Attached files
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): January 27, 2010
BERLINER
COMMUNICATIONS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction of
incorporation)
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000-28579
(Commission
File Number)
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75-2233445
(IRS
Employer Identification No.)
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18-01
Pollitt Dr.
Fair
Lawn, New Jersey
(Address
of principal executive offices)
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07410
(Zip
Code)
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(201)
791-3200
(Registrant's
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement.
General
On
January 27, 2010, Berliner Communications, Inc. ("Berliner"), BCI East, Inc., a
Delaware corporation and a wholly-owned subsidiary of Berliner ("Merger Sub"),
Unitek Holdings, Inc., a Delaware corporation ("Unitek"), Rich Berliner (solely
in his capacity as Parent Representative) (the "Parent Representative") and HM
Capital Partners LLC (solely in its capacity as Company Representative) (the
"Company Representative") entered into an Agreement and Plan of Merger (the
"Merger Agreement"), pursuant to which Merger Sub merged with and into Unitek
and Unitek became a wholly-owned subsidiary of Berliner (the "Merger").
The time on January 27, 2010 at which the Merger became effective is referred to
herein as the "Effective Time." Following the Merger, Berliner intends to
change its name to UniTek Global Services, Inc. and apply for a new ticker
symbol on the OTC Bulletin Board.
Pursuant
to the terms and conditions of the Merger Agreement, at the Effective Time, each
outstanding share of common stock of Unitek (the "Unitek Common Stock") was
converted into the right to receive 0.012 shares of series A preferred stock of
Berliner (the "Berliner Series A Preferred Stock") and 0.4 shares of common
stock of Berliner (the "Berliner Common Stock"), and each share of series A
preferred stock of Unitek (the "Unitek Preferred Stock") was converted into the
right to receive 0.02 shares of series B preferred stock of Berliner (the
"Berliner Series B Preferred Stock" and, collectively with the Berliner Series A
Preferred Stock and the Berliner Common Stock, the "Merger
Consideration"). The terms of the Berliner Series A Preferred Stock and
the Berliner Series B Preferred Stock are summarized in Item 5.03 of this Form
8-K.
Based on
the number of shares of Unitek capital stock and Berliner capital stock
outstanding as of January 27, 2010, the stockholders of Unitek immediately prior
to the Effective Time will hold more than 80% of the voting capital stock of
Berliner outstanding immediately following the Merger. In addition, as
part of the Merger, options to acquire shares of Unitek Common Stock were
converted into options to acquire an equivalent amount of shares of Berliner
Common Stock (the "Substitute Options"), and warrants to acquire shares of
Unitek Common Stock were converted into warrants to acquire an equivalent amount
of shares of Berliner Common Stock (the "Substitute Warrants"). The
Substitute Options and the Substitute Warrants generally retain the same (or
substantially equivalent) vesting, exercisability and expiration terms as the
original Unitek options or warrants, respectively. The Substitute Options
and the Substitute Warrants are summarized in Items 5.02 and 5.03 to this Form
8-K, respectively, and incorporated herein by reference.
A copy of
the press release dated January 27, 2010 announcing the Merger and related
transactions is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
Reasons
for Approving the Merger Agreement
At a
special meeting of Berliner's board of directors (the "Board") convened on
January 26, 2010,
the Board unanimously adopted and declared advisable the Merger Agreement and
the Merger and related transactions and unanimously determined that the Merger
was in the best interests of Berliner and its stockholders.
The
Board, in reaching its decision to approve the Merger Agreement, consulted with
Berliner's management, as well as with its financial, accounting and legal
advisors, carefully reviewed a significant amount of information over a
seven-month period and considered a variety of factors weighing positively
towards the Merger, including, without limitation, the following:
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the
combination of Berliner and Unitek will enhance the capabilities and
competitiveness of Berliner and its subsidiaries following the completion
of the Merger (the "Post-Closing Company") in the following
ways:
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the
Post-Closing Company will service the satellite, cable, wired and wireless
telecommunications industries, significantly diversifying Berliner's
existing service offerings and customer
base;
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the
complementary operations and capabilities of Berliner and Unitek are
expected to allow the Post-Closing Company to benefit from economies of
scale and significant operating
efficiencies;
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the
greater scale, scope and reach of the Post-Closing Company, with 3,521
employees and 111 offices across the U.S. and in Canada, is expected to
make the Post-Closing Company a more attractive partner for potential
customers with national business models or nationwide network
build-outs;
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the
Merger will result in a company that, because of increased size, economies
of scale and diversified customer base, is expected to have greater
capital flexibility, a greater ability to respond to competitive
pressures, greater diversification opportunities and an enhanced ability
to compete profitably in the long
term;
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the
combination of Berliner's and Unitek's businesses through the Merger will
result in a variety of service offerings and improved market penetration,
thus the Post-Closing Company is expected to be able to better serve
customers and leverage technical expertise in overlapping segments;
and
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the
Post-Closing Company will have an expanded management team and Board of
Directors, with representatives from both Berliner and Unitek bringing
additional customer relationships, industry expertise, knowledge and
resources;
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the
Board's analysis of the business, operations, financial condition,
earnings and prospects of both Berliner and Unitek, including the results
of Berliner's business, accounting and legal due diligence review of
Unitek and its businesses;
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the
alternatives reasonably available to Berliner,
including:
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remaining
a stand-alone entity and pursuing acquisitions of strategic
assets;
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the
sale of Berliner to a third party;
and
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the
possibility of pursuing an alternative strategic business combination with
another third party;
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the
opinion of Duff & Phelps, LLC, dated January 26, 2010, to the Board as
to the fairness, from a financial point of view, to Berliner's
stockholders of the ratio at which shares of Unitek Common Stock are to be
converted into shares of Berliner Common Stock in the Merger (treating the
Berliner Series A Preferred Stock on an as-converted basis), taking into
account, among other considerations, the ratio at which shares of Unitek
Preferred Stock are to be converted into Berliner Series B Preferred Stock
in the Merger;
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the
opportunity for Berliner's stockholders to participate in a company with a
larger and potentially more liquid market for its stock and, as
stockholders in the combined company, to participate in any increase in
the value of Berliner's business following the
Merger;
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the
strategic nature of the Merger and the significant opportunity for growth
and synergies as compared to a stand-alone
Berliner;
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new
satellite and cable business units have increased financial stability and
visibility as compared to a stand-alone Berliner wireless
business;
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Berliner
performed a substantial investigation prior to entering into the Merger
Agreement to ascertain the interest of other potential financial and
strategic acquirors who might offer better terms than Unitek for a
transaction with Berliner. This investigation included a process to
evaluate third party interest in acquiring Berliner, which resulted in
discussions with potential financial and strategic acquirors in addition
to Unitek, certain of whom engaged in diligence investigations concerning
Berliner. Following such process, in consultation with its advisors
and management, the Board considered potential alternatives and believed
that no superior offer was available based on market conditions;
and
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the
other terms of the Merger Agreement,
including:
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the
representations and warranties of Unitek and Berliner;
and
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the
covenants of Unitek and Berliner and their effect on the operations of the
Post-Closing Company following the Effective Time, including the rights
granted to the Special Committee (as defined below) in respect of
Berliner's credit facilities, governing documents and certain affiliated
party transactions;
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In
addition to these factors, the Board also considered the potential adverse
impact of other factors weighing negatively against the Merger. These included,
without limitation, the following:
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the
challenges of integrating the businesses and workforces of Berliner and
Unitek;
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the
risk that the cost savings, synergies and other benefits expected to be
obtained in the Merger might not be fully
realized;
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the
disparities in compensation levels and operating philosophy that may pose
cultural and management challenges for the Post-Closing
Company;
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the
potential disruption to Berliner's or Unitek's businesses that could
result from the announcement of the Merger, including the potential loss
of existing customers and
employees;
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the
substantial dilution to the current Berliner stockholders as a result of
the issuance of the Merger Consideration;
and
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the
substantial indebtedness of the Post-Closing
Company.
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In view
of the complexity and wide variety of information and factors, both positive and
potentially adverse, considered by the Board, the Board did not find it
practical to quantify, rank or otherwise assign relative or specific weights to
the information and factors considered. In addition, the Board did not reach any
specific conclusion with respect to the information and each of the factors
considered, or any aspect of any particular factor, but, rather, conducted an
overall analysis of the information and factors described above, including,
among other things, by engaging in thorough discussions with Berliner's
management and outside financial, accounting and legal advisors. In considering
the information and factors described above, individual members of the Board may
have given different weight to different information or factors. The Board
considered all of the information and these factors as a whole for over seven
months and believed the information and factors supported its decision to
approve the Merger Agreement and the transactions contemplated thereby
(including the Merger). After taking into consideration all of the information
and factors described above, the Board unanimously concluded that the Merger was
in the best interests of Berliner and its stockholders and that Berliner should
proceed with the Merger.
Merger
Agreement
Parties
The
parties to the Merger Agreement are:
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Berliner
Communications, Inc., a publicly-traded Delaware
corporation;
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BCI
East, Inc., a private Delaware corporation and a wholly-owned subsidiary
of Berliner;
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Unitek
Holdings, Inc., a privately-held Delaware
corporation;
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Rich
Berliner (solely in his capacity as Parent Representative);
and
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HM
Capital Partners LLC (solely in its capacity as Company
Representative).
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Escrow
Pursuant
to an escrow agreement, dated as of January 27, 2010, 10,980,000 shares of
Berliner Common Stock included in the Merger Consideration were placed into
escrow and will be available for six months after the Effective Time to satisfy
any indemnification claims with respect to any breaches of representations or
warranties made by Unitek in the Merger Agreement.
Indemnification
Pursuant
to the Merger Agreement, both Berliner and Unitek made representations and
warranties, which survive the closing of the transactions contemplated thereby
(the "Closing") and terminate six months thereafter. As discussed above, any
indemnification claims with respect to any breaches of representations or
warranties made by Unitek in the Merger Agreement will be supported solely by
shares of Berliner Common Stock held in escrow, which shares will be cancelled
in the event of a successful indemnification claim. Any indemnification
claims with respect to any breaches of representations or warranties made by
Berliner in the Merger Agreement will be payable solely by way of issuance of up
to 10,980,000 shares of additional Berliner Common Stock to holders of Unitek
Common Stock (on a pro-rata basis) in the event of a successful indemnification
claim. The number of shares of Berliner Common Stock canceled or issued in
the event of a successful indemnification claim as mentioned above will equal
the total amount of the indemnification claim divided by the Market Value (as
such term is defined in the Merger Agreement) of each share of Berliner Common
Stock. No indemnification claim may be made with respect to Berliner
or Unitek by an indemnified party until the aggregate amount of losses for which
all indemnified parties seeking to be indemnified by Berliner or Unitek,
respectively, exceed $1,000,000 in the aggregate. The limitation in the
immediately preceding sentence will not apply to claims relating to breaches of
either party's representations relating to working capital or
fraud.
Representations
and Warranties
The
Merger Agreement contains customary representations and warranties made by
Unitek, on the one hand, and Berliner and Merger Sub on the other hand.
Such representations cover, among other things, (a) proper corporate
organization and similar corporate matters, (b) capital structure, (c) financial
statements and internal controls, (d) the absence of undisclosed liabilities and
changes, (e) assets, properties and intellectual property, (f) contracts, (g)
compliance with laws, (h) litigation, (i) tax, employment and environmental
matters and (j) insurance matters.
Covenants
Charter
Amendment. Promptly following the Closing (and subject to statutory
notice requirements), Berliner will amend and restate its Amended and Restated
Certificate of Incorporation (the "Charter Amendment") to provide for (1) an
increased number of authorized shares of Berliner Common Stock and (2) the
creation of the Special Committee (as defined below). Stockholders holding
a majority of the voting stock of Berliner following the Effective Time have
entered into a voting agreement, pursuant to which they agreed to approve the
Charter Amendment (among other things), which was approved and recommended
unanimously by the Board immediately after the Effective Time.
Stockholders holding a majority of the voting stock of Berliner then approved
the Charter Amendment by written consent, and it is expected that such Charter
Amendment will be filed with the Secretary of State of the State of Delaware and
become effective after an information statement is sent to Berliner's
non-consenting stockholders and the applicable statutory notice periods have
expired.
Special
Committee. In connection with the Merger, the Board established a
special committee (the "Special Committee") comprised of two Berliner directors
(initially Rich Berliner and Mark S. Dailey) who were directors prior to the
Merger (the "Continuing Directors") and one post-Effective Time Berliner
independent director appointed by the Board (initially Richard Siber). The
Special Committee will automatically dissolve on January 27, 2013. For so
long as the Special Committee exists, Berliner may not take certain actions
without the Special Committee's consent, including:
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amending
or modifying the Charter Amendment or the bylaws of Berliner (the
"Bylaws") in a manner that would amend the rights of the Berliner Series A
or Berliner Series B Preferred
Stock;
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issuing
additional shares of Berliner Series A or Berliner Series B Preferred
Stock to an Affiliated Party (as such term is defined in the Merger
Agreement) (except pursuant to the Credit Support Agreement, as defined
below);
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making
certain changes or determinations with respect to the BMO Loan Documents
(as such term is defined in the Merger Agreement);
or
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entering
into any transactions or amending certain agreements with affiliated
parties, including HM Capital Partners LLC (except for employment
arrangements and benefit programs approved by the Board or the
compensation committee of the
Board).
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Employee
Benefits. Following the Effective Time, Berliner and Unitek will
honor all of the pre-Closing employee benefit plans of Berliner and its
subsidiaries and will allow pre-Effective Time Berliner employees to participate
in the employee benefit plans of Berliner or Unitek and their
subsidiaries. Following the Effective Time, Berliner employees will
receive full credit for service for purposes of eligibility and vesting under
any employee benefit plans of Berliner or Unitek that provides benefits to
employees of Berliner after the Effective Time.
Director and Officer
Indemnification and Insurance. For six years following the
Effective Time, Berliner and Unitek will (1) indemnify current and former
directors, members, managers, officers and employees of Berliner or Unitek (or
any of their respective subsidiaries) against liabilities and costs incurred in
connection with any claim arising out of such party's pre-Closing actions or
omissions (including acts or omissions in connection with such person serving as
an officer, member, manager, director or other fiduciary in any entity if the
services were performed at the request of Unitek or Berliner, including the
Merger) to the fullest extent permitted under applicable law and (2) maintain
current Berliner or Unitek director and officer liability insurance or
replacement policies that contain terms that are no less favorable than those
provided by the current Berliner or Unitek director and officer liability
insurance policies.
Berliner Board and
Committees. Following the Effective Time, the Board was
reconstituted to be made up of two Continuing Directors and seven directors designated by
Unitek. See Item 5.02 of this Form 8-K for additional
information.
Repayment of
Debt. At the Effective Time, in accordance with the terms of the
Merger Agreement, Unitek repaid amounts due under Berliner's senior credit
facility with PNC Bank, N.A. See Item 1.02 of this Form 8-K for additional
information.
Accounting
Treatment of the Merger
Notwithstanding
the fact that Berliner was the legal acquirer under the Merger and remains the
registrant for Securities and Exchange Commission ("SEC") reporting purposes,
the Merger was accounted for as a reverse acquisition with Unitek as the
accounting acquirer. Berliner will account for the Merger as a purchase business
combination, using Unitek's historical financial information and accounting
policies and applying fair value estimates to the acquired assets, liabilities
and commitments of Berliner as of January 27, 2010.
The
foregoing description of the Merger Agreement does not purport to be complete
and is qualified in its entirety by reference to the Merger Agreement, which is
filed as Exhibit 10.1 to this Form 8-K and incorporated herein by
reference.
Registration
Rights Agreement
In
connection with the Merger, Berliner entered into a registration rights
agreement (the "Registration Rights Agreement") with Unitek shareholders,
granting such shareholders registration rights with respect to the shares
received as Merger Consideration (the "Registrable Securities"). Pursuant
to the Registration Rights Agreement, the holders of at least a majority of the
Registrable Securities will be able to require Berliner to (a) register all or
part of their Registrable Securities two times on a Form S-1 or by way of a
similar long-form registration (provided that the aggregate offering value of
the securities to be registered is at least $10 million) and (b) register
all or part of their Registrable Securities an unlimited number of times, to the
extent available, on a Form S-3 (provided that the aggregate offering value of
the securities to be registered is at least $5 million). The holders of
Registrable Securities will also be able to require Berliner to include their
shares in future registration statements that Berliner files, subject to
reduction at the option of the underwriters of such offering.
Berliner
will be obligated under the Registration Rights Agreement to pay the
registration expenses incurred in connection with any registration,
qualification or compliance relating to the exercise of a holder's registration
rights, other than underwriting discounts and commissions. Additionally,
Berliner agrees to indemnify holders of Registrable Securities covered by a
registration statement against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"), or to contribute
to payments the holders may be required to make because of any such liabilities.
The holders of Registrable Securities will indemnify Berliner for losses
resulting from any untrue statement or omission of material fact made by any
such holders in a registration statement; provided that each holder's obligation
to indemnify Berliner will be individual, not joint and several, and will be
limited to the net amount of proceeds received by such holder from the sale of
the Registrable Securities pursuant to such registration statement.
The
foregoing description of the Registration Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the Registration
Rights Agreement, which is filed as Exhibit 10.2 to this Form 8-K and
incorporated herein by reference.
Voting
Agreement
In
connection with the Merger, Berliner entered into a voting agreement (the
"Voting Agreement") with certain stockholders (the "Controlling Stockholders")
holding a majority of the voting capital stock of Berliner following the
Effective Time. Pursuant to the Voting Agreement, the Controlling
Stockholders agree, among other things, to approve the Charter Amendment (which
was approved immediately following the Effective Time), to re-elect Rich
Berliner to the Board upon the expiration of his term in 2012 and, if
recommended by the Board, to re-elect Mark S. Dailey to the Board upon the
expiration of his term in 2012.
The
foregoing description of the Voting Agreement does not purport to be complete
and is qualified in its entirety by reference to the Voting Agreement, which is
filed as Exhibit 10.3 to this Form 8-K and incorporated herein by
reference.
Credit
Support Agreement
In
connection with the Merger, Berliner and Unitek (collectively, the "Obligors")
entered into a credit support agreement (the "Credit Support Agreement") with
Sector Performance Fund, LP and SPF SBS LP (collectively, the "Credit Support
Parties"), who are affiliates of HM Capital Partners LLC, whereby the Obligors
will pay the Credit Support Parties a credit support fee (the "Credit Support
Fee") in exchange for the Credit Support Parties' continued guaranty of Unitek's
performance under its credit facility with BMO Capital Markets Financing, Inc.
(the "BMO Loan"). The Credit Support Parties held approximately 71.6% of
the voting rights of Berliner’s
capital stock outstanding immediately following the Merger. The
Credit Support Fee is equal to 6% (or the maximum contract rate of interest
permitted by law if less than 6%) (the "Stated Rate") on the aggregate of the
outstanding principal amount and interest payable under the BMO Loan. The Credit
Support Fee will be paid quarterly in arrears in cash, or, at the option of
Berliner (and for so long as the Special Committee exists, with the consent of
the Special Committee), in shares of Berliner Series B Preferred Stock which
will be issued quarterly; provided, that if the Unitek Credit Agreements (as
such term is defined in the Merger Agreement) do not permit the payment of the
Credit Support Fee in cash, then such fee will be paid in shares of Berliner
Series B Preferred Stock.
If either
Credit Support Party is required to perform its obligations under the guaranty,
the Obligors will enter into a loan facility with the Credit Support Parties on
substantially the same terms as the BMO Loan (the "Sector Loan Facility").
The principal amount of the Sector Loan Facility will equal the amount of the
guaranty funded by the Credit Support Parties and the interest rate will be
equal to 8% (or the maximum contract rate of interest permitted by law if less
than 8%), plus the rate previously applicable to the BMO Loan. The
interest payable under the Sector Loan Facility will be paid in arrears in cash,
or, at the option of Berliner (and for so long as the Special Committee exists,
with the consent of the Special Committee), in shares of Berliner Series B
Preferred Stock which will be issued quarterly; provided, that if the Unitek
Credit Agreements do not permit the payment of such interest in cash, then such
interest will be paid in shares of Berliner Series B Preferred Stock.
During the nine-month period following the establishment of a Sector Loan
Facility, the Obligors must use commercially reasonable efforts to repay the
principal amount and interest payable under the Sector Loan Facility. Any
principal or interest payable under the Sector Loan Facility not repaid on or
before the end of such nine-month period will automatically convert into shares
of Berliner Series B Preferred Stock.
The
foregoing description of the Credit Support Agreement does not purport to be
complete and is qualified in its entirety by reference to the Credit Support
Agreement, which is filed as Exhibit 10.4 to this Form 8-K and incorporated
herein by reference.
Certain
statements in this Current Report on Form 8-K, which are not historical fact,
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such statements involve risks and uncertainties that
could cause actual results to differ materially from our expectations. Such
risks and uncertainties include, without limitation, risks detailed in our
filings with the SEC, the risk that future trends we have identified, including,
but not limited to, the expected benefits and synergies related to the
combination of Berliner and Unitek, our stock price, trading volume, top and
bottom-line growth and liquidity, do not materialize or if they materialize that
they do not have the beneficial effect we anticipate, as well as the risk that
we will not be able to achieve our sales and profitability goals. All
forward-looking statements in this Current Report on Form 8-K are made as of the
date hereof, based on information available to us on the date hereof, and we
disclaim any intention or obligation to revise any forward-looking statements,
including, without limitation, financial estimates, whether as a result of new
information, future events or otherwise.
Item
1.02 Termination of a Material Definitive Agreement.
On
January 27, 2010, Unitek paid in full the outstanding principal balance of the
BCI senior credit facility with PNC Bank, N.A. ("PNC"), which had a maturity
date of April 17, 2011. This payoff was funded by proceeds received by
Unitek from its issuance of Unitek Preferred Stock and excess cash on hand at
BCI immediately prior to the Merger. As a result of this payoff, the
credit facility with PNC was terminated. Unitek had no material
relationship with PNC other than in respect of the credit facility that was
terminated.
Item
2.01 Completion of Acquisition or Disposition of Assets.
The
Merger was completed on January 27, 2010. No Berliner stockholder
approval was required by Delaware law or other rules or regulations. The
information set forth in Item 1.01 above under the headings "General" and "The
Merger Agreement" of this report is hereby incorporated by
reference.
Item
3.02 Unregistered Sales of Equity Securities.
As
described in Item 1.01 above, pursuant to the Merger Agreement, Berliner issued
shares of Berliner Series A Preferred Stock, Berliner Series B Preferred Stock
and Berliner Common Stock to the Unitek stockholders. The offer and sale of the
shares of Berliner Series A Preferred Stock, Berliner Series B Preferred Stock
and Berliner Common Stock in connection with the Merger Agreement are being made
in reliance on an exemption from registration under the Securities Act, pursuant
to Section 4(2) thereof. The terms of the Berliner Series A Preferred Stock and
the Berliner Series B Preferred Stock are set forth in Item 5.03
below.
Item
5.01 Changes in Control of Registrant.
Upon the
Effective Time, a change of control of Berliner occurred, with the former
stockholders of Unitek acquiring control of Berliner. As of
January 27, 2010
and after giving effect to the Merger, former Unitek shareholders held more than 80% of the
outstanding voting rights of Berliner’s
capital stock.
Item
5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(b)
Resignation
of Directors
In
connection with the Merger Agreement, the following individuals resigned their
positions on the Board and the indicated committees of the Board at the
Effective Time:
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Peter
J. Mixter (Audit Committee and Compensation
Committee);
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Mehran
Nazari (Audit Committee and Compensation
Committee);
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John
Stevens Robling, Jr. (Audit Committee);
and
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Thom
Waye.
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Resignation
of Executive Officers
At the
Effective Time, Rich Berliner resigned his position as Chief Executive Officer
of Berliner but will continue to serve as Chief Marketing Officer of Berliner
and as Chief Executive Officer of BCI Communications, Inc., a Delaware
corporation ("BCI"), effective as of the Effective Time. Michael S.
Guerriero resigned his position as Chief Operating Officer of Berliner but will
continue to serve as Chief Operating Officer of BCI, effective as of the
Effective Time. Raymond A. Cardonne, Jr. resigned his position as Chief
Financial Officer and Treasurer of Berliner but will continue to serve as Chief
Financial Officer and Treasurer of BCI, effective as of the Effective
Time. Robert Bradley resigned his position as Vice President of Berliner
but will continue to serve as Vice President of BCI, effective as of the
Effective Time.
(c)
Appointment
of Executive Officers
At the
Effective Time:
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Peter
Giacalone became Chairman and President of
Berliner;
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C.
Scott Hisey became Chief Executive Officer of Berliner;
and
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·
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Ronald
Lejman became Chief Financial Officer and Treasurer of
Berliner.
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Biographical
Information
The
following biographical descriptions set forth certain information with respect
to certain post-Effective Time executive officers of Berliner:
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Peter
Giacalone, 50, has been the President of Unitek USA, LLC, a Delaware
limited liability company and an indirect, wholly-owned subsidiary of
Unitek ("Unitek USA") since July 2008, and prior to that was the President
and Chief Executive Officer of 180 Connect, Inc. from March 2005 through
July 2008 and the Executive Vice President of DIRECTV, Inc. from January
2004 through March 2005.
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·
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C.
Scott Hisey, 44, has been the Chief Executive Officer of Unitek USA since
its inception in 2004.
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Ronald
Lejman, 41, has been the Chief Financial Officer of Unitek USA since
September 2008, and prior to that was the Chief Financial Officer of
Freedom Enterprise Inc. from February 2005 through September 2008.
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Employment
Agreements
The
following summarizes the material terms of Berliner's employment agreements with
Peter Giacalone, C. Scott Hisey and Ronald Lejman. These employment
agreements were entered into by Unitek or one of its subsidiaries prior to the
Merger and were not amended in connection with the Merger.
Peter
Giacalone
On July
5, 2009, Unitek USA entered into an employment agreement with Mr. Giacalone, now
Berliner's Chairman and President. The employment agreement was effective
as of July 5, 2009 and has a three-year term expiring July 5, 2012.
Mr. Giacalone
receives an annual base salary of $325,000.
Mr. Giacalone
is entitled to participate in all of the Post-Closing Company's compensation and
employee benefit plans. Mr. Giacalone is eligible to earn a cash
bonus at the end of each fiscal year based on operational and financial criteria
set by the Compensation Committee of the board of directors of Unitek USA (the
"Unitek USA Board"). For the fiscal year ending December 31, 2010,
Mr. Giacalone's target bonus is $225,000.
Mr. Giacalone
may be entitled to receive certain payments upon termination of his
employment. If Mr. Giacalone's employment is terminated without Cause
(as defined in his employment agreement), if he resigns for Good Reason (as
defined in his employment agreement) or upon Mr. Giacalone's Death or
Disability (as defined in his employment agreement), he will be entitled to
receive from Unitek USA, in addition to his annual base salary, benefits and
other compensation earned through the date of termination (the "Accrued
Obligations"), (1) (A) upon Death or Disability, his annual base salary for
twelve (12) months following the date of termination or (B) upon termination
without Cause or with Good Reason, his annual base salary for twenty four (24)
months following the date of termination, (2) the pro-rata portion of his annual
incentive bonus for the calendar year in which the termination occurred and (3)
payment of certain medical benefits expenses sufficient to maintain
Mr. Giacalone's benefits at the level as of the date of termination for
twelve (12) months following the date of termination. If
Mr. Giacalone's employment is terminated with Cause, he is entitled to
receive the Accrued Obligations. Payments made in connection with
termination of employment are subject to Mr. Giacalone's execution of a
general release of claims.
Mr. Giacalone's
employment agreement contains customary confidentiality, non-competition and
non-solicitation provisions. Mr. Giacalone's non-competition period is two
years following the date of termination.
C.
Scott Hisey
On July
5, 2009, Unitek USA entered into an employment agreement with Mr. Hisey, now
Berliner's Chief Executive Officer. The agreement was effective as of July
5, 2009 and has a three-year term expiring July 5, 2012.
Mr. Hisey
receives an annual base salary of $325,000;
Mr. Hisey
is entitled to participate in all of the Post-Closing Company's compensation and
employee benefit plans. Mr. Hisey is eligible to earn a cash bonus at
the end of each fiscal year based on operational and financial criteria set by
the Compensation Committee of the Unitek USA Board. For the fiscal year
ending December 31, 2010, Mr. Hisey's target bonus is
$225,000.
Mr. Hisey
may be entitled to receive certain payments upon termination of his
employment. If Mr. Hisey's employment is terminated without Cause (as
defined in his employment agreement), if he resigns for Good Reason (as defined
in his employment agreement) or upon Mr. Hisey's Death or Disability (as
defined in his employment agreement), he will be entitled to receive from Unitek
USA, in addition to his annual base salary and the Accrued Obligations, (1) (A)
upon Death or Disability, his annual base salary for twelve (12) months
following the date of termination or (B) upon termination without Cause or with
Good Reason, his annual base salary for twenty four (24) months following the
date of termination, (2) the pro-rata portion of his annual incentive bonus for
the calendar year in which the termination occurred and (3) payment of certain
medical benefits expenses sufficient to maintain Mr. Hisey's benefits at
the level as of the date of termination for twelve (12) months following the
date of termination. If Mr. Hisey's employment is terminated with
Cause, he is entitled to receive the Accrued Obligations. Payments made in
connection with termination of employment are subject to Mr. Hisey's
execution of a general release of claims.
Mr. Hisey's
employment agreement contains customary confidentiality, non-competition and
non-solicitation provisions. Mr. Hisey's non-competition period is two
years following the date of termination.
Ronald
Lejman
On July
5, 2009, Unitek USA entered into an employment agreement with Mr. Lejman, now
Berliner's Chief Financial Officer. The agreement was effective as of July
5, 2009 and has a three-year term expiring July 5, 2012.
Mr. Lejman
receives an annual base salary of $250,000;
Mr. Lejman
is entitled to participate in all of the Post-Closing Company's compensation and
employee benefit plans. Mr. Lejman is eligible to earn a cash bonus
at the end of each fiscal year based on operational and financial criteria set
by the Compensation Committee of the Unitek USA Board. For the fiscal year
ending December 31, 2010, Mr. Lejman's target bonus is
$200,000.
Mr. Lejman
may be entitled to receive certain payments upon termination of his
employment. If Mr. Lejman's employment is terminated without Cause"
(as defined in his employment agreement), if he resigns for Good Reason (as
defined in his employment agreement) or upon Mr. Lejman's Death or
Disability (as defined in his employment agreement), he will be entitled to
receive from Unitek USA, in addition to his annual base salary and the Accrued
Obligations, (1) (A) upon Death or Disability, his annual base salary for twelve
(12) months following the date of termination or (B) upon termination without
Cause or with Good Reason, his annual base salary for twenty four (24) months
following the date of termination, (2) the pro-rata portion of his annual
incentive bonus for the calendar year in which the termination occurred and (3)
payment of certain medical benefits expenses sufficient to maintain
Mr. Lejman's benefits at the level as of the date of termination for twelve
(12) months following the date of termination. If Mr. Lejman's
employment is terminated with Cause, he is entitled to receive the Accrued
Obligations. Payments made in connection with termination of employment
are subject to Mr. Lejman's execution of a general release of
claims.
Mr. Lejman's
employment agreement contains customary confidentiality, non-competition and
non-solicitation provisions. Mr. Lejman's non-competition period is two
years following the date of termination.
The
foregoing is a summary of the employment agreements with Messrs. Giacalone,
Hisey and Lejman. Each summary is qualified in its entirety by reference to the
individual employment agreements, as attached hereto as Exhibits 10.7, 10.8 and
10.9 of this Form 8-K, respectively, and incorporated herein by
reference.
The
following summarizes the material terms of the amendments to Berliner's
employment agreements with Rich Berliner, Nicholas Day, Michael S. Guerriero,
Robert Bradley and Raymond A. Cardonne, Jr. These amendments were entered
into by Berliner or one of its subsidiaries in connection with the
Merger.
Rich
Berliner
On
January 27, 2010, Berliner amended its employment agreement with Mr. Berliner,
now the Chief Marketing Officer of Berliner and the Chief Executive Officer of
BCI. The amendment provides that the performance targets for Mr.
Berliner's annual stock and option bonuses will be based on the revenue, gross
margins and EBITDA of BCI, rather than Berliner as a whole. The amendment
revises the terms and procedures relating to payments by Berliner to Mr.
Berliner following the termination of his employment so that any such payments
comply with the provisions of Section 409A of the Internal Revenue Code
("Section 409A"). In addition, in order to receive severance payments
following termination of his employment, Mr. Berliner must execute a release of
claims against Berliner.
Nicholas
Day
On
January 27, 2010, Berliner amended its employment agreement with Mr. Day, now
the General Counsel and Secretary of Berliner. The amendment provides that
Berliner and Mr. Day will negotiate in good faith an incentive compensation
package (including Berliner stock options) for Mr. Day designed to be
substantially similar to the incentive compensation packages of Berliner's
senior management team. The amendment also revises the terms and
procedures relating to payments by Berliner to Mr. Day following the termination
of his employment so that any such payments comply with the provisions of
Section 409A. In addition, in order to receive severance payments
following termination of his employment, Mr. Day must execute a release of
claims against Berliner.
Michael
S. Guerriero
On
January 27, 2010, Berliner amended its employment agreement with Mr. Guerriero,
now the Chief Operating Officer of BCI. The amendment provides that the
performance targets for Mr. Guerriero's annual stock and option bonuses will be
based on the revenue, gross margins and EBITDA of BCI, rather than Berliner as a
whole. The amendment revises the terms and procedures relating to payments
by Berliner to Mr. Guerriero following the termination of his employment so that
any such payments comply with the provisions of Section 409A. In addition,
in order to receive severance payments following termination of his employment,
Mr. Guerriero must execute a release of claims against Berliner.
Robert
Bradley
On
January 27, 2010, Berliner amended its employment agreement with Mr. Bradley,
now the Vice President, BCI East of BCI. The amendment provides that the
performance targets for Mr. Bradley's annual stock and option bonuses will be
based on the revenue, gross margins and EBITDA of BCI, rather than Berliner as a
whole. The amendment revises the terms and procedures relating to payments
by Berliner to Mr. Bradley following the termination of his employment so that
any such payments comply with the provisions of Section 409A. In addition,
in order to receive severance payments following termination of his employment,
Mr. Bradley must execute a release of claims against Berliner.
Raymond
A. Cardonne, Jr.
On
January 27, 2010, Berliner amended its employment agreement with Mr. Cardonne,
now the Chief Financial Officer and Treasurer of BCI. The amendment
provides for Mr. Cardonne to remain employed by Berliner through
June 30, 2010 (the "Resignation Date"), and he will be eligible to receive
certain post-employment payments and benefits. In addition, all unvested
Berliner stock options held by Mr. Cardonne will vest on the Resignation Date
and will be exercisable for three months thereafter. The amendment revises
the terms and procedures relating to payments by Berliner to Mr. Cardonne
following the termination of his employment so that any such payments comply
with the provisions of Section 409A. In addition, in order to receive
severance payments following termination of his employment, Mr. Cardonne must
execute a release of claims against Berliner.
The
foregoing is a summary of the amendments to the employment agreements with
Messrs. Berliner, Day, Guerriero, Bradley and Cardonne. Each summary is
qualified in its entirety by reference to the individual amendments, as attached
hereto as Exhibits 10.10, 10.11, 10.12, 10.13 and 10.14 of this Form 8-K,
respectively, and incorporated herein by reference.
(d)
Board
of Directors
Pursuant
to the Merger Agreement and as a result of Board actions on January 26, 2010,
each of the following former members of the Board will continue to serve on the
Board (in the now indicated classes of the Board):
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·
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Rich
Berliner, 56, Class I; and
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·
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Mark
S. Dailey, 51, Class I.
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Pursuant
to the Merger Agreement and as a result of Board actions on January 26, 2010,
the following individuals were appointed to the Board (and to the indicated
classes of the Board):
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Peter
Giacalone, 50, Class II;
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Peter
Brodsky, 39, Class II;
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·
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C.
Scott Hisey, 44, Class III;
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·
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Dean
MacDonald, 50, Class I;
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Richard
Siber, 48, Class III;
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·
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Daniel
J. Hopkin, 32, Class II; and
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·
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Joseph
Colonnetta, 47, Class III.
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Following
the Effective Time, Messrs. Dailey, MacDonald and Siber will receive an annual
stipend of $15,000.00, $2,500.00 for each board meeting attended in person and
$1,500.00 for each board meeting attended by telephone. If any of Messrs.
Dailey, MacDonald and Siber are members of the Audit Committee or the
Compensation Committee, they will receive $500.00 for each meeting attended in
person or by telephone. The Chairman of the Audit Committee will receive
an additional annual stipend of $7,500. Messrs. Dailey, MacDonald and
Siber will be eligible for additional equity awards at the discretion of the
Board, subject to attendance at no less than 75% of all Board and Committee
meetings, as applicable, during the fiscal year preceding the
award.
Board
Committees
The
Berliner Board will continue to have an Audit Committee and Compensation
Committee, and will create a Special Committee to approve certain related party
transactions and other matters as set forth in the Merger Agreement and the
Charter Amendment. Pursuant to the Merger Agreement and as a result of
Board actions of January 27, 2010, Messrs. Berliner, Dailey and Siber were
appointed to the Special Committee; Messrs. Siber and Dailey were appointed to
the Audit Committee of the Board; and Messrs. Giacalone, Brodsky and Hisey were
appointed to the Compensation Committee.
Related
Party Transactions
Amended
and Restated Monitoring and Oversight Agreement
In
connection with the Merger, on January 27, 2010, Berliner entered into an
Amended and Restated Monitoring and Oversight Agreement (the "M&O
Agreement") with BCI, Unitek USA, Unitek, Unitek Midco, Inc., a Delaware
corporation ("Midco), and Unitek Acquisition, Inc., a Delaware corporation
("Acquisition," and together with Berliner, BCI, Unitek USA, Unitek, and Midco,
the "Clients") and HM Capital Partners I LP ("HM LP"). Pursuant to
the M&O Agreement, the Clients will pay HM LP an annual fee of $720,000 for
calendar year 2010, $730,000 for calendar year 2011 and $754,000 for calendar
year 2012 and for each calendar year thereafter, in consideration for HM LP's
provision of financial oversight and monitoring services to the Clients as they
may be requested from time to time. Each annual fee mentioned above will
be payable in equal quarterly installments on March 31, June 30, September 30
and December 31 of the applicable year; provided, that such payment will not be
paid unless the Total Leverage Ratio (as such term is defined in the Unitek
First Lien Credit Agreement, which such term is defined in the Merger Agreement)
is below 3.50:1.00 at the end of the applicable quarter, and if not paid, each
such payment will accrue until the Total Leverage Ratio is below 3.50:1.00 at
any subsequent quarter at which time all accrued and unpaid payments will become
due and payable. Further, to the extent any amounts payable under the
M&O Agreement are not permitted to be paid under the Unitek First Lien
Credit Agreement, such amounts will continue to accrue until the earlier of the
time at which such amounts are permitted to be paid under the Unitek First Lien
Credit Agreement or the termination of the Unitek First Lien Credit Agreement in
accordance with its terms, at which such time such amounts will become due and
payable.
Each of
the Clients have also agreed to indemnify HM LP, its affiliates, and their
respective directors, partners, officers, controlling persons, agents and
employees (collectively referred to as the "Indemnified Persons") from and
against any and all claims, liabilities, losses, damages and expenses incurred
by any Indemnified Person (including those arising out of an Indemnified
Person’s negligence and reasonable fees and disbursements of the Indemnified
Person’s counsel) related to or arising out of (i) actions taken or omitted to
be taken by any of the Clients, (ii) actions taken or omitted to be taken
by an Indemnified Person with any Client’s consent or in conformity with any
Client’s instructions or any Client’s actions or omissions or (iii) HM LP’s
engagement that do not result primarily from the bad faith, gross negligence or
willful misconduct of such Indemnified Persons.
The
M&O Agreement expires upon the earlier of September 27, 2017 or a buyout of
the M&O Agreement. Berliner is obligated to buy out the M&O
Agreement upon the first to occur of: (1) any sale or distribution by Berliner
or its subsidiaries to the public of its capital stock and, in connection
therewith, the capital stock of Berliner or its subsidiaries becoming listed on
an established stock exchange or a national market system; (2) any consolidation
or merger of Berliner with or into another entity or other business combination
or transfer of securities of Berliner by any of its stockholders or a series of
transactions in which the stockholders of Berliner immediately prior to such
transaction own less than 50% of the equity of Berliner or HM Capital Partners
LLC or any fund or management company affiliated therewith owns less than 25% of
the equity of Berliner; (3) any sale, license, transfer or disposition of all or
substantially all of the assets of Berliner; or (4) the Special Committee's
approval of Berliner buying out the M&O Agreement.
Peter
Brodsky and Joseph Colonnetta are Partners and Daniel Hopkin is a Vice President
of HM Capital Partners LLC, which is an affiliate of HM LP. The foregoing
description of the M&O Agreement does not purport to be complete and is
qualified in its entirety by reference to the M&O Agreement, which is filed
as Exhibit 10.17 to this Form 8-K and incorporated herein by
reference.
Credit
Support Agreement
Peter
Brodsky and Joseph Colonnetta are Partners and Daniel Hopkin is a Vice President
of HM Capital Partners LLC, which is an affiliate of the Credit Support
Parties. Furthermore, Peter Brodsky and Joseph Colonnetta are each
executive officers of the ultimate general partner of each of the Credit Support
Parties and they each own an interest in such general partner. Daniel
Hopkin is an officer of the ultimate general partner of each of the
ultimate general partner of each of the Credit Support Parties and owns an
interest in the general partner of Sector Performance Fund, LP.
The
information set forth in Item 1.01 above under the heading “Credit Support
Agreement” of this report is hereby incorporated by reference.
Nex-Link
USA, LLC
Unitek
USA and C. Scott Hisey, the Chief Executive Officer of Berliner, jointly own and
operate Nex-Link USA, LLC, a Delaware limited liability company ("Nex-Link"), a
joint venture formed by Mr. Hisey as a disabled veteran-owned business
enterprise for the purpose of supporting customers requiring work to be
completed by a disabled veteran-owned entity. Mr. Hisey, a registered
disabled veteran, owns 51% of the membership units of Nex-Link. Unitek USA
owns the remaining 49% of the membership units of Nex-Link. Nex-Link’s
assets were valued at approximately $0.1 million as of December 31, 2009.
Nex-Link generated sales of approximately $0.7 million in 2009.
Historically, Nex-Link has distributed 100% of its net income to Unitek
USA. Furthermore, Unitek USA is a lender to Nex-Link pursuant to a
revolving credit agreement, dated as of July 2, 2008 (the "Nex-Link Credit
Agreement"). Nex-Link's current principal outstanding under the Nex-Link
Credit Agreement is approximately $0.2 million. Under the Unitek First
Lien Credit Agreement, the maximum amount that Unitek USA and its subsidiaries
may lend to third parties, including Nex-Link, is $1,000,000 in the
aggregate. No principal or interest payable under the Nex-Link Credit
Agreement was paid in Berliner's last fiscal year. Nex-Link’s effective
interest rate for Berliner's last fiscal year was based on the prime rate
published in the Wall Street Journal plus two percent.
Director
and Officer Indemnification Agreements
Following
the Merger, Berliner entered into indemnification agreements (the "D&O
Indemnification Agreements") with Berliner's directors and certain executive
officers (Messrs. Berliner, Dailey, Giacalone, Hisey, Brodsky, MacDonald, Siber,
Yannantuono, Perkins, Lejman, Day, Hopkin and Colonnetta), whereby Berliner
agreed to indemnify them, to the fullest extent permitted under Delaware law,
against all expenses, judgments, costs, fines and amounts paid in settlement
actually incurred by the directors in connection with any civil, criminal,
administrative or investigative action brought against the directors by reason
of their relationship with Berliner. The D&O Indemnification Agreements
provide for indemnification rights regarding third-party claims and in certain
circumstances, proceedings brought by or in the right of Berliner. In addition,
the D&O Indemnification Agreements provide for the advancement of expenses
incurred in connection with any proceeding covered by the D&O
Indemnification Agreements, as permitted by Delaware law.
Also,
following the Merger, Berliner and its subsidiaries entered into an
indemnification priority agreement (the "Indemnification Priority Agreement")
with HM Capital Partners LLC to clarify the priority of advancement of expenses
and indemnification obligations among Berliner, its subsidiaries and any of
Berliner's directors appointed by HM Capital Partners LLC and other related
matters.
The
foregoing is a summary of the D&O Indemnification Agreements and the
Indemnification Priority Agreement and is qualified in its entirety by reference
to the form of D&O Indemnification Agreement and the Indemnification
Priority Agreement attached hereto as Exhibits 10.15 and 10.16, respectively, of
this Form 8-K and incorporated herein by reference.
(e)
Equity
Incentive Plan
Immediately
prior to the Merger, an aggregate of 15,823,301 shares of Unitek Common Stock
were issuable upon exercise of outstanding Unitek options (the "Unitek Options")
awarded pursuant to the Unitek Holdings, Inc. 2007 Equity Incentive Plan (the
"Equity Incentive Plan"). No holders of more than 10% of the voting power
of all Unitek securities held any Unitek Options immediately prior to the
Merger. The Unitek Options had a weighted average exercise price of
$1.00 per share. Following the Merger, the Unitek Options were
converted into options to acquire an equivalent amount of shares of Berliner
Common Stock (the "Substitute Options"). The Substitute Options generally retain
the same (or substantially equivalent) vesting, exercisability and expiration
terms as the Unitek Options. Upon the consummation of the Merger and
the distribution of the Substitute Options, no further options will be awarded
under the Equity Incentive Plan.
This
summary is qualified by reference to the full text of the form of Substitute
Option and the Equity Incentive Plan, which are attached hereto as Exhibits 10.5
and 10.18 of this Form 8-K, respectively, and incorporated herein by
reference.
Bonuses
On
January 26, 2010, the Board determined and approved bonuses to be paid to
Messrs. Day ($30,000), Guerriero ($24,365) and Bradley ($22,763).
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Charter
Amendment
Following
the Effective Time, holders of a majority of Berliner's outstanding voting
capital stock approved the Charter Amendment. The Charter Amendment
will be filed with the Secretary of State of the State of Delaware and become
effective following proper notice to the non-consenting stockholders of Berliner
in accordance with statutory notice requirements. The Charter
Amendment will:
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increase
Berliner's authorized capital stock to a total of 220,000,000 shares,
consisting of 200,000,000 shares of Berliner Common Stock and 20,000,000
shares of Berliner Preferred Stock;
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change
Berliner's corporate name to "UniTek Global Services, Inc.";
and
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establish
the Special Committee and set forth the rights, powers and obligations of
the Special Committee as discussed in Item 1.01 under the sub-heading
"Charter Amendment" under the heading
"Covenants."
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Immediately
upon the effectiveness of the Charter Amendment, each share of Berliner Series A
Preferred Stock will automatically convert into the applicable number of shares
of Berliner Common Stock, as discussed in this Item 5.03 under the heading
"Certificate of Designation - Series A Preferred Stock."
The
foregoing is a summary of the Charter Amendment. This summary is qualified in
its entirety by reference to the Charter Amendment, as amended and attached
hereto as Exhibit 3.1 to this Form 8-K and incorporated herein by
reference.
Amendment
to Bylaws
At the
Effective Time, the Board amended and restated the Bylaws of Berliner (the
"Bylaws"). The primary changes to the Bylaws were as
follows:
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added
Article II, Sections 4 and 5 to clarify and update the process and
procedures for stockholders to nominate an individual for election to the
Board or to propose other business to be considered at an annual or
special meeting of stockholders. For example, the amended sections provide
that the notice required to be submitted by a stockholder for either
director nominations or other business must disclose, among other things,
all swaps, hedges and other derivative instruments and arrangements
entered into, directly or indirectly, by the stockholder or any of its
controlled affiliates, and all contracts, arrangements, understandings and
relationships with respect to the stockholder's investment in Berliner,
including with other stockholders, potential investors in Berliner and
potential transaction advisers such as financial advisors, legal counsel
and proxy solicitation firms;
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changed
Article III, Section 4 to include a definition of "cause" with
respect to removal of directors that includes (1) the willful failure by a
director to perform, or the gross negligence of a director in performing,
such director's duties, (2) engaging in willful or serious misconduct that
is injurious to the Corporation or (3) the conviction of, or the entry of
a plea of nolo contendere to, a
felony;
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revised
Article VIII to clarify the terms and procedures for Berliner's
indemnification of its directors. For example, the amended
sections provide that, in order to be indemnified by Berliner, a director
must have acted in good faith and in a
manner that such director reasonably believed to be in or not opposed to
the best interests of Berliner and,
with respect to any criminal proceeding, without reasonable cause to believe
such director's conduct was unlawful. In addition, Berliner is not
obligated to indemnify directors for claims covered by an insurance policy
or other indemnification
arrangement;
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added
changes throughout the Bylaws allowing the Board to take certain actions
using electronic means; and
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the
Board also made certain technical and conforming amendments to the
Bylaws.
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The
foregoing is a summary of the amendments to the Bylaws. This summary is
qualified in its entirety by reference to the Bylaws, as amended and filed as
Exhibit 3.4 to this Form 8-K and incorporated herein by reference.
Change
in Fiscal Year
In
connection with the Merger, Berliner changed its fiscal year end from June 30 to
December 31 (effective as of December 31, 2009). Berliner will account for the
Merger as a purchase business acquisition. Consequently, Berliner
will file a transition report on Form 10-K for the six-month period ended
December 31, 2009.
Certificate
of Designation - Series A Preferred Stock
On
January 27, 2010, Berliner filed with the Secretary of State of the State of
Delaware a Certificate of Designation of Series A Convertible Preferred Stock
designating 1,317,602 shares of Berliner Series A Preferred Stock. At
the Effective Time, each outstanding share of Unitek Common Stock was converted
into the right to receive 0.012 shares of Berliner Series A Preferred Stock, in
addition to 0.4 shares of Berliner Common Stock.
Rank. With
respect to the distribution of assets upon liquidation, dissolution or winding
up of Berliner, the Berliner Series A Preferred Stock ranks pari passu with the
Berliner Common Stock.
Dividends. The
holders of the Berliner Series A Preferred Stock are entitled to participate in
dividends paid to the Berliner Common Stock on an as-converted
basis.
Voting
Rights. The holders of the Berliner Series A Preferred Stock
are entitled to vote with the holders of the Berliner Common Stock on an
as-converted basis.
Automatic
Conversion. Each share of Berliner Series A Preferred Stock
will be automatically converted into 50 shares of Berliner Common Stock, subject
to customary structural anti-dilution adjustments for stock splits, dividends
and similar events, upon the filing and effectiveness of the Charter
Amendment. The terms of the Berliner Series A Preferred Stock do not
contain any price-based anti-dilution provisions. In the event of
certain corporate changes, including any consolidation or merger in which
Berliner is not the surviving entity, sale or transfer of all or substantially
all of Berliner's assets, certain share exchanges and certain distributions of
property or assets to the holders of Berliner Common Stock, the holders of the
Berliner Series A Preferred Stock have the right to receive upon conversion, in
lieu of shares of Berliner Common Stock otherwise issuable, such securities
and/or other property as would have been issued or payable as a result of such
corporate change with respect to or in exchange for the Berliner Common Stock
issuable upon conversion of the Berliner Series A Preferred
Stock.
The
foregoing description of the Berliner Series A Preferred Stock is qualified in
its entirety by reference to the Series A Certificate of Designation attached
hereto as Exhibit 3.2 to this Form 8-K and incorporated herein by
reference.
Certificate
of Designation - Berliner Series B Preferred Stock
On
January 27, 2010, Berliner filed with the Secretary of State of the State of
Delaware a Certificate of Designation of Series B Convertible Preferred Stock
designating 682,398 shares of Berliner Series B Preferred Stock. At
the Effective Time, each outstanding share of Unitek Preferred Stock was
converted into the right to receive 0.02 shares of Berliner Series B Preferred
Stock.
Rank. With
respect to the distribution of assets upon liquidation, dissolution or winding
up of Berliner, the Berliner Series B Preferred Stock ranks (1) senior to all
classes of Berliner's common stock; (2) senior to all other series of Berliner's
previously authorized preferred stock; (3) senior to any class or series of
capital stock of Berliner created after the designation of the Berliner Series B
Preferred Stock, which does not, by its terms, rank senior to or pari
passu with the Berliner Series B Preferred Stock (each a "Junior
Security").
Dividends. The
holders of the Berliner Series B Preferred Stock are entitled to participate in
dividends paid to the Berliner Common Stock on an as-converted
basis.
Liquidation
Rights. In the event of a liquidation, dissolution or winding
up of Berliner, before any distribution is made to the holders of any Junior
Security, the holders of the Berliner Series B Preferred Stock are entitled to
be paid out of the assets of Berliner an amount equal to the greater of (1)
$100.00 per share of Berliner Series B Preferred Stock (as adjusted for stock
splits, stock dividends, combinations or the like) plus any declared but unpaid
dividends on the Berliner Series B Preferred Stock, and (2) the amount payable
with respect to such shares of Berliner Series B Preferred Stock as if they had
been converted into Berliner Common Stock.
Voting
Rights. The holders of the Berliner Series B Preferred Stock
are entitled to vote with the holders of the Berliner Common Stock on an
as-converted basis.
Optional
Conversion. Each share of Berliner Series B Preferred Stock is
convertible at any time following the effectiveness of the Charter Amendment, at
the option of the holder thereof, into shares of Berliner Common
Stock. The number of shares of Berliner Common Stock into which the
Berliner Series B Preferred Stock is convertible is equal to the Series B
Original Issue Price divided by $1.00 (the "Conversion Price"), such that the
actual conversion ratio would currently be 50 shares of Berliner Common Stock
for each share of Berliner Series B Preferred Stock, subject to standard
structural anti-dilution adjustments for stock splits, dividends and similar
events. The terms of the Berliner Series B Preferred Stock do not
contain any price-based anti-dilution provisions. In the event of
certain corporate changes, including any consolidation or merger in which
Berliner is not the surviving entity, sale or transfer of all or substantially
all of Berliner's assets, certain share exchanges and certain distributions of
property or assets to the holders of Berliner Common Stock, the holders of the
Berliner Series B Preferred Stock have the right to receive upon conversion, in
lieu of shares of Berliner Common Stock otherwise issuable, such securities
and/or other property as would have been issued or payable as a result of such
corporate change with respect to or in exchange for the Berliner Common Stock
issuable upon conversion of the Berliner Series B Preferred Stock.
Protective
Provisions. Berliner may not, without the prior approval (by
vote or written consent) of the holders of a majority of the then outstanding
shares of the Berliner Series B Preferred Stock: (1) amend or waive any
provision of Berliner's Certificate of Incorporation or Bylaws in a way that
would alter the rights, preferences or privileges of the Berliner Series B
Preferred Stock; or (2) create any capital stock having rights, preferences or
privileges senior to or on parity with the Berliner Series B Preferred
Stock.
Election of
Director. The holders of the Berliner Series B Preferred Stock
shall be entitled to elect one (1) member of the Board until such time as the
Berliner Series B Preferred Stock represents less than five percent (5%) of the
then-outstanding shares of Berliner Common Stock (including the Preferred Stock
voting on an as-converted basis), after which time the Berliner Series B
Preferred Stock shall at no time thereafter be entitled to separately elect a
member of the Board.
The
foregoing description of the Berliner Series B Preferred Stock is qualified in
its entirety by reference to the Series B Certificate of Designation attached
hereto as Exhibit 3.3 to this Form 8-K and incorporated herein by
reference.
Substitute
Warrants
Immediately
prior to the Merger, an aggregate of 5,000,000 shares of Unitek Common
Stock were issuable upon exercise of outstanding Unitek warrants (the "Unitek
Warrants"). No holders of more than 10% of the voting power of all
Unitek securities held any Unitek Warrants immediately prior to the
Merger. The Unitek Warrants had a weighted average exercise price of
$2.50. Following the Merger, the Unitek Warrants were converted into
warrants to acquire an equivalent amount of shares of Berliner Common Stock (the
"Substitute Warrants"). The Substitute Warrants generally retain the same (or
substantially equivalent) vesting, exercisability and expiration terms as the
Unitek Warrants.
This
summary is qualified by reference to the full text of the Form of Substitute
Warrant, which is attached hereto as Exhibit 10.6 to this Form 8-K and
incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits.
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(a)
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Financial
Statements of Business Acquired.
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The
audited consolidated financial statements required by this Item are not being
filed herewith. To the extent such information is required by this
Item, it will be filed by amendment to this Current Report on Form 8-K not later
than 71 days after the date on which this Current Report on Form 8-K is required
to be filed.
The
unaudited consolidated financial statements required by this Item are not being
filed herewith. To the extent such information is required by this
Item, it will be filed by amendment to this Current Report on Form 8-K not later
than 71 days after the date on which this Current Report on Form 8-K is required
to be filed.
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(b)
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Pro
Forma Financial Information.
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The pro
forma financial information required by this Item is not being filed
herewith. To the extent such information is required by this Item, it
will be filed by amendment to this Current Report on Form 8-K not later than 71
days after the date on which this Current Report on Form 8-K is required to be
filed.
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(d)
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Exhibits.
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See the Exhibit Index immediately
following the signature page hereto.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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BERLINER
COMMUNICATIONS, INC.
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/s/ Rich Berliner
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Date:
January 27, 2010
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Name: Rich
Berliner
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Title: President
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EXHIBIT
INDEX
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Exhibit No.
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Description
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3.1
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Form
of Amended and Restated Articles of Incorporation of Berliner
Communications, Inc.
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3.2
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Certificate
of Designation for the Berliner Series A Preferred Stock of Berliner
Communications, Inc.
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3.3
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Certificate
of Designation for the Berliner Series B Preferred Stock of Berliner
Communications, Inc.
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3.4
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Amended
and Restated Bylaws of Berliner Communications, Inc.
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10.1
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Agreement
and Plan of Merger, dated as of January 27, 2010, by and among Berliner
Communications, Inc., BCI East, Inc., Rich Berliner (as Parent
Representative), HM Capital Partners LLC (as Company Representative) and
Unitek Holdings, Inc.
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10.2
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Registration
Rights Agreement, dated as of January 27, 2010, by and between Berliner
Communications, Inc. and those holders of capital stock of Berliner listed
on Exhibit A thereto
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10.3
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Voting
Agreement, dated as of January 27, 2010, by and among Berliner
Communications, Inc., HM Capital Partners, LLC, and those holders of
capital stock of Berliner listed on Exhibit A thereto
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10.4
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Credit
Support Agreement, dated as of January 27, 2010, by and among Sector
Performance Fund, LP, SPF SBS LP, Unitek Holdings, Inc. and Berliner
Communications, Inc.
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10.5
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Form
of Substitute Option
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10.6
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Form
of Substitute Warrant
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10.7.1
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Employment
Agreement, dated as of July 5, 2009, by and between Unitek USA, LLC and
Peter Giacalone
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10.7.2
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Amendment
to Employment Agreement, dated as of December 23, 2009, by and between
Unitek USA, LLC and Peter Giacalone
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10.8.1
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Employment
Agreement, dated as of July 5, 2009, by and between Unitek USA, LLC and C.
Scott Hisey
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10.8.2
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Amendment
to Employment Agreement, dated as of December 23, 2009, by and between
Unitek USA, LLC and C. Scott Hisey
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10.9.1
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Employment
Agreement, dated as of July 5, 2009, by and between Unitek USA, LLC and
Ronald Lejman
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10.9.2
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Amendment
to Employment Agreement, dated as of December 23, 2009, by and between
Unitek USA, LLC and Ronald Lejman
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10.10
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Amendment
to Employment Agreement, dated as of January 27, 2010, by and between
Berliner Communications, Inc. and Rich Berliner
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10.11
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Amendment
to Employment Agreement, dated as of January 27, 2010, by and between
Berliner Communications, Inc. and Robert Bradley
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10.12
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Amendment
to Employment Agreement, dated as of January 27, 2010, by and between
Berliner Communications, Inc. and Michael S. Guerriero
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10.13
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Amendment
to Employment Agreement, dated as of January 27, 2010, by and between
Berliner Communications, Inc. and Nicholas Day
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10.14
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Amendment
to Employment Agreement, dated as of January 27, 2010, by and between
Berliner Communications, Inc. and Raymond A. Cardonne,
Jr.
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10.15
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Form
of D&O Indemnification
Agreement
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10.16
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Indemnification
Priority Agreement, dated as of January 27, 2010, by and among HM Capital
Partners LLC, Berliner Communications, Inc., BCI Communications, Inc.,
Unitek USA, LLC, Unitek Holdings, Inc., Unitek Midco, Inc. and Unitek
Acquisition, Inc.
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10.17
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Amended
and Restated Monitoring and Oversight Agreement, dated as of January 27,
2010, by and among BCI Communications, Inc., Unitek USA, LLC, Unitek
Holdings, Inc., Unitek Midco, Inc., Unitek Acquisition, Inc. and HM
Capital Partners I LP
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10.18
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Unitek
Holdings, Inc. 2007 Equity Incentive Plan
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99.1
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Press
Release dated January 27,
2010
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