................................................8
Section 3. Meetings...............................................................................9
Section 4. Quorum and Manner of Acting............................................................9
Section 5. Other Committees.......................................................................9
Section 6. Alternate Members of Committees.......................................................10
Section 7. Minutes of Committees.................................................................10
Ex. C-i
Section 8. Presence at Meetings by Means of Communications Equipment.............................10
ARTICLE VI GENERAL
Section 1. Actions Without a Meeting.............................................................10
Section 2. Presence at Meetings by Means of Communications Equipment.............................10
ARTICLE VII NOTICES
Section 1. Type of Notice........................................................................10
Section 2. Waiver of Notice......................................................................11
Section 3. When Notice Unnecessary...............................................................11
ARTICLE VIII OFFICERS
Section 1. General...............................................................................11
Section 2. Election or Appointment...............................................................11
Section 3. Salaries of Elected Officers..........................................................11
Section 4. Term..................................................................................11
Section 5. Chairman of the Board.................................................................12
Section 6. Chief Executive Officer...............................................................12
Section 7. President.............................................................................12
Section 8. Vice Presidents.......................................................................12
Section 9. Assistant Vice Presidents.............................................................13
Section 10. Secretary.............................................................................13
Section 11. Assistant Secretaries.................................................................13
Section 12. Treasurer.............................................................................13
Section 13. Assistant Treasurers..................................................................14
Section 14. Controller............................................................................14
Section 15. Assistant Controllers.................................................................14
ARTICLE IX INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other than Those
by or in the Right of the Corporation.................................................14
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the
Right of the Corporation..............................................................15
Section 3. Authorization of Indemnification......................................................15
Section 4. Good Faith Defined....................................................................16
Section 5. Indemnification by a Court............................................................16
Section 6. Expenses Payable in Advance...........................................................16
Section 7. Nonexclusivity of Indemnification and Advancement of Expenses.........................17
Section 8. Insurance.............................................................................17
Section 9. Certain Definitions...................................................................17
Section 10. Survival of Indemnification and Advancement of Expenses...............................18
Section 11. Limitation on Indemnification.........................................................18
Ex. C-ii
Section 12. Indemnification of Employees and Agents...............................................18
Section 13. Savings Provision.....................................................................18
ARTICLE X CERTIFICATES REPRESENTING STOCK
Section 1. Right to Certificate..................................................................18
Section 2. Facsimile Signatures..................................................................19
Section 3. New Certificates......................................................................19
Section 4. Transfers.............................................................................19
Section 5. Record Date...........................................................................19
Section 6. Registered Stockholders...............................................................20
ARTICLE XI GENERAL PROVISIONS
Section 1. Dividends.............................................................................20
Section 2. Reserves..............................................................................20
Section 3. Annual Statement......................................................................20
Section 4. Checks................................................................................20
Section 5. Fiscal Year...........................................................................20
Section 6. Corporate Seal........................................................................20
ARTICLE XII AMENDMENTS...........................................................................................21
Ex. C-iii
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices
at such other place or places, both within and without the State of Delaware, as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of the
stockholders for the election of directors shall be held at such time and place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at which
meeting the stockholders shall elect by a plurality vote a Board of Directors
and transact such other business as may properly be brought before the meeting.
Section 3. Notice of Annual Meetings. Written notice of the
annual meeting, stating the place, date, and hour of the meeting, shall be given
to each stockholder of record entitled to vote at such meeting not less than 10
or more than 60 days before the date of the meeting.
Section 4. Special Meetings. Unless otherwise required by law,
special meetings of stockholders, for any purpose or purposes, may be called by
either (i) the Chairman of the Board of Directors, if there is one, (ii) the
Chief Executive Officer, (iii) the President or (iv) the Board of Directors. The
ability of the stockholders to call a special meeting of stockholders is hereby
specifically denied.
Section 5. Notice of Special Meetings. Written notice of a
special meeting, stating the place, date, and hour of the meeting and the
purpose or purposes for which the meeting is called, shall be given to each
stockholder of record entitled to vote at such meeting not less than 10 or more
than 60 days before the date of the meeting.
Section 6. Nature of Business at Meetings of Stockholders. No
business may be transacted at an annual meeting of stockholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors (or
any duly authorized committee thereof), (b) otherwise properly brought before
the annual meeting by or at the direction of the Board of Directors (or any
duly authorized committee thereof) or (c) otherwise properly brought before the
annual meeting by any stockholder of the Company (i) who is a stockholder of
record on the date of the giving of the notice provided for in this Section 6
and on the record date for the determination of stockholders entitled to vote at
such annual meeting and (ii) who complies with the notice procedures set forth
in this Section 6.
In addition to any other applicable requirements, for business
to be properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to the
Secretary of the Company.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Company not less than sixty (60) days nor more than ninety (90) days prior to
the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure of the date of the annual meeting was made, whichever
first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of such stockholder,
(iii) the class or series and number of shares of capital stock of the Company
which are owned beneficially or of record by such stockholder, (iv) a
description of all arrangements or understandings between such stockholder and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting.
Once business has been properly brought before the annual
meeting in accordance with the procedures in this Section 6, nothing in this
Section 6 shall be deemed to preclude discussion by any stockholder of any such
business. If the Chairman of an annual meeting determines that business was not
properly brought before the annual meeting in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the business was not
properly brought before the meeting and such business shall not be transacted.
Section 7. Quorum. Except as otherwise provided by statute or
the Certificate of Incorporation, the holders of stock having a majority of the
voting power of the stock entitled to be voted thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at all meetings of the stockholders. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time without notice (other than
announcement at the meeting at which the adjournment is taken of the time and
place of the adjourned meeting) until a quorum shall be present or represented.
At such adjourned meeting at
Ex. C-2
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally notified. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
Section 8. Organization. At each meeting of the stockholders,
the Chairman of the Board or the Chief Executive Officer, determined as provided
in Article V of these Bylaws, or if those officers shall be absent therefrom,
another officer of the Corporation chosen as chairman by a majority of the votes
cast by the stockholders present in person or by proxy and entitled to vote
thereat, or if all the officers of the Corporation shall be absent therefrom, a
stockholder of record holding shares of stock of the Corporation so chosen,
shall act as chairman of the meeting and preside thereat. The Secretary or, if
he shall be absent from such meeting or shall be required pursuant to the
provisions of this Section 8 to act as chairman of such meeting, the person whom
the chairman of such meeting shall appoint shall act as secretary of such
meeting and keep the minutes thereof.
Section 9. Voting. Except as otherwise provided in the
Certificate of Incorporation, each stockholder shall, at each meeting of the
stockholders, be entitled to one vote in person or by proxy for each share of
stock of the Corporation held by him and registered in his name on the books of
the Corporation on the date fixed pursuant to the provisions of Section 5 of
Article X of these Bylaws as the record date for the determination of
stockholders who shall be entitled to notice of and to vote at such meeting.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held directly or indirectly by the Corporation, shall
not be entitled to vote. Any vote by stock of the Corporation may be given at
any meeting of the stockholders by the stockholder entitled thereto, in person
or by his proxy appointed by an instrument in writing subscribed by such
stockholder or by his attorney thereunto duly authorized and delivered to the
Secretary of the Corporation or to the secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from its
date, unless said proxy shall provide for a longer period. Each proxy shall be
revocable unless expressly provided therein to be irrevocable and unless
otherwise made irrevocable by law. At all meetings of the stockholders all
matters, except where other provision is made by law, the Certificate of
Incorporation, or these Bylaws, shall be decided by the vote of a majority of
the votes cast by the stockholders present in person or by proxy and entitled to
vote thereat, a quorum being present. Unless demanded by a stockholder of the
Corporation present in person or by proxy at any meeting of the stockholders and
entitled to vote thereat, or so directed by the chairman of the meeting, the
vote thereat on any question other than the election or removal of directors
need not be by written ballot. Upon a demand of any such stockholder for a vote
by written ballot on any question or at the direction of such chairman that a
vote by written ballot be taken on any question, such vote shall be taken by
written ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and shall state the
number of shares voted.
Section 10. Action By Written Consent. Unless otherwise provided
in the Certificate of Incorporation, any action required or permitted to be
taken at any annual or special meeting of stockholders of the Corporation, may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the
Ex. C-3
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
this Section 10 to the Corporation, written consents signed by a sufficient
number of holders to take action are delivered to the Corporation by delivery to
its registered office in the state of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and who, if the action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for such meeting had been the date that
written consents signed by a sufficient number of holders to take the action
were delivered to the Corporation as provided above in this section.
Section 11. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its stock
ledger, either directly or through another officer of the Corporation designated
by him or through a transfer agent appointed by the Board of Directors, to
prepare and make, at least 10 days before every meeting of the stockholders, a
complete list of the stockholders entitled to vote thereat, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days before said
meeting, at the principal executive offices of the Corporation. The list shall
also be produced and kept at the time and place of said meeting during the whole
time thereof, and may be inspected by any stockholder of record who shall be
present thereat. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, such list or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 12. Inspectors of Votes. At each meeting of the
stockholders, the chairman of such meeting may appoint two Inspectors of Votes
to act thereat, unless the Board of Directors shall have theretofore made such
appointments. Each Inspector of Votes so appointed shall first subscribe an oath
or affirmation faithfully to execute the duties of an Inspector of Votes at such
meeting with strict impartiality and according to the best of his ability. Such
Inspectors of Votes, if any, shall take charge of the ballots, if any, at such
meeting and, after the balloting thereat on any question, shall count the
ballots cast thereon and shall make a report in writing to the secretary of such
meeting of the results thereof. An Inspector of Votes need not be a stockholder
of the Corporation, and any officer of the Corporation may be an Inspector of
Votes on any question other than a vote for or against his election to any
position with the Corporation or on any other question in which he may be
directly interested.
Ex. C-4
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors, which shall have and may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute, the Certificate of Incorporation, or these Bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Number, Qualification, and Term of Office. The
number of directors which shall constitute the whole Board of Directors of the
reorganized Company shall initially be nine (9). [The initial Board of Directors
of the reorganized Company shall consist of the following individuals: [ ].] The
number of directors which shall constitute the whole Board of Directors shall be
determined from time to time by resolution of the Board of Directors. The
directors shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors. The
initial division of the Board of Directors into classes shall be made by the
decision of the affirmative vote of a majority of the entire Board of Directors.
The term of the initial Class I directors shall terminate on the date of the
[2003] annual meeting; the term of the initial Class II directors shall
terminate on the date of the [2004] annual meeting; and the term of the initial
Class III directors shall terminate on the date of the [2005] annual meeting. At
each succeeding annual meeting of stockholders beginning in [2003], successors
to the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. Directors need not be
stockholders. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Sections 5 and 6 of this Article III, and
each director elected shall hold office until the third succeeding meeting next
after his election and until his successor is duly elected and qualified, or
until his death or retirement or until he resigns or is removed in the manner
hereinafter provided. Directors shall be elected by a plurality of the votes of
the shares present in person or represented by proxy and entitled to vote on the
election of directors at any annual or special meeting of stockholders. Such
election shall be by written ballot.
Section 3. Resignations. Any director may resign at any time by
giving written notice of his resignation to the Corporation. Any such
resignation shall take effect at the time specified therein, or if the time when
it shall become effective shall not be specified therein, then it shall take
effect immediately upon its receipt by the Corporation. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 4. Nomination of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors of the Company, except as may be otherwise provided in the
Certificate of Incorporation with
Ex. C-5
respect to the right of holders of preferred stock of the Corporation to
nominate and elect a specified number of directors in certain circumstances.
Nominations of persons for election to the Board of Directors may be made at any
annual meeting of stockholders, or at any special meeting of stockholders called
for the purpose of electing directors, (a) by or at the direction of the Board
of Directors (or any duly authorized committee thereof) or (b) by any
stockholder of the Company (i) who is a stockholder of record on the date of the
giving of the notice provided for in this Section 4 and on the record date for
the determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section 4.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary of the Company.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Company (a) in the case of an annual meeting, not less than sixty (60) days nor
more than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within thirty (30) days
before or after such anniversary date, notice by the stockholder in order to be
timely must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth (10th) day following the day on which notice of
the date of the special meeting was mailed or public disclosure of the date of
the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the stockholder proposes to
nominate for election as a director (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the class or series and number of shares of capital stock of
the Company which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Company which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be
Ex. C-6
accompanied by a written consent of each proposed nominee to being named as a
nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the
Company unless nominated in accordance with the procedures set forth in this
Section 4. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective and such defective nomination
shall be disregarded.
Section 5. Removal of Directors. Any director may be removed,
but only for cause, at any time, by the affirmative vote by written ballot of a
80% in voting interest of the stockholders of record of the Corporation entitled
to vote, given at an annual meeting or at a special meeting of the stockholders
called for that purpose. The vacancy in the Board of Directors caused by any
such removal shall be filled by the stockholders at such meeting or, if not so
filled, by the Board of Directors as provided in Section 6 of this Article III.
Section 6. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
annual meeting next after their election and until their successors are elected
and qualified, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Place of Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 2. Annual Meetings. The first meeting of each newly
elected Board of Directors shall be held immediately following the annual
meeting of stockholders, and no notice of such meeting to the newly elected
directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held
immediately following the annual meeting of stockholders, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as shall
be specified in a written waiver signed by all of the directors.
Section 3. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
Section 4. Special Meetings; Notice. Special meetings of the
Board of Directors may be called by the Chairman of the Board, the Chief
Executive Officer, or the Secretary on 24 hours' notice to each director, either
personally or by telephone or by mail, telegraph, telex, cable, wireless, or
other form of recorded communication; special meetings shall be called by the
Chairman of the Board, the President, or the Secretary in like manner and on
Ex. C-7
like notice on the written request of two directors. Notice of any such meeting
need not be given to any director, however, if waived by him in writing or by
telegraph, telex, cable, wireless, or other form of recorded communication, or
if he shall be present at such meeting.
Section 5. Quorum and Manner of Acting. At all meetings of the
Board of Directors, a majority of the directors at the time in office (but not
less than one-third of the whole Board of Directors) shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, except as may be otherwise specifically provided by statute
or by the Certificate of Incorporation. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 6. Remuneration. Unless otherwise expressly provided by
resolution adopted by the Board of Directors, none of the directors shall, as
such, receive any stated remuneration for his services; but the Board of
Directors may at any time and from time to time by resolution provide that a
specified sum shall be paid to any director of the Corporation, either as his
annual remuneration as such director or member of any committee of the Board of
Directors or as remuneration for his attendance at each meeting of the Board of
Directors or any such committee. The Board of Directors may also likewise
provide that the Corporation shall reimburse each director for any expenses paid
by him on account of his attendance at any meeting. Nothing in this Section 6
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving remuneration therefor.
ARTICLE V
COMMITTEES OF DIRECTORS
Section 1. Executive Committee; How Constituted and Powers. The
Board of Directors may in its discretion, by resolution passed by a majority of
the whole Board of Directors, designate an Executive Committee consisting of one
or more of the directors of the Corporation. Subject to the provisions of
Section 141 of the General Corporation Law of the State of Delaware, the
Certificate of Incorporation, and these Bylaws, the Executive Committee shall
have and may exercise, when the Board of Directors is not in session, all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and shall have the power to authorize the seal
of the Corporation to be affixed to all papers which may require it; but the
Executive Committee shall not have the power to fill vacancies in the Board of
Directors, the Executive Committee, or any other committee of directors or to
elect or approve officers of the Corporation. The Executive Committee shall have
the power and authority to authorize the issuance of common stock and grant and
authorize options and other rights with respect to such issuance. The Board of
Directors shall have the power at any time, by resolution passed by a majority
of the whole Board of Directors, to change the membership of the Executive
Committee, to fill all vacancies in it, or to dissolve it, either with or
without cause.
Section 2. Organization. The Chairman of the Executive
Committee, to be selected by the Board of Directors, shall act as chairman at
all meetings of the Executive
Ex. C-8
Committee and the Secretary shall act as secretary thereof. In case of the
absence from any meeting of the Executive Committee of the Chairman of the
Executive Committee or the Secretary, the Executive Committee may appoint a
chairman or secretary, as the case may be, of the meeting.
Section 3. Meetings. Regular meetings of the Executive
Committee, of which no notice shall be necessary, may be held on such days and
at such places, within or without the State of Delaware, as shall be fixed by
resolution adopted by a majority of the Executive Committee and communicated in
writing to all its members. Special meetings of the Executive Committee shall be
held whenever called by the Chairman of the Executive Committee or a majority of
the members of the Executive Committee then in office. Notice of each special
meeting of the Executive Committee shall be given by mail, telegraph, telex,
cable, wireless, or other form of recorded communication or be delivered
personally or by telephone to each member of the Executive Committee not later
than the day before the day on which such meeting is to be held. Notice of any
such meeting need not be given to any member of the Executive Committee,
however, if waived by him in writing or by telegraph, telex, cable, wireless, or
other form of recorded communication, or if he shall be present at such meeting;
and any meeting of the Executive Committee shall be a legal meeting without any
notice thereof having been given, if all the members of the Executive Committee
shall be present thereat. Subject to the provisions of this Article V, the
Executive Committee, by resolution adopted by a majority of the whole Executive
Committee, shall fix its own rules of procedure.
Section 4. Quorum and Manner of Acting. A majority of the
Executive Committee shall constitute a quorum for the transaction of business,
and the act of a majority of those present at a meeting thereof at which a
quorum is present shall be the act of the Executive Committee.
Section 5. Other Committees. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of Directors,
designate one or more other committees consisting of one or more directors of
the Corporation, which, to the extent provided in said resolution or
resolutions, shall have and may exercise, subject to the provisions of Section
141 of the Delaware General Corporation Law, and the Certificate of
Incorporation and these Bylaws, the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
shall have the power to authorize the seal of the Corporation to be affixed to
all papers which may require it; but no such committee shall have the power to
fill vacancies in the Board of Directors, the Executive Committee, or any other
committee or in their respective membership, to appoint or remove officers of
the Corporation, or to authorize the issuance of shares of the capital stock of
the Corporation, except that such a committee may, to the extent provided in
said resolutions, grant and authorize options and other rights with respect to
the common stock of the Corporation pursuant to and in accordance with any plan
approved by the Board of Directors. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors. A majority of all the members of any such committee may
determine its action and fix the time and place of its meetings and specify what
notice thereof, if any, shall be given, unless the Board of Directors shall
otherwise provide. The Board of Directors shall have power to change the members
of any such committee at any time to fill vacancies, and to discharge any such
committee, either with or without cause, at any time.
Ex. C-9
Section 6. Alternate Members of Committees. The Board of
Directors may designate one or more directors as alternate members of the
Executive Committee or any other committee, who may replace any absent or
disqualified member at any meeting of the committee, or if none be so appointed
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Section 7. Minutes of Committees. Each committee shall keep
regular minutes of its meetings and proceedings and report the same to the Board
of Directors at the next meeting thereof.
Sectin 8. Presence at Meetings by Means of Communications
Equipment. Members of the Board of Directors, or of any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors
or such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting conducted pursuant to this Article V
shall constitute presence in person at such meeting.
ARTICLE VI
GENERAL
Section 1. Actions Without a Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board of Directors or committee, as the case may be, consent thereto in writing
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or the committee.
Section 2. Presence at Meetings by Means of Communications
Equipment. Members of the Board of Directors, or of any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors
or such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting conducted pursuant to this Section 2
shall constitute presence in person at such meeting.
ARTICLE VII
NOTICES
Section 1. Type of Notice. Whenever, under the provisions of any
applicable statute, the Certificate of Incorporation, or these Bylaws, notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, in person or
by mail, addressed to such director or stockholder, at his address as it appears
on the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given in any manner
permitted by Article IV hereof and shall be deemed to be given at the time when
Ex. C-10
first transmitted by the method of communication so permitted.
Section 2. Waiver of Notice. Whenever any notice is required to
be given under the provisions of any applicable statute, the Certificate of
Incorporation, or these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto, and transmission of a waiver
of notice by a director or stockholder by mail, telegraph, telex, cable,
wireless, or other form of recorded communication may constitute such a waiver.
Section 3. When Notice Unnecessary. Whenever, under the
provisions of the Delaware General Corporation Law, the Certificate of
Incorporation or these Bylaws, any notice is required to be given to any
stockholder, such notice need not be given to the stockholder if:
(a) notice of two consecutive annual meetings and all notices of
meetings held during the period between those annual meetings,
if any, or
(b) all (but in no event less than two) payments (if sent by first
class mail) of distributions or interest on securities during
a 12-months period,
have been mailed to that person, addressed at his address as shown on the
records of the Corporation, and have been returned undeliverable. Any action or
meeting taken or held without notice to such a person shall have the same force
and effect as if the notice had been duly given. If such a person delivers to
the Corporation a written notice setting forth his then current address, the
requirement that notice be given to that person shall be reinstated.
ARTICLE VIII
OFFICERS
Section 1. General. The elected officers of the Corporation
shall be a President and a Secretary. The Board of Directors may also elect or
appoint a Chairman of the Board, a Chief Executive Officer, one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, a Controller, one or
more Assistant Controllers, and such other officers and agents as may be deemed
necessary or advisable from time to time, all of whom shall also be officers.
Two or more offices may be held by the same person.
Section 2. Election or Appointment. The Board of Directors at
its annual meeting shall elect or appoint, as the case may be, the officers to
fill the positions designated in or pursuant to Section 1 of this Article VIII.
Officers of the Corporation may also be elected or appointed, as the case may
be, at any other time.
Section 3. Salaries of Elected Officers. The salaries of all
elected officers of the Corporation shall be fixed by the Board of Directors.
Section 4. Term. Each officer of the Corporation shall hold his
office until his successor is duly elected or appointed and qualified or until
his earlier resignation or
Ex. C-11
removal. Any officer may resign at any time upon written notice to the
Corporation. Any officer elected or appointed by the Board of Directors or the
Executive Committee may be removed at any time by the affirmative vote of a
majority of the whole Board of Directors. Any vacancy occurring in any office of
the Corporation by death, resignation, removal, or otherwise may be filled by
the Board of Directors.
Section 5. Chairman of the Board. The Chairman of the Board, if
any, shall be a member of the Board of Directors and shall preside when present
at all meetings of the Board of Directors. The Chairman of the Board shall
preside when present at all meetings of the stockholders of the Corporation
unless he delegates such authority to another officer of the Corporation. The
Chairman of the Board shall advise and counsel the Chief Executive Officer and
the other officers of the Corporation and shall exercise such powers and perform
such duties as shall be assigned to or required of him from time to time by the
Board of Directors.
Section 6. Chief Executive Officer. The Chief Executive Officer,
if any, shall have general supervision of the affairs of the Corporation and
general and active control of all its business. He shall preside, in the absence
of the Chairman of the Board, at all meetings of stockholders and at all
meetings of the Board of Directors. He shall see that all orders and resolutions
of the Board of Directors and the stockholders are carried into effect. He shall
have general authority to execute bonds, deeds and contracts in the name of the
Corporation and affix the corporate seal thereto; to sign stock certificates; to
cause the employment or appointment of such employees and agents of the
Corporation as the proper conduct of operations may require, and to fix their
compensation, subject to the provisions of these Bylaws; to remove or suspend
any employee or agent who shall have been employed or appointed under his
authority or under authority of an officer subordinate to him; to suspend for
cause, pending final action by the authority which shall have elected or
appointed him, any officer subordinate to the Chief Executive Officer; and, in
general, to exercise all the powers and authority usually appertaining to the
chief executive officer of a corporation, except as otherwise provided in these
Bylaws.
Section 7. President. The President shall be the Chief Operating
Officer of the Corporation, shall in the absence or disability of the Chief
Executive Officer perform the duties and exercise the powers of the Chief
Executive Officer, and shall have, subject to review and approval of the Chief
Executive Officer, if one is elected, responsibility for the general day-to-day
operations of the Corporation's properties and facilities and such other duties
and responsibilities as (i) are customarily possessed by a chief operating
officer of a corporation similar in size and line of business as the Corporation
and (ii) may be delegated to him from time to time by the Board of Directors or
the Chief Executive Officer of the Corporation.
Section 8. Vice Presidents. In the absence of the President or
in the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors or the President may from time to time
prescribe.
Ex. C-12
Section 9. Assistant Vice Presidents. In the absence of a Vice
President or in the event of his inability or refusal to act, the Assistant Vice
President (or in the event there shall be more than one, the Assistant Vice
Presidents in the order designated by the Board of Directors or in the absence
of any designation, then in the order of their appointment) shall perform the
duties and exercise the powers of that Vice President, and shall perform such
other duties and have such other powers as the Board of Directors, the
President, or the Vice President under whose supervision he is appointed may
from time to time prescribe.
Section 10. Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
Executive Committee or other standing committees when required. He shall give,
or cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or the President, under whose
supervision he shall be. He shall have custody of the corporate seal of the
Corporation, and he, or an Assistant Secretary, shall have authority to affix
the same to any instrument requiring it, and when so affixed, it may be attested
by his signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his signature. The Secretary shall
keep and account for all books, documents, papers, and records of the
Corporation, except those for which some other officer or agent is properly
accountable. He shall have authority to sign stock certificates and shall
generally perform all the duties usually appertaining to the office of the
secretary of a corporation.
Section 11. Assistant Secretaries. In the absence of the
Secretary or in the event of his inability or refusal to act, the Assistant
Secretary (or, if there shall be more than one, the Assistant Secretaries in the
order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Secretary and shall perform such other duties and
have such other powers as the Board of Directors, the President, or the
Secretary may from time to time prescribe.
Section 12. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. If required by the
Board of Directors, he shall give the Corporation a bond (which shall be renewed
every six years) in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in his possession or under
his control belonging to the Corporation. The Treasurer shall be under the
Ex. C-13
supervision of the Vice President in charge of finance if one is so designated,
and he shall perform such other duties as may be prescribed by the Board of
Directors, the President or any such Vice President in charge of finance.
Section 13. Assistant Treasurers. The Assistant Treasurer or
Assistant Treasurers shall assist the Treasurer, and in the absence of the
Treasurer or in the event of his inability or refusal to act, the Assistant
Treasurer (or in the event there shall be more than one, the Assistant
Treasurers in the order designated by the Board of Directors, or in the absence
of any designation, then in the order of their appointment) shall perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board of Directors, the President, or
the Treasurer may from time to time prescribe.
Section 14. Controller. The Controller, if one is appointed,
shall have supervision of the accounting practices of the Corporation and shall
prescribe the duties and powers of any other accounting personnel of the
Corporation. He shall cause to be maintained an adequate system of financial
control through a program of budgets and interpretive reports. He shall initiate
and enforce measures and procedures whereby the business of the Corporation
shall be conducted with the maximum efficiency and economy. If required, he
shall prepare a monthly report covering the operating results of the
Corporation. The Controller shall be under the supervision of the Vice President
in charge of finance, if one is so designated, and he shall perform such other
duties as may be prescribed by the Board of Directors, the President, or any
such Vice President in charge of finance.
Section 15. Assistant Controllers. The Assistant Controller or
Assistant Controllers shall assist the Controller, and in the absence of the
Controller or in the event of his inability or refusal to act, the Assistant
Controller (or, if there shall be more than one, the Assistant Controllers in
the order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Controller and perform such other duties and have
such other powers as the Board of Directors, the President, or the Controller
may from time to time prescribe.
ARTICLE IX
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
other than Those by or in the Right of the Corporation. Subject to Section 3 of
this Article IX, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
Ex. C-14
to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person reasonably believed to be in
or not to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this Article IX,
the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
under this Article IX (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article IX, as the case may be. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (ii) by a committee of such directors designated by a
majority vote of such directors, even though less than a quorum, or (iii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion or (iv) by the stockholders. Such
determination shall be made, with respect to former directors and officers, by
any person or persons having the authority to act on the matter on behalf of the
Corporation. To the extent, however, that a present or former director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
Ex. C-15
Section 4. Good Faith Defined. For purposes of any determination
under Section 3 of this Article IX, a person shall be deemed to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe such
person's conduct was unlawful, if such person's action is based on the records
or books of account of the Corporation or another enterprise, or on information
supplied to such person by the officers of the Corporation or another enterprise
in the course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or reports
made to the Corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Corporation or another enterprise. The term "another enterprise" as used in
this Section 4 shall mean any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise of which such person
is or was serving at the request of the Corporation as a director, officer,
employee or agent. The provisions of this Section 4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in Section 1 or
2 of this Article IX, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article IX,
and notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article IX. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article IX, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article IX nor the absence of any determination thereunder shall be a defense to
such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article IX.
Ex. C-16
Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article IX shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under the Certificate of Incorporation, any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article IX shall be made to the
fullest extent permitted by law. The provisions of this Article IX shall not be
deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article IX but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article IX.
Section 9. Certain Definitions. For purposes of this Article IX,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article IX with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article IX, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article IX.
Ex. C-17
Section 10. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article IX shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding
anything contained in this Article IX to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof
of this Article IX), the Corporation shall not be obligated to indemnify any
director or officer in connection with a proceeding (or part thereof) initiated
by such person unless such proceeding (or part thereof) was authorized or
consented to by the Board of Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Corporation similar to those conferred in this
Article IX to directors and officers of the Corporation.
Section 13. Savings Provision. If this Article IX or any portion
hereof shall be invalidated on any ground by a court of competent jurisdiction
the Corporation shall nevertheless indemnify each Corporate Functionary as to
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement with respect to any action, suit, proceeding, or investigation,
whether civil, criminal or administrative, including a grand jury proceeding or
action or suit brought by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article IX that shall not have been
invalidated.
ARTICLE X
CERTIFICATES REPRESENTING STOCK
Section 1. Right to Certificate. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed (by original
signature or by facsimile) by, or in the name of the Corporation by, the
Chairman of the Board, the Chief Executive Officer, the President, or a Vice
President and by the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences, and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations, or restrictions of
such preferences or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock; provided, that, except as otherwise provided in
Chapter 1 of Title 8 of the Delaware General Corporation Law, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock a statement that the Corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences, and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of
Ex. C-18
such preferences or rights.
Section 2. Facsimile Signatures. Any of or all the signatures on
the certificate may be facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
Section 3. New Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation and which is alleged to have
been lost, stolen, or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require (provided that if the holder is a financial institution or
other institutional investor then its own agreement will be satisfactory) or to
give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen, or destroyed or the issuance of
such new certificate.
Section 4. Transfers. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation, or authority to
transfer, it shall be the duty of the Corporation, subject to any proper
restrictions on transfer, to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
Section 5. Record Date. The Board of Directors may fix in
advance a date, not preceding the date on which the resolution fixing the record
date is adopted, and
(i) not more than 60 days nor less than 10 days preceding the date
of any meeting of stockholders, as a record date for the
determination of the stockholders entitled to notice of, and
to vote at, any such meeting and any adjournment thereof,
(ii) not more than 10 days after the date on which the resolution
fixing the record date is adopted, as a record date in
connection with obtaining a consent of the stockholders in
writing to corporate action without a meeting, or
(iii) not more than 60 days before the date for payment of any
dividend or distribution, or the date for the allotment of
rights, or the date when any change, or conversion or exchange
of capital stock shall go into effect, or the date on which
any other lawful action shall be taken, as the record date for
determining the stockholders entitled to receive payment of
any such dividend or distribution, or to receive any such
allotment of rights, or to exercise the rights in respect of
any such
Ex. C-19
change, conversion or exchange of capital stock or other
lawful action of the corporation,
and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, any such meeting and any adjournment thereof (provided, however,
that the Board of Directors may fix a new record date for an adjourned meeting),
or to give such consent, or to receive payment of such dividend or distribution,
or to receive such allotment of rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
Section 6. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not provided by the laws of the State of Delaware.
ARTICLE XI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, if any, subject to the provisions of the Certificate of
Incorporation, may be declared by the Board of Directors (but not any committee
thereof) at any regular meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation.
Section 2. Reserves. Before payment of any dividend, there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, thinks proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
Section 3. Annual Statement. The Board of Directors shall
present at each annual meeting, and at any special meeting of the stockholders
when called for by vote of the stockholders, a full and clear statement of the
business and condition of the Corporation.
Section 4. Checks. All checks or demands for money and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
prescribe.
Section 5. Fiscal Year. The fiscal year of the Corporation shall
be determined by the Board of Directors.
Section 6. Corporate Seal. The corporate seal shall have
inscribed thereon the
Ex. C-20
name of the Corporation, the year of its organization, and the word "Delaware."
The seal may be used by causing it or a facsimile thereof to be impressed,
affixed, reproduced, or otherwise.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended, or repealed or new Bylaws may be
adopted by the stockholders or by the Board of Directors at any regular meeting
of the stockholders or the Board of Directors or at any special meeting of the
stockholders or the Board of Directors if notice of such alteration, amendment,
repeal, or adoption of new Bylaws be contained in the notice of such special
meeting; provided however, that only stockholders of the Company may amend or
repeal any Bylaws adopted by such stockholders and a provision of these Bylaws
requiring a supermajority vote may only be altered, amended or repealed by the
same supermajority vote required to act under such provision.
Ex. C-21
CERTIFICATION
I, __________________, Secretary of the Corporation, hereby certify
that the foregoing is a true , accurate and complete copy of the Bylaws of
Pinnacle Merger Corp adopted by its Board of Directors as of [ ], 2002
---------------------------------------
[ ], Secretary
Ex. C-22
EXHIBIT D
[FORM OF OPINION]
Items to Be Covered in the Holland & Knight LLP Legal Opinion
Subject to customary qualification, the following are the items to be included
in the opinion from Holland &Knight LLP to be delivered at the Closing. To the
extent that an item is explicitly confirmed in he Confirmation Order, it may be
excluded in the legal opinion. Capitalized terms used without definition having
the meanings ascribed to them in the Securities Purchase Agreement.
1. The Companies are each corporations duly organized, validly
existing and in good standing under the laws of the State of
Delaware and, upon confirmation of the Plan, will have the
requisite corporate power and corporate authority to carry on
their respective businesses as they are now being conducted
or presently proposed to be conducted.
2. The Companies have all corporate right, corporate power and
corporate authority to enter into the Securities Purchase
Agreement and each of the other Transaction Documents to
which they are parties and, subject to the approval of the
Bankruptcy Court, to consummate the transactions contemplated
hereby and thereby.
3. The execution and delivery by the Companies of the Securities
Purchase Agreement and each of the other Transaction
Documents to which they are parties, and the issuance, sale
and delivery of the New Common Shares by Pinnacle and the
compliance by the Companies with each of the provisions of
the Securities Purchase Agreement and each of the other
Transaction Documents to which they are parties, will be upon
confirmation of the Plan (a) within the corporate power and
authority of the Companies, and (b) have been duly authorized
by all requisite corporate action of the Companies.
4. The Securities Purchase Agreement and each of the other
Transaction Documents to which the Companies are parties are
duly and validly executed and delivered by the Companies, and
each such Transaction Document, upon approval by the
Bankruptcy Court, will constitute a valid and binding
agreement of the Companies, enforceable against the Companies
in accordance with its terms, except as such enforcement is
limited by bankruptcy, reorganization, insolvency and other
similar laws affecting the enforcement of creditors' rights
generally and limitations imposed by general principles of
equity.
5. Counsel is not aware of any material violation by the
Companies of any Law or any material litigation concerning
the Companies except as disclosed in the SEC Reports or in
Section 3.7(a) or 3.11 of the Companies Disclosure Schedule.
6. The issuance pursuant of the New Common Shares pursuant to
the Bankruptcy Plan does not require registration under
Section 5 of the Securities Act of 1933, as amended.
7. Based upon a review of the official docket maintained by the
Bankruptcy Court in Pinnacle's Chapter 11 case as of [ ] a.m.
EST, on [ ], 2002, no appeal of, or motion to vacate, stay,
rehear or revoke the Confirmation Order has been filed and
not withdrawn. The Bankruptcy Plan, having been confirmed on
[ ], 2002, by the Confirmation Order which was entered on [
], 2002, is binding in accordance with its terms, as same may
have been modified by the Confirmation Order, upon all
holders of claims (as defined in the Bankruptcy Plan) and
interests (as defined in the Bankruptcy Plan) who received
proper notice thereof. In accordance with and subject to the
terms of the Confirmation Order, and subject to consummation
of the Bankruptcy Plan, as of the date hereof, the Bankruptcy
Plan is in full force and effect.
8. An opinion in form and substance reasonably acceptable to the
Investors that Pinnacle is a REIT under Section 856 of the
Code.
EX. D-2
EXHIBIT E
DEUTSCHE BANK TRUST COMPANY DEUTSCHE BANK SECURITIES INC.
AMERICAS 00 Xxxx 00xx Xxxxxx
00 Xxxx 00xx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000
BANC OF AMERICA SECURITIES LLC
BANK OF AMERICA, N.A. 0 Xxxx 00xx Xxxxxx
000 Xxxxx Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
April 25, 2002
Fortress Investment Group, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Chairman and CEO
Xxxxxxxxx Capital Partners, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Chairman
Re Senior Secured Financing Commitment Letter
Ladies and Gentlemen:
You have informed Deutsche Bank Trust Company Americas ("DBTCA"),
Deutsche Bank Securities Inc. ("DBSI" and, together with DBTCA, "DB"), Bank of
America, N.A. ("BOA") and Banc of America Securities LLC ("BAS" and, together
with BOA and any affiliate thereof designated by BOA and/or BAS, "BA") that
Fortress Investment Group, LLC ("Fortress") and Xxxxxxxxx Capital Partners,
L.P. ("Greenhill" and, together with Fortress, the "Sponsors" and each, a
"Sponsor") intend to make a cash common equity investment in Pinnacle Holdings
Inc. ("Holdings") (such investment being herein called the "Investment"),
through a transaction structured in a manner satisfactory to the Agents (as
defined below) as a "pre-arranged" plan of reorganization (the "Plan") under
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). As
consideration for such Investment, the Sponsors shall receive 100% (on a fully
diluted basis) of the equity interests in Holdings; provided that the 100%
figure contained above in this sentence may be reduced pursuant to certain
equity issuances satisfactory to the Agents, so long as the aggregate
amount of such equity interests so issued does not exceed (on a fully diluted
basis) more than 49.9% of the equity of Holdings.
It is our understanding that, pursuant to the terms of the Plan, the
following (collectively called the "Refinancing") shall occur:
(i) the existing $362 million senior credit facility
(the "Existing Senior Credit Facility") of Pinnacle Towers, Inc. (the
"Borrower") shall be repaid in full through the making of cash
payments in an aggregate amount not to exceed the lesser of (x) $362
million or (y) the aggregate principal amount outstanding thereunder;
(ii) in the event that the Borrower obtains a
debtor-in-possession credit facility (the "DIP Credit Facility") in
connection with the filing of the Plan, the aggregate amount
outstanding under such DIP Credit Facility on the Closing Date shall
be repaid in full in cash, and such DIP Credit Facility shall be
terminated;
(iii) the Borrower's existing senior seller notes (the
"Seller Notes"), in an aggregate principal amount not to exceed $25
million (as reduced by the Seller Note Repayment Amount (as defined
below)), shall be assumed by the Borrower pursuant to the Plan (as so
assumed, the "Assumed Seller Notes"), so long as the terms and
conditions of such Seller Notes are satisfactory to the Agents;
(iv) other liabilities (consisting of balance sheet
liabilities classified as "Current Liabilities" and "Other
Liabilities") in an aggregate principal amount not to exceed $65
million shall be assumed pursuant to the Plan; provided that all such
liabilities (as so assumed, the "Other Assumed Liabilities" and,
together with the Assumed Seller Notes, the "Assumed Liabilities")
shall be reasonably satisfactory to the Agents;
(v) holders of Holdings' 10% senior discount notes due
2008 (the "Existing Senior Notes") will be offered an aggregate
consideration of $114 million (or approximately 35% of their fully
accreted value of $325 million) in either (a) cash or (b) at the
election of the holder, a combination of cash and/or up to 100% of
such consideration in new common equity of Holdings at the value of
the common equity issued pursuant to the Common Equity Financing (as
defined below) (with the amount of such Common Equity Financing to be
reduced by the amount (the "Existing Senior Notes Cash Reduction
Amount") by which the cash payable to the holders of Existing Senior
Notes is reduced by reason of their election to receive common equity
of Holdings as contemplated by the preceding clause (b); it being
understood and agreed that the aggregate amount of consideration
received by the holders of the Existing Senior Notes may, (I) in the
event that a Determination (as defined in the Securities Purchase
Agreement (as defined in the Term Sheet)) has been made, be reduced by
the Tax Amount (as defined in the Securities Purchase Agreement)
and/or (II) in the event that the Closing Date occurs after the date
that is the three month anniversary of the date of this letter, be
increased in accordance with the last sentence of Section 5.8(b) of
the Securities Purchase Agreement;
EX. E-2
(vi) holders of Holdings' 5 1/2% convertible subordinated
notes due 2007 (the "Existing Convertible Subordinated Notes") will be
offered an aggregate consideration of $1 million in cash;
(vii) (x) warrants to purchase up to 1% of the common
equity of Holdings will be available for distribution to certain
existing holders of Holdings' common equity and (y) warrants to
purchase up to 2% of the common equity of Holdings will be available
for distribution to holders of the Existing Convertible Subordinated
Notes, which warrants, in each case, would contain an exercise price
equal to two times the value on the effective date of the common
equity issued pursuant to the Common Equity Financing and be subject
to other terms and conditions satisfactory to the Agents; and
(viii) other liabilities (including a portion of the Seller
Notes (if any)) required by the Plan to be repaid shall be repaid in
full in cash, so long as the amount of such other liabilities to be
repaid does not cause Cash Funding (as defined in the Securities
Purchase Agreement) to exceed $415 million.
The Plan would further provide that all existing debt, liabilities and equity
of Holdings and its subsidiaries (subject to such exceptions as may be agreed
by the Agents in their sole discretion) will be extinguished pursuant to the
Plan, except for (x) the Assumed Seller Notes which would be assumed as
contemplated by clause (iii) above and (y) the Other Assumed Liabilities, which
would be assumed to the extent described in clause (iv) above. It is our
further understanding that the fees and expenses payable in connection with the
Transaction (as defined below) will not exceed $23 million.
In order to finance the payments owing pursuant to the Plan (including
without limitation those described above), the Investment and the Refinancing,
and to provide for the working capital needs and general corporate requirements
of Holdings and its subsidiaries after giving effect to the consummation of the
Plan, it is presently contemplated that (i) Holdings shall receive cash common
equity financing (the "Common Equity Financing") from the Sponsors in an
aggregate amount of at least $205 million (as reduced by the (x) Existing
Senior Notes Cash Reduction Amount and (y) subject to the terms of the
Securities Purchase Agreement, the amount (if any) by which the Cash Funding is
less than $415 million, and as increased by the Lease Rejection Amount (as
defined in the Securities Purchase Agreement) and (ii) the Borrower shall
obtain a senior secured credit facility in the aggregate amount of $340 million
(the "Senior Secured Financing") (with the transactions described in preceding
clauses (i) and (ii) being herein collectively referred to as the "Financing
Transactions" and, together with the Investment, the Refinancing, and the Plan
(including the consummation thereof) being herein referred to as the
"Transaction").
The sources of funds needed to effect the Transaction, as well as to
pay all fees and expenses incurred in connection with the Transaction, shall be
provided solely through the Financing Transactions. It is understood further
that the Senior Secured Financing shall consist of (i) a $300 million term loan
facility (the "Term Loan Facility") and (ii) a $40 million revolving loan
facility (the "Revolving Loan Facility" and, together with the Term Loan
Facility, the "Credit Facilities"); it being understood that (w) all of the
Term Loan Facility shall be drawn on the closing date of the Transaction (the
"Closing
EX. E-3
Date") to make cash payments owing pursuant to the Plan and to pay fees and
expenses in connection with the Transaction, (x) no portion of the Revolving
Loan Facility (other than an amount not to exceed the aggregate principal
amount of Seller Notes repaid by the Borrower on the Closing Date (such amount,
the "Seller Note Repayment Amount")) may be utilized to make payments owing
pursuant to the Plan or to pay any fees and expenses incurred in connection
with the Transaction (it being understood and agreed that letters of credit
under the Revolving Loan Facility may be issued on the Closing Date to support
the obligations of the Borrower and its subsidiaries in respect of the Seller
Notes) and (y) no portion of the Revolving Loan Facility may be utilized on or
after the Closing Date to pay any portion of any taxes that are due or become
due with respect to "built-in-gains" in assets acquired, directly or indirectly
from any entity treated as a corporation (other than as a "S" corporation) for
U.S. federal income tax purposes. A summary of certain terms of the Senior
Secured Financing is set forth in Exhibit A attached hereto (the "Term Sheet").
Please note that those matters that are not covered or made clear herein or in
Exhibit A or in the related fee letter of even date herewith (the "Fee Letter")
are subject to mutual agreement of the parties. The terms and conditions of
this commitment may be modified only in writing signed by each of the parties
hereto.
Each of DBTCA, DBSI and BA is pleased to confirm that, subject to the
terms and conditions set forth herein and in the Term Sheet, (i) DBTCA hereby
commits to severally provide $220 million of the Senior Secured Financing, (ii)
BA hereby commits to severally provide $120 million of the Senior Secured
Financing, (iii) DBTCA will act as sole Administrative Agent (in such capacity,
the "Administrative Agent") for a syndicate of lenders who will participate in
the Senior Secured Financing (together with DBTCA and BA, the "Lenders"), (iv)
DBSI will act as sole Lead Arranger and Book Manager for the Senior Secured
Financing (in such capacity, the "Lead Arranger") and (v) BA will act as sole
Syndication Agent (in such capacity, the "Syndication Agent" and, together with
the Administrative Agent and the Lead Arranger, the "Agents" and each, an
"Agent") for the Senior Secured Financing. At the Agents' option, DBTCA, DBSI,
BA and/or one or more affiliates thereof may also be designated as
"Documentation Agent" or such other titles as may be deemed appropriate or
desirable by the Agents. Notwithstanding anything to the contrary contained
above in this paragraph, in connection with the syndication of the Senior
Secured Financing, the Agents shall have the right to award one or more of the
roles or titles described above, or such other titles as may be determined by
the Agents, to one or more other Lenders, in each case as determined by the
Agents in their sole discretion. You agree that, except as contemplated by the
immediately preceding sentence, no other agents, co-agents or arrangers will be
appointed, no other titles will be awarded and no compensation (other than that
expressly contemplated by the Term Sheet and the Fee Letter) will be paid in
connection with the Senior Secured Financing unless you and we shall so agree.
You also hereby agree that the Agents shall be entitled, after consultation
with you, to change the terms and conditions, pricing, fees and structure of
the Senior Secured Financing if the Agents determine that such changes are
advisable to ensure the successful syndication of the Senior Secured Financing,
provided that the total amount of the commitments under the Senior Secured
Financing remain unchanged. Furthermore, if the Closing Date occurs before the
Senior Secured Financing has been fully syndicated (as determined by the
Agents), then (x) you shall cause the Borrower and the Guarantors (as defined
in the Term Sheet) to enter into documentation on the Closing Date satisfactory
to the Agents acknowledging that the provisions of the preceding sentence shall
survive until
EX. E-4
such time as the Senior Secured Financing has been successfully syndicated, as
determined by the Agents and (y) it shall be a condition precedent to the
Closing Date that the actions described in preceding clause (x) shall have been
taken.
DBTCA and BA reserve the right, prior to or after execution of the
definitive credit documentation, to syndicate all or part of their commitment
hereunder to one or more other Lenders that will become party to such
definitive credit documentation pursuant to a syndication to be managed by the
Agents. You agree that, upon delivery to DBTCA and/or BA by another Lender
(which is a reputable fund or financial institution) of a commitment letter for
all or a portion of the Senior Secured Financing containing terms no less
favorable to the Borrower than the terms hereof, DBTCA and/or BA shall be fully
relieved of their respective obligations hereunder to the extent of, and in
proportion with, their respective commitments set forth in such commitment
letter (unless otherwise agreed by DBTCA and BA). All aspects of the
syndication, including, without limitation, timing, potential syndicate members
to be approached, titles, allocations and division of fees, shall be determined
by the Agents. You agree to actively assist the Agents in such syndication,
including by using your commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your existing lending relationships
and to provide the Agents and the Lenders, promptly upon request, with all
information reasonably deemed necessary by the Agents to complete successfully
the syndication, including, but not limited to, (a) an information package for
delivery to potential syndicate members and participants and (b) projections
and all information prepared by you or your affiliates or advisors relating to
the transactions described herein. You also agree to make available your
representatives and the senior officers and representatives of Holdings and the
Borrower, in each case from time to time and to attend and make presentations
regarding the business and prospects of Holdings and the Borrower and their
respective subsidiaries at a meeting or meetings of Lenders or prospective
Lenders. You and your affiliates shall each agree to refrain, and to cause
Holdings and its subsidiaries to refrain, from any other debt financings
(including refinancings and renewals of debt, but excluding the Refinancing)
during the syndication process unless otherwise agreed to by the Agents. You
further agree to make your officers and representatives, and to cause officers
and representatives of Holdings and its subsidiaries to be, available to
participate in information meetings for potential syndicate members at such
times and places as the Agents may reasonably request.
You represent, warrant and covenant that to the best of your knowledge
(i) no written information which has been or is hereafter furnished by you or
on your behalf in connection with the transactions contemplated hereby and (ii)
no other information given at information meetings for potential syndicate
members and supplied or approved by you (such written information and other
information being referred to herein collectively as the "Information") taken
as a whole contained (or, in the case of Information furnished after the date
hereof, will contain), as of the time it was (or hereafter is) furnished, any
material misstatement of fact or omitted (or will omit) as of such time to
state any material fact necessary to make the statements therein taken as a
whole not misleading, in the light of the circumstances under which they were
(or hereafter are) made; provided that, with respect to Information consisting
of statements, estimates and projections regarding the future performance of
Holdings and its subsidiaries (collectively, the "Projections"), no
representation, warranty or covenant is made other than that the Projections
have been (and, in the case of Projections furnished after the date hereof,
will be) prepared in good
EX. E-5
faith based on assumptions believed to be reasonable at the time of preparation
thereof. You agree to supplement the Information and the Projections from time
to time until the date of the initial borrowing under the Senior Secured
Financing, as appropriate, so that the representations and warranties in the
preceding sentence remain correct. You understand that, in syndicating the
Senior Secured Financing, the Agents will use and rely on the Information and
the Projections without independent verification thereof.
As you are aware, each of DB's and BA's commitments hereunder are
subject to (a) there not occurring or becoming known to the Agents any
condition or circumstance which has had, or could reasonably be expected to
have, a material adverse effect on the Transaction or on the property, assets,
nature of assets, operations, liabilities, condition (financial or otherwise)
or prospects of the Borrower or Holdings and its subsidiaries taken as a whole
(each, a "Material Adverse Effect"), (b) the Agents not becoming aware (whether
as a result of their due diligence analyses and reviews or otherwise) after the
date hereof of any information not previously known to the Agents which either
Agent believes is materially negative information with respect to the
Transaction or the business, property, assets, nature of assets, operations,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
Holdings and its subsidiaries taken as a whole, or which is inconsistent in a
material and adverse manner with any such information or other matter disclosed
to the Agents prior to the date hereof, (c) there not having occurred, a
material disruption of or, after the date hereof, a material adverse change in
financial, banking or capital market conditions that, in either Agent's
reasonable judgment, could materially impair the syndication of the Senior
Secured Financing, (d) each Agent's reasonable satisfaction that prior to and
during the syndication of the Senior Secured Financing there shall be no
competing offering, placement or arrangement of any debt securities or bank
financing by or on behalf of Holdings or any of its subsidiaries or affiliates
and (e) the other conditions set forth or referred to herein or in the Term
Sheet.
To induce us to issue this letter and to proceed with the
documentation of the proposed financing, you hereby jointly and severally agree
that all of our and our affiliates' fees and expenses (including the reasonable
fees and expenses of counsel and consultants) arising in connection with this
letter and in connection with the Transaction and other transactions described
herein (including in connection with our due diligence and syndication efforts)
shall be for your joint and several account (and that you shall from time to
time upon request from any Agent (as defined in the immediately succeeding
sentence) reimburse it and its affiliates for all such fees and expenses paid
by them), whether or not the Senior Secured Financing is made available or
definitive credit documents are executed. You further agree to indemnify and
hold harmless each Agent (which, for purposes of this paragraph, shall be
defined to include any other agent or co-agent designated by the Agents with
respect to the Senior Secured Financing), each Lender (including, in any event,
DBTCA and BA) and their respective affiliates and each director, officer,
employee, representative and agent thereof (each, an "indemnified person") from
and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against
or involve any Agent or Lender or any other such indemnified person as a result
of or arising out of or in any way related to or resulting from this letter
and, upon demand, to pay and reimburse each Agent, each Lender and each other
indemnified person for any reasonable legal or other out-of-pocket expenses
incurred in connection with investigating, defending or preparing to defend any
such action, suit, proceeding (including
EX. E-6
any inquiry or investigation) or claim (whether or not any Agent or Lender or
any other such person is a party to any action or proceeding out of which any
such expenses arise); provided, however, that you shall not have to indemnify
any indemnified person against any loss, claim, damage, expense or liability to
the extent same resulted from the gross negligence or willful misconduct of the
respective indemnified person (as determined by a court of competent
jurisdiction in a final and non-appealable judgment). This letter and the Term
Sheet (collectively, the "Commitment Letter") is issued for your benefit only
and no other person or entity may rely thereon. Neither the Agents nor any
other indemnified person shall be responsible or liable to you or any other
person for (x) any determination made by it pursuant to this letter in the
absence of gross negligence or willful misconduct on the part of such person
(as determined by a court of competent jurisdiction in a final and
non-appealable judgment) or (y) any consequential damages which may be alleged
as a result of this letter or the financing contemplated hereby.
Each of us reserves the right to employ the services of our affiliates
(including, in the case of DB, Deutsche Bank AG) in providing services
contemplated by this letter and to allocate, in whole or in part, to our
affiliates certain fees payable to us in such manner as we and our affiliates
may agree in our sole discretion. You also agree that we may at any time and
from time to time assign all or any portion of our commitments hereunder to one
or more of our affiliates. You further acknowledge that we may share with any
of our affiliates, and such affiliates may share with us, any information
related to the Transaction, Holdings, the Borrower, the Sponsors (and your and
their respective subsidiaries and affiliates), or any of the matters
contemplated hereby. Each of us agrees to treat, and cause any of our
affiliates to treat, all non-public information provided to it by the Sponsors,
Holdings and the Borrower as confidential information in accordance with
customary banking industry practices.
You agree that this Commitment Letter is for your confidential use
only and that neither its existence nor the terms hereof will be disclosed by
you to any person other than your officers, directors, employees, accountants,
attorneys and other advisors, and then only on a "need to know" basis in
connection with the transactions contemplated hereby and on a confidential
basis. Notwithstanding the foregoing, you shall be permitted to furnish a copy
hereof to (x) Holdings and existing shareholders and existing creditors of
Holdings and its subsidiaries (collectively, the "Sellers") and their advisors
in connection with the proposed Transaction and (y) the United States
Bankruptcy Court having jurisdiction over the Transaction in connection with a
proposed Plan and, following your acceptance of the provisions hereof and your
return of an executed counterpart of this Commitment Letter and the related Fee
Letter to us as provided below, (i) you may make public disclosure of the
existence and amount of the commitments hereunder and of the identity of the
Agents, (ii) you may file a copy of this Commitment Letter (but not the Fee
Letter) in any public record in which it is required by law to be filed and
(iii) you may make such other public disclosure of the terms and conditions
hereof as, and to the extent, you are required by law, in the opinion of your
counsel, to make. Except as otherwise required by law or unless the Agents have
otherwise consented, you are not authorized prior to your acceptance of this
letter as provided below to show or circulate this letter to any other person
or entity (other than your legal or financial advisors in connection with your
evaluation hereof). If this letter is not accepted by you as provided below,
please immediately return this letter (and any copies hereof) to the
undersigned.
EX. E-7
The provisions of the three immediately preceding paragraphs shall
survive any termination of this letter.
This Commitment Letter and the Fee Letter (and your rights and
obligations hereunder and thereunder) shall not be assignable by you to any
person or entity without the prior written consent of each Agent (and any
purported assignment without such consent shall be null and void). This
Commitment Letter and the Fee Letter may not be amended or waived except by an
instrument in writing signed by you and us. Each of this Commitment Letter and
the Fee Letter may be executed in any number of counterparts, each of which
shall be an original and all of which, when taken together, shall constitute
one agreement. Delivery of an executed signature page of this Commitment Letter
or the Fee Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof or thereof, as the case may be. This
Commitment Letter and the Fee Letter shall be governed by, and construed in
accordance with, the laws of the State of New York. This Commitment Letter and
the Fee Letter sets forth the entire agreement between the parties as to the
matters set forth herein and supersedes all prior communications, written or
oral, with respect to the matters herein.
EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
CONTEMPLATED BY THIS COMMITMENT LETTER OR THE FEE LETTER. YOU HEREBY SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED
IN THE COUNTY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS
COMMITMENT LETTER, THE FEE LETTER OR ANY MATTERS CONTEMPLATED HEREBY OR
THEREBY.
Our willingness, and commitments, with respect to the Senior Secured
Financing as set forth above will terminate on the earlier to occur of (x) May
15, 2002, unless on or prior to such date Holdings shall have filed pursuant to
the Bankruptcy Code its "pre-arranged" Plan (which shall be in form and
substance satisfactory to the Agents), (y) the occurrence of an event of
default (or similar defined term) under the DIP Credit Facility (without giving
effect to any waiver, amendment or consent in respect of (or prior to the
occurrence of) any such event of default) or (z) August 15, 2002, unless on or
prior to such date the Transaction has been consummated and a definitive credit
agreement evidencing the Senior Secured Financing, satisfactory in form and
substance to the Agents (the "Credit Agreement") shall have been entered into
and the initial borrowings shall have occurred thereunder.
This letter replaces and supersedes our previous Commitment Letter to
you, dated January 25, 2002, concerning the Transaction, except with respect to
the confidentiality, indemnification and expense reimbursement provisions
referred to therein, each of which shall survive in accordance with the terms
and conditions thereof.
* * *
EX. E-8
If you are in agreement with the foregoing, please sign and return to
the Agents the enclosed copy of this letter, together with a copy of the
enclosed Fee Letter, no later than 5:00 p.m., New York time, on April 26, 2002.
Unless this letter and the related Fee Letter are signed and returned by the
time and date provided in the immediately preceding sentence, this letter shall
terminate at such time and date.
Very truly yours,
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:
--------------------------------------
Name:
Title:
DEUTSCHE BANK SECURITIES INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
BANK OF AMERICA, N.A.
By:
--------------------------------------
Name:
Title:
BANC OF AMERICA SECURITIES LLC
By:
--------------------------------------
Name:
Title:
EX. E-9
Agreed to and Accepted this
day of , 2002:
---- ------------
FORTRESS INVESTMENT GROUP, LLC
By:
--------------------------
Name:
Title:
XXXXXXXXX CAPITAL PARTNERS, L.P.
By:
--------------------------
Name:
Title:
EX. E-10
SUMMARY OF CERTAIN TERMS
OF CREDIT FACILITIES
Unless otherwise defined herein, capitalized terms used herein and defined in
the letter agreement to which this Exhibit A is attached (the "Commitment
Letter") are used herein as therein defined.
I. Description of Credit Facilities
Borrower: Pinnacle Towers, Inc. (the "Borrower").
Total Credit
Facility: $340 million.
Credit
Facilities: 1. Term Loan Facility in an aggregate principal
amount of $300 million (the "Term Loan
Facility").
2. Revolving Loan Facility in an aggregate
principal amount of $40 million (the
"Revolving Loan Facility" and, together with
the Term Loan Facility, the "Credit
Facilities").
A. Term Loan Facility
Use of
Proceeds: The loans made pursuant to the Term Loan Facility (the
"Term Loans") may only be incurred on the date of the
effectiveness of the Plan (the "Closing Date"), and the
proceeds thereof shall be used solely to finance, in
part, the Transaction and to pay fees and expenses in
connection with the Transaction.
Maturity: The final maturity of the Term Loan Facility shall be
7 years from the Closing Date (the "Term Loan
Maturity Date").
Amortizations: The Term Loans shall amortize in quarterly installments
in annual amounts to be determined.
Availability: Term Loans may be incurred on the Closing Date, in each
case in a manner consistent with the requirements set
forth under the heading "Use of Proceeds" above. No
amount of Term Loans once repaid may be reborrowed.
B. Revolving Loan Facility
Use of Proceeds: The proceeds of loans under the Revolving Loan Facility
(the "Revolving Loans" and, together with the Term
Loans, the "Loans")
EX. E-11
shall be utilized for the working capital, capital
expenditures and general corporate purposes set forth
in the Credit Agreement and determined to the
satisfaction of the Agents and the Required Lenders (as
defined below), provided that (i) no portion of the
Revolving Loan Facility (other than an amount not to
exceed the Seller Note Repayment Amount) may be
utilized to pay amounts owing pursuant to the Plan or
to pay any fees and expenses incurred in connection
with the Transaction (it being understood and agreed
that letters of credit under the Revolving Loan
Facility may be issued on the Closing Date to support
the obligations of the Borrower and its subsidiaries in
respect of the Seller Notes) and (ii) no portion of the
Revolving Loan Facility may be utilized on or after the
Closing Date to pay any portion of any taxes that are
due or become due with respect to "built-in-gains" in
assets acquired, directly or indirectly from any entity
treated as a corporation (other than as a "S"
corporation) for U.S. federal income tax purposes. A
portion to be negotiated of the Revolving Loan Facility
will be available for the issuance of stand-by and
trade letters of credit ("Letters of Credit") to
support obligations of the Borrower and its
subsidiaries satisfactory to the Agents and the
Required Lenders. Maturities for Letters of Credit will
not exceed twelve months, renewable annually thereafter
and, in any event, shall not extend beyond the tenth
business day prior to the Revolving Loan Maturity Date
(as defined below).
Maturity: The final maturity of the Revolving Loan Facility shall
be 5 years from the Closing Date (the "Revolving Loan
Maturity Date").
Availability: Revolving Loans may be borrowed, repaid and reborrowed
on and after the Closing Date and prior to the
Revolving Loan Maturity Date in accordance with the
terms of the definitive credit documentation governing
the Credit Facilities.
II. Terms Applicable to All Credit Facilities
Administrative
Agent: DBTCA (in such capacity, the "Administrative Agent").
Lead Arranger
and Book Manager: DBSI.
Syndication
Agent: BA.
Lenders: DBTCA, BA and/or a syndicate of lenders formed by the
Agents (the "Lenders").
Required
Lenders: Lenders having aggregate commitments and/or
outstandings (as appropriate) pertaining to all
tranches (taken in the aggregate) in excess of 50% (the
"Required Lenders").
Guaranties: Holdings and each direct and indirect subsidiary of
Holdings (other
EX. E-12
than the Borrower) (each, a "Guarantor" and,
collectively, the "Guarantors") shall be required to
provide an unconditional guaranty of all amounts owing
under the Senior Secured Financing (the "Guaranties").
Such guarantees shall be in form and substance
satisfactory to the Agents and shall, to the extent
requested by the Agents, also guarantee the Borrower's
and its subsidiaries' obligations under interest rate
swaps/foreign currency swaps or similar agreements with
a Lender or its affiliates. All guarantees shall be
guarantees of payment and not of collection.
Notwithstanding anything to the contrary contained
above, non-U.S. subsidiaries of the Borrower shall not
be required to provide guarantees (and shall not
constitute Guarantors) so long as the furnishing of
such guarantees gives rise to material adverse tax
consequences to the Borrower.
The Guaranties shall contain terms and conditions
satisfactory to the Agents and customary for
transactions of this type.
Security: All amounts owing under the Senior Secured Financing
(and all obligations under the Guaranties) will be
secured by (x) a first priority perfected security
interest in all stock, equity interests and promissory
notes owned by the Borrower and the Guarantors,
provided that not more than 65% of the total
outstanding voting stock of any non-U.S. subsidiary of
the Borrower shall be required to be pledged if the
pledging thereof would give rise to material adverse
tax consequences to the Borrower and (y) a first
priority perfected security interest in all other
tangible and intangible assets (including receivables,
contract rights, securities, patents, trademarks, other
intellectual property, inventory, equipment, real
estate and leasehold interests) owned by the Borrower
and each Guarantor, subject (in each case) to
exceptions satisfactory to the Agents.
All documentation (collectively referred to herein as
the "Security Agreements") evidencing the security
required pursuant to the immediately preceding
paragraph shall be in form and substance satisfactory
to the Agents, and shall effectively create first
priority security interests in the property purported
to be covered thereby, with such exceptions as are
acceptable to the Agents in their reasonable
discretion.
Optional Commit-
ment Reductions: The unutilized portion of the total commitments may,
upon three business days' notice, be reduced or
terminated by the Borrower without penalty in minimum
amounts to be agreed.
Voluntary
Prepayments: Voluntary prepayments may be made at any time on three
business days' notice in the case of Eurodollar Loans,
or one business day's notice in the case of Base Rate
Loans, without premium or penalty, in minimum principal
amounts to be agreed; provided that voluntary
EX. E-13
prepayments of Eurodollar Loans made on a date other
than the last day of an interest period applicable
thereto shall be subject to customary breakage costs.
Voluntary prepayments of Term Loans shall apply to
reduce future scheduled amortization payments of the
Term Loans being prepaid in a manner to be determined.
Mandatory
Repayments: Mandatory repayments of Term Loans shall be required
from (a) 100% of the proceeds (net of (i) taxes and
costs and expenses in connection with the sale and (ii)
the amount of cash necessary to (subject to the
limitation on dividends referred to in the section
entitled "Covenants" below) be distributed as a result
of such asset sale in connection with the maintenance
of the REIT (as defined in the Code (as defined in the
Securities Purchase Agreement)) status of Holdings and
its subsidiaries) from asset sales by Holdings and its
subsidiaries (subject to reinvestment exceptions to be
negotiated), (b) 100% of the net proceeds from
issuances of debt (with appropriate exceptions to be
mutually agreed upon) by Holdings and its subsidiaries,
(c) 100% of the net proceeds from issuances of equity
by, or capital contributions to Holdings and its
subsidiaries (with appropriate exceptions to be
mutually agreed upon), (d) 75% (subject to a step-down
to 50% based on meeting a leverage test to be agreed
upon and so long as no default or event of default
under the Credit Facilities is in existence) of annual
excess cash flow (to be defined to the satisfaction of
the Agents) of Holdings and its subsidiaries (it being
understood and agreed that the definition of excess
cash flow shall be defined to exclude the amount of
cash necessary to (subject to the limitation on
dividends referred to in the section entitled
"Covenants" below) be distributed in connection with
the maintenance of the REIT status of Holdings and its
subsidiaries) and (e) 100% of the net proceeds from
insurance recovery and condemnation events of Holdings
and its subsidiaries (subject to certain reinvestment
rights to be negotiated).
All mandatory repayments of Term Loans made pursuant to
clauses (a)-(e) above shall apply to reduce future
scheduled amortization payments of the Term Loans being
repaid pro rata based upon the then remaining amounts
of such payments. To the extent the amount of any
mandatory repayment which would otherwise be required
as provided above exceeds the aggregate principal
amount of Term Loans then outstanding, such excess
shall apply to reduce the commitments under the
Revolving Loan Facility. In addition, (i) if at any
time the outstandings pursuant to the Revolving Loan
Facility (including Letter of Credit outstandings)
exceed the aggregate commitments with respect thereto,
prepayments of Revolving Loans (and/or the cash
collateralization of Letters of Credit) shall be
required in an amount equal to such excess and (ii)
upon the occurrence of a change of control (to be
defined), all commitments under the Credit Facilities
shall terminate and all outstanding Loans shall become
due and payable.
EX. E-14
Interest Rates: At the Borrower's option, Loans may be maintained from
time to time as (x) Base Rate Loans, which shall bear
interest at the Base Rate in effect from time to time
plus the Applicable Margin (as defined below) or (y)
Eurodollar Loans, which shall bear interest at the
Eurodollar Rate (adjusted for maximum reserves) as
determined by the Administrative Agent for the
respective interest period plus the Applicable Margin,
provided, that until the earlier to occur of (i) the
90th day following the Closing Date or (ii) the date
upon which the Agents shall determine in their sole
discretion that the primary syndication has been
completed, Eurodollar Loans shall be restricted to a
single one month Interest Period at all times, with the
first such Interest Period to begin not sooner than 3
business days after the Closing Date and with any
subsequent Interest Periods to begin on the last day of
the prior one month Interest Period theretofore in
effect.
"Applicable Margin" shall mean a percentage per annum
equal to (x) in the case of Term Loans (A) maintained
as Base Rate Loans, 3.00% and (B) maintained as
Eurodollar Loans, 4.00%; (y) in the case of Revolving
Loans (A) maintained as Base Rate Loans, 2.50% and (B)
maintained as Eurodollar Loans, 3.50%. So long as no
default or event of default exists under the Credit
Facilities, the Applicable Margin on the Revolving
Loans and the Term Loans shall be subject to one
step-down to be determined (but, in any event, not
commencing until the delivery of the Borrower's
financial statements in respect of its first fiscal
quarter ending at least one year after the Closing
Date) based on meeting a leverage test to be agreed.
"Base Rate" shall mean the higher of (x) the rate that
the Administrative Agent announces from time to time as
its prime lending rate, as in effect from time to time
and (y) 1/2 of 1% in excess of the overnight federal
funds rate.
Interest periods of 1, 2, 3 and 6 months shall be
available in the case of Eurodollar Loans.
The Credit Facilities shall include customary
protective provisions for such matters as defaulting
banks, capital adequacy, increased costs, reserves,
funding losses, illegality and withholding taxes. The
Borrower shall have the right to replace any Lender
that charges a material amount in excess of that being
charged by the other Lenders with respect to
contingencies described in the immediately preceding
sentence.
Interest in respect of Base Rate Loans shall be payable
quarterly in arrears on the last business day of each
calendar quarter. Interest in respect of Eurodollar
Loans shall be payable in arrears at the end of the
applicable interest period and every three months in
the case of interest periods in excess of three months.
Interest will also be payable at the time of repayment
of any Loans and at maturity. All
EX. E-15
interest on Base Rate Loans, Eurodollar Loans and
commitment fees and any other fees shall be based on a
360-day year and actual days elapsed.
Default
Interest: Overdue principal, interest and other amounts shall
bear interest at a rate per annum equal to the greater
of (i) the rate which is 2% in excess of the rate
otherwise applicable to Base Rate Loans of the
respective tranche under the Senior Secured Financing
from time to time and (ii) the rate which is 2% in
excess of the rate then borne by such borrowings. Such
interest shall be payable on demand.
Commitment Fee: A commitment fee, at a per annum rate equal to the
Applicable Commitment Fee Percentage (as defined
below), on the daily undrawn portion of the commitments
of each Lender under the Revolving Loan Facility will
commence accruing on the Closing Date and will be
payable quarterly in arrears.
"Applicable Commitment Fee Percentage" shall mean (i)
on any date that (x) the total unutilized commitments
under the Revolving Loan Facility exceed 50% of the
total commitments under the Revolving Loan Facility or
(y) a default or event of default exists under the
Senior Secured Financing, 0.75% and (ii) on any date
that the total unutilized commitments under the
Revolving Loan Facility are less than or equal to 50%
of the total commitments under the Revolving Loan
Facility, 0.50%.
Letter of
Credit Fees: A letter of credit fee equal to the Applicable Margin
for Revolving Loans maintained as Eurodollar Loans on
the outstanding stated amount of Letters of Credit (the
"Letter of Credit Fee") to be shared proportionately by
the Lenders in accordance with their participation in
the respective Letter of Credit, and a facing fee of
1/4 of 1% per annum (but in no event less than $500 per
annum for each Letter of Credit) (the "Facing Fee") to
be paid to the issuer of each Letter of Credit for its
own account, in each case calculated on the aggregate
stated amount of all Letters of Credit for the stated
duration thereof. Letter of Credit Fees and Facing Fees
shall be payable quarterly in arrears. In addition, the
issuer of a Letter of Credit will be paid its customary
administrative charges in connection with Letters of
Credit issued by it.
Agent/
Lender Fees: The Agents and the Lenders shall receive such fees as
have been separately agreed upon.
Assignments and
Participations: Neither Holdings nor the Borrower may assign its rights
or obligations under the Senior Secured Financing. Any
Lender may
EX. E-16
assign, and may sell participations in, its rights and
obligations under the Senior Secured Financing, subject
(x) in the case of participations, to customary
restrictions on the voting rights of the participants
and (y) in the case of assignments, to such limitations
as may be established by the Administrative Agent
(including (i) a minimum assignment amount to be
established by the Administrative Agent (or, if less,
the entire amount of such assignor's commitments and
outstanding Loans at such time), (ii) an assignment fee
in the amount of $3,500 to be paid by the respective
assignor or assignee to the Administrative Agent and
(iii) the receipt of the consent of the Administrative
Agent (not to be unreasonably withheld or delayed)).
The Senior Secured Financing shall provide for a
mechanism which will allow for each assignee to become
a direct signatory to the Senior Secured Financing and
will relieve the assigning Lender of its obligations
with respect to the assigned portion of its commitment.
Documentation;
Governing Law: The Lenders' commitments will be subject to the
negotiation, execution and delivery of definitive
financing agreements (and related security
documentation, guaranties, etc.) consistent with the
terms of this Term Sheet, in each case prepared by
White & Case LLP as counsel to the Agents, and
satisfactory to the Agents and the Lenders (including,
without limitation, as to the terms, conditions,
representations, covenants and events of default
contained therein). All documentation (except security
documentation that the Agents determine should be
governed by local law) shall be governed by the
internal laws of the State of New York.
Commitment
Termination: The commitments hereunder shall terminate on the
earlier to occur of (x) May 15, 2002, unless on or
prior to such date Holdings shall have filed pursuant
to the Bankruptcy Code its "pre-arranged" Plan (which
shall be in form and substance satisfactory to the
Agents), (y) the occurrence of an event of default (or
similar defined term) under the DIP Credit Facility
(without giving effect to any waiver, amendment or
consent in respect of (or prior to the occurrence of)
any such event of default) or (z) August 15, 2002
unless definitive documentation with respect to the
Credit Facilities has been executed and delivered, the
Transaction has been consummated and the initial
borrowings under the Credit Facilities have occurred.
Conditions
Precedent: Those conditions precedent that are usual and customary
for these types of facilities, and such additional
conditions precedent as are appropriate under the
circumstances. Without limiting the foregoing, the
following conditions shall apply:
A. To the Initial Loans
(i) The structure and all terms of, and the documentation
(including, without limitation, the Securities
Purchase Agreement (the "Securities Purchase
Agreement") among Holdings, the Borrower and the
investors named therein, entered into in connection
with the Investment) for, each
EX. E-17
component of the Transaction shall be satisfactory in
form and substance to the Agents and the Required
Lenders, and such documentation shall be in full
force and effect. All conditions precedent to the
consummation of the Transaction, as set forth in the
documentation relating thereto (including, without
limitation, in the Securities Purchase Agreement),
shall have been satisfied (including, in the case of
the Refinancing, the repayment of all indebtedness,
and the release of all liens, relating thereto), and
not waived except with the consent of the Agents and
the Required Lenders, to the satisfaction of the
Agents and the Required Lenders. Each component of
the Transaction shall have been consummated in
accordance with the documentation therefor and all
applicable laws.
(ii) Holdings shall have received at least $205 million of
cash (as reduced by (x) the Existing Senior Notes
Cash Reduction Amount and (y) subject to the terms of
the Securities Purchase Agreement, the amount (if
any) by which Cash Funding is less than $415 million,
and as increased by the Lease Rejection Amount) from
the Common Equity Financing, and Holdings shall have
contributed all proceeds of the Common Equity
Financing to the Borrower. All terms and conditions
(and the documentation) in connection with the Common
Equity Financing (including the identity of any
equity investors (including management) in Holdings
and the relative amounts of their equity investments
in Holdings) shall be satisfactory to the Agents and
the Required Lenders.
(iii) The Borrower shall have used all cash proceeds
received from the financing described in clause (ii)
to make payments owing in connection with the
Transaction before utilizing any proceeds of Loans
pursuant to the Credit Facilities for such purpose.
The cash proceeds received from the Common Equity
Financing, when added to the aggregate principal
amount of Term Loans incurred on the Closing Date,
shall be sufficient to effect the Transaction
(including to make all payments owing pursuant to the
Plan) and to pay fees and expenses in connection
therewith.
(iv) After giving effect to the consummation of the
Transaction, Holdings and its subsidiaries shall have
no outstanding preferred equity, indebtedness or
contingent liabilities, except for (i) the Senior
Secured Financing and (ii) the Assumed Liabilities,
and all stock of the Borrower shall be owned by
Holdings free and clear of liens (other than those
securing the Senior Secured Financing). All terms and
conditions (and the amount) of all Assumed
Liabilities permitted to remain outstanding after
giving effect to the Transaction, shall be required
to be satisfactory to the Agents and the Required
EX. E-18
Lenders in their sole discretion.
(v) All necessary governmental (domestic and foreign) and
third party approvals and/or consents in connection
with the Transaction, the transactions contemplated
by the Credit Facilities and otherwise referred to
herein shall have been obtained and remain in effect,
and all applicable waiting periods shall have expired
without any action being taken by any competent
authority which, in the judgment of the Agents,
restrains, prevents, or imposes materially adverse
conditions upon, the consummation of the Transaction
or the transactions contemplated by the Credit
Facilities or otherwise referred to herein.
Additionally, there shall not exist any judgment,
order, injunction or other restraint prohibiting or
imposing materially adverse conditions upon the
Transaction or the transactions contemplated by the
Credit Facilities.
(vi) The Plan, and a disclosure statement relating to the
Plan and provided pursuant to Section 1125 of the
Bankruptcy Code shall, in each case, have been
approved by the applicable United States Bankruptcy
Court having jurisdiction over the Transaction and be
in form and substance satisfactory to the Agents and
the Required Lenders. The Plan shall have been
confirmed pursuant to a notice of confirmation (the
"Notice of Confirmation") in accordance with Sections
1128 and 1129 of the Bankruptcy Code, and such Notice
of Confirmation shall be in form and substance
satisfactory to the Agents and the Required Lenders.
The Notice of Confirmation shall not have been stayed
and shall have been final and non-appealable and all
conditions precedent to the effective date of the
Plan shall have been satisfied (and not waived
without the consent of the Agents and the Required
Lenders) to the satisfaction of the Agents and the
Required Lenders.
(vii) Nothing shall have occurred (and neither the Agents
nor the Required Lenders shall have become aware of
any facts or conditions not previously known) which
the Agents or the Required Lenders shall determine
could reasonably be expected to have a material
adverse effect on the rights or remedies of the
Agents or the Lenders, or on the ability of Holdings
and its subsidiaries to perform their obligations to
the Agents or the Lenders or which has had, or could
reasonably be expected to have, a Material Adverse
Effect.
(viii) No litigation by any entity (private or governmental)
shall be pending or threatened with respect to the
Credit Facilities or any documentation executed in
connection therewith, or with respect to the
Transaction, or which the Agents or the Required
Lenders shall determine has had, or could reasonably
be
EX. E-19
expected to have, a materially adverse effect on the
Transaction or a Material Adverse Effect.
(ix) All agreements relating to, and the corporate and
capital structure of, Holdings and its subsidiaries,
and all organizational documents of Holdings and its
subsidiaries, in each case as the same will exist
after giving effect to the consummation of the
Transaction, shall be satisfactory to the Agents and
the Required Lenders.
(x) All Loans and all other financings to the Borrower
(and all guaranties thereof and security therefor),
as well as the Transaction and the consummation
thereof, shall be in full compliance in all material
respects with all applicable requirements of law,
including Regulations T, U and X of the Federal
Reserve Board (the "Margin Regulations").
(xi) After giving effect to the Transaction, the
financings incurred in connection therewith and the
other transactions contemplated hereby, there shall
be no conflict with, or default under, any agreement
of Holdings and its subsidiaries (including any such
agreements (i) acquired pursuant to the Investment,
(ii) entered into pursuant to the Transaction and
(iii) in respect of Existing Indebtedness), subject
to such exceptions as may be agreed upon.
(xii) All costs, fees, expenses (including, without
limitation, legal fees and expenses) and other
compensation contemplated hereby, payable to the
Agents and the Lenders or otherwise payable in
respect of the Transaction shall have been paid to
the extent due.
(xiii) The Guaranties and Security Agreements required
hereunder shall have been executed and delivered in
form, scope and substance satisfactory to the Agents
and the Required Lenders, and the Lenders shall have
a first priority perfected security interest in all
assets of Holdings and its subsidiaries as and to the
extent required above.
(xiv) The Agents shall have received legal opinions from
counsel (including, without limitation, New York
counsel) covering matters acceptable to the Agents
(including, without limitation, (x) a no-conflicts
opinion as to the Assumed Liabilities and any other
material contracts of Holdings or any of its
subsidiaries and (y) compliance with the Margin
Regulations).
(xv) The Lenders shall have received a solvency
certificate in form and substance satisfactory to the
Agents, from the chief financial officer of Holdings,
setting forth the conclusions that,
EX. E-20
after giving effect to the Transaction and the
incurrence of all the financings contemplated herein,
each of Holdings, the Borrower, Holdings and its
subsidiaries taken as a whole and the Borrower and
its subsidiaries taken as a whole, is or are not
insolvent and will not be rendered insolvent by the
indebtedness incurred in connection therewith, and
will not be left with unreasonably small capital with
which to engage in its or their businesses and will
not have incurred debts beyond its or their ability
to pay such debts as they mature.
(xvi) The Agents and the Lenders shall have received and be
satisfied with (i) audited, unaudited and pro forma
consolidated financial statements of Holdings and its
subsidiaries meeting the requirements of Regulation
S-X for registration statements (as if such a
registration statement for a debt issuance of the
Borrower, guaranteed by Holdings, became effective on
the Closing Date) on Form S-1 (including, without
limitation, the audited financial statements in
respect of the fiscal year of Holdings and its
subsidiaries ended December 31, 2001), (ii) interim
financial statements for each month of Holdings and
its subsidiaries commencing with March 2002 and
ending prior to the Closing Date (which interim
monthly financial statements shall be delivered to
the Agents and the Lenders on or prior to 5 business
days after the end of such month), (iii) detailed
projected consolidated financial statements of
Holdings and its subsidiaries for the seven fiscal
years ended after the Closing Date, which projections
shall (x) reflect the forecasted consolidated
financial condition of Holdings and its subsidiaries
after giving effect to the Transaction and the
related financing thereof, and (y) be prepared and
approved by the Borrower and (iv) all information
delivered prior to the Closing Date to the lenders
under the DIP Credit Facility and the members of the
existing creditors' steering committee concurrently
with the delivery of such information to such
persons. In addition, (x) on or prior to April 30,
2002, the Agents and the Lenders shall have received
and be satisfied with consolidated monthly budgets of
Holdings and its subsidiaries in respect of each of
the months of April 2002, May 2002, June 2002, July
2002 and August 2002 and (y) the actual revenues of
Holdings and its subsidiaries as reported on the
interim monthly financial statements referred to in
clause (ii) of the immediately preceding sentence
shall (I) in the case of such revenues generated in
April 2002, be no less than 95% of the budgeted
revenues as delivered pursuant to the
EX. E-21
preceding clause (x) and (II) in the case of such
revenues generated in each month thereafter ending
prior to the Closing Date, be, when added to each
month prior to said month commencing with April 2002,
no less than 95% of the budgeted revenues in respect
of said months as delivered pursuant to the preceding
clause (x) (calculated, in each case, on a cumulative
basis) (i.e., the actual revenues reported for the
month of May 2002, when added to the actual revenues
reported in respect of the month of April 2002, shall
be no less than 95% of the budgeted revenues in
respect of said months (calculated on a cumulative
basis)).
(xvii) The Lenders shall have received evidence of insurance
maintained by Holdings and its subsidiaries
consistent with that of other companies of
substantially similar size and scope of operations in
the same or substantially similar businesses.
(xviii) The Agents shall have received, in form, scope and
substance reasonably satisfactory to them,
environmental reports from environmental consultants
reasonably satisfactory to them, and such other
reports, audits or certifications as they may
reasonably request.
(xix) During the period from the date hereof through the
Closing Date, Holdings and its subsidiaries shall
have been operated in the ordinary course and there
shall not have been sold any material asset of
Holdings and its subsidiaries other than in the
ordinary course and consistent with past practice.
(xx) There shall have been no material adverse change,
after the date hereof and prior to the completion of
the primary syndication of the Senior Secured
Financing (as determined by the Agents), to the
syndication market for credit facilities similar in
nature to the Credit Facilities contemplated herein
and there shall not have occurred and be continuing
during such period a material disruption of or
material adverse change in financial, banking or
capital markets that would have a material adverse
effect on the primary syndication, in each case as
determined by each Agent in its reasonable
discretion. The Sponsors, Holdings and the Borrower
shall have fully cooperated in the syndication
efforts, including, without limitation, by promptly
providing the Agents with all information reasonably
deemed necessary by them to successfully complete the
syndication.
(xxi) The Agents shall be satisfied with the management of
Holdings and its subsidiaries after giving effect to
the Transaction, and with all management employment
agreements and arrangements and all management equity
and incentive options.
(xxii) The Borrower shall have entered into a lease
agreement with Arch Communications, which lease
agreement shall be satisfactory to the Agents and the
Required Lenders.
EX. E-22
(xxiii) The Lenders shall have received, in form, scope and
substance satisfactory to the Agents and the Required
Lenders, (I) a first lien Mortgage, Deed of Trust or
Deed to Secure Debt encumbering all of Holdings' and
its subsidiaries owned, and to the extent required by
the Agents and the Required Lenders, leased (whether
by lease, easement or other possessory interest)
property, including all improvements and fixtures
located thereon (each, a "Mortgaged Property" and
collectively, the "Mortgaged Properties") (it being
understood and agreed that this clause (xxiii) shall
not apply to the leased property of Holdings and its
subsidiaries to the extent that the consent of the
landlord of such leased property cannot be obtained
following the exercise of commercially reasonably
efforts by Holdings and its subsidiaries to obtain
such consent), (II) ALTA surveys (or such other
surveys reasonably acceptable to the Agents and the
Required Lenders) for each Mortgaged Property
certified to the Administrative Agent acting in its
capacity as collateral agent for the Lenders (the
"Collateral Agent"), showing a state of facts
acceptable to the Agents and Required Lenders, (III)
a lender's form of Title Insurance Policy (1992),
insuring the lien of the Mortgage, Deed of Trust
and/or Deed to Secure Debt, as the case may be, as a
valid and enforceable first priority lien, subject to
only those exceptions reasonably acceptable to the
Agents and the Required Lenders, and containing all
endorsements reasonably required by the Agents and
the Required Lenders, (IV) a local counsel
enforceablility opinion for each state in which a
Mortgaged Property is located, stating that, among
other things, the Mortgage, Deed of Trust and/or Deed
to Secure Debt, as the case may be, is a valid
obligation of the Mortgagor, Trustor and/or Grantor,
as the case may be, enforceable in accordance with
its terms, and including such other matters as the
Agents and the Required Lenders may reasonably
request, (V) evidence that either: (a) each Mortgaged
Property does not lie in a flood zone; or (b) if any
such Mortgaged Property does lie in a flood, zone,
evidence of flood insurance covering such Mortgaged
Property, (VI) if recommended by local real estate
counsel, a UCC-1 fixture filing covering fixtures and
improvements located on each Mortgaged Property,
(VII) evidence of payment of all taxes, fees, and
charges relating to the conditions set forth above,
including, but not limited to, payment of title
insurance premiums and mortgage recording taxes, and
(VIII) any and all other documents and/or instruments
reasonable requested by the Agents which are deemed
by the Agents as necessary to accomplish any of the
foregoing.
(xxiv) (I) Holdings and its subsidiaries shall have
resolved, to the satisfaction of the Agents and the
Required Lenders, all tax
EX. E-23
issues related to the failure of Holdings and/or any
of its subsidiaries, as the case may be, to make
elections under U.S. Treasury Regulations section
301.7701-3 (the "check-the-box regulations") to treat
certain foreign subsidiaries of Holdings and its
subsidiaries as partnerships or as disregarded
entities for U.S. federal income tax purposes, (II)
for all periods from the formation of Holdings and
its subsidiaries (or any of their respective
predecessors) through the Closing Date (other than in
respect of the matter described in the preceding
clause (I)), the Agents and the Required Lenders
shall be satisfied that Holdings and its subsidiaries
were organized and have operated in conformity with
the requirements for qualification as a REIT and
(III) either (a) a final, non-appealable
determination by the Bankruptcy Court (as defined in
the Securities Purchase Agreement) or the Internal
Revenue Service ("IRS") shall have been made as to
the amount of taxes due with respect to
"built-in-gains" in assets acquired prior to the
Closing Date, directly or indirectly from any entity
treated as a corporation (other than an "S"
corporation) for U.S. federal income tax purposes or
(b) in the event that a final, non-appealable
determination by the Bankruptcy Court or the IRS
shall not have been made as to the amount of taxes
due with respect to "built-in-gains" in assets
acquired directly or indirectly from any entity
treated as a corporation (other than an "S"
corporation) for U.S. federal income tax purposes,
the Sponsors and/or the holders of the Existing
Senior Notes shall have entered into arrangements, in
form and substance (and subject to documentation)
satisfactory to the Agents and Required Lenders,
providing for the payment of any and all taxes that
are or become due prior to, on or after the Closing
Date with respect to such "built-in-gains" in assets
acquired prior to the Closing Date and referred to
above.
B. To All Loans*
(i) All representations and warranties shall be true and
correct on and as of the date of the borrowing
(although any representations and warranties which
expressly relate to a given date or period shall be
required to be true and correct as of the respective
date or for the respective period, as the case may
be), before and after giving effect to such borrowing
and to the application of the proceeds therefrom, as
though made on and as of such date.
--------------
* It is understood and agreed that for the purpose of satisfying the conditions
precedent set forth below in this Section B, no effect shall be given to any
waiver, amendment or modification of such representation and warranties,
covenants, Defaults or events of default unless any such waiver, amendment or
modification is agreed to by more than 50% of the Lenders holding commitments
under the Revolving Loan Facility.
EX. E-24
(ii) No event of default under the Credit Facilities or
event (a "Default") which with the giving of notice
or lapse of time or both would be an event of default
under the Credit Facilities, shall have occurred and
be continuing, or would result from such borrowing.
C. To Revolving
Loans The Borrower may not incur any Revolving Loan if
(after giving effect to the incurrence thereof and
the application of proceeds therefrom and any cash or
Cash Equivalents (to be defined) on hand (to the
extent such proceeds and/or other cash or Cash
Equivalents are actually utilized by the Borrower
and/or any other subsidiary of Holdings on the
respective date of incurrence of such Revolving Loan
for a permitted purpose other than an investment in
Cash Equivalents)) Holdings and its subsidiaries
would hold cash and Cash Equivalents on such date of
incurrence in an aggregate amount in excess of
U.S.$15 million (for purposes of cash and Cash
Equivalents denominated in a currency other than U.S.
Dollars, taking the U.S. Dollar equivalent of such
cash or Cash Equivalents).
Representations
and Warranties: Those representations and warranties which are usual
and customary for these types of facilities, and such
additional representations and warranties as are
appropriate under the circumstances.
Covenants: Those covenants usual and customary for these types
of facilities, and such additional covenants as are
appropriate under the circumstances (with customary
exceptions to be agreed upon). Special-purpose
corporation covenants shall apply to Holdings.
Although the covenants have not yet been specifically
determined, we anticipate that the other covenants
shall in any event include, but not be limited to:
(i) Limitations on other indebtedness (including
contingent liabilities and seller notes).
(ii) Limitations on mergers, acquisitions, joint ventures,
partnerships and acquisitions and dispositions of
assets.
(iii) Limitations on sale-leaseback transactions.
(iv) Limitations on dividends and restricted payments
(including, without limitation, limitations on the
payment of dividends that may be required to be made
by Holdings and its subsidiaries (or any related
entity) in connection with the acquisition of
corporations prior to the Closing Date).
EX. E-25
(v) Limitations on voluntary prepayments of Existing
Indebtedness and other indebtedness and amendments
thereto, and amendments to organizational documents
and other material agreements.
(vi) Limitations on transactions with affiliates and
formation of subsidiaries.
(vii) Limitations on (x) investments (including joint
ventures) and (y) cash and Cash Equivalents at any
time Revolving Loans are outstanding.
(viii) Maintenance of existence and properties.
(ix) Limitations on liens.
(x) Various financial covenants customary for a
transaction of this type, including without
limitation:
(a) Maximum Total Debt to EBITDA;
(b) Minimum Interest Coverage Ratio;
(c) Minimum Fixed Charge Coverage Ratio; and
(d) Minimum EBITDA.
(xi) Limitations on capital expenditures.
(xii) Adequate insurance coverage.
(xiii) ERISA covenants.
(xiv) Financial reporting, notice of environmental,
ERISA-related matters and material litigation and
visitation and inspection rights.
(xv) Compliance with laws, including environmental and
ERISA.
(xvi) Payment of taxes and other liabilities.
(xvii) Limitation on changes in nature of business.
(xviii) The obtaining of interest rate protection in amounts
and for periods to be determined.
(xix) Use of proceeds.
Events of
Default: Those events of default usual and customary for these
types of facilities, and such additional events of
default as are appropriate under the circumstances,
including, without
EX. E-26
limitation, a change of control (to be defined to the
satisfaction of the Agents) of Holdings or the Borrower.
Indemnification: The documentation for the Senior Secured Financing will
contain customary indemnities for the Lenders (other than as a
result of the respective Lender's gross negligence or willful
misconduct as determined by a court of competent jurisdiction
in a final and non-appealable decision).
EX. E-27
EXHIBIT F
PINNACLE HOLDINGS INC.
EMPLOYEE STOCK OPTION PLAN
SECTION 1. PURPOSE OF PLAN.
The name of this plan is the Pinnacle Holdings Inc. Employee Stock
Option Plan (the "Plan"). The Plan was adopted by the Board (as hereinafter
defined) on [ ], 2002. The purpose of the Plan is to provide additional
incentive to selected management employees of the Company (as hereinafter
defined) and its Subsidiaries (as hereinafter defined) whose contributions are
essential to the growth and success of the Company's business, in order to
strengthen the commitment of such persons to the Company and its Subsidiaries,
motivate such persons to faithfully and diligently perform their
responsibilities and attract and retain competent and dedicated persons whose
efforts will result in the long-term growth and profitability of the Company. To
accomplish such purposes, the Plan provides that the Company may grant Incentive
Stock Options (as hereinafter defined) and Nonqualified Stock Options (as
hereinafter defined). The Plan is intended, to the extent applicable, to satisfy
the requirements of section 162(m) of the Code (as hereinafter defined) and
shall be interpreted in a manner consistent with the requirements thereof.
SECTION 2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Administrator" means the Board, or if and to the
extent the Board does not administer the Plan, the Committee in accordance with
Section 3 hereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means (1) the continued failure by the
Participant substantially to perform his or her duties and obligations to the
Company or a Subsidiary, including without limitation repeated refusal to follow
the reasonable directions of his or her employer, knowing violation of law in
the course of performance of the duties of Participant's employment with the
Company or a Subsidiary, repeated absences from work without a reasonable
excuse, and intoxication with alcohol or illegal drugs while on the Company's or
a Subsidiary's premises during regular business hours (other than any such
failure resulting from his or her incapacity due to physical or mental illness);
(2) fraud or material dishonesty against the Company or a Subsidiary; or (3) a
conviction or plea of guilty or nolo contendere for the commission of a felony
or a crime involving material dishonesty. Determination of Cause shall be made
by the Administrator in its sole discretion.
(d) "Change in Capitalization" means any increase,
reduction, or change or exchange of Shares for a different number or kind of
shares or other securities or property by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of warrants or
rights, stock dividend, stock split or reverse stock
split, combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise, or any other corporate action, such as
declaration of a special dividend, that affects the capitalization of the
Company.
(e) "Change in Control" means any Person (other than
Fortress Investment Group LLC, Xxxxxxxxx Capital Partners, L.P. or their
respective Affiliates becoming the "Beneficial Owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of Shares representing in
excess of 50% of the then outstanding Shares.
(f) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.
(g) "Committee" means any committee or subcommittee the
Board may appoint to administer the Plan. If at any time or to any extent the
Board shall not administer the Plan, then the functions of the Administrator
specified in the Plan shall be exercised by the Committee. The composition of
the Committee shall at all times consist solely of persons who are (1)
"nonemployee directors" as defined in Rule 16b-3 issued under the Exchange Act,
and (2) unless otherwise determined by the Board, "outside directors" as defined
in section 162(m) of the Code.
(h) "Company" means Pinnacle Holdings Inc., a Delaware
corporation (or any successor corporation).
(i) "Disability" means (1) any physical or mental
condition that would qualify a Participant for a disability benefit under any
long-term disability plan maintained by the Company, (2) when used in connection
with the exercise of an Incentive Stock Option following termination of
employment, disability within the meaning of Section 22(e)(3) of the Code, or
(3) such other condition as may be determined in the sole discretion of the
Administrator to constitute Disability.
(j) "Effective Date" means the business day that the Plan
of Reorganization becomes effective.
(k) "Eligible Recipient" means a management employee of
the Company or any of its Subsidiaries who has been selected as an eligible
participant by the Administrator.
(l) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(m) "Exercise Price" means the per share price at which a
holder of an Option may purchase the Shares issuable upon exercise of the
Option.
(n) "Fair Market Value" as of a particular date shall
mean the fair market value of a share of New Common Stock as determined by the
Administrator in its sole discretion; provided, however, that (1) if the New
Common Stock is admitted to trading on a national securities exchange, fair
market value of a share of New Common Stock on
Ex. F-2
any date shall be the closing sale price reported for such share on such
exchange on the last day preceding such date on which a sale was reported, (2)
if the New Common Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation ("Nasdaq") System or other comparable
quotation system and has been designated as a National Market System ("NMS")
security, fair market value of a share of New Common Stock on any date shall be
the closing sale price reported for such share on such system on the last date
preceding such date on which a sale was reported, or (3) if the New Common Stock
is admitted to quotation on the Nasdaq System but has not been designated as an
NMS security, fair market value of a share of New Common Stock on any date shall
be the average of the highest bid and lowest asked prices of such share on such
system on the last date preceding such date on which both bid and ask prices
were reported.
(o) "Incentive Stock Option" shall mean an Option that is
an "incentive stock option" within the meaning of section 422 of the Code, or
any successor provision, and that is designated in the applicable Option
Agreement as an Incentive Stock Option.
(p) "New Common Stock" means the common stock, par value
$.01 per share, of the Company.
(q) "Nonqualified Stock Option" means any Option that is
not an Incentive Stock Option, including any Option that provides (as of the
time such Option is granted) that it will not be treated as an Incentive Stock
Option.
(r) "Option" means an option to purchase shares of New
Common Stock granted pursuant to Section 7 hereof.
(s) "Option Agreement" means, with respect to each
Option, the written agreement between the Company and the Participant setting
forth the terms and conditions of the Option.
(t) "Participant" means any Eligible Recipient selected
by the Administrator, pursuant to the Administrator's authority in Section 3
hereof, to receive grants of Options. A Participant who receives the grant of an
Option is sometimes referred to herein as an "Optionee."
(u) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (1) the Company or any of its
Subsidiaries, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(v) "Plan of Reorganization" means the Company's
pre-negotiated plan of reorganization, including all supplements, appendices and
schedules thereto.
Ex. F-3
(w) "Retirement" means a termination of a Participant's
employment, other than for Cause, on or after attainment of age 65.
(x) "Shares" means shares of New Common Stock and any
successor security.
(y) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by the Board or, at
the Board's sole discretion, by the Committee, which shall serve at the pleasure
of the Board. Pursuant to the terms of the Plan, the Administrator shall have
the power and authority, without limitation:
(1) to select those Eligible Recipients who shall be
Participants;
(2) to determine whether and to what extent Options are
to be granted hereunder to Participants;
(3) to determine the number of Shares to be covered by
each Option granted hereunder;
(4) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of each Option granted hereunder;
(5) to determine the terms and conditions, not
inconsistent with the terms of the Plan, which shall govern all written
instruments evidencing Options granted hereunder;
(6) to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall from time to time deem
advisable; and
(7) to interpret the terms and provisions of the Plan and
any Option issued under the Plan (and any Option Agreement relating thereto),
and to otherwise supervise the administration of the Plan.
(b) All decisions made by the Administrator pursuant to
the provisions of the Plan shall be final, conclusive and binding on all
persons, including the Company and the Participants. No member of the Board or
the Committee, nor any officer or employee of the Company acting on behalf of
the Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent
Ex. F-4
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.
SECTION 4. SHARES RESERVED FOR ISSUANCE UNDER THE PLAN.
(a) Subject to Section 5 hereof, the total number of
shares of New Common Stock reserved and available for issuance under the Plan
shall be equal to _______ Shares. Such Shares may consist, in whole or in part,
of authorized and unissued Shares or treasury shares. From and after the date
that the Plan is intended to comply with the requirements of Section 162(m) of
the Code, the aggregate number of Shares with respect to which Options may be
granted to any individual Optionee during the Company's fiscal year shall not
exceed [ ]. If an Option previously granted to any individual Optionee is
canceled in the same fiscal year of the Company in which it was granted, the
canceled option will be counted against the limitation described in the
immediately preceding sentence of this Section 4(a).
(b) To the extent that an Option expires or is otherwise
canceled or terminated without being exercised, the Shares covered by such
Option shall again be available for issuance in connection with future Options
granted under the Plan.
SECTION 5. EQUITABLE ADJUSTMENTS.
In the event of any Change in Capitalization, an equitable substitution
or proportionate adjustment shall be made in (i) the aggregate number and/or
kind of shares of common stock reserved for issuance under the Plan, and (ii)
the kind, number and/or option price of shares of stock or other property
subject to outstanding Options granted under the Plan, in each case as may be
determined by the Administrator, in its sole discretion. Such other equitable
substitutions or adjustments shall be made as may be determined by the
Administrator, in its sole discretion. Without limiting the generality of the
foregoing, in connection with a Change in Capitalization, the Administrator may
provide, in its sole discretion, for the cancellation of any outstanding Option
in exchange for payment in cash or other property of the Fair Market Value of
the Shares covered by such Options, reduced by the exercise price thereof.
SECTION 6. ELIGIBILITY.
The Participants under the Plan shall be selected from time to time by
the Administrator, in its sole discretion, from among Eligible Recipients. The
Administrator shall have the authority to grant Options to any Eligible
Recipient.
SECTION 7. OPTIONS.
(a) General. Participants who are granted Options shall
enter into an Option Agreement with the Company, in such form as the
Administrator shall determine, which Option Agreement shall set forth, among
other things, the Exercise Price of the Option, the term of the Option and
provisions regarding exercisability of the Option granted thereunder. Each
Option shall be clearly identified in the applicable Option Agreement as either
an Incentive Stock Option or a Nonqualified Stock Option. The provisions of each
Option need not be the same with respect to each Participant. More than
Ex. F-5
one Option may be granted to the same Participant and be outstanding
concurrently hereunder. Options granted under the Plan shall be subject to the
terms and conditions set forth in paragraphs (b)-(k) of this Section 7 and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable.
(b) Exercise Price. The per share Exercise Price of
Shares purchasable under an Option shall be determined by the Administrator in
its sole discretion at the time of grant but shall generally not be less than
100% of the Fair Market Value per Share on such date; provided, however, that in
the case of an Incentive Stock Option, the Exercise Price shall in no event be
less than the Fair Market Value per Share at the time of grant.
(c) Option Term. The term of each Option shall be fixed
by the Administrator, but no Option shall be exercisable more than ten years
after the date such Option is granted.
(d) Exercisability. Options shall be exercisable at such
time or times and subject to such terms and conditions, including the attainment
of preestablished corporate performance goals, as shall be determined by the
Administrator in the Option Agreement. The Administrator may also provide that
any Option shall be exercisable only in installments, and the Administrator may
waive such installment exercise provisions at any time, in whole or in part,
based on such factors as the Administrator may determine in its sole discretion.
(e) Method of Exercise. Options may be exercised in whole
or in part by giving written notice of exercise to the Company specifying the
number of Shares to be purchased, accompanied by payment in full of the
aggregate Exercise Price of the Shares so purchased in cash or its equivalent,
as determined by the Administrator. As determined by the Administrator, in its
sole discretion, payment in whole or in part may also be made (1) by means of
any cashless exercise procedure approved by the Administrator (including the
withholding of Shares otherwise issuable upon exercise), (2) in the form of
unrestricted Shares already owned by the Optionee which, (x) in the case of
unrestricted Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of surrender, and (y) have a Fair
Market Value on the date of surrender equal to the aggregate option price of the
Shares as to which such Option shall be exercised.
(f) Limitations on Incentive Stock Options. To the extent
that the aggregate Fair Market Value of shares of New Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by an
Optionee during any calendar year under the Plan and any other stock option plan
of the Company shall exceed $100,000, such Options shall be treated as
Nonqualified Stock Options. Such Fair Market Value shall be determined as of the
date on which each such Incentive Stock Option is granted. No Incentive Stock
Option may be granted to an individual if, at the time of the proposed grant,
such individual owns (or is deemed to own under the Code) stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company unless (1) the Exercise Price of such Incentive Stock Option is at least
110% of the Fair Market Value of a share of New Common Stock at the time such
Incentive Stock
Ex. F-6
Option is granted and (2) such Incentive Stock Option is not exercisable after
the expiration of five years from the date such Incentive Stock Option is
granted.
(g) Rights as Stockholder. An Optionee shall have no
rights to dividends or any other rights of a stockholder with respect to the
Shares subject to an Option until the Optionee has given written notice of
exercise, has paid in full for such Shares, has satisfied the requirements of
Section 10 hereof and, if requested, has given the representation described in
paragraph (b) of Section 11 hereof.
(h) Transfers of Options. Except as otherwise determined
by the Administrator, and in any event in the case of an Incentive Stock Option,
no Option granted under the Plan shall be transferable by an Optionee otherwise
than by will or the laws of descent and distribution. Unless otherwise
determined by the Administrator in accord with the provisions of the immediately
preceding sentence, an Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or, during the period the Optionee is under a
legal disability, by the Optionee's guardian or legal representative.
(i) Termination of Employment.
(1) Unless the applicable Option Agreement provides
otherwise, in the event that the employment of an Optionee with the Company or a
Subsidiary shall terminate for any reason other than Cause, Retirement,
Disability, or death, (A) Options granted to such Optionee, to the extent that
they are exercisable at the time of such termination, shall remain exercisable
until the date that is 90 days after such termination, on which date they shall
expire, and (B) Options granted to such Optionee, to the extent that they were
not exercisable at the time of such termination, shall expire at the close of
business on the date of such termination. The 90-day period described in this
Section 7(i)(1) shall be extended to one year after the date of such termination
in the event of the Optionee's death during such 90-day period. Notwithstanding
the foregoing, no Option shall be exercisable after the expiration of its term.
(2) Unless the applicable Option Agreement provides
otherwise, in the event that the employment of an Optionee with the Company or a
Subsidiary shall terminate on account of the Retirement, Disability, or death of
the Optionee, (A) Options granted to such Optionee, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until the
date that is one year after such termination, on which date they shall expire
and (B) Options granted to such Optionee, to the extent that they were not
exercisable at the time of such termination, shall expire at the close of
business on the date of such termination. Notwithstanding the foregoing, no
Option shall be exercisable after the expiration of its term.
(3) In the event of the termination of an Optionee's
employment for Cause, all outstanding Options granted to such Optionee shall
expire at the commencement of business on the date of such termination.
(j) Other Change in Employment Status. An Option shall be
affected, both with regard to vesting schedule and termination, by leaves of
absence, changes from full-time to part-time employment, partial disability or
other changes in the employment status of an Optionee, in the discretion of the
Administrator. The
Ex. F-7
Administrator shall follow the written policy of the Company (if any) as it may
be in effect from time to time, with regard to such matters.
(k) Acceleration Upon Change in Control. In the event of
a Change in Control, that portion of an Optionee's outstanding Options that are
not then vested and/or exercisable shall become fully vested and exercisable as
of the date of such Change in Control.
SECTION 8. AMENDMENT AND TERMINATION.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any Option theretofore granted without such Participant's
consent. Unless the Board determines otherwise, the Board shall obtain approval
of the Company's stockholders for any amendment that would require such approval
in order to satisfy the requirements of section 162(m) of the Code, stock
exchange rules or other applicable law. The Administrator may amend the terms of
any Option theretofore granted, prospectively or retroactively, but, subject to
Section 5 of Plan, no such amendment shall impair the rights of any Participant
without his or her consent.
SECTION 9. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.
SECTION 10. WITHHOLDING TAXES.
Whenever cash is to be paid pursuant to an Option, the Company shall
have the right to deduct therefrom an amount sufficient to satisfy any federal,
state and local withholding tax requirements related thereto. Whenever Shares
are to be delivered pursuant to an Option, the Company shall have the right to
require the Participant to remit to the Company in cash an amount sufficient to
satisfy any federal, state and local withholding tax requirements related
thereto. With the approval of the Administrator, a Participant may satisfy the
foregoing requirement by electing to have the Company withhold from delivery
Shares or by delivering already owned unrestricted Shares, in each case, having
a value equal to the minimum amount of tax required to be withheld. Such shares
shall be valued at their Fair Market Value on the date of which the amount of
tax to be withheld is determined. Fractional share amounts shall be settled in
cash. Such a election may be made with respect to all or any portion of the
shares to be delivered pursuant to an Option.
SECTION 11. GENERAL PROVISIONS.
(a) Shares shall not be issued pursuant to the exercise
of any Option granted hereunder unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act and the
Ex. F-8
requirements of any stock exchange upon which the New Common Stock may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
(b) The Administrator may require each person acquiring
Shares to represent to and agree with the Company in writing that such person is
acquiring the Shares without a view to distribution thereof. The certificates
for such Shares may include any legend that the Administrator deems appropriate
to reflect any restrictions on transfer.
(c) All certificates for Shares delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the New Common Stock may then be listed, and any applicable federal or
state securities law, and the Administrator may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions.
(d) The adoption of the Plan shall not confer upon any
Eligible Recipient any right to continued employment or service with the Company
or Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or Subsidiary to terminate the employment or service of any
of its Eligible Recipients at any time.
SECTION 12. EFFECTIVE DATE OF PLAN.
The effective date of the Plan shall be the Effective Date, subject to
the approval of the Company's stockholders within twelve months before or after
such date.
SECTION 13. TERM OF PLAN.
No Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date, but Options theretofore granted may extend
beyond that date.
Ex. F-9
EXHIBIT G
WARRANT AGREEMENT
between
PINNACLE HOLDINGS INC.
and
[ ]
as Warrant Agent
Dated as of , 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
ARTICLE II ISSUANCE OF WARRANTS...................................................................................4
2.1 Issuance........................................................................................4
2.2 Share Amount....................................................................................4
2.3 Form Of Warrant Certificate.....................................................................4
2.4 Execution Of Warrant Certificate................................................................4
2.5 Countersignature Of Warrant Certificates........................................................4
ARTICLE III EXERCISE PERIOD.......................................................................................5
ARTICLE IV EXERCISE PRICES........................................................................................5
ARTICLE V EXERCISE OF WARRANTS....................................................................................5
5.1 Manner Of Exercise..............................................................................5
5.2 When Exercise Effective.........................................................................6
5.3 Delivery Of Certificates, Etc. .................................................................6
5.4 Fractional Shares...............................................................................6
ARTICLE VI ADJUSTMENT OF THE AMOUNT OF COMMON STOCK ISSUABLE AND THE EXERCISE PRICE UPON EXERCISE.................7
6.1 Stock Dividends, Split-ups, And Combinations Of Shares..........................................7
6.2 Distributions...................................................................................7
6.3 Exercise Price Adjustment.......................................................................7
6.4 Adjustments For Mergers And Consolidations......................................................8
6.5 Calculation To Nearest Cent And One-hundredth Of Share..........................................8
6.6 Notice Of Adjustment In Exercise Price..........................................................8
6.7 Other Notices...................................................................................9
6.8 No Change In Warrant Terms On Adjustment: No Adjustment for Distributions under the Plan........9
6.9 Treasury Shares.................................................................................9
ARTICLE VII CONSOLIDATION, MERGER, ETC ...........................................................................9
ARTICLE VIII NO DILUTION OR IMPAIRMENT...........................................................................10
ARTICLE IX REPORTS...............................................................................................10
ARTICLE X NOTIFICATION OF CERTAIN EVENTS.........................................................................11
10.1 Available Information..........................................................................11
Ex. G-i
ARTICLE XI RESERVATION OF STOCK..................................................................................11
11.1 Reservation; Due Authorization, Etc............................................................11
11.2 Compliance With Law............................................................................11
ARTICLE XII PAYMENT OF TAXES.....................................................................................11
ARTICLE XIII LOSS OR MUTILATION..................................................................................12
ARTICLE XIV WARRANT REGISTRATION.................................................................................12
14.1 Registration...................................................................................12
14.2 Transfer Or Exchange...........................................................................12
14.3 Valid And Enforceable..........................................................................13
14.4 Endorsement....................................................................................13
14.5 No Service Charge..............................................................................13
14.6 Cancellation...................................................................................13
ARTICLE XV WARRANT AGENT.........................................................................................13
15.1 Obligations Binding............................................................................13
15.2 No Liability...................................................................................13
15.3 Instructions...................................................................................14
15.4 Agents.........................................................................................14
15.5 Cooperation....................................................................................14
15.6 Agent Only.....................................................................................14
15.7 Right To Counsel...............................................................................14
15.8 Compensation...................................................................................15
15.9 Accounting.....................................................................................15
15.10 No Conflict....................................................................................15
15.11 Resignation; Termination.......................................................................15
15.12 Change Of Warrant Agent........................................................................16
15.13 Successor Warrant Agent........................................................................16
ARTICLE XVI REMEDIES, ETC........................................................................................16
16.1 Remedies.......................................................................................16
16.2 Warrant Holder Not Deemed A Stockholder........................................................17
16.3 Right Of Action................................................................................17
ARTICLE XVII MISCELLANEOUS.......................................................................................17
17.1 Notices........................................................................................17
17.2 Governing Law And Consent To Forum.............................................................18
17.3 Benefits Of This Agreement.....................................................................18
17.4 Agreement Of Holders Of Warrant Certificates...................................................18
17.5 Counterparts...................................................................................18
17.6 Amendments.....................................................................................18
17.7 Consent To Jurisdiction........................................................................19
Ex. G-ii
17.8 Headings.......................................................................................19
EXHIBITS
Exhibit A: Form of _________ Warrant Certificate
Ex. G-iii
WARRANT AGREEMENT
THIS WARRANT AGREEMENT, is made and entered into as of [ ], 2002 (the
"Agreement"), by and between PINNACLE HOLDINGS INC., a Delaware corporation (the
"Company"), and [ ], as Warrant Agent (the "Warrant Agent").
WITNESSETH:
WHEREAS, in connection with the financial restructuring of the Company
pursuant to the Securities Purchase Agreement (as defined herein) and the plan
of reorganization (the "Plan") the Company proposes to issue warrants which are
exercisable to purchase up to __________ shares of Common Stock (as defined
herein), subject to adjustment as provided herein (the "Warrants"), to the
holders of the Company's Convertible Notes and Old Common Stock (each as defined
herein) in exchange for such Convertible Notes and Old Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to act, in connection with the
issuance, transfer, exchange, replacement, and exercise of the Warrant
Certificates and other matters as provided herein; and
WHEREAS, the Company desires to enter into this Agreement to set forth
the terms and conditions of the Warrants and the rights of the holders thereof,
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual agreements set forth herein, the Company and the Warrant Agent hereby
agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the respective meanings
set forth below. Whenever the context requires, such terms shall include the
plural as well as the singular number.
"Affiliate" means with respect to any Person, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, (a) "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting Common Stock (or equivalent equity interests), by contract or
otherwise, and the terms "controlling" or "controlled" have meanings correlative
to the foregoing, and (b) a subsidiary of a Person is an Affiliate of such
Person and of each other subsidiary of that Person.
"Agreement" means this Warrant Agreement, as the same may be amended or
modified from time to time hereafter.
"Bankruptcy Code" means title 11 of the United States Code.
"Bankruptcy Court" means the United States Bankruptcy Court or other
U.S. Federal court of competent jurisdiction in which the Chapter 11 Case is
pending.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close; provided, that,
in determining the period within which certificates or Warrants are to be issued
and delivered at a time when shares of Common Stock are listed or admitted to
trading on any national securities exchange or in the over-the-counter market
and in determining the Fair Value of any securities listed or admitted to
trading on any national securities exchange or in the over-the-counter market,
"Business Day" shall mean any day when the principal exchange on which such
securities are then listed or admitted to trading is open for trading or, if
such securities are traded in the over-the-counter market in the United States,
such market is open for trading; provided, further, that any reference in this
Agreement to "days" (unless Business Days are specified) shall mean calendar
days.
"Chapter 11 Case" means a case or cases under Chapter 11 of the
Bankruptcy Code concerning the Company and/or any of its Subsidiaries.
"Common Stock" means the Company's Common Stock, par value $.01 per
share, as authorized from and after the Consummation Date.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
"Company" means Pinnacle Holdings Inc., a Delaware corporation.
"Consummation Date" has the meaning specified in the Plan.
"Convertible Notes" shall mean the 5 1/2% Convertible Subordinated
Notes due 2007.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be amended and in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934 shall
include a reference to the comparable section, if any, of any such successor
Federal statute.
"Exercise Period" has the meaning specified in Article 3.
"Exercise Price" has the meaning specified in Article 4.
"Fair Value" means (a) with respect to Common Stock in each case if
such security is listed on one or more stock exchanges or quoted on the National
Market System or SmallCap Market of NASDAQ (the "NASDAQ Market"), the average of
the closing sales prices of a share of such Common Stock on the primary national
or regional stock exchange on which such security is listed or on the NASDAQ
Market if quoted thereon or (b) if the Common Stock is not so listed or quoted
but is traded in the over-the-counter market (other than the NASDAQ Market), the
average of the closing bid and asked prices of a share of such Common Stock in
each case for the 30 Business Days (or such lesser number of
Ex. G-2
Business Days as such Common Stock or other security shall have been so listed,
quoted or traded) next preceding the date of measurement; provided, however,
that if no such sales price or bid and asked prices have been quoted during the
preceding 30-day period or there is otherwise no established trading market for
such security, then "Fair Value" means the value of such Common Stock as
determined reasonably and in good faith by the Board of Directors of the
Company; and provided, further, however, that in the event the current market
price of a share of such Common Stock is determined during a period following
the announcement by the Company of (x) a dividend or distribution on the Common
Stock payable in shares of Common Stock, or (y) any subdivision, combination, or
reclassification of the Common Stock, and prior to the expiration of 30 Business
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination, or reclassification, then and in each
such case, the "Fair Value" shall be appropriately adjusted to take into account
ex-dividend trading. Anything herein to the contrary notwithstanding, in case
the Company shall issue any shares of Common Stock, rights, or options, in
connection with the acquisition by the Company of the stock or assets of any
other Person or the merger of any other Person into the Company, the Fair Value
of the Common Stock so issued shall be determined as of the date the number of
shares of Common Stock, rights, or options, was determined (as set forth in a
written agreement between the Company and the other party to the transaction)
rather than on the date of issuance of such shares of Common Stock, rights, or
option.
"Issue Date" has the meaning specified in Section 2.1.
"Old Common Stock" means the Company's common stock, par value $.01 per
share, outstanding as of the date of the Company's filing of the petition
commencing the Chapter 11 Case.
"Person" means any individual, partnership, association, joint venture,
corporation, business trust, unincorporated organization, government, or
department, agency or subdivision thereof, or other person or entity.
"Plan" means the reorganization plan of the Company, as confirmed by
order of the Bankruptcy Court entered on , 2002.
"Public Offering" means any offering of Common Stock to the public
pursuant to an effective registration statement under the Securities Act.
"Securities Act" means the Securities Act of 1933, or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be amended and in effect at the time.
"Securities Purchase Agreement" means that agreement by and among
Pinnacle Holdings Inc. and Pinnacle Towers Inc., on the one hand, and the
Investors named therein, on the other hand, dated as of ________________________
____, 2002.
"Subsidiaries" means each corporation, limited liability company,
partnership, business association or other Person in which the Company owns any
direct or indirect equity interest.
Ex. G-3
"Warrant Agent" means [ ].
"Warrant Certificate" has the meaning specified in Section 2.3.
"Warrants" means, the Company's Warrants to purchase up to an aggregate
of __________ shares of Common Stock at the Exercise Price, subject to
adjustment as provided herein, issued in exchange for the Convertible Notes and
Old Common Stock pursuant to the Plan.
ARTICLE 2
ISSUANCE OF WARRANTS
2.1 Issuance. On the date hereof (the "Issue Date"),
which is also the Consummation Date, the Company shall, pursuant to the Plan,
deliver to the Company's disbursing agent under the Plan for re-distribution to
the holders of the Convertible Notes and Old Common Stock, a global certificate
for an aggregate of __________ Warrants.
2.2 Share Amount. The number of shares of Common Stock
purchasable upon exercise of the Warrants shall be one (1) Warrant to one (1)
share of Common Stock, subject to adjustments from and after the Issue Date as
provided in Article 6 of this Agreement.
2.3 Form Of Warrant Certificate. The Warrants shall be
evidenced by certificates substantially in the form attached hereto as Exhibit A
(the "Warrant Certificate"). Each Warrant Certificate shall be dated as of the
date on which it is countersigned by the Warrant Agent, which shall be on the
Issue Date or, in the event of a division, exchange, substitution or transfer of
any of the Warrants, on the date of such event. The Warrant Certificate may have
such further legends and endorsements stamped, printed, lithographed, or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation pursuant thereto or with any rule or
regulation of any securities exchange on which the Warrants may be listed.
2.4 Execution Of Warrant Certificate. Warrant
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, Vice Chairman of the Board, Chief Executive Officer, President, any Vice
President, Treasurer or Secretary, either manually or by facsimile signature
printed thereon. In case any such officer of the Company whose signature shall
have been placed upon any Warrant Certificate shall cease to be such officer of
the Company before countersignature by the Warrant Agent or issuance and
delivery thereof, such Warrant Certificate nevertheless may be countersigned by
the Warrant Agent and issued and delivered with the same force and effect as
though such person had not ceased to be such officer of the Company.
2.5 Countersignature Of Warrant Certificates. Warrant
Certificates shall be manually countersigned by an authorized signatory of the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
Such manual countersignature shall constitute conclusive evidence of such
authorization. The Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of this Section 2.5, and deliver
Ex. G-4
any new Warrant Certificates, as directed by the Company pursuant to Section 2.1
and as and when required pursuant to the provisions of Articles 13 and 14. Each
Warrant Certificate shall, when manually countersigned by an authorized
signatory of the Warrant Agent, entitle the registered holder thereof to
exercise the rights as the holder of the number of Warrants set forth thereon,
subject to the provisions of this Agreement.
ARTICLE III
EXERCISE PERIOD
Each Warrant shall entitle the holder thereof to purchase from the
Company one (1) share of Common Stock (subject to the adjustments provided
herein), at any time during the five (5) year period that commences on the First
Business Day that is one (1) day after the Issue Date, and that terminates at
5:00 p.m., New York City time on the First Business Day that is five (5) years
after the Issue Date (the "Exercise Period").
ARTICLE IV
EXERCISE PRICES
The Exercise Price for the Warrants shall be $[20.00] per share of
Common Stock (subject to adjustment pursuant to Article 6 hereof).
ARTICLE IV
EXERCISE OF WARRANTS
5.1 Manner Of Exercise. All or any of the Warrants
represented by a Warrant Certificate may be exercised by the registered holder
thereof during normal business hours on any Business Day, by surrendering such
Warrant Certificate, with the subscription form set forth therein duly executed
by such holder, by hand or by mail to the Warrant Agent at its office addressed
to [ ], [ ] , or, if such exercise shall be in connection with an underwritten
Public Offering, at the location designated by the Company. Such Warrant
Certificate shall be accompanied by payment in respect of each Warrant that is
exercised, which shall be made by certified or official bank or bank cashier's
check payable to the order of the Company, except as otherwise provided herein.
Such payment shall be in an amount equal to the product of the number of shares
of
Ex. G-5
Common Stock (without giving effect to any adjustment therein) designated in
such subscription form multiplied by the original Exercise Price for the
Warrants being exercised (plus such additional consideration as may be provided
herein). Upon such surrender and payment, such holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock determined as provided in Articles 2
and 3, and as and if adjusted pursuant to Article 6.
5.2 When Exercise Effective. Each exercise of any Warrant
pursuant to Section 5.1 shall be deemed to have been effected immediately prior
to the close of business on the Business Day on which the Warrant Certificate
representing such Warrant, duly executed, with accompanying payment shall have
been delivered as provided in Section 5.1, and at such time the Person or
Persons in whose name or names the certificate or certificates for Common Stock
shall be issuable upon such exercise as provided in Section 5.3 shall be deemed
to have become the holder or holders of record thereof.
5.3 Delivery Of Certificates, Etc.
(a) As promptly as practicable after the exercise of
any Warrant, and in any event within five (5) Business Days thereafter (or, if
such exercise is in connection with an underwritten Public Offering,
concurrently with such exercise), the Company at its expense (other than as to
payment of transfer taxes which will be paid by the holder) will cause to be
issued and delivered to such holder, or as such holder may otherwise direct in
writing (subject to Article 13),
(i) a certificate or certificates for the
number of shares of Common Stock to which such holder is entitled, and
(ii)if less than all the Warrants
represented by a Warrant Certificate are exercised, a new Warrant Certificate or
Warrant Certificates of the same tenor and for the aggregate number of Warrants
that were not exercised, executed, and countersigned in accordance with Sections
2.4 and 2.5.
(b) The Warrant Agent shall countersign any new
Warrant Certificate, register it in such name or names as may be directed in
writing by such holder, and shall deliver it to the person entitled to receive
the same in accordance with this Section 5.3. The Company, whenever required by
the Warrant Agent, will supply the Warrant Agent with Warrant Certificates
executed on behalf of the Company for such purpose.
5.4 Fractional Shares. No fractional shares of Common
Stock shall be issued upon any exercise of Warrants. If more than one Warrant
Certificate shall be delivered for exercise at one time by the same holder, the
number of full shares or securities that shall be issuable upon exercise shall
be computed on the basis of the aggregate number of Warrants exercised. As to
any fraction of a share of Common Stock, the Company shall pay a cash adjustment
in respect thereto in an amount equal to
Ex. G-6
the product of the Fair Value per share of Common Stock as of the Business Day
next preceding the date of such exercise multiplied by such fraction of a share.
ARTICLE VI
ADJUSTMENT OF THE AMOUNT OF COMMON STOCK ISSUABLE AND THE
EXERCISE PRICE UPON EXERCISE
6.1 Stock Dividends, Split-ups, And Combinations Of
Shares. If after the date hereof the number of outstanding shares of Common
Stock is increased by a dividend, share distribution, or split up, in each case
payable in shares of Common Stock, or if the number of outstanding shares of
Common Stock is combined into a smaller number of such shares or in the event of
any other reclassification of shares of Common Stock (other than a
reclassification in connection with a merger, consolidation, or other business
combination which will be governed by Section 6.4), then the number of shares of
Common Stock issuable upon exercise of each Warrant immediately after the
occurrence of any such event shall be adjusted so that the holder of each
Warrant shall be entitled to receive the kind and number of shares of Common
Stock of the Company which such holder would have been entitled to receive upon
the occurrence of such event had such Warrant been exercised immediately prior
thereto or any record date with respect thereto (with any record date
requirement being deemed to have been satisfied). Any adjustment made pursuant
to this Section 6.1 shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.
6.2 Distributions. If after the date hereof the Company
shall distribute to all holders of its shares of Common Stock evidences of its
indebtedness or assets (excluding all cash distributions and all other
distributions determined by the Board of Directors of the Company in its sole
discretion to be necessary or appropriate to permit the Company's continued
qualification as a "real estate investment trust") or rights to subscribe to
shares of Common Stock expiring more than 45 days after the issuance thereof,
then in each such case the Exercise Price in effect immediately prior to such
distribution shall be decreased to an amount determined by multiplying such
Exercise Price by a fraction, the numerator of which is the Fair Value of a
share of the Common Stock at the date of such distribution less the Fair Value
per share of Common Stock outstanding at such date of the assets or evidences of
indebtedness so distributed or of such subscription rights (as determined by the
board of directors of the Company, whose determination shall be conclusive, and
described in a statement filed with the Warrant Agent) and the denominator of
which is the Fair Value of a share of Common Stock at such date. Such adjustment
shall be made whenever any such distribution is made, and shall become effective
retroactively on the date immediately after the record date for the
determination of stockholders entitled to receive such distribution.
6.3 Exercise Price Adjustment. Whenever the number of
shares of Common Stock into which a Warrant is exercisable is adjusted as
provided in this Article 6, then the Exercise Price payable upon exercise of the
Warrant shall simultaneously be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, the numerator of which shall
be the number of shares of Common Stock into
Ex. G-7
which such Warrant was exercisable immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Common Stock into which
such Warrant was exercisable immediately thereafter.
6.4 Adjustments For Mergers And Consolidations. In case
the Company, after the date hereof, shall merge or consolidate with another
Person, then, in the case of any such transaction, proper provision shall be
made so that, upon the basis and terms and in the manner provided in this
Warrant Agreement, the holders of the Warrants, upon the exercise thereof at any
time after the consummation of such transaction (subject to the Exercise
Period), shall at the election of the Company made prior to the consummation of
such transaction be entitled to receive (at the aggregate Exercise Price in
effect at the time of the transaction for all Common Stock issuable upon such
exercise immediately prior to such consummation), in lieu of the Common Stock
issuable upon such exercise prior to such consummation, either (a) the amount of
securities, cash, or other property to which such holder would have been
entitled as a holder of Common Stock upon such consummation if such holder had
exercised the rights represented by the Warrants held by such holder immediately
prior thereto (which in the case of a transaction in which stockholders may
elect to receive different consideration shall be deemed to be the consideration
received by stockholders who fail to make an election), subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in Sections 6.1 and 6.2 hereof, or (b) the excess, if
any, of the Fair Value of all Common Stock) issuable upon such exercise
immediately prior to such consummation over the aggregate Exercise Price in
effect at the time of such consummation, payable in cash promptly following such
consummation. In the event that the Company makes the election provided for in
clause (b) of the immediately preceding sentence, the Warrants shall expire upon
consummation of such transaction.
6.5 Calculation To Nearest Cent And One-hundredth Of
Share. All calculations under this Article 6 shall be made to the nearest cent
or to the nearest one-hundredth of a share, as the case may be.
6.6 Notice Of Adjustment In Exercise Price. Whenever the
Exercise Price and securities issuable shall be adjusted as provided in this
Article 6, the Company shall forthwith file with the Warrant Agent a statement,
signed by the Chairman of the Board, Vice Chairman of the Board, the President,
or any Vice President of the Company and by its Treasurer or an Assistant
Treasurer or its Secretary or an Assistant Secretary, stating in detail the
facts requiring such adjustment, the Exercise Price that will be effective after
such adjustment and the impact of such adjustment on the number and kind of
securities issuable upon exercise of the Warrants. The Company shall also cause
a notice setting forth any such adjustments to be sent by mail, first class,
postage prepaid, to each registered holder of Warrants at its address appearing
on the Warrant register. The Warrant Agent shall have no duty with respect to
any statement filed with it except to keep the same on file and available for
inspection by registered holders of Warrants during reasonable business hours.
The Warrant Agent shall not at any time be under any duty or responsibility to
any holder of a Warrant to determine whether any facts exist which may require
any adjustment to the Exercise Price or securities issuable, or with
Ex. G-8
respect to the nature or extent of any adjustment of the Exercise Price or
securities issuable when made or with respect to the method employed in making
such adjustment.
6.7 Other Notices. In case the Company after the date
hereof shall propose to take any action of the type described in Sections 6.1,
6.2, or 6.3 of this Article 6, the Company shall give notice to the Warrant
Agent and to each registered holder of a Warrant in the manner set forth in
Section 6.6 of this Article 6, which notice shall specify, in the case of action
of the type specified in Section 6.2 or 6.3, the date on which a record shall be
taken with respect to any such action. Such notice shall be given, in the case
of any action of the type specified in Section 6.2 or 6.3, at least ten (10)
days prior to the record date with respect thereto. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of any such
action. Where appropriate, such notice may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
Section 6.6 of this Article 6.
6.8 No Change In Warrant Terms On Adjustment: No
Adjustment for Distributions under the Plan. Irrespective of any adjustments in
the Exercise Price or the number of shares of Common Stock issuable upon
exercise, Warrants theretofore or thereafter issued may continue to express the
same prices and number of shares as are stated in the similar Warrants issuable
initially, or at some subsequent time, pursuant to this Agreement, and the
Exercise Price and such number of shares issuable upon exercise specified
thereon shall be deemed to have been so adjusted. Without limiting the
foregoing, no adjustment shall be made pursuant to this Article 6 by reason of
(a) the issuance of shares of Common Stock or other securities, including the
Warrants, pursuant to the Plan, (b) the issuance of any stock options issued
pursuant to or as permitted by the Plan, (c) the issuance or sale by the Company
of any shares of Common Stock pursuant to the exercise of any stock options or
Warrants; or (d) the issuance of shares of Common Stock for consideration
consisting in cash or property in whole or in part.
6.9 Treasury Shares. Shares of Common Stock at any time
owned by the Company shall not be deemed to be outstanding for the purposes of
any computation under this Article 6.
ARTICLE VII
CONSOLIDATION, MERGER, ETC.
Notwithstanding anything contained herein to the contrary, the Company
will not effect a merger or consolidation unless, prior to the consummation of
such transaction, each Person (other than the Company) which may be required to
deliver any Common Stock, securities, cash, or property upon the exercise of
this Warrant as provided herein shall assume, by written instrument delivered to
the Warrant Agent, the obligations of the Company under this Warrant Agreement
and under each of the Warrants, including, without limitation, the obligation to
deliver such shares of Common Stock, cash, or property as may be required
pursuant to Article 6 hereof.
Ex. G-9
ARTICLE VIII
NO DILUTION OR IMPAIRMENT
The Company will not, by amendment of its certificate of incorporation
or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issuance or sale of securities, or any other voluntary action or
omission, avoid or seek to avoid the observance or performance of any of the
terms of this Agreement or any of the Warrants issued hereunder, but will at all
times in good faith observe and perform all such terms and take all such action
as may be necessary or appropriate to protect the rights of each holder of a
Warrant against dilution or other impairment of the kind specified herein,
provided, however, that, subject to compliance with the applicable provisions of
this Agreement, the Company shall not be prohibited by this Article VIII or by
any provision of this Agreement from making decisions providing for, inter alia,
the merger or consolidation of the Company or the sale of its assets which
transactions, in the judgment of the Company's board of directors, are in the
best interests of the Company and its stockholders. Without limiting the
generality of the foregoing, the Company (a) will not permit the par value of
any shares of stock receivable upon the exercise of any Warrant to exceed the
amount payable therefore upon such exercise, (b) will take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of stock upon the exercise of
all of the Warrants from time to time outstanding, and (c) will not take any
action that results in any adjustment of the shares issuable upon exercise of
the Warrants (or which entitles the holders of the Warrants to receive upon such
exercise) if the total number of shares of Common Stock issuable after the
action upon the exercise of all of the Warrants would exceed the total number of
shares of Common Stock then authorized by the Company's certificate of
incorporation and available for the purpose of issuance upon such exercise.
ARTICLE IX
REPORTS
In each case of any adjustment or readjustment in the shares of Common
Stock issuable upon exercise of the Warrants, the Company at its expense will
promptly compute such adjustment or readjustment after giving effect to such in
accordance with the terms of this Agreement and shall prepare a report setting
forth such adjustment or readjustment and showing in reasonable detail the
method of calculation thereof and the facts upon which such adjustment or
readjustment is based. The Company will promptly mail a copy of each such report
to the Warrant Agent, which shall promptly mail a copy to each holder of a
Warrant. The Warrant Agent will cause the same to be available for inspection at
its principal office during normal business hours by any holder of a Warrant or
any prospective purchaser of a Warrant designated by the holder thereof.
Ex. G-10
ARTICLE X
NOTIFICATION OF CERTAIN EVENTS
10.1 Available Information. The Company shall promptly
file with the Warrant Agent copies of its annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may by rules and regulations prescribe) that the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act.
ARTICLE IX
RESERVATION OF STOCK
11.1 Reservation; Due Authorization, Etc. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, solely for issuance and delivery
upon exercise of Warrants, the full number of shares of Common Stock from time
to time issuable upon exercise of all Warrants and any other outstanding
warrants, options, or similar rights, from time to time outstanding. All shares
of Common Stock shall be duly authorized and, when issued upon such exercise,
shall be duly and validly issued, and (in the case of shares) fully paid and
nonassessable, and free from all taxes, liens, charges, security interests,
encumbrances, and other restrictions created by or through the Company.
11.2 Compliance With Law. The Company will use its best
efforts, at its expense and on a continual basis, to assure that all shares of
Common Stock that may be issued upon exercise of Warrants may be so issued and
delivered without violation of any Federal or state securities law or
regulation, or any other law or regulation applicable to the Company or any of
its Subsidiaries; provided, that, with respect to any such exercise involving a
sale or transfer of Warrants or any such securities issuable upon such exercise,
the Company shall have no obligation to register such Warrants or securities
under any such securities law.
ARTICLE XII
PAYMENT OF TAXES
The Company will pay any and all documentary stamp or similar issue
taxes payable to the United States of America or any State, or any political
subdivision or taxing authority thereof or therein, in respect of the issuance
or delivery of shares of Common Stock on exercise of Warrants, provided, that
the Company shall not be required to pay any tax that may be payable in respect
of any transfer of a Warrant or any transfer involved in the issuance and
delivery of Common Stock in a name other than that of the registered holder of
the Warrants to be exercised, and no such issuance or delivery shall be made
unless and until the person requesting such issuance has paid to the Company the
amount of any such tax or has established, to the reasonable satisfaction of the
Company, that such tax has been paid.
Ex. G-11
ARTICLE XIII
LOSS OR MUTILATION
Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the ownership of and the loss, theft,
destruction, or mutilation of any Warrant Certificate and of an indemnity bond
reasonably satisfactory to them in form or amount, and (in the case of
mutilation) upon surrender and cancellation thereof, then, in the absence of
notice to the Company or the Warrant Agent that the Warrants represented thereby
have been acquired by a bona fide purchaser, the Company shall execute and
deliver to the Warrant Agent and, upon the Company's request, an authorized
signatory of the Warrant Agent shall manually countersign and deliver, to the
registered holder of the lost, stolen, destroyed, or mutilated Warrant
Certificate, in exchange for or in lieu thereof, a new Warrant Certificate of
the same tenor and for a like aggregate number of Warrants. Upon the issuance of
any new Warrant Certificate under this Article 13, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the
reasonable fees and expenses of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this Article 13
in lieu of any lost, stolen, or destroyed Warrant Certificate shall be entitled
to the same benefits of this Agreement equally and proportionately with any and
all other Warrant Certificates, whether or not the allegedly lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone. The
provisions of this Article 13 are exclusive and shall preclude (to the extent
lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen or destroyed Warrant Certificates.
ARTICLE XIV
WARRANT REGISTRATION
14.1 Registration. The Warrant Certificates shall be
issued in registered form only and shall be registered in the names of the
record holders of the Warrant Certificates to whom they are to be delivered. The
Company shall maintain or cause to be maintained a register in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Warrants and of transfers or exchanges of Warrant
Certificates as provided in this Agreement. Such register shall be maintained at
the office of the Company or the Warrant Agent located at the respective address
therefore as provided in Section 17.1. Such register shall be open for
inspection upon notice at all reasonable times by the Warrant Agent and each
holder of a Warrant.
14.2 Transfer Or Exchange. Subject to Section 2.1 hereof,
at the option of the holder, Warrant Certificates may be exchanged or
transferred for other Warrant Certificates for a like aggregate number of
Warrants, upon surrender of the Warrant Certificates to be exchanged at the
office of the Company or the Warrant Agent maintained for such purpose at the
respective address therefore as provided in Section 17.1, and upon payment of
the charges herein provided. Whenever any Warrant Certificates are so
surrendered for exchange or transfer, the Company shall execute, and
Ex. G-12
an authorized signatory of the Warrant Agent shall manually countersign and
deliver, the Warrant Certificates that the holder making the exchange is
entitled to receive.
14.3 Valid And Enforceable. All Warrant Certificates
issued upon any registration of transfer or exchange of Warrant Certificates
shall be the valid obligations of the Company, evidencing the same obligations,
and entitled to the same benefits under this Agreement, as the Warrant
Certificates surrendered for such registration of transfer or exchange.
14.4 Endorsement. Every Warrant Certificate surrendered
for registration of transfer or exchange shall (if so required by the Company or
the Warrant Agent) be duly endorsed, or be accompanied by an instrument of
transfer in form reasonably satisfactory to the Company and the Warrant Agent
and duly executed by the registered holder thereof or such holder's officer or
representative duly authorized in writing.
14.5 No Service Charge. No service charge shall be made
for any registration of transfer or exchange of Warrant Certificates.
14.6 Cancellation. Any Warrant Certificate surrendered for
registration of transfer, exchange or the exercise of the Warrants represented
thereby shall, if surrendered to the Company, be delivered to the Warrant Agent,
and all Warrant Certificates surrendered or so delivered to the Warrant Agent
shall be promptly cancelled by the Warrant Agent. Any such Warrant Certificate
shall not be reissued by the Company and, except as provided in this Article 14
in case of an exchange or transfer, in Article 13 in case of a mutilated Warrant
Certificate and in Article 3 in case of the exercise of less than all the
Warrants represented thereby, no Warrant Certificate shall be issued hereunder
in lieu thereof. The Warrant Agent shall deliver to the Company from time to
time or otherwise dispose of such cancelled Warrant Certificates in a manner
reasonably satisfactory to the Company.
ARTICLE XV
WARRANT AGENT
15.1 Obligations Binding. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the terms and conditions
set forth in this Article 15. The Company, and the holders of Warrants by their
acceptance thereof, shall be bound by all of such terms and conditions.
15.2 No Liability. The Warrant Agent shall not by
countersigning Warrant Certificates or by any other act hereunder be accountable
with respect to or be deemed to make any representations as to the validity or
authorization of the Warrants or the Warrant Certificates (except as to its
countersignature thereon), as to the validity, authorization, or value (or kind
or amount) of any Common Stock or any other property delivered or deliverable
upon exercise of any Warrant, or as to the purchase price of such Common Stock,
securities, or other property. The Warrant Agent shall not (a) be liable
Ex. G-13
for any recital or statement of fact contained herein or in the Warrant
Certificates or for any action taken, suffered, or omitted by the Warrant Agent
in good faith in the belief that any Warrant Certificate or any other document
or any signature is genuine or properly authorized, (b) be responsible for
determining whether any facts exist that may require any adjustment of the
purchase price and the number of shares of Common Stock purchasable upon
exercise of Warrants, or with respect to the nature or extent of any such
adjustments when made, or with respect to the method of adjustment employed, (c)
be responsible for any failure on the part of the Company to issue, transfer, or
deliver any Common Stock or property upon the surrender of any Warrant for the
purpose of exercise or to comply with any other of the Company's covenants and
obligations contained in this Agreement or in the Warrant Certificates, or (d)
be liable for any act or omission in connection with this Agreement except for
its own bad faith, negligence, or willful misconduct.
15.3 Instructions. The Warrant Agent is hereby authorized
to accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, Vice Chairman of the Board, President, any Vice
President, Treasurer or any Assistant Treasurer of the Company, and to apply to
any such officer for advice or instructions. The Warrant Agent shall not be
liable for any action taken, suffered, or omitted by it in good faith in
accordance with the instructions of any such officer.
15.4 Agents. The Warrant Agent may execute and exercise
any of the rights and powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys, agents, or employees, provided
reasonable care has been exercised in the selection and in the continued
employment of any such attorney, agent, or employee. The Warrant Agent shall not
be under any obligation or duty to institute, appear in, or defend any action,
suit, or legal proceeding in respect hereof, but this provision shall not affect
the power of the Warrant Agent to take such action as the Warrant Agent may
consider proper. The Warrant Agent shall promptly notify the Company in writing
of any claim made or action, suit, or proceeding instituted against the Warrant
Agent arising out of or in connection with this Agreement.
15.5 Cooperation. The Company will perform, execute,
acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further acts, instruments, and assurances as may reasonably
be required by the Warrant Agent in order to enable the Warrant Agent to carry
out or perform its duties under this Agreement.
15.6 Agent Only. The Warrant Agent shall act solely as
agent. The Warrant Agent shall not be liable except for the performance of such
duties as are specifically set forth herein, and no implied covenants or
obligations shall be read into this Agreement against the Warrant Agent, whose
duties and obligations shall be determined solely by the express provisions
hereof.
15.7 Right To Counsel. The Warrant Agent may at any time
consult with legal counsel satisfactory to it (who may be legal counsel for the
Company) and the Warrant Agent shall incur no liability or responsibility to the
Company or to any Warrant
Ex. G-14
holder for any action taken, suffered, or omitted by the Warrant Agent in good
faith in accordance with the opinion or advice of such counsel.
15.8 Compensation. The Company agrees to pay the Warrant
Agent reasonable compensation for its services hereunder and to reimburse the
Warrant Agent for its reasonable expenses hereunder; and further agrees to
indemnify the Warrant Agent and hold it harmless against any and all
liabilities, including, but not limited to, judgments, costs, and reasonable
counsel fees for anything done, suffered, or omitted by the Warrant Agent in the
execution of its duties and powers hereunder, except for any such liabilities
that arise as a result of the Warrant Agent's bad faith, negligence, or willful
misconduct.
15.9 Accounting. The Warrant Agent shall account promptly
to the Company with respect to Warrants exercised and concurrently pay to the
Company all moneys received by the Warrant Agent on behalf of the Company on the
purchase of shares of Common Stock through the exercise of Warrants.
15.10 No Conflict. The Warrant Agent and any stockholder,
director, officer, or employee of the Warrant Agent may buy, sell, or deal in
any of the Warrants or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
15.11 Resignation; Termination. The Warrant Agent may
resign its duties and be discharged from all further duties and liabilities
hereunder (except liabilities arising as a result of the Warrant Agent's bad
faith, negligence, or willful misconduct), after giving thirty (30) days' prior
written notice to the Company. The Company may remove the Warrant Agent upon
thirty (30) days' written notice, and the Warrant Agent shall thereupon in like
manner be discharged from all further duties and liabilities hereunder, except
as to liabilities arising as a result of the Warrant Agent's bad faith,
negligence, or willful misconduct. The Company shall cause to be mailed (by
first class mail, postage prepaid) to each registered holder of a Warrant at
such holder's last address as shown on the register of the Company, at the
Company's expense, a copy of such notice of resignation or notice of removal, as
the case may be. Upon such resignation or removal the Company shall promptly
appoint in writing a new warrant agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after it has been notified in
writing of such resignation by the resigning Warrant Agent or after such
removal, then the holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a new warrant agent. Pending appointment of
a successor to the Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. Any successor
warrant agent, whether appointed by the Company or by such a court, shall be a
corporation, incorporated under the laws of the United States or of any state
thereof and authorized under such laws to exercise corporate trust powers, be
subject to supervision and examination by Federal or state authority, and have a
combined capital and surplus of not
Ex. G-15
less than $100,000,000 as set forth in its most recent published annual report
of condition. After acceptance in writing of such appointment by the new warrant
agent it shall be vested with the same powers, rights, duties, and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act, or deed; but if for any reason
it shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act, or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such appointment
the Company shall file notice thereof with the resigning or removed Warrant
Agent and shall forthwith cause a copy of such notice to be mailed (by first
class mail, postage prepaid) to each registered holder of a Warrant at such
holder's last address as shown on the register of the Company. Failure to give
any notice provided for in this Section 15.11, or any defect in any such notice,
shall not affect the legality or validity of the resignation of the Warrant
Agent or the appointment of a new warrant agent, as the case may be.
15.12 Change Of Warrant Agent. If at any time the name of
the Warrant Agent shall be changed and at such time any of the Warrant
Certificates shall have been countersigned but not delivered, the Warrant Agent
may adopt the countersignature under its prior name and deliver Warrant
Certificates so countersigned; and if at that time any of the Warrant
Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name; and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and this Agreement.
15.13 Successor Warrant Agent. Any corporation into which
the Warrant Agent or any new warrant agent may be merged or any corporation
resulting from any consolidation to which the Warrant Agent or any new warrant
agent shall be a party or any corporation succeeding to all or substantially all
the agency business of the Warrant Agent or any new warrant agent shall be a
successor Warrant Agent under this Agreement without any further act; provided,
that such corporation would be eligible for appointment as a new warrant agent
under the provisions of Section 15.11 of this Article 15. The Company shall
promptly cause notice of the succession as Warrant Agent of any such successor
Warrant Agent to be mailed (by first class mail, postage prepaid) to each
registered holder of a Warrant at its last address as shown on the register of
the Company.
ARTICLE XVI
REMEDIES, ETC.
16.1 Remedies. The Company stipulates that the remedies at
law of each holder of a Warrant in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant Agreement are not and will not be adequate and that, to the
fullest extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
Ex. G-16
16.2 Warrant Holder Not Deemed A Stockholder. Prior to the
exercise of the Warrants represented thereby no holder of a Warrant Certificate,
as such, shall be entitled to any rights of a stockholder of the Company,
including, but not limited to, the right to vote, to receive dividends or other
distributions, to exercise any preemptive right or, except as otherwise provided
herein, to receive any notice of meetings of stockholders, and no such holder
shall be entitled to receive notice of any proceedings of the Company except as
provided in this Agreement. Nothing contained in this Agreement shall be
construed as imposing any liabilities on such holder to purchase any securities
or as a stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors or stockholders of the Company or otherwise.
16.3 Right Of Action. All rights of action in respect of
this Agreement are vested in the registered holders of the Warrants. Any
registered holder of any Warrant, without the consent of the Warrant Agent or
the registered holder of any other Warrant, may in such holder's own behalf and
for such holder's own benefit enforce, and may institute and maintain any suit,
action, or proceeding against the Company suitable to enforce, or otherwise in
respect of, such holder's right to exercise such holder's Warrants in the manner
provided in the Warrant Certificate representing such Warrants and the Company's
obligations under this Agreement and the Warrants.
ARTICVLE XVII
MISCELLANEOUS
17.1 Notices. Any notice, demand, or delivery authorized
by this Agreement shall be sufficiently given or made if sent by first class
mail, postage prepaid, addressed to any registered holder of a Warrant at such
holder's last known address appearing on the register of the Company, and to the
Company or the Warrant Agent as follows:
If to the Company:
Pinnacle Holdings Inc.
000 Xxxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: [ ]
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Warrant Agent:
[ ]
or such other address as shall have been furnished in writing, in accordance
with this Section 17.1, to the party giving or making such notice, demand or
delivery.
Ex. G-17
17.2 Governing Law And Consent To Forum. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, THE COMPANY AND THE
WARRANT AGENT EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW
YORK STATE COURT SITTING IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION, OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PERSON TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
17.3 Benefits Of This Agreement. This Agreement shall be
binding upon and inure to the benefit of the Company and the Warrant Agent and
their respective successors and assigns, and the registered and beneficial
holders from time to time of the Warrants and of holders of the Common Stock,
where applicable. Nothing in this Agreement is intended or shall be construed to
confer upon any other person, any right, remedy or claim under or by reason of
this Agreement or any part hereof.
17.4 Agreement Of Holders Of Warrant Certificates. Every
holder of a Warrant Certificate, by accepting the same, covenants and agrees
with the Company, the Warrant Agent, and with every other holder of a Warrant
Certificate that the Warrant Certificates are transferable on the registry books
of the Warrant Agent only upon the terms and conditions set forth in this
Agreement, and the Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute owner for
all purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
17.5 Counterparts. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
17.6 Amendments. The Warrant Agent may, without the
consent or concurrence of the holders of the Warrants, by supplemental agreement
or other writing, join with the Company in making any amendments or
modifications of this Agreement that they shall have been advised by counsel (a)
are required to cure any ambiguity or to correct any defective or inconsistent
provision or clerical omission or mistake or manifest error herein contained and
which do not accurately reflect the understanding of the parties hereto, (b) add
to the covenants and agreements of the Company in this Agreement further
covenants and agreements of the Company thereafter to be observed, or surrender
any rights or powers reserved to or conferred upon the Company in this
Agreement, or (c) do not and will not adversely affect, alter, or change the
rights,
Ex. G-18
privileges, or immunities of the registered holders of Warrants or of any person
entitled to the benefits of this Agreement who has not assented to such change,
in writing. This Agreement may otherwise be amended by the Company and the
Warrant Agent only with the consent of the holders of a majority of the then
outstanding Warrants. Notwithstanding the foregoing, the consent of each holder
of a Warrant affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of shares of Common Stock
purchasable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein). The Warrant Agent shall join with the Company in
the execution and delivery of any such amendment unless such amendment affects
the Warrant Agent's own rights, duties, or immunities hereunder, in which case
the Warrant Agent may, but shall not be required to, join in such execution and
delivery. Upon execution and delivery of any amendment pursuant to this Section
17.6, such amendment shall be considered a part of this Agreement for all
purposes and every holder of a Warrant Certificate theretofore or thereafter
countersigned and delivered hereunder shall be bound thereby.
17.7 Consent To Jurisdiction. The parties hereby expressly
acknowledge and agree that, to the extent permitted by applicable law, the
Bankruptcy Court shall have exclusive jurisdiction to hear and determine any and
all disputes concerning the distribution of Warrants hereunder to holders of the
Convertible Notes and Old Common Stock pursuant to the Plan. The Warrant Agent
hereby assents to the jurisdiction of the Bankruptcy Court with respect to any
such disputes and waives any argument of lack of such jurisdiction.
17.8 Headings. The table of contents hereto and the
descriptive headings of the several sections hereof are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
Ex. G-19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
PINNACLE HOLDINGS INC.
By:
--------------------------------------
Name:
Title:
[ ]
By:
--------------------------------------
Name:
Title:
Ex. G-20
EXHIBIT A
FORM OF WARRANT CERTIFICATE
Ex. G-20
[FORM OF FACE OF WARRANT CERTIFICATE]
Warrant Number of Warrant(s):
No.
------------- ----------------
Exercisable During the Period Commencing , 2002
and Terminating at 5:00 p.m. , 200_
except as provided below
WARRANT TO PURCHASE
COMMON STOCK
OF
PINNACLE HOLDINGS INC.
This Certifies that _________________ or registered assigns, is the
owner of the number of WARRANTS set forth above, each of which represents the
right, at any time after _____________, 2002 and on or before 5:00 p.m., New
York City time, on ________________, 2007, to purchase from Pinnacle Holdings
Inc., a Delaware corporation (the "Company"), at the price of $20.00 (the
"Exercise Price"), one share of Common Stock, $.01 par value, of the Company as
such stock was constituted as of _______________, 2002, subject to adjustment as
provided in the Warrant Agreement hereinafter referred to, upon surrender
hereof, with the subscription form on the reverse hereof duly executed, by hand
or by mail to [warrant agent], or to any successor thereto, as the warrant agent
under the Warrant Agreement, at the office of such successor maintained for such
purpose (any such warrant agent being herein called the "Warrant Agent") (or, if
such exercise shall be in connection with an underwritten Public Offering of
shares of such Common Stock (as such term and other capitalized terms used
herein are defined in the Warrant Agreement) subject to the Warrant Agreement,
at the location at which the Company shall have agreed to deliver such
securities), and simultaneous payment in full (by certified or official bank or
bank cashier's check payable to the order of the Company) of the Exercise Price
in respect of each Warrant represented by this Warrant Certificate that is so
exercised, all subject to the terms and conditions hereof and of the Warrant
Agreement.
Upon any partial exercise of the Warrants represented by this Warrant
Certificate, there shall be issued to the holder hereof a new Warrant
Certificate representing the Warrants that were not exercised.
No fractional shares may be issued upon the exercise of rights to
purchase hereunder, and as to any fraction of a share otherwise issuable, the
Company will make a cash adjustment in lieu of such issuance, as provided in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement, dated as of _____________, 2002 (the "Warrant Agreement"),
between the Company and [ ], as Warrant Agent, and is subject to the terms
and provisions contained therein, all of which terms and provisions the holder
of this Warrant Certificate consents to by acceptance hereof. Copies of the
Warrant Agreement are on
Ex. G-21
file at the above- mentioned office of the Warrant Agent and may be obtained by
writing to the Warrant Agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Dated: PINNACLE HOLDINGS INC.
By:
-------------------------------------
Title:
Countersigned:
[ ],
as Warrant Agent
By:
---------------------------------
Authorized Signatory
Ex. G-22
[FORM OF REVERSE OF WARRANT CERTIFICATE]
PINNACLE HOLDINGS INC.
The transfer of this Warrant Certificate and all rights hereunder is
registrable by the registered holder hereof, in whole or part, on the register
of the Company upon surrender of this Warrant Certificate at the office or
agency of the Company or the office of the Warrant Agent maintained for such
purpose at [ ], duly endorsed or accompanied by a written instrument of
transfer duly executed and in form satisfactory to the Company and the Warrant
Agent, by the registered holder hereof or his attorney duly authorized in
writing and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer or registration thereof. Upon any partial
transfer the Company will cause to be delivered to such holder a new Warrant
Certificate or Certificates with respect to any portion not so transferred.
This Warrant Certificate may be exchanged at the office or agency of
the Company or the office of the Warrant Agent maintained for such purpose at
[ ], for Warrant Certificates representing the same aggregate number of
Warrants, each new Warrant Certificate to represent such number of Warrants as
the holder hereof shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the holder of
this Warrant Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company, including, but not limited to, the right to vote, to
receive dividends or other distributions, to exercise any preemptive right or,
except as provided in the Warrant Agreement, to receive any notice of meetings
of stockholders, and shall not be entitled to receive notice of any proceedings
of the Company except as provided in the Warrant Agreement. Nothing contained
herein shall be construed as imposing any liabilities upon the holder of this
Warrant Certificate to purchase any securities or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors or
stockholders of the Company or otherwise.
This Warrant Certificate shall be void and all rights represented
hereby shall cease unless exercised on or before the close of business on
____________, [2007].
This Warrant Certificate shall not be valid for any purpose until it
shall have been manually countersigned by an authorized signatory of the Warrant
Agent.
Witness the facsimile seal of the Company and the signature of its duly
authorized officer.
Ex. G-23
SUBSCRIPTION FORM
(To be executed only upon exercise of warrant)
TO PINNACLE HOLDINGS INC.
[ ], as Warrant Agent
The undersigned (a) irrevocably exercises the Warrants represented by the within
Warrant Certificate, (b) purchases one share of Common Stock of Pinnacle
Holdings Inc. (before giving effect to the adjustments provided in the Warrant
Agreement referred to in the within Warrant Certificate) for each Warrant so
exercised and herewith makes payment in full of the purchase price of $20.00 in
respect of each Warrant so exercised as provided in the Warrant Agreement (such
payment being by certified or official bank or bank cashier's check payable to
the order of Pinnacle Holdings Inc.), all on the terms and conditions specified
in the within Warrant Certificate and the Warrant Agreement, (iii) surrenders
this Warrant Certificate and all right, title, and interest therein to Pinnacle
Holdings Inc., and (iv) directs that the securities or other property
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Dated:
---------------------------------------
(Owner)*
---------------------------------------
(Signature Of Authorized Representative)
---------------------------------------
(Street Address)
---------------------------------------
(City) (State) (Zip Code)
Securities or property to be issued and delivered to
--------------------------
Signature Guaranteed**
Please insert social
security or other
identifying number
-------------------
Name
--------------------------------------------------------------------------
Xxxxxx Xxxxxxx
----------------------------------------------------------------
Xxxx, Xxxxx, and Zip Code
-----------------------------------------------------
Ex. G-24
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee named
below all of the rights of the undersigned under the within Warrant Certificate,
with respect to the number of warrants set forth below:
Name Of Assignee Address No. Of Warrants
Please insert social
security or other
identifying number
of Assignee
---------------
and does hereby irrevocably constitute and appoint __________________ attorney
to make such transfer on the books of Pinnacle Holdings Inc. maintained for that
purpose, with full power of substitution in the premises.
Dated:
---------------, -----
-----------------------------------------
Signature Of Authorized
Representative
---------------------------
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed **
-------------------
*The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever.
** The signature must be guaranteed by a securities transfer agents medallion
program ("stamp") participant or an institution receiving prior approval from
the Warrant Agent.
Ex. G-25
EXHIBIT H
Term Sheet for Joint Reorganization Plan of
Pinnacle Holdings Inc., Pinnacle Towers Inc. and Pinnacle Towers III, Inc. (1)
I. GENERAL PROVISIONS
A. Debtors and Pinnacle Holdings Inc. ("PHI"), and
Plan Proponents its wholly-owned subsidiaries,
Pinnacle Towers Inc. ("PTI"),
Pinnacle Towers III, Inc.
("PT-III") and such other
subsidiaries as Investors and the
Companies may agree, collectively
"Debtors".
II. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
A. Unclassified Claims
1. Administrative Claims At the option of Debtors, and in
consultation with Investors, either
(a) payment in accordance with
terms, (b) cash equal to unpaid
portion of allowed claim, or (c)
such other treatment as to which
applicable Debtor and holder agree
upon in writing; liabilities
incurred in ordinary course of
business during Chapter 11 case to
be paid in ordinary course of
business. The DIP Financing will be
paid in accordance with its terms.
2. Professional Fee Claims Payment (i)
in the ordinary course pursuant to
court order and (ii) in full as
soon as practicable after
Bankruptcy Court's order granting
final fee application becomes a
final order.
3. Priority Tax Claims At discretion of Debtors after
consultation with, and written
approval of, Investors, (a) payment
in the ordinary course when due,
(b) cash equal to unpaid portion of
allowed claim, (c) deferred cash
payments over a period not
exceeding six years after date of
assessment of claim, of a value, as
of effective date of Plan, equal to
such allowed claim, or (d) such
other treatment as to which Debtors
and holder agree upon in writing.
Plan to have appropriate provisions
for contested tax claims.
4. General Unsecured At discretion of PHI after
consultation with
---------------------
(1) Unless otherwise defined, capitalized terms used here have the meanings
ascribed to them in the Securities Purchase Agreement, dated as of April ___,
2002 (the "Purchase Agreement").
Claims Investors, each allowed general
unsecured claim will ride through
the bankruptcy unimpaired.
B. Classes of Claims And Interests Against PHI
1. Other Priority Claims At the option
of Debtors, and in consultation
with Investors, either (a) payment
in accordance with terms, (b) cash
equal to unpaid portion of allowed
claim, or (c) such other treatment
as to which PHI and holder agree
upon in writing.
2. Secured Claims
a. Senior Credit Facility Each holder of an Allowed Senior
Claims Credit Facility Claim shall receive
in full satisfaction, settlement,
release, and discharge of and in
exchange for such Allowed Senior
Credit Facility Claim cash equal to
the unpaid portion of such Allowed
Senior Credit Facility Claim.
b. Other Secured Claims At discretion of PHI after
consultation with and written
approval of, Investors (a) retain
lien on collateral securing claim
and receive deferred cash payments
totaling at least allowed amount of
claim, of a value, as of effective
date of Plan, of at least value of
holder's interest in Debtor's
interest in collateral, (b) upon
abandonment by Debtor, receive
collateral securing claim, (c)
receive payments or liens amounting
to indubitable equivalent of claim,
(d) have claim reinstated, or (e)
receive such other treatment as
Debtors and holder agree upon in
writing.
3. Intercompany Claims Each allowed intercompany claim
will (a) remain unimpaired; (b) be
reinstated; or (c) receive such
other treatment as to which PHI,
Investors and holders agree upon in
writing.
4. Senior Note Claims As provided in the Purchase
Agreement.
5. Convertible Note Claims As provided in the Purchase
Agreement, subject to cramdown.
6. Old Common Stock As provided in the Purchase
Interests and Equity Agreement, subject to cramdown.
Securities Claims
(arising from litigation)
and Other Equity
Interests
Ex.H-2
C. Classes of Claims And Interests Against PTI
1. Other Priority Claims At the option of Debtors, and in
consultation with Investors, either
(a) payment in accordance with
terms, (b) cash equal to unpaid
portion of allowed claim, or (c)
such other treatment as to which
PTI and holder agree upon in
writing
2. Secured Claims
a. Senior Credit Facility Each holder of an Allowed Senior
Claims Credit Facility Claim shall receive
in full satisfaction, settlement,
release, and discharge of and in
exchange for such Allowed Senior
Credit Facility Claim cash equal to
the unpaid portion of such Allowed
Senior Credit Facility Claim.
b. Seller Note Claims Seller Note claims will be
unimpaired and reinstated,
provided, however, that if the
holders thereof choose to put such
Seller Notes to the Company in
accordance with the terms thereof,
they will be paid cash payments
totaling at least the allowed
amount of such claim, as of
effective date of Plan.
c. Other Secured Claims At discretion of PTI after
consultation with, and written
approval of, Investors (a) retain
lien on collateral securing claim
and receive deferred cash payments
totaling at least allowed amount of
claim, of a value, as of effective
date of Plan, of at least value of
holder's interest in Debtor's
interest in collateral, (b) upon
abandonment by Debtor, receive
collateral securing claim, (c)
receive payments or liens amounting
to indubitable equivalent of claim,
(d) have claim reinstated, or (e)
receive such other treatment as
Debtors and holder agree upon in
writing
3. Intercompany Claims At discretion of PTI after
consultation with, and written
approval of, Investors, each
allowed intercompany claim will (a)
remain unimpaired; (b) be
reinstated; or (c) receive such
other treatment as to which PTI,
Investors and holders agree upon in
writing.
4. Equity Security Reinstated.
Interests
D. Classes of Claims And Interests Against PT-III
Ex.H-3
1. Rejection Damage Claims Will be funded as provided in
Arising from PT-III the Purchase Agreement.
Obligations
2. All Other PT-III Claims Reinstated.
III. MEANS FOR IMPLEMENTATION OF PLAN
A. Continued Corporate Existence New Pinnacle will be created and
merged with PHI and Subsidiaries
will continue to exist after
effective date of Plan as separate
corporate entities, in accordance
with applicable law of respective
jurisdictions of incorporation
B. Corporate Action
1. Cancellation Of Existing On effective date of Plan, all
Securities And existing securities not
Agreements reinstated under Plan will be
cancelled
2. Certificate of Certificate of incorporation and
Incorporation by-laws of each Debtor will be
and By-Laws amended as necessary to satisfy
provisions of Plan and Bankruptcy
Code including, among other things,
(a) a provision exempting Investors
from application of Section 203 of
DGCL to any transaction involving
Debtors, (b) a provision expressly
opting out of Section 203 of DGCL,
(c) provisions prohibiting issuance
of non-voting equity securities,
and if applicable, (d) as to
classes of securities issued
pursuant to Plan or thereafter
possessing voting power, for
appropriate distribution of such
power among such classes
3. Termination of Rights On effective date of Plan, PHI's
Plan rights plan will be terminated
C. Restructuring Transaction
1. New Equity Investment As provided in the Purchase
Agreement
2. New As provided in the Purchase
Securities-- Agreement
Authorization/Issuance/
Reserve
3. Registration and As provided in the Investors
Preemptive Rights Agreement
Ex.H-4
4. Exit Financing; DB Reorganized PTI will enter into one
Financing or more post-confirmation loan
facilities, which may be DB
Financing; DB Financing or other
post-confirmation loan
facilit(ies), may consist of debt
secured by a first priority lien on
and security interest in
substantially all of reorganized
PTI's assets
D. Directors And Officers On effective date of Plan, term of
current board of directors of PHI
will expire; initial Board of
Directors of reorganized PHI will
consist of nine (9) directors, to
be designated pursuant to terms of
the Purchase Agreement
IV. ACCEPTANCE OR REJECTION OF PLAN
A. Classes Entitled To Vote Each impaired class of claims and
interests that will (or may)
receive or retain property or any
interest in property under Plan
V. SECURITIES TO BE ISSUED IN CONNECTION WITH PLAN
A. General Description Reorganized PHI will issue for
distribution in accordance with
provisions of Plan all new common
stock, warrants, and new employee
stock options required for
distribution or sale under Plan
All securities will be deemed
issued as of Distribution Date (as
defined in Plan) regardless of date
on which they are actually
distributed
VI. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. Assumed Contracts And Leases As of effective date of Plan, each
Debtor will be deemed to have
assumed each executory contract and
unexpired lease to which it is a
party, unless such contract or
lease (i) was previously assumed
or, with concurrence of Investors,
rejected by such Debtor, (ii)
previously expired or terminated
pursuant to its own terms, or (iii)
is subject of motion to reject
filed on or before confirmation
date. Investors shall provide
payment for rejection damages to
the extent provided for in the
Purchase Agreement.
VII. PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND UNLIQUIDATED CLAIMS
A. Distribution Reserve On effective date of Plan, Debtors
or third party disbursing agent
will withhold distribution reserve
Ex.H-5
from cash, warrants or other
property to be distributed under
Plan; distributions from reserve
will be made on account of disputed
claims once they become allowed
claims
VIII. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF PLAN
A. Conditions To Confirmation Entry of order, in form and
substance acceptable to Investors,
and Committee approving disclosure
statement with respect to the Plan.
Confirmation Order will be in form
and substance acceptable to
Investors and Committee.
Investors will have arranged for
credit availability under amended
credit facility or a new senior
financing facility, which may be DB
Financing, in amount, form and
substance acceptable to Debtors.
Any other conditions provided in
the Purchase Agreement.
B. Conditions To Consummation As provided in the Purchase
Agreement
IX. MODIFICATIONS AND AMENDMENTS
A. General Description Debtors may alter, amend, or modify
Plan or exhibits at any time prior
to confirmation date.
X. RETENTION OF JURISDICTION
A. General Description Standard, broad retention of
jurisdiction provision,
supplemented by provisions
specifically retaining jurisdiction
to hear and determine all matters
related to Purchase Agreement
XI. MISCELLANEOUS PROVISIONS
A. Discharge/Injunction All consideration distributed under
Plan will be in exchange for, and
in complete satisfaction,
settlement, discharge, and release
of, all claims and interests
specified in the Plan.
Discharge provided by Plan and
Section 1141 of Bankruptcy Code
will act as an injunction against
commencement or continuation of any
action, employment of process, or
act to collect, offset, or recover
Claims and Interests discharged by
Plan
Ex.H-6
B. Releases Effective as of confirmation date,
but subject to occurrence of
consummation of Plan, each of
Debtors', reorganized Debtors', and
Investors' respective current and
former officers, directors,
subsidiaries, affiliates, members,
managers, shareholders, partners,
representatives, employees,
attorneys, and agents and their
respective property will be
released from any and all claims,
obligations, rights, causes of
action, and liabilities which
Debtors or reorganized Debtors may
be entitled to assert, in whole or
in part based on any act or
omission, transaction, or other
occurrence taking place on or
before confirmation date in any way
relating to Debtors, their
business, their governance, their
securities disclosure practices,
purchase or sale of any of Debtors
debt securities or equity
securities, or restructuring
transaction, other than for such
person's or entity's gross
negligence or willful misconduct,
provided, however, that no such
release shall have the effect of
releasing in any way any accounting
firm or their affiliates or release
any insurer or other obligor under
any director and officer liability
or other insurance policy without
the Companies' written consent.
Holders of Senior Note Claims
consent to releases, and parties to
lockup agreements agree not to
object to releases. Holders of PHI
Class 5, 6 and 7 claims can opt
into additional third-party
releases. To the extent the Court
fails to approve releases, the
broadest releases permissible under
law will be included.
C. Exculpation And Limitation Of Standard exculpation and limitation
Liability of liability for reorganized
Debtors, Investors, statutory
committee(s), or any of their
respective present or former
members, officers, directors,
employees, advisors, attorneys, or
agents, with respect to acts or
omissions in connection with,
relating to, or arising out of,
Chapter 11 case, solicitation of
acceptances of Plan, pursuit of
confirmation of Plan, consummation
of Plan, or administration of Plan
or property to be distributed under
Plan, except for their willful
misconduct
Ex.H-7
EXHIBIT I
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF______________
- - - - - - - - - - - - - - - - - X
IN RE :
:
PINNACLE HOLDINGS INC. AND : CHAPTER 11
PINNACLE TOWERS INC., : CASE NO. 02-______(___)
: (JOINTLY ADMINISTERED)
DEBTORS. :
- - - - - - - - - - - - - - - - - X
ORDER ALLOWING BREAK-UP PAYMENT
AS GENERAL UNSECURED CLAIM2
-------------
(2) TO BE USED IF SEEKING ALLOWANCE OF BREAK-UP PAYMENT AS GENERAL UNSECURED
CLAIM FOLLOWING PREPETITION TERMINATION OF SECURITIES PURCHASE AGREEMENT.
This matter having come before the Court on the motion (the "Motion") of
Pinnacle Holdings Inc. ("Holdings") and Pinnacle Towers Inc. ("Towers") [and
certain of their subsidiaries and affiliates], debtors and debtors-in-possession
(together, the "Debtors"), for an order allowing as a general unsecured claim
the break-up payment (the "Break-Up Payment"), as described in Section 8.2 of
the securities purchase agreement (the "Purchase Agreement"), dated as of April
___, 2002, between and among Holdings and Towers, on the one hand, and Fortress
Registered Investment Trust and Xxxxxxxxx Capital Partners L.P., Xxxxxxxxx
Capital Partners (Cayman), L.P., Xxxxxxxxx Capital Partners (Executives), L.P.
and Greenhill Capital, L.P., (together, the "Investors"), on the other;(3) and
the Court having reviewed the Motion and determined that the relief requested
in the Motion is in the best interests of the Debtors, their estates, their
creditors, and other parties-in-interest; and upon the record herein; and after
due deliberation thereon; and good and sufficient cause appearing therefor,
it is hereby
FOUND AND DETERMINED THAT:
A. Notice of the Motion was good and sufficient under the
particular circumstances and no other or further notice need be given.
B. The Debtors have articulated good and sufficient reasons for
allowance of the Break-Up Payment to the Investors as a general unsecured claim
payable solely in accordance with the terms of Section 8.2 of the Purchase
Agreement in the Debtors' Chapter 11 cases. Allowance of the Break-Up Payment as
a general unsecured claim pursuant to Section 8.2 of the Purchase Agreement is
reasonable and appropriate considering, among other things, the size and nature
of the proposed equity investment by the Investors and the efforts expended by
the Investors in seeking to consummate the transactions contemplated by the
Purchase Agreement.
C. Payment of the Break-Up Payment was an integral part of the
transactions contemplated by the Purchase Agreement and, in the absence of the
Debtors' obligations to make such payment as specified in the Purchase
Agreement, neither Investor would have entered into the Purchase Agreement.
-----------------
(3) Unless otherwise defined, capitalized terms used herein shall have the
meanings ascribed to them in the Motion or the Purchase Agreement, as the case
may be.
Ex. I-2
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
1. The Motion be, and it hereby is, GRANTED.
2. Subject to the satisfaction of the conditions
specified in such Section, the Break-Up Payment, as described in Section 8.2 of
the Purchase Agreement be, and is hereby is, allowed as a general unsecured
claim in the amount of $12,000,000 in the Chapter 11 cases of each of the
Debtors (the "Allowed Break-Up Payment Claim"), payable solely in accordance
with the terms of Section 8.2.
3. The Debtors shall be jointly and severally liable for
all distributions to be made on account of the Allowed Break-Up Payment Claim
pursuant to the terms of any plan(s) of reorganization confirmed for the Debtors
in these Chapter 11 cases.
4. The terms and provisions this Order shall be binding
in all respects upon the Debtors, their estates, their respective affiliates,
successors and assigns, and any trustee, responsible person, estate
administrator, representative or similar person subsequently appointed for or in
connection with any of the Debtors' estates or affairs in these Chapter 11 cases
or in any subsequent case(s) under the Bankruptcy Code involving any of the
Debtors.
5. Nothing contained in any plan(s) of reorganization
confirmed for the Debtors in these Chapter 11 cases shall conflict with or
derogate from the terms of this Order and, in the event of any inconsistency
between such plan(s) and this Order, the terms of this Order shall govern.
Dated: _________, ________
_____________, 2002
------------------------------------
The Honorable _____________
United States Bankruptcy Judge
Ex. I-3
EXHIBIT J
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF______________
- - - - - - - - - - - - - - - - - - X
IN RE :
:
PINNACLE HOLDINGS INC. AND : CHAPTER 11
PINNACLE TOWERS INC., : CASE NO. 02-______(___)
: (JOINTLY ADMINISTERED)
DEBTORS. :
- - - - - - - - - - - - - - - - - - X
ORDER APPROVING BREAK-UP PAYMENT
PROVISION OF SECURITIES PURCHASE AGREEMENT(4)
---------
(4) TO BE USED IF SEEKING PAYMENT OF BREAK-UP PAYMENT AS ADMINISTRATIVE EXPENSE
UNDER 11 X.X.X.XX.XX. 503(B) AND 507(A).
This matter having come before the Court on the motion (the "Motion")
of Pinnacle Holdings Inc. ("Holdings") and Pinnacle Towers Inc. ("Towers") [and
certain of their subsidiaries and affiliates], debtors and debtors-in-possession
(together, the "Debtors"), for an order approving the proposed break-up payment
(the "Break-Up Payment") provision of the securities purchase agreement (the
"Purchase Agreement"), dated as of April ___, 2002, between and among Holdings
and Towers, on the one hand, and Fortress Registered Investment Trust and
Xxxxxxxxx Capital Partners L.P., Xxxxxxxxx Capital Partners (Cayman), L.P.,
Xxxxxxxxx Capital Partners (Executives), L.P. and Greenhill Capital, L.P.,
(together, the "Investors"), on the other;5 and the Court having reviewed the
Motion and determined that the relief requested in the Motion is in the best
interests of the Debtors, their estates, their creditors, and other
parties-in-interest; and upon the record herein; and after due deliberation
thereon; and good and sufficient cause appearing therefor, it is hereby
FOUND AND DETERMINED THAT:
A. Notice of the Motion was good and sufficient under
the particular circumstances and no other or further notice need be given.
B. The Debtors have articulated good and sufficient
reasons for approving the Break-Up Payment to the Investors. The Debtors'
payment to the Investors of the Break-Up Payment pursuant to Section 8.2 of the
Purchase Agreement is (a) an actual and necessary cost and expense of preserving
the Debtors' estates, within the meaning of section 503(b) of the Bankruptcy
Code, (b) of substantial benefit to the Debtors, their estates, their creditors,
and other parties-in-interest, (c) reasonable and appropriate
------------
(5) Unless otherwise defined, capitalized terms used herein shall have the
meanings ascribed to them in the Motion or the Purchase Agreement, as the case
may be.
Ex. J-2
considering, among other things, the size and nature of the proposed equity
investment by the Investors and the efforts that have been and will be expended
by the Investors in seeking to consummate the transactions contemplated by the
Purchase Agreement, including, but not limited to, procurement of the New Senior
Credit Facility, and (d) necessary to ensure that the Investors will continue to
pursue their proposed equity investment in the Debtors and the other
transactions contemplated by the Purchase Agreement.
C. Payment of the Break-Up Payment is an integral part
of the transactions contemplated by the Purchase Agreement and, in the absence
of the Debtors' obligations to make such payment as specified in the Purchase
Agreement, neither Investor would have entered into the Purchase Agreement.
Accordingly, the Investors are unwilling to hold open their offer to pursue the
proposed equity investment in the Debtors and consummate the other transactions
contemplated by the Purchase Agreement unless they are assured of the Debtors'
ability, right, and obligation to pay the Break-Up Payment.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED
THAT:
6. The Motion be, and it hereby is, GRANTED.
7. The Break-Up Payment provisions of the Purchase
Agreement in accordance with Section 8.2 of the Purchase Agreement be, and they
hereby are, approved.
8. The Debtors' obligations to pay the Break-Up Payment
in accordance with Section 8.2 of the Purchase Agreement shall be, and it hereby
is, entitled to priority as an administrative expense of the Debtors' estates
under sections 503(b) and 507(a)(1) of the Bankruptcy Code.
9. The terms and provisions this Order shall be binding
in all respects upon the Debtors, their estates, their respective affiliates,
successors and assigns, and any
Ex. J-3
trustee, responsible person, estate administrator, representative or similar
person subsequently appointed for or in connection with any of the Debtors'
estates or affairs in these Chapter 11 cases or in any subsequent case(s) under
the Bankruptcy Code involving any of the Debtors.
10. Nothing contained in any plan(s) of reorganization
confirmed for the Debtors in these Chapter 11 cases shall conflict with or
derogate from the terms of this Order and, in the event of any inconsistency
between such plan(s) and this Order, the terms of this Order shall govern.
Dated: _________, ________
_____________, 2002
------------------------------------
The Honorable _____________
United States Bankruptcy Judge
Ex. J-4
