EXHIBIT 10.1
AMENDMENT AND ACKNOWLEDGEMENT
This Amendment and Acknowledgement (this "Agreement") is made and
entered into as of May 20, 2002, by and among (a) Pinnacle Holdings Inc., a
Delaware corporation (the "Company"), (b) each of Fortress Registered Investment
Trust ("Fortress") and Xxxxxxxxx Capital Partners L.P. ("Greenhill," Fortress
and together with their permitted successors and assignees under the Securities
Purchase Agreement (as hereinafter defined), the "Investors"), and (c) the
undersigned institutions (the "Consenting Noteholders") of the Company's 10%
Senior Discount Notes due 2008 (the "Senior Notes"). The Company, the Investors
and the Consenting Noteholders are collectively referred to herein as the
"Parties" and individually as a "Party." Capitalized terms not defined herein
shall have the meaning ascribed thereto in the Securities Purchase Agreement
referred to below.
WHEREAS, the Company has entered into a Securities Purchase Agreement
dated April 25, 2002 with the Investors (the "Securities Purchase Agreement")
and the Company, the Investors and the Consenting Noteholders have entered into
Lock-Up and Forbearance Agreements dated April 25, 2002 (the "Lock-Up
Agreements");
WHEREAS, the Securities Purchase Agreement provides that the New
Pinnacle Certificate of Incorporation shall be in the form attached as Exhibit B
to the Securities Purchase Agreement;
WHEREAS, Section 5.9 of the Securities Purchase Agreement provides
that, at or prior to the Closing, Pinnacle shall enter into an Investor
Agreement (the "Investor Agreement") substantially in form attached to the
Securities Purchase Agreement as Exhibit A, 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 of the
Securities Purchase Agreement;
WHEREAS, following the execution of the Securities Purchase Agreement
the Parties continued to discuss the forms of the New Pinnacle Certificate of
Incorporation and the Investor Agreement and certain provisions of the
Securities Purchase Agreement;
WHEREAS, the Parties have finalized revisions to the forms of the New
Pinnacle Certificate of Incorporation and the Investor Agreement and wish to
memorialize their understanding and agreement that the revised forms of Investor
Agreement and New Pinnacle Certificate of Incorporation attached hereto as
Annexes A and B, respectively, are agreed to by all Parties and that such forms
will replace in their entireties the forms of Investor Agreement and the New
Pinnacle Certificate of Incorporation attached to the Securities Purchase
Agreement as Exhibits A and B on April 25, 2002 (the foregoing the "Revised
Exhibits Confirmation"); and
WHEREAS, the Parties wish to confirm their understanding and agreement
certain provisions of the Securities Purchase Agreement are being amended as set
forth in this in this Agreement (the "Amendment Confirmation").
NOW, THEREFORE BE IT RESOLVED, that in consideration of the premises
and the mutual covenants and agreements set forth herein and the Securities
Purchase Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are acknowledged, the Parties agree as follows:
1. Amendments to Securities Purchase Agreement.
(a) Section 5.8(b) of the Securities Purchase Agreement is hereby
amended by adding the following sentence at the end thereof:
In order to exercise an election to receive New Common Shares pursuant
to this Section 5.8(b), each holder of the Senior Notes shall be
required to deliver the required election form reflecting its
irrevocable election not later than 5:00 P.M., EDT, on the third
Business Day prior to the date set for the confirmation hearing by the
Bankruptcy Court, it being agreed that any such election shall be
binding on such holder or any transferee of the Senior Notes as to
which such election was made.
(b) Section 5.8(j) of the Securities Purchase Agreement is hereby
amended by adding the following sentence at the end thereof:
Each of the Investors and each of the Companies further agrees to take
any action necessary to cause the Board of Directors of New Pinnacle to
grant waivers providing that (I) those Persons who are original parties
to the Investor Agreement and their "Permitted Transferees" within the
meaning of clause (B) or (C) of the definition of "Permitted
Transferee" in the Investor Agreement (collectively, the "Covered
Stockholders") may, notwithstanding the ownership limitations relating
to Section 382 of the Code, as contained in Section 2.1(a)(2) of Part D
of Article Four of the New Pinnacle Certificate of Incorporation, (a)
transfer capital stock to, or acquire it from, another Covered
Stockholder, (b) transfer capital stock in a Public Offering or
pursuant to a Tag-Along Sale or a Drag-Along Sale, in each case as
contemplated in the Investor Agreement, or (c) transfer capital stock
consistent with Rule 144 under the Securities Act, and (II) a direct
transferee of capital stock pursuant to a transfer described in (I)
above may acquire and hold such capital stock notwithstanding such
ownership limitations which relate to Section 382 of the Code.
(c) Section 5.15 of the Securities Purchase Agreement is hereby
amended by deleting "$1,500,000" and replacing it with "$2,750,000".
(d) Section 10.6 of the Securities Purchase Agreement is hereby
amended by deleting the definition of "Required New Equity Amount" and
replacing it with the following:
"Required New Equity Amount" shall mean (x) $205,000,000, plus (y) the
Lease Rejection Amount, minus (z) such amount as may agreed between the
Investors and the lenders under the New Credit Facility or Alternative
Financing but not to exceed the amount, if any, by which the Cash
Funding is less than $415,000,000.
2
2. Agreement and Confirmation. Each of the Parties hereby agrees to and
gives the Revised Exhibits Confirmation and the Amendment Confirmation and each
of the Consenting Noteholders agrees and confirms that any consent or approval
required under its Lock-up Agreement to be given in connection with the
foregoing is hereby deemed to be given.
3. Section 7.2(k)(iii) Satisfied. The Investors hereby confirm that the
condition provided for in Section 7.2(k)(iii) of the Securities Purchase
Agreement is deemed to be satisfied.
4. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to any conflicts of law provision which would require the application of
the law of any other jurisdiction.
5. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation of this Agreement.
6. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of the Parties and their respective successors, assigns, heirs,
executors, administrators and representatives.
7. Entire Agreement. This Agreement constitute the entire agreement of the
Parties with respect to the subject matter of this Agreement, and supersede all
other prior negotiations, agreements, and understandings, whether written or
oral, among the Parties with respect to the subject matter of this Agreement but
does not otherwise alter or affect the Securities Purchase Agreement, together
with its various Exhibits, or the Lock-Up Agreements.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
9. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction, shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
3
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.
PINNACLE HOLDINGS INC.
By:
-----------------------------------------
Name:
Title:
FORTRESS REGISTERED INVESTMENT TRUST
By:
-----------------------------------------
Name:
Title:
XXXXXXXXX CAPITAL PARTNERS L.P.
By:
-----------------------------------------
Name:
Title:
Shepherd Investments International, LTD. &
Xxxxx Investments, LP
By:
-----------------------------------------
Name:
Title:
Xxxxxx Capital
By:
-----------------------------------------
Name:
Title:
Farallon Capital Offshore Investors, Inc.
By:
-----------------------------------------
Name:
Title:
4
Tinicum Partners, L.P.
By:
-----------------------------------------
Name:
Title:
Farallon Capital Institutional Partners
III, L.P.
By:
-----------------------------------------
Name:
Title:
Farallon Capital Institutional Partners II,
L.P.
By:
-----------------------------------------
Name:
Title:
Farallon Capital Institutional Partners,
L.P.
By:
-----------------------------------------
Name:
Title:
Farallon Capital Partners, L.P.
By:
-----------------------------------------
Name:
Title:
5
ANNEX A
PINNACLE HOLDINGS INC.
--------------
INVESTOR AGREEMENT
--------------
Dated as of [Closing Date], 2002(1)
------------
(1) The Closing Date under the Securities Purchase Agreement.
Annex A-1
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 receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
-------------------
(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.
Annex A-2
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) "Amendment" shall mean the Amendment and
Acknowledgement, dated as of May 20, 2002, by and among the Company, Fortress,
Greenhill, Xxxxxxxx Investments International, LTD. & Xxxxx Investments, LP,
Xxxxxx Capital, Farallon Capital Offshore Investors, Inc., Tinicum Partners,
L.P., Farallon Capital Institutional Partners III, L.P., Farallon Capital
Institutional Partners II, L.P., Farallon Capital Institutional Partners, L.P.
and Farallon Capital Partners, L.P.
(c) "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.
(d) "Board" shall mean the board of directors of the
Company.
(e) "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.
(f) "Commission" shall mean the United States Securities
and Exchange Commission or any successor agency.
(g) "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.
(h) "Effective Date" shall mean the date of issuance of
securities pursuant to the Bankruptcy Plan.
(i) "Electing Noteholder" shall mean any party to this
Agreement identified as an "Electing Noteholder" on the signature pages of this
Agreement.
(j) "Employee Stock Option Plan" shall mean the Employee
Stock Option Plan in the form attached to the Securities Purchase Agreement as
Exhibit F; provided
Annex A-3
that no amendment thereof shall be given effect in a manner that is adverse in
any economic respect to the rights of Electing Noteholders as such rights are
set forth in the form of this Agreement attached as Exhibit A to the Amendment.
(k) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
(l) "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.
(m) "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.
(n) "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.
(o) "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.
(p) "Public Offering" shall mean an offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act, including an offering in which Investors are entitled to
sell Common Stock pursuant to the terms of this Agreement.
(q) "Registrable Amount" shall mean 5% of the then
outstanding Registrable Securities.
Annex A-4
(r) "Registrable Securities" shall mean (i) any Common
Stock issued to the Stockholders pursuant to the Plan, (ii) any Common Stock
issued or issuable upon exercise of the Warrants distributed pursuant to the
Plan and (iii) any Common Stock otherwise acquired by Stockholders; provided,
that, for purposes of Articles VI and VII (and the defined terms used therein
when used therein), "Registrable Securities" shall be deemed to include any
securities (including such Warrants) directly or indirectly convertible into or
exchangeable for shares of Common Stock. 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 or a pro rata portion 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 held by Stockholders.
(s) "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
(t) "Securities Purchase Agreement" shall mean the
securities purchase agreement, dated as of April 25, 2002, by and among
Fortress, Greenhill, the corporate predecessor of the Company and Pinnacle
Towers, Inc; provided, that no amendment thereof shall be given effect in a
manner that is adverse in any economic respect to the rights of Electing
Noteholders as such rights are set forth in the form of this Agreement attached
as Exhibit A to the Amendment.
(u) "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, for so long as such Person under clause (i)
or (ii), together with its Permitted Transferees, continues to hold at least 5%
of the issued and outstanding Registrable Securities.
(v) "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.
(w) "Underwritten Offering" shall mean a sale of
securities of the Company to an underwriter or underwriters for reoffering to
the public.
(x) "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).
Annex A-5
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 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
Annex A-6
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 Greenhill, 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 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
Annex A-7
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 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:
Annex A-8
(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.
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").
Annex A-9
(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 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
Annex A-10
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; provided, that the foregoing shall not restrict
transfers made pursuant to the "drag along" or "tag along" provisions of this
Agreement.
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
Annex A-11
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 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:
Annex A-12
(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;
(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, and, at the request of any Selling Holder, 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;
(x) make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
registration statement;
Annex A-13
(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 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 or one year 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
Annex A-14
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 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
Annex A-15
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 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
Annex A-16
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.
(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
Annex A-17
Registrable Securities (each a "Qualified Stockholder"), have the right to
purchase additional shares of Common Stock, or securities directly or indirectly
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 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 or exchange feature was contained in
the securities so issued and the exercise thereof 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.
Annex A-18
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 Fortress
and Xxxxxxxxx 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 initial directors
designated as set forth in Section 5.10 of the Securities Purchase Agreement
(without giving effect to any amendments to such Section 5.10 other than the
Amendment) 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 (x) Xxxxx Xxxxxx, or any other designee of
Xxxxxx Capital reasonably acceptable to Fortress/Xxxxxxxxx, at least until the
Company's 2005 annual meeting of shareholders, and (y) 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. No
amendment shall be made to Article Eleven of the New Pinnacle Certificate of
Incorporation (as in effect on the date of this Agreement), unless in each such
case such amendment shall have been approved by each Person that was an original
party to this Agreement and remains a "Stockholder" at the time of such
amendment.
Annex A-19
(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 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);
Annex 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.
Section 5.3 Board Waivers. The Company confirms and agrees
that the Board has approved, and will not take action to rescind or modify, the
waivers provided for in Section 5.8(j) of the Securities Purchase Agreement as
to each Investor that is an original party to this Agreement.
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 Two Year No Transfer Period. 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 both
Xxxxxxxxx and Fortress;
(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 either by Tag-Along Persons pursuant to
Section 7.1 or by Drag-Along Stockholders pursuant to Section 7.2;
Annex A-21
(e) any bona fide pledge of the Registrable
Securities to a bank, financial institution or other lender;
(f) any transfer in compliance with 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 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 Registrable Securities 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 Registrable Securities by a
Tag-Along Person pursuant to Section 7.1 or a Drag-Along Stockholder pursuant to
Section 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(a), such
Stockholder shall provide notice ("Transfer Notification") to each of Fortress
and Xxxxxxxxx at least ten Business Days prior to the proposed transfer date of
the number of Registrable Securities proposed to be Transferred. Fortress and
Xxxxxxxxx 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 Xxxxxxxxx shall be deemed to have approved
such proposed Transfer if they fail to notify such Stockholder by such date.
Annex A-22
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.
Section 6.6 Charter Provisions. No amendment shall be
made to the Company's Certificate of Incorporation as in effect as of the date
of this Agreement in a manner that would (a) narrow the definition or
application of the term "Section 382 Excepted Holder", as that term is used in
the Company's Certificate of Incorporation, (b) add restrictions to the
transferability of the Registrable Securities beyond those provided for in the
Company's Certificate of Incorporation, this Agreement or the securities laws,
or (c) nullify the rights of any Stockholder explicitly provided for in this
Agreement, unless in each such case such amendment shall have been approved by
each Person that was an original party to this Agreement and remains a
"Stockholder" at the time of such amendment.
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 within the meaning of clause (B) or
(C) of the definition of "Permitted Transferee", (ii) Transfers among Fortress,
Xxxxxxxxx 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 consistent with Rule 144
under the Securities Act, each of Fortress and Xxxxxxxxx, in each case for so
long as it shall hold at least 15% of the Registrable Securities, 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
Annex A-23
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.
(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 (or both
Fortress and Xxxxxxxxx should they together be deemed to be the Largest
Holder), including in connection with a sale or exchange, whether directly or
pursuant to a merger, consolidation or otherwise (a "Drag-Along Sale"), such
Drag-
Annex A-24
Along Seller may require all other Stockholders (the "Drag-Along Stockholders")
to sell all Registrable Securities and any other securities of the Company
("Drag-Along Rights") then held 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. For purposes of the foregoing, it is agreed that (x)
Drag-Along Stockholders shall not be required to convert or exchange
Registrable Securities that are other than Common Stock unless the Drag-Along
Seller is also converting or exchanging such Registrable Securities, (y) if the
Drag-Along Seller is selling Common Stock but is not selling other Registrable
Securities of the same type as is held by one or more Drag-Along Stockholders,
such other Registrable Securities shall be valued at the value of the Common
Stock issuable thereunder in the Drag-Along Sale, net of the exercise or
conversion price therefor and (z) Drag-Along Stockholders shall not be required
to accept consideration in a Drag Along Sale other than cash or securities.
(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 on the terms and conditions set forth in the Drag-Along Notice
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.
Annex A-25
(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.
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 reasonable
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 to which such Other
Stockholder is a party, and such Other Stockholder's 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 compliance
with 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
Annex A-26
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
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 after 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
Annex A-27
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 Proposing Stockholder shall have a 60 day period during which to effect a
transfer of any or all of the Offered Stock, subject to Article VII and Section
7.1 hereof, on substantially the same or more favorable (as to the Proposing
Stockholder) 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.
Annex A-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 in compliance with 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
Annex A-29
with a copy (which shall not constitute notice) to:
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 (which shall not constitute notice) 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 received (including by overnight
courier) by 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.
Annex A-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 permitted 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 Offering
or in a sale consistent with 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 reasonably 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.
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
Annex A-31
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 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.
Annex A-32
(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.
Annex A-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:
Annex A-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.
Annex A-35
ANNEX B
CERTIFICATE OF INCORPORATION
OF
PINNACLE HOLDINGS INC.
ARTICLE ONE
The name of the Corporation is Pinnacle Holdings Inc.
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
Annex B-1
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
possessing 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 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.
Annex B-2
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 [__]
percent(1) 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 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
---------
(1) The percentage will be 9.9 percent, or such lower percentage as
necessary based upon the beneficial ownership of those noteholders
that elect to receive stock, as determined prior to closing.
Annex B-3
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: (i) any Beneficial Owner or
Constructive Owner of the Corporation for whom one or more of the
provisions of Section 2.1(a) are waived in accordance with, and
subject to, Section 2.7; (ii) the original parties to the Investor
Agreement, together with the Beneficial Owners of such parties, but
only with respect to any such party's initial ownership of Capital
Stock; and (iii) direct transferees of the parties described in (ii)
above, provided, however, that (W) the Transfer or transferee meets
one or more of the requirements contained in the next sentence, (X)
the Excepted Holder Limit applicable to the transferor immediately
following such Transfer shall be reduced to the greater of the
Aggregate Stock Ownership Limit or such transferor's ownership
percentage immediately after such Transfer, (Y) the Excepted Holder
Limit applicable to the transferee immediately following such Transfer
shall not exceed the greater of the Aggregate Stock Ownership Limit or
the amount of Capital Stock acquired in such Transfer, and (Z) the
transferee shall establish to the satisfaction of the Board of
Directors of the Corporation that no "Individual", within the meaning
of Section 542(a)(2) of the Code, shall, through the transferee,
Beneficially Own shares of Capital Stock in excess of the greater of
(I) the Aggregate Stock Ownership Limit, or (II) the percentages of
Capital Stock Beneficially Owned by and acquired from any Individual
or Individuals through such transferor immediately prior to such
Transfer. The persons or Transfers described in (iii)(W) of the
preceding sentence are limited to (a) "Permitted Transferees" of the
original parties to the Investor Agreement, within the meaning of
clause (B) or (C) of the definition of "Permitted Transferees" in the
Investor Agreement (collectively, the "Covered Stockholders"), (b) any
Transfer or acquisition of Capital Stock among Covered Stockholders,
(c) any Transfer of Capital Stock in a Public Offering or pursuant to
a Tag-Along Sale or a Drag-Along Sale, in each case as contemplated in
the Investor Agreement, (d) any Transfer of Capital Stock consistent
with Rule 144 under the Securities Act of 1933, and (e) any direct
transferee of Capital Stock pursuant to a Transfer described in (b),
(c) or (d) of this sentence by a Covered Stockholder.
"Excepted Holder Limit" means, with respect to an Excepted
Holder or a Section 382 Excepted Holder (other than a Person described
in (ii) of the definition of Excepted Holder or (ii)(a) of the
definition of Section 382 Excepted Holder), and provided that such
affected Excepted Holder or Section 382 Excepted Holder agrees to and
does comply with the requirements established by the Board of
Directors pursuant to Section
Annex B-4
2.7, any percentage limit or limits established by the Board of
Directors for such Excepted Holder or Section 382 Excepted Holder
pursuant to Section 2.7.
"Initial Date" means [______], 2002(2).
"Investor Agreement" means the Investor Agreement, dated as
of the Initial Date, by and among the predecessor of the Corporation
(as to certain provisions) and certain Beneficial Owners.
"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 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
---------
(2) The date to be inserted will be the date of the Investor Agreement.
Annex B-5
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 Excepted Holder" means: (i) any Beneficial Owner
or direct or indirect owner of Capital Stock for whom one or more of
the provisions of Section 2.1(a) are waived in accordance with, and
subject to, Section 2.7; (ii) the original parties to the Investor
Agreement and their "Permitted Transferees" within the meaning of
clause (B) or (C) of the definition of "Permitted Transferees" in the
Investor Agreement (collectively, the "Covered Stockholders"), but
only with respect to (a) any such party's initial ownership of Capital
Stock, (b) any Transfer or acquisition of Capital Stock among Covered
Stockholders, (c) any Transfer of Capital Stock in a Public Offering
or pursuant to a Tag-Along Sale or a Drag-Along Sale, in each case as
contemplated in the Investor Agreement, and (d) any Transfer of
Capital Stock consistent with Rule 144 under the Securities Act of
1933; and (iii) any direct transferee of Capital Stock pursuant to a
Transfer described in (b), (c) or (d) of clause (ii) above by a
Covered Stockholder.
"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).
"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)
Annex B-6
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) REIT Limitations.
(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 the
Aggregate Stock Ownership Limit.
(B) No Person, other than an Excepted
Holder, 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.
(C) 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 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.
(D) No Person shall Transfer any
Beneficial Ownership or Constructive Ownership of, or any
direct or indirect interest in Capital
Annex B-7
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).
(2) Section 382 Provisions. No Person, other
than a Section 382 Excepted Holder, shall:
(A) Beneficially Own or directly or
indirectly own shares of Capital Stock in an amount equal to
or in excess of the Section 382 Limit.
(B) Transfer any Beneficial 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.
(3) Excepted Holders. No Excepted Holder or
Section 382 Excepted Holder shall Beneficially Own or directly or
indirectly own shares of Capital Stock in excess of any Excepted
Holder Limit applicable to such Excepted Holder or Section 382
Excepted Holder.
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
Annex B-8
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 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
Annex B-9
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
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 (i)
Article TWELVE of this Certificate of Incorporation, (ii) Section
2.7(c) hereof, and (iii) the provisions in the definitions of the
terms Excepted Holder and Section 382 Excepted Holder in Section 1,
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.
Annex B-10
c. The Board of Directors may only reduce the
Excepted Holder Limit for an Excepted Holder or a Section 382 Excepted
Holder for whom the Board of Directors has created an Excepted Holder
Limit (1) with the written consent of such Excepted Holder or Section
382 Excepted Holder at any time, or (2) pursuant to the terms and
conditions of any agreements and undertakings entered into with such
Excepted Holder or Section 382 Excepted Holder in connection with the
establishment of the Excepted Holder Limit for that Excepted Holder or
Section 382 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.
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
Annex B-11
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 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.
Annex B-12
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.
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
Annex B-13
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
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:
Annex B-14
Class I Class II Class III
--------------------------------------- ---------------------------------- ----------------------------
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 FOUR
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 FIVE
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
Annex B-15
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 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 SIX
The Corporation expressly elects not to be governed by
Section 203 of the Delaware Corporation Law.
ARTICLE SEVEN
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.
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:
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Annex B-16
