UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION. IN RE PINNACLE HOLDINGS CORP. No. 8 :01-CV-624-T-27-MSS SECURITIES LITIGATION

Transcription

1 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION IN RE PINNACLE HOLDINGS CORP. No. 8 :01-CV-624-T-27-MSS SECURITIES LITIGATION STIPULATION AND AGREEMENT OF SETTLEMENT This Stipulation and Agreement of Settlement (the "Stipulation") is submitted pursuant to Rule 23 of the Federal Rules of Civil Procedure. Subject to the approval of the Court, thi s Stipulation is entered into among Lead Plaintiffs Carl Overton, Joseph and Anna Fallon, Ariene Jakob, William Meyers, and Craig Sands, on behalf of themselves and the Class (as hereinafter defined), Louisiana School Employees' Retirement System, on behalf of itself and the Section 1 1 Sub-Class (as hereinafter defined), Defendants Pinnacle Holdings Inc. ("Pinnacle"), Robert Wolsey ("Wolsey"), Steven Day ("Day"), Jeffrey Card ("Card "), Peter O 'B rien, Andrew Banks, Peni Garber, Peggy Koenig, and Royce Yudkoff (collectively, the "'Officer and Director Defendants"), Deutsche Bank Securities, Inc. (originally sued as "Deutsche Bank Alex. Brown"), Goldman Sachs & Co., Merrill Lynch & Company, Raymond James & Associates, Inc., Salomon Smith Barney, and Banc of America Securities LLC (collectively, the "Underwriter Defendants" ) and PricewaterhouseCoopers LLP ("PwC") (Pinnacle, the Officer and Director Defendants, the Underwriter Defendants, and PwC are collectively referred to hereinafter as the "Defendants"), by and through their respective counsel. WHEREAS : A. Beginning on March 23, 2001, six class actions alleging violations of federal securities laws - Foster v. Pinnacle Holdings Inc., et al., Case No. 8:01-CV-624-T-27MSS ; Worrall v. Pinnacle Holdings Inc., et al., Case No. 8 :01-CV-698-T-27TGW ; Troncatty v.

2 Pinnacle Holdings Inc., et al., Case No. 8 :01 -CV-749-T-27TBM; Aiastasi v. Pinnacle Holding s Inc., et al., Case No. 8 :01-CV-839-T-27TGW ; Forney v. Pinnacle Holdings Inc., et al., Case No. T-27TBM - were filed in this Court and were subsequently consolidated under the caption above, and are hereinafter referred to as the "Action" ; B. Plaintiffs have moved for leave to file a Second Consolidated Amended Complaint (the "Complaint"). The Complaint alleges, among other th ings, that Pinnacle, the Officer and Director Defendants (other than Card) and the Underwriter Defendants violated Sections I 1 and 15 of the Securities Act of 1933 by disseminating to the public a false and misleading Registration Statement and Prospectus (collectively the "Prospectus") relating to the January 18, Offering. The Complaint also alleges that the false and misleading information in the Prospectu s caused the price of the stock issued under the Prospectus to be artificially inflated. The Section 11 claims are brought on behalf of a putative Sub-Class consisting of all persons who bough t Pinnacle shares on, or traceable to, the January 18, 2000 Offering, and were damaged thereby ; C. The Complaint also alleges that Pinnacle, Day, Wolsey, Card and PWC (th e "Section 10(b) Defendants") violated Section 10(b) of the Securities Exchange Act of 1934, an d Rule I Ob-5 promulgated thereunder, by disseminating false and misleading statements and/or concealing material adverse facts regarding Pinnacle' s business operations and financial condition between June 29, 1999 and August 14, 2001, inclusive (th e "Class Period"). The Complaint alleges that the false and misleading information caused the price of Pinnacle's common stock t o be artificially inflated during the Class Period. The Section 10(b) claims are brought on behalf of a putative Class consisting of all persons who purchased or otherwise acquired Pinnacle' s 8 :01-CV-902-T-27TGW; and Derogatis v. Pinnacle Holdings Inc.- et al., Case No. 8 :01-CV

3 common stock during the Class Period and were damaged thereby. The Complaint also alleges that Day, Wolsey and Card are liable as control persons under Section 20(a) of the Secu rities Exchange Act of D. Defendants have denied, and continue to deny, each and every claim an d contention alleged by plaintiffs in this Action. Defendants have expressly denied, and continue t o deny, all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been allegdd, in this Action. Defendants also have denied, and continue to deny, inter alia, the allegations that plaintiffs or the Class have suffered damage, that the price of Pinnacle common stock was artificially inflated by reasons o f alleged misrepresentations, non-disclosures or otherwise, or that plaintiffs or the Class wer e harmed by the conduct alleged in this Action. This Stipulation shall in no event be construed o r deemed to be evidence of or an admission or concession on the part of any Defendant with respect to any claim or of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that the Defendants have asserted. Nonetheless, Defendants have concluded that further conduct of this Action would be protracted and expensive, and that it i s desirable that this Action be fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation. Defendants also have taken into account the uncertaint y and risks inherent in any litigation, especially in complex cases like this Action. Defendants have therefore determined that it is desirable and beneficial to them that this Action be settled in the manner and upon the terms and conditions set forth in this Stipulation. E. Plaintiffs' Counsel represent that they have conducted an investigation relating t o the claims and the underlying events and transactions alleged in the Complaint. Plaintiffs' Counsel -3-

4 represent that they have performed a pre-filing investigation, reviewed and analyzed confirmatory discovery and have researched the applicable law with respect to the claims of Plaintiffs and th e Class against the Defendants and the potential defenses thereto. This Stipulation shall not b e construed or deemed to be a concession by any Plaintiff of any infirmity in the claims asserted i n the Action ; F. Plaintiffs, by their counsel, have conducted discussions and arm's length negotiations with counsel for Defendants with respect to a compromise and settlement of the Action with a view to settling the issues in dispute and achieving the best relief possible consistent with the interests of the Class. A mediation was conducted at which the parties reached th e outlines of a settlement. G. Plaintiffs' Counsel represent that, based upon their pre-filing investigation, a review and analysis of confirmatory discovery and information learned at the mediation, Plaintiffs ' Counsel have concluded that the terms and conditions of this Stipulation are fair, reasonable an d adequate to Plaintiffs and the Class, and in their best interests, and have recommended to lea d plaintiffs, and lead plaintiffs have agreed to, settle the claims raised in the Action pursuant to the terms and provisions of this Stipulation, after considering (a) the substantial benefits that Plaintiffs and the members of the Class will receive from settlement of the Action, (b) the attendant risks o f litigation, and (c) the desirability of permitting the Settlement to be consummated as provided b y the terms of this Stipulation; and H. Pinnacle has filed a petition under Chapter 11 of Title 11 of the United State s Code, 11 U.S.C. 101, et seq. (the "Bankruptcy Code"). On July 30, 2002, the United State s Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") entered an -4-

5 order (the "Confirmation Order") confirming the First Amended Plan of Reorganization of Pinnacle Towers III Inc., Pinnacle Holdings Inc., Pinnacle Towers Inc. and Pinnacle San Antoni o LLC, debtors and debtors-in-possession (collectively " Debtors"), dated June 27, 2002 (the "Plan"). In the Confirmation Order, the Bankruptcy Court approved the payment by Pinnacle' s Directors and Officers' insurer, Genesis Insurance Company (" Genesis") of $8,200,000 on behal f of Pinnacle and the Officer and Director Defendants to the plaintiff Class. Pursuant to th e confirmed Plan, effective as of the Confirmation Date, but subject to the occurrence of th e Effective Date of the Plan, certain creditors and equity holders of Pinnacle are deemed to hav e given releases to Pinnacle, the Officer and Director Defendants and PwC of all claims which an y of such parties may be entitled to assert based in whole or in part upon any act or omission, transaction or other occurrence taking place on or before the Confirmation Date in any way relating to the Debtors, their business, their governance, their securities disclosure practices, or the purchase or sale of any of Debtors' debt securities or equity securities. The releases of nondebtor Defendants under the Plan are contingent on this Settlement becoming effective. NOW THEREFORE, without any admission or concession on the part of Plaintiffs of an y lack of merit of the Action whatsoever, and without an y admission or concession of any liability or wrongdoing or lack of merit in the defenses whatsoever by Defendants, it is hereby STIPULATED AND AGREED, by and among the parties to this Stipulation, through their respective attorneys, subject to approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, in consideration of the benefits flowing to the parties hereto from the Settlement, that all Settled Claims (as defined below) as against the Released Parties (as define d below) and all Inter-Defendant Claims (as defined below) as against any Inter-Defendant Released -5-

6 Parties (as defined below) shall be compromised, settled, released and dismissed with prejudice, upon and subject to the following terms and conditions : CERTAIN DEFINITIONS As used in this Stipulation, the following terms shall have the following meanings : (a) "Authorized Claimant' 'means a Class Member who submits a timely and valid Proof of Claim and Release form to the Claims Administrator. (b) "Bankruptcy Court" means the United States Bankruptcy Court for the Southern District of New York. (c) "Bankruptcy Order" shall have the meaning given that term in paragraph 23(a) hereof. (d) "Barred Claims" means any an d all claims, demands, rights, causes of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory or common law, or any other law, rule or regulation, includin g both known claims and Unknown Claims, that have been or could have been asserted in an y forum by the Class Members, or any of them, or the successors or assigns of any of them, whether directly, indirectly, representative or in any other capacity, against any of the Released Parties, which ari se out of, or relate in any way, directly or indirectly, to, or could have been asserted based upon, the allegations, transactions, facts, events, matters, occurrences, acts, representation s or omissions involved in, set forth in, referred to, or which relate directly or indirectly to thi s Securities Action, including, without limitation, claims for negligence, gross negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of fiduciary duty. -6-

7 (e) "Claims Administrator" means the firm of Gilardi & Co. LLC which shal l administer the Settlement. (f) "Class" and "Class Members" means, for the purposes of this Settlemen t only, all persons who purchased or otherwise acquired the common stock of Pinnacle Holding s Inc. ("Pinnacle") during the period from June 29, 1999 through and including August 14, 2001, including persons who acquired Pinnacle common stock pursuant to or traceable to the January 18, 2000 Offering. Excluded from the Class are Defendants in this Action, members of th e immediate families (parents, spouses, siblings, and children) of each of the Officer and Directo r Defendants, any subsidiary or affiliate of Pinnacle, PwC, or the Underwriter Defendants and th e directors and officers of Pinnacle, PwC, the Underwriter Defendants or their subsidiari es or affiliates, or any entity in which any excluded person has a contr olling interest, and the legal representatives, heirs, successors in interest or assigns of any excluded person. Also excluded from the Class are any putative Class Members who exclude themselves by filing a request for exclusion in accordance with the requirements set forth in the Notice. All persons excluded from the Class pursuant to this paragraph are referred to as "Excluded Persons." (g) "Class Period" means, for the purposes of the Settlement only, the period of time from June 29, 1999 through and including August 14, (h) "Confirmation Order" has the meaning given that term in paragraph H of the recitals hereof. (i) "Confirmatory Discovery" means any and all documents, transcripts, or other information provided by any Defendant to Plaintiffs' Co-Lead Counsel pursuant to th e terms of the parties' Memorandum of Understanding dated as of May 16,

8 (j) "Defendants" means Pinnacle, the Officer and Director Defendants, th e Underwriter Defendants, and PwC. (k) "Defendants' Counsel" means the law firm of Holland & Knight, LLP ("Holland & Knight"), for Defendant Pinnacle, the law firm of Akerman Senterfitt & Eidson, P.A., for Officer an d Director Defendants Robert Wolsey, Steven Day, Peter O' Brien, Andrew B anks, Peni Garber, Peggy Koenig, and Royce Yudkoff, the law firm of Foley & Lardner for Officer and Director Defendant Jeffrey Card, the law firm of Piper Rudnick LLP for the Underwriter Defendants, and the law firm of Wilmer, Cutler & Pickering for Defendant PwC. (1) "Escrow Agent" shall have the definition given that term in paragraph 4(a ) hereof. (m) "Effective Date" means the date upon which the Settlement contemplated by this Stipulation shall become effective, as set forth in paragraph 23 below. (n) "Excluded Persons" shall have the definition given that term in paragrap h 1(f) hereof. (o) "Genesis" shall have the definition given that term in paragraph 1(r) hereof. (p) "Gross Settlement Fund" shall have the definition given that term i n paragraph 4(d) hereof. (q) "Individual Defendants" means Robert Wolsey, Steven Day, and Jeffrey Card. (r) "Insurer" means Genesis Insurance Company ("Genesis"), the directors an d officers liability insurance carrier for Pinnacle and the Officer and Director Defendants. -8-

9 (s) "Inter-Defendant Claims" means any and all claims, demands, rights, cause s of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory or common law, or any other law, rule or regulation, includin g both known claims and Unknown Claims, that have been or could have been asserted, directly, indirectly, representatively or in any other capacity, in any forum by any Inter-Defendant Release d Party against any other Inter-Defendant Released Party, which arise out of, or relate in any way, directly or indirectly, to, the allegations, transactions, facts, events, matters, occurrences, acts, representations or omissions involved in, set forth in, referred to, or that relate to Pinnacle an d that could have been asserted in this Securities Action, including without limitation, claims fo r negligence, gross negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of fiduciary duty. "Inter-Defendant Claims" does not mean and shall not include claims (1) by and between the Officer and Director Defendants and Pinnacle concerning any SEC investigation, claims unrelated to this Securitie s Action, and defense costs relating to this Securities Action ; and (2) by Pinnacle or the Officer an d Director Defendants against Genesis. (t) "Inter-Defendant Released Parties" means Defendants, their affiliates, representatives, shareholders, creditors, partners, principals, officers, directors, employees, professional advisors, attorneys, agents, successors in interest, including but not limited to a trustee appointed in a chapter 7 or 11 proceeding. (u) "January 18, 2000 Offering" means the offer and sale by Pinnacle of shares of Pinnacle Common Stock pursuant to a registration statement, number , filed under the Securities Act of 1933 and declared effective on January 18, 2000, as amended by a -9-

10 registration statement, number , filed under the Securities Act of 1933 and pursuant to Rule 462(b) thereunder. (v) "Notice" means the Notice of Pendency of Class Action, Hearing On Proposed Settlement and Attorneys' Fee Petition and Right to Share in Settlement Fund, which i s to be sent to members of the Class substantially in the form attached hereto as Exhibit 2 to Exhibit A. (w) "Notice and Administration Account" has the meaning given that term in paragraph 4(e) hereof. (x) "Officer and Director Defendants" means defendants Robert Wolsey, Steven Day, Jeffrey Card, Peter O'Brien, Andrew Banks, Peni Garber, Peggy Koenig, and Royc e Yudkoff. (y) "Order and Final Judgment' 'means the proposed order to be entere d approving the Settlement substantially in the form attached hereto as Exhibit B. (z) "Plaintiffs' Counsel" means Plaintiffs' Co-Lead Counsel and all plaintiffs ' counsel listed at the end of this Stipulation. (aa) "Plaintiffs' Co-Lead Counsel" means the law firms of Milberg Weiss Bershad Hynes & Lerach LLP ("Milberg Weiss"), and Schiffrin & Barroway, LLP. (bb) "Plan" shall have the definition given that term in paragraph H of th e recitals hereof. (cc) "Preliminary Approval Order" means the proposed order preliminari ly approving the Settlement and directing notice thereof to the Class substantially in the for m attached hereto as Exhibit A. -10-

11 (dd) "Proof of Claim and Release" means the proposed proof of claim an d release to be executed by Class Members substantially in the form attached hereto as Exhibit I to Exhibit A. (ee) "Publication Notice" means the summary notice of proposed Settlement and hearing for publication substantially in the form attached hereto as Exhibit 3 to Exhibit A. (ff) "PwC" means defendant PricewaterhouseCoopers LLP. (gg) "Released Parties" means Defendants, their past or present affiliates, subsidiaries, parents, successors and predecessors, shareholders, creditors, partners, principals, officers, directors, agents, employees, insurers, reinsurers, professional advisors, attorneys, auditors, accountants and any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any of the Defendants, an d the legal representatives, heirs, successors in interest or assigns of th e Defendants. (hh) "Section 11 Sub-Class" means, for the purposes of this Settlement only, all persons who acquired Pinnacle common stock pursuant to or traceable to the January 18, 2000 Offering. Excluded from the Section 11 Sub-Class are all persons excluded from the Class, as set forth in paragraph 1(e) hereof. (ii) "Settled Claims" means any an d all claims, demands, rights, causes of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory or common law, or any other law, rule or regulation, including both known claims and Unknown Claims, that have been or could have been asserted in any forum by Class Members, or any of them, or the successors or assigns of any of them, whether -11-

12 directly, indirectly, representatively or in any other capacity, against any of the Released Parties, which arise out of, or relate in any way, directly or indirectly, to the allegations, transactions, facts, events, matters, occurrences, acts, representations or omissions involved in, set forth in, referred to, or that could have been asserted in this Securities Action, including without limitation, claims for negligence, gross negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of fiduciary duty, arising out of, based upon or related in any way to the purchase or acquisi tion of Pinnacle securities by any Class Member during the Class Period or in the January 18, 2000 Offering. (jj) "Settled Defendants' Claims" means any and all claims, rights or causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or common law or any other law, rule or regulation, including both known claims and Unknown Claims, that hav e been or could have been asserted in the Action or any forum by the Defendants or any of them o r the successors or assigns of any of them against any of the Plaintiffs, Class Members or their attorneys, which arise out of or relate in any way to the institution, prosecution, or settlement of the Action except claims relating to the enforcement of the settlement of the Action. (kk) "Settlement" means the settlement contemplated by this Stipulation. (11) "Settlement Fai rness Hearing" means the hearing contemplated by paragraph 4 of the Preliminary Order in Connection with Settlement Proceedings, attached heret o as Exhibit A. (mm) "Taxes" shall have the definition given that term in paragraph 5(b) hereof. (nn) "Termination Notice" shall have the definition given that term in paragrap h 24 hereof

13 (oo) "Underwriter Defendants" means Deutsche Bank Securities, Inc. (originally sued as "Deutsche Bank Alex. Brown"), Goldman Sachs & Co., Merrill Lynch & Company, Raymond James & Associates, Inc., Salomon Smith Barney, and Banc of America Securitie s LLC. (pp) "Unknown Claims" means any and all Settled Claims, Settled Defendants ' Claims, and Inter-Defendant Claims released pursuant to this Stipulation that any releasing party does not know or suspect to exist in his, her, or its favor at the time of the release, which, i f known by him, her, or it might have affected his, her or its decision(s) with respect to th e Stipulation. With respect to any and all claims released pursuant to this Stipulation, the partie s hereto stipulate and agree that upon the Effective Date, the releasing party(ies) shall expressly, and each Class Member shall be deemed to have, and by operation of the Order and Final Judgment shall have, expressly waived any and all provisions, rights, and benefits conferred by any law of any sate or territory of the United States, or principle of common law, which is similar, comparable, or equivalent to Cal. Civ. Code Section 1542, which provides : A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. Plaintiffs and Defendants acknowledge, and Class Members by operation of law shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in the definition of claim s released pursuant to this Stipulation was separately bargained for and was a material element o f this Settlement. -13-

14 SCOPE AND EFFECT OF SETTLEMEN T 2. As set forth in the Order and Final Judgment, the obligations incurred pursuant t o this Stipulation shall be in full and final disposition of the Action and any and all Settled Claims a s against all Released Parties, any and all Inter-Defendant Claims as against all Inter-Defendan t Released Parties, and any and all Settled Defendants' Claims. 3. (a) The parties agree to entry of an Order and Final Judgment providing tha t Plaintiffs and members of the Class on behalf of themselves, their heirs, executors, administrators, successors and assigns shall, with respect to each and every Settled Claim, release and forever discharge, and shall forever be enjoined from prosecuting all Settled Claims, and shall covenant to refrain from instituting, commencing or prosecuting either directly, indirectly, representatively, or in any other capacity, all Barred Claims against any of the Released Parties, whether or not such Class Member executes and delivers the Proof of Claim and Release, or otherwise shares in the Gross Settlement Fund. (b) The parties agree to entry of an Order and Final Judgment providing tha t each of the Defendants, on behalf of themselves and the Released Parties, shall release and forever discharge each and every of the Settled Defend ants' Claims, and shall forever be enjoined from prosecuting the Settled Defendants' Claims. (c) The parties agree to entry of an Order and Final Judgment providing that each of the Inter-Defendant Released Parties shall release and forever discharge each and every of the Inter-Defendant Claims, and shall forever be enjoined from prosecuting the Inter-Defendan t Claims as against any of the other Inter-Defendant Released Parties. -14-

15 (d) The parties agree to entry of an Order and Final Judgment providing that t o the full extent provided by Section 21D(f)(7) of the Securities Exchange Act of 1934, 15 U.S.C. 78u-4(f)(7), and the common law of the U.S. Court of Appeals for the Eleventh Circuit, al l claims, including, but not limited to, claims for contribution, or equitable indemnification against any party or third person, including but not limited to, any trustee appointed in a Chapter 7 or 1 1 bankruptcy proceeding, related, directly or indirectly, to the facts of this action shall be barred ; provided, however, that the claims excluded from the definition of Inter-Defendant Claims in th e last sentence of paragraph 1(s) hereof shall not be barred. (e) The parties shall move the Court to enter an agreed protective order governing the confidentiality of all Confirmatory Discovery. (f) The parties shall move the Court to convene the Settlement Fairnes s Hearing not sooner than 70 days after entry of the Preliminary Approval Order. (g) Pinnacle shall use its best efforts to obtain releases by certain creditor an d equity holders of Pinnacle, the Officer and Director Defendants, and PwC, in substantially similar form as that proposed in Pinnacle's Plan of Reorganization at Article XVI(I), a copy of which is attached to the pa rties' Memorandum of Understanding dated as of May 16, Th e Confirmation Order specifically approves the releases contained in Article XVI(I) of the Plan. THE SETTLEMENT CONSIDERATION 4. (a) Defendant Pinnacle, and the Officer and Director Defendants have caused Pinnacle's directors and officers liability insurance carrier, Genesis Insurance Company, to pay, t o Plaintiffs and the Class, $8,200,000 (the "Genesis Cash Settlement Amount") into a joint interestbearing escrow account (the "Joint Escrow Account") under the control of Milberg Weiss and -15-

16 Holland & Knight as escrow agents (each referred to as "Escrow Agent," and collectively, "Escrow Agents"). It is understood that, of such $ 8.2 million payment, $4.1 million shall b e deemed to have been made on behalf of Pinnacle, and $4.1 million shall be deemed to have been made on behalf of the Officer and Director Defendants. (b) PwC has paid $2,600,000 (the "PwC Cash Settlement Amount") into the Joint Escrow Account on behalf of Plaintiffs and the Class. (c) The Underwriter Defendants have paid $200,000 (the "Underwriter Cas h Settlement Amount") into the Joint Escrow Account on behalf of Plaintiffs and the Class. (d) The Genesis Cash Settlement Amount, the PwC Cash Settlement Amount, the Underwriter Cash Settlement Amount, and any interest earned thereon shall be the "Gros s Settlement Fund. " (e) Upon satisfaction of the conditions set forth in paragraphs 23(a) and 23(b) hereof, $100,000 of the Gross Settlement Fund shall be transferred from the Joint Escrow Account into a separate money market account with a U. S. bank under the control of Plaintiffs ' Co-Lead Counsel (the "Notice and Administration Account") to be used solely for paying the cost of notice to the Class and the administration of the claims submitted pursuant to the Order and Final Judgment Approving Settlement to be entered by the District Court. Only the unused portion, if any, of the foregoing administration and costs fund shall be refundable to the Joint Escrow Account. In the event that the costs of notice to the Class and the administration of claims exceed $100,000, Plaintiffs and the Class shall be solely responsible for such excess costs. (a) The Gross Settlement Fund, net of any Taxes (as defined below) on the income thereof, shall be used to pay (i) the attorneys' fee and expense award referred to i n -16-

17 paragraph 8 hereof, and (ii) any remaining administration expenses referred to in paragraph 9 hereof The balance of the Gross Settlement Fund after the above payments shall be the Net Settlement Fund which shall be distributed to the Authorized Claimants as provided in paragraph s 10 to 12 hereof. All funds held by the Escrow Agent(s) shall be deemed to be in the custody of the Court and shall remain subject to the jurisdiction of the Court until such time as the funds shal l be distributed or returned to the persons paying the same pursuant to this Stipulation and/o r further order of the Court. The Escrow Agent(s) shall invest any funds in excess of $100,000 i n short term United States Treasury Securities or securities backed by the full faith and credit of th e United States government or fully insured by the U. S. government or an agency thereof, and shal l collect and reinvest all interest accrued thereon. Any funds held in escrow in an amount of les s than $100,000 may be held in an interest bearing bank account insured by the FDIC. The parties hereto agree that the Gross Settlement Fund is intended to be a Qualified Settlement Fund within the meaning of Treasury Regulation 1.468E-1 and that Milberg Weiss, as administrator of the Gross Settlement Fund within the meaning of Treasury Regulation 1.468B-2(k)(3), shall b e responsible for filing tax returns for the Gross Settlement Fund and paying from the Gross Settlement Fund any Taxes owed with respect to the Gross Settlement Fund. Counsel for Defendants agree to provide promptly to the Escrow Agent( s) the statement described in Treasury Regulation 1.468B-3(e). After the Effective Date, Holland & Knight shall resign a s Escrow Agent and administrator and Milberg Weiss shall act as sole Escrow Agent an d administrator, and Holland & Knight shall have no further responsibility for any of the matters discussed in this paragraph

18 (b) All (i) taxes on the income of the Gross Settlement Fund and (ii) expense s and costs incurred in connection with the taxation of the Gross Settlement Fund (including, without limitation, expenses of tax attorneys and accountants) (collectively "Taxes") shall be pai d out of the Gross Settlement Fund, shall be considered to be a cost of administration of th e settlement and shall be timely paid by the Escrow Agent(s) without prior Order of the Court. In all events Defendants and their counsel shall have no liability or responsibility for the Taxes. The Gross Settlement Fund shall indemnify and hold each of the Defendants and Defendants ' counsel harmless for Taxes (including, without limitation, Taxes payable by reason of any such indemnification). Further, Taxes shall be treated as, and considered to be, a cost of administration of the Gross Settlement Fund and shall be timely paid by the Escrow Agent(s) out of the Gross Settlement Fund without prior order from the Court and the Escrow Agent(s) shall be obligate d (notwithstanding anything herein to the contrary) to withhold from distribution to Authorized Claimants any funds necessary to pay such amounts including the establishment of adequate reserves for any Taxes (as well as any amounts that may be required to be withheld under Treas. Reg. Sec B-2(l)(2)); neither Defendants nor their counsel are responsible nor shall they have any liability therefor. ADMINISTRATIO N 6. The Claims Administrator shall administer the Settlement under Plaintiffs' Co-Lead Counsel's supervision and subject to the jurisdiction of the Court. Except as stated in paragraph 14 hereof, Defendants shall have no responsibility for the administration of the Settlement an d shall have no liability to the Class in connection with such administration. Defendants' Counse l shall cooperate in the administration of the Settlement to the extent reasonably necessary t o -18-

19 effectuate its terms. Pinnacle shall provide without charge all information from Pinnacle's transfer records concerning the identity of Class Members and their transactions. 7. Without further approval from the Defendants or the Court, Plaintiffs' Co-Lea d Counsel may pay from the Notice and Administration Account the reasonable costs and expense s associated with the administration of the Settlement, including without limitation, the costs of identifying members of the Class and effecting mail notice and Publication Notice. Such amount s shall include, without limitation, the actual costs of publication, printing and mailing the Notice, reimbursements to nominee owners for forwarding notice to their beneficial owners, and the administrative expenses incurred and fees charged by the Claims Administrator in connection wit h providing notice and processing the submitted claims. ATTORNEYS' FEES AND EXPENSE S Plaintiffs' Counsel will apply to the Court for an award from the Gross Settlement Fund of attorneys' fees not to exceed one-third (331/3%) of the Gross Settlement Fund and reimbursement of expenses, plus interest on such expenses at the same net rate as is earned by the Gross Settlement Fund from the date of funding to the date of payment. Such attorneys' fees, expenses, and interest as are awarded by the Court shall be payable from the Gross Settlemen t Fund to Plaintiffs' Counsel upon the Effective Date, subject to Plaintiffs' Counsel's obligation t o make appropriate refunds or repayments to the Gross Settlement Fund plus accrued interest at th e same net rate as is earned by the Gross Settlement Fund, if and when, as a result of any appeal and/or further proceedings on remand, or successful collateral attack, the fee or cost award is reduced or reversed. The procedure for and the allowance or disallowance by the Court of any application by Plaintiffs' Co-Lead Counsel for attorneys' fees and expenses, including the fees an d -19-

20 expenses of experts and consultants, to be paid from the Gross Settlement Fund, are not part of the Settlement set forth in this Stipulation, and are to be considered by the Court separately fro m the Court's consideration of the fairness, reasonableness, and adequacy of the Settlement, and an y order proceedings relating to any fee and expense application, or any appeal from any orde r relating thereto or reversal or modification thereof, shall not operate to terminate or cancel th e Stipulation, or affect or delay the finality of the Order an d Final Judgment. The Released Parties shall have no involvement in, nor responsibility for, and no liability whatsoever with respect to, the allocation among Plaintiffs' Counsel, or any other counsel, expert or consultant and/or any other person who may assert some claim thereto, of any fee and expense award that the Court may make in this Action. ADMINISTRATION EXPENSES 9. Plaintiffs' Counsel will apply to the Court, on notice to Defendants' Counsel, for an order (the "Class Distribution Order") approving the Claims Administrator's administrativ e determinations concerning the acceptance and rejection of the claims submitted herein an d approving any fees and expenses not previously applied for, including the fees and expenses of th e Claims Administrator, and, if the Effective Date has occurred, directing payment of the Net Settlement Fund to Authorized Claimants. DISTRIBUTION TO AUTHORIZED CLAIMANTS 10. The Claims Administrator shall determine each Authorized Claimant' o rata share of the "Net Settlement Fund" based upon each Authorized Claimant's Recognized Claim (a s defined in the Plan of Allocation described in the Notice an nexed hereto as Exhibit 2 to Exhibit A, or in such other Plan of Allocation as the Court approves). -20-

21 11. The Plan of Allocation proposed in the Notice is not a necessary term of thi s Stipulation and it is not a condition of this Stipulation that that Plan of Allocation be approved. 12. Each Authorized Claimant shall be allocated a jw share of the Net Settlement Fund based on his or her Recognized Claim compared to the total Recognized Claims of al l accepted claimants. This is not a claims-made settlement. The Defendants shall not be entitled t o get back any of the settlement monies once the Settlement becomes final. The Defendants shal l have no involvement in reviewing or challenging claims. ADMINISTRATION OF THE SETTLEMENT 13. Any member ofthe Class who does not submit a valid Proof of Claim and Release will not be entitled to receive any of the proceeds from the Net Settlement Fund but wil l otherwise be bound by all of the terms of this Stipulation an d the Settlement, including the term s of the Judgment to be entered in the Action an d the releases provided for herein, and will b e barred from bringing any action against the Released Parties concerning the Settled Claims as provided herein. 14. Plaintiffs' Co-Lead Counsel shall be responsible for supervising the administratio n of the Settlement an d disbursement of the Net Settlement Fund by the Claims Administrator. Except for their obligation to pay the Cash Settlement Amount, and Pinnacle's obligation to cooperate in the production of information, without charge to any party, with respect to th e identification of Class Members from Pinnacle's shareholder transfer records, as provided herein, Defendants shall have no liability, obligation or responsibility for the administration of the Settlement or disbursement of the Net Settlement Fund. Plaintiffs' Co-Lead Counsel shall hav e -21-

22 the right, but not the obligation, to waive what they deem to be formal or technical defects in any Proofs of Claim submitted in the interests of achieving substantial justice. 15. For purposes of determining the extent, if any, to which a Class Member shall b e entitled to be treated as an "Authorized Claimant", the following conditions shall apply : (a) Each Class Member shall be required to submit a Proof of Claim and Release (see attached Exhibit 1 to Exhibit A), supported by such documents as are designate d therein, including proof of the Claimant's loss, or such other documents or proof as Plaintiffs' Co- Lead Counsel, in their discretion, may deem acceptable ; (b) All Proofs of Claim must be submitted by the date specified in the Notice unless such period is extended by Order of the Court. Any Class Member who fails to submit a Proof of Claim and Release by such date shall be forever barred from receiving any payment pursuant to this Stipulation (unless, by Order of the Court, a later submi tted Proof of Claim and Release by such Class Member is approved), but shall in all other respects be bound by all of the terms of this Stipulation and the Settlement including the terms of the Judgment to be entered i n the Action and the releases provided for herein, and will be barred from bringing any actio n against the Released Parties concerning the Settled Claims as provided herein. Provided that it i s received before the motion for the Class Distribution Order is filed, a Proof of Claim and Releas e shall be deemed to have been submitted when posted, if received with a postmark indicated on th e envelope and if mailed by first-class mail and addressed in accordance with the instruction s thereon. In all other cases, the Proof of Claim and Release shall be deemed to have been submitted when actually received by the Claims Administrator; -22-

23 (c) Each Proof of Claim and Release shall be submitted to and reviewed by th e Claims Administrator, under the supervision of Plaintiffs' Co-Lead Counsel, who shall determin e in accordance with this Stipulation the extent, if any, to which each claim shall be allowed, subject to review by the Court pursuant to subparagraph (e) below; (d) Proofs of Claim that do not meet the submission requirements may be rejected. Prior to rejection of a Proof of Claim and Release, the Claims Administrator shal l communicate with the Claimant in order to remedy the curable deficiencies in the Proofs of Claim and Releases submitted. The Claims Administrator, under supervision of Plaintiffs' Co-Lead Counsel, shall notify, in a timely fashion and in writing, all Claimants whose Proofs of Claim the y propose to reject in whole or in part, setting forth the reasons therefor, and shall indicate in suc h notice that the Claimant whose claim is to be rejected has the right to a review by the Court if th e Claimant so desires and complies with the requirements of subparagraph (e) below; (e) If any Claimant whose claim has been rejected in whole or in part desires to contest such rejection, the Claimant must, within twenty (20) days after the date of mailing of th e notice required in subparagraph (d) above, serve upon the Claims Administrator a notice an d statement of reasons indicating the Claimant's grounds for contesting the rejection along with any supporting documentation, and requesting a review thereof by the Court. If a dispute concerning a claim cannot be otherwise resolved, Plaintiffs' Co-Lead Counsel shall thereafter present th e request for review to the Court ; and (f) The administrative determinations of the Claims Administrator acceptin g and rejecting claims sh all be presented to the Court, on notice to Defendants ' Counsel, fo r approval by the Court in the Class Distribution Order. -23-

24 16. Each Claimant shall be deemed to have submitted to the jurisdiction of the Court with respect to the Claimant's claim, and the claim will be subject to investigation and discover y under the Federal Rules of Civil Procedure, provided that such investigation and discovery shal l be limited to that Claimant 's status as a Class Member and the validity and amount of the Claimant' s claim. No discovery shall be allowed on the merits of the Action or Settlement in connection with processing of the Proofs of Claim. 17. Payment pursuant to this Stipulation shall be deemed final and conclusive against all Class Members. All Class Members whose claims are not approved by the Court shall be barred from participating in distributions from the Net Settlement Fund, but otherwise shall be bound by all of the terms of this Stipulation and the Settlement, including the terms of the Order and Final Judgment to be entered in the Action an d the releases provided for herein, and will be barred from bringing any action against the Released Parties concerning the Settled Claims as provided herein. 18. All proceedings with respect to the administration, processing and determination of claims described by paragraph 15 of this Stipulation and the determination of all controversies relating thereto, including disputed questions of law and fact with respect to the validity of claims, shall be subject to the jurisdiction of the Court. 19. The Net Settlement Fund shall be distributed to Authorized Claimants by the Claims Administrator only after the Effective Date and after : (i) all Claims have been processed, and all Claimants whose Claims have been rejected or disallowed, in whole or in part, have bee n notified and provided the opportunity to be heard concerning such rejection or disallowance ; (ii) all objections with respect to all rejected or disallowed claims have been resolved by the Court, -24-

25 and all appeals therefrom have been resolved or the time therefor has expired; (iii) all matters with respect to attorneys' fees, costs, and disbursements have been resolved by the Court, all appeal s therefrom have been resolved or the time therefor has expired ; and (iv) all costs of administratio n have been paid. TERMS OF PRELIMINARY APPROVAL ORDE R 20. Promptly after this Stipulation has been fully executed, Plaintiffs' Co-Lead Counse l and Defendants' Counsel jointly shall apply to the Court for entry of an Preliminary Approva l Order, substantially in the form annexed hereto as Exhibit A. After entry of such order, Plaintiffs' Co-Lead Counsel shall promptly cause to be published and mailed the Publication Notice an d Notice annexed hereto as Exhibits 3 and 2 to Exhibit A, respectively. TERMS OF ORDER AND FINAL JUDGMENT 21. If the Settlement contemplated by this Stipulation is approved by the Court, Plaintiffs' Co-Lead Counsel and Defendants' Counsel jointly shall promptly request that the Court enter an Order and Final Judgment substantially in the form annexed hereto as Exhibit B. SUPPLEMENTAL AGREEMENT 22. Simultaneously herewith, Plaintiffs' Co-Lead Counsel and Defendants' Counsel ar e executing a "Supplemental Agreement" setting forth certain conditions under which thi s Stipulation may be withdrawn or terminated by Defendants if potential Class Members wh o purchased in excess of a certain number of shares of Pinnacle common stock traded during th e Class Period exclude themselves from the Class. The Supplemental Agreement shall not be filed prior to the Settlement Fairness Hearing unless a dispute arises as to its terms. In the event of a withdrawal by any Defendant(s) from this Stipulation pursuant to the Supplemental Agreement, -25-

26 all other parties shall have the right to withdraw from this Stipulation during the period beginning five (5) calendar days after the first such withdrawal and ending twenty (20) calendar days after the first such withdrawal, in accordance with the terms of the Supplemental Agreement. In the event that either (a) Plaintiffs' Co-Lead Counsel or (b) all Defendants withdraw from the Stipulation pursuant to the Supplemental Agreement, and such withdrawals are not nullifie d pursuant to the Supplemental Agreement, this Stipulation shall become null and void and of n o further force and effect, except that the provisions of paragraphs 25 and 26 hereof shall apply. Notwithstanding the foregoing, the Stipulation shall not become null and void as a result of the election by any Defendant(s) to exercise his, her, its, or their option to withdraw from the Stipulation pursuant to the Supplemental Agreement until all conditions set forth in th e Supplemental Agreement have been satisfied. Copies of all requests for exclusion received, together with copies of all written revocations of requests for exclusion, shall be delivered to al l Defendants' counsel within three (3) business days of receipt by Plaintiffs' Co-Lead Counsel an d in no event later than twenty-seven (27) business days before the Court conducts a hearing t o approve the Settlement. EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATIO N 23. The Effective Date of Settlement shall be the date when all the following shall have occurred : (a) entry by the United States Bankruptcy Court having jurisdiction over th e bankruptcy of Pinnacle (the "Bankruptcy Court") of a final order approving the payment b y Genesis of the $8.2 million payment referenced in paragraph 4(a) hereof (the "Bankruptc y Order"), and the expiration of any time for appeal or review of the Bankruptcy Order, or, if an y -26-

27 appeal is filed and not dismissed, after the Bankruptcy Order is upheld on appeal in all materia l respects and is no longer subject to review upon appeal or review by writ of certiorari ; (b) entry of the Preliminary Approval Order in all mate rial respects in the form annexed hereto as Exhibit A ; (c) approval by the Court of the Settlement, following notice to the Class and a hearing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure ; (d) entry by the Court of an Order and Final Judgment, in all mate rial respect s in the form set forth in Exhibit B annexed hereto, an d the expiration of any time for appeal or review of such Order and Final Judgment, or, if any appeal is filed and not dismissed, after suc h Order and Final Judgment is upheld on appeal in all material respects and is no longer subject to review upon appeal or review by writ of certiorari, or, in the event that the Court enters an order and final judgment in form other than that provided above ("Alternative Judgment") and none of the parties hereto elect to terminate this Settlement, the date that such Alternative Judgment becomes final and no longer subject to appeal or review. 24. Either (a) Plaintiffs ' Co-Lead Counsel, (b) Pinnacle and the Officer and Director Defendants acting as a group, (c) PwC, or (d) the Underwriter Defend ants acting as a group, sh al l have the right to terminate the Settlement and this Stipulation by providing written notice of its o r their election to do so (`Termination Notice") to all other parties hereto within thirty (30) day s after: 1) the refusal by the Bankruptcy Court to enter the Bankruptcy Order in any material respect; 2) the Court's refusal to enter the Preliminary Approval Order in any materi al respect; 3) the Court's refusal to approve this Stipulation in any material respect; 4) the Court's refusal to enter the Order and Final Judgment in any material respect; 5) the date upon which the Order and -27-

28 Final Judgment is modified or reversed in any mate rial respect by the Court of Appeals or the Supreme Court; or 6) the date upon which an Alternative Judgment is modified or reversed in an y material respect by the Court of Appeals or the Supreme Court. In the event that any party provides a Termination Notice pursuant to this paragraph, all other parties shall have the right to withdraw from this Stipulation within 30 calendar days of the first Termination Notice. In the event that either (x) Plaintiffs' Co-Lead Counsel or (y) all Defendants withdraw from th e Stipulation pursuant to this paragraph, this Stipulation shall become null and void and of no further force and effect, except that the provisions of paragraphs 25 and 26 hereof shall apply. 25. Except as otherwise provided herein, in the event the Settlement is terminate d pursuant to paragraphs 22 or 24 hereof, then the parties to this Stipulation shall be deemed t o have reverted to their respective status in the Action immediately prior to execution of the parties ' Memorandum of Understanding as of May 16, 2002 and, except as otherwise expressly provided, the parties shall proceed in all respects as if this Stipulation and any related orders had not bee n entered, and any portion of the Gross Settlement Fund previously paid by Defendants, together with any interest earned thereon, less any Taxes due with respect to such income, and less costs o f administration and notice actually incurred and paid or payable from the Notice an d Administration Account pursuant to paragraph 4(e) hereof, shall be returned directly to th e persons paying the same in proportion to the amounts paid within 15 business days of termination of the settlement. NO ADAUSSION OF WRONGDOING 26. This Stipulation, whether or not consummated, and any proceedings taken pursuant to it : -28-

29 (a) shall not be offered or received against the Defendants as evidence of or construed as or deemed to be evidence of any presumption, concession, or admission by any of the Defendants with respect to the truth of any fact alleged by Plaintiffs or the validity of an y claim that has been or could have been asserted in the Action or in any litigation, or the deficiency of any defense that has been or could have been asserted in the Action or in any litigation, or of any liability, negligence, fault, or wrongdoing of the Defendants; (b) shall not be offered or received against the Defendants as evidence of a presumption, concession or admission of any fault, misrepresentation or omission with respect to any statement or written document approved or made by any Defendant, or against the Plaintiffs and the Class as evidence of any infirmity in the claims of Plaintiffs and the Class ; (c) shall not be offered or received against the Defendants as evidence of a presumption, concession or admission that the Class may be certified ; (d) shall not be offered or received against the Defendants or against th e Plaintiffs or the Class as evidence of a presumption, concession or admission with respect to an y liability, negligence, fault or wrongdoing, or in any way referred to for any other reason as agains t any of the parties to this Stipulation, in any other civil, criminal or administrative action or proceeding, other than such proceedings as may be necessary to effectuate the provisions of thi s Stipulation ; (e) shall not be construed against the Defendants or the Plaintiffs and the Clas s as an admission, evidence, or concession that the consideration to be given hereunder represents the amount which could be or would have been recovered after trial ; -29-

30 (f) shall not be construed as or received in evidence as an admission, concession or presumption against Plaintiffs or the Class or any of them that any of their claim s are without merit or that damages recoverable under the Complaint would not have exceeded th e Gross Settlement Fund ; and (g) Any Defendant(s) may file the Stipulation and/or the Order and Final Judgment in any action that may be brought against them in order to support a defense or counterclaim based on principles of res judicata, collateral estoppel, release, good fait h settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusio n or similar defense or counterclaim. MISCELLANEOUS PROVISION S 27. All of the exhibits attached hereto are hereby incorporated by reference as though fully set forth herein. 28. Each Defendant (other than Pinnacle) warrants as to himself, herself or itself that, as to the payments made by or on behalf of him, her or it, at the time of such payment that the Defendant made or caused to be made pursuant to paragraph 4 above, he, she or it was no t insolvent nor did nor will the payment required to be made by or on behalf of him, her or it rende r such Defendant insolvent within the meaning of and/or for the purposes of the United States Bankruptcy Code, including 101 and 547 thereof. This warranty is made by each such Defendant and not by such Defendant's Counsel. 29. Neither lead plaintiffs nor Plaintiffs ' Counsel shall issue any press release or make, directly or indirectly, any statement to the public at large that disparages Pinnacle, the Officer an d -30-

31 Director Defendants, PwC, or the Underwriter Defendants. This provision shall not apply to lead plaintiffs' court filings in support of the proposed Settlement, and shall be of no further force o r effect if the Settlement is terminated pursuant to paragraphs 22 or 24 hereof. 30. If a case is commenced in respect of any Defendant, including Pinnacle (or any insurer contributing funds to the Cash Settlement Amount on behalf of any Defendant) under Titl e 11 of the United States Code (Bankruptcy), or a trustee, receiver or conservator is appointe d under any similar law, and in the event of the entry of a final order of a court of competen t jurisdiction determining the transfer of money to the Gross Settlement Fund or any portio n thereof by or on behalf of such Defendant to be a preference, voidable transfer, fraudulent transfe r or similar transaction, and any portion thereof is so returned prior to the Effective Date, and such amount is not promptly deposited to the Gross Settlement Fund by others, then, at the election of Plaintiffs' Co-Lead Counsel, the parties shall jointly move the Court to vacate and set aside th e releases given and the Order and Final Judgment entered pursuant to this Stipulation, and th e parties shall be restored to their respective positions in the litigation prior to execution of th e parties' Memorandum of Understanding as of May 16, 2002, and any cash amounts in the Gros s Settlement Fund shall be returned as provided in paragraph 25 above. 31. The parties to this Stipulation intend the Settlement to be a final and complet e resolution of all disputes asserted or which could be asserted by the Class Members against th e Released Parties with respect to the Settled Claims. Accordingly, Plaintiffs and Defendants agree not to assert in any forum that the litigation was brought by Plaintiffs or defended by Defendant s in bad faith or without a reasonable basis. The parties hereto shall assert no claims of any -31-

32 violation of Rule 11 of the Federal Rules of Civil Procedure relatihg to the prosecution, defense, or settlement of the Action. The parties agree that the amount paid and the other terms of th e Settlement were negotiated at arm's length in good faith by the parties, and reflect a settlemen t that was reached voluntarily after consultation with experienced legal counsel. 32. This Stipulation may not be modified or amended, nor may any of its provisions b e waived except by a writing signed by all parties hereto or their successors-in-interest. 33. The headings herein are used for the purpose of convenience only and are no t meant to have legal effect. 34. The administration and consummation of the Settlement as embodied in thi s Stipulation shall be under the authority of the Court and the Court shall retain jurisdiction for th e purpose of entering orders providing for awards of attorneys' fees and expenses to Plaintiffs ' Counsel and enforcing the terms of this Stipulation. 35. The waiver by one party of any breach of this Stipulation by any other party shall not be deemed a waiver of any other prior or subsequent breach of this Stipulation. 36. This Stipulation and its exhibits, the Supplemental Agreement, the Escrow Agreement between Milberg Weiss Bershad Hynes & Lerach LLP and Holland & Knight, LLP, and the Settlement Agreement and Release dated as of June 6, 2002 between Genesis, Pinnacle, and the Officer and Director Defendants constitute the entire agreement among the parties heret o concerning the Settlement of the Action, an d no representations, warranties, or inducements have -32-

33 been made by any party hereto concerning this Stipulation and its exhibits and the Supplementa l Agreement other than those contained and memorialized in such documents. 37. This Stipulation may be executed in one or more counterpart s. All execute d counterparts and each of them shall be deemed to be one and the same instrument. 38. This Stipulation shall be binding upon, and inure to the benefit of, the successors and assigns of the parties hereto. 39. The construction, interpretation, operation, effect and validity of this Stipulation, and all documents necessary to effectuate it, shall be governed by the internal laws of the State o f Florida without regard to conflicts of laws, except to the extent that federal law requires tha t federal law governs. 40. This Stipulation shall not be construed more strictly against one party than another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel for one o f the parties, it being recognized that it is the result of arm' s-length negotiations between the parties and all parties have contributed substantially and materially to the preparation of this Stipulation. 41. All counsel and any other person executing this Stipulation and any of the exhibits hereto, or any related settlement documents, warrant and represent that they have the ful l authority to do so and that they have the authority to take appropriate action required or permitted to be taken pursuant to the Stipulation to effectuate its terms. 42. Plaintiffs' Co-Lead Counsel and Defendants' Counsel agree to cooperate fully with one another in seeking Court approval of the Preliminary Approval Order, the Stipulation and th e -33-

34 Settlement, and to promptly agree upon and execute all such other documentation as may b e reasonably required to obtain final approval by the District Court of the Settlement. -34-

35 DATED : September 11, 2002 MILBERG WEISS BERSHAD HYNES & LERACIIL P By: 'w' eth J. Vi R. Timothy V The Plaza 5355 Town Center Road, Suite 900 Boca Raton, Florida Telephone: (561) Facsimile: (561) 367»840 0 Co-Lead Counsel for Plaintiffs SCHIFFRIN & BARROWAY, LLP B By : LU11L- David Kessler Marc I. Willner Three Bala Plaza East, Suite 400 Bala Cynwyd, Pennsylvania Telephone: (610) Facsimile: (610) Co-Lead Counsel for Plaintiffs HOLLAND & KNIGHT, LL P By: )A...~ Tracy A. Nichol -i G'1 r 0* wu '1 s1ar, 701 Brickell Avenue, Suite 3000 I L " L..~~..~ Miami, Florida Telephone : (305) Facsimile : (305) Counsel for Defendant Pinnacle Holdings, Corp.

36 AKERMAN SENTjERFITT & EIDSON, P.A. By : P' Th,i. f rvwjr... Stanley Wakshlag 4 ) _ Brian P. Miller One Southeast Third Avenue 28th Floor Miami, Florida Telephone: (305) Facsimile: (305) Counsel for the Defendants Robert Wolsey, Steven Day, Peter O'Brien, Andrew Banks, Peni Garber, Peggy Koenig, Royce Yudkoff FOLEY & LARDNER By : k&uaa 4. t4', t tiv / A. Richard S. Davis Kenneth B. Winer Phillips Point West Tower 777 South Flagler Drive Suite 90 1 West Palm Beach, Florida Telephone: (561) Facsimile: (561) Counsel for Jeffrey J. Card WILMER, CUTLER & PICKERING 4 By : Andrew B. Weissman Joseph K. Brenner 2445 M Street, N.W. Washington, D.C Telephone: (202) Facsimile: (202) Counsel for Pricew*IterhouseCoopers LLP

37 AKERMAN SENTERFITT & EIDSON, P.A. By : Stanley Wakshlag Brian P. Miller One Southeast Tbird Avenue 28`x' Floor Miami, Florida Telephone: (305) Facsimile : (305) Counsel for the Defendants Robert Wolsey, Steven Day, Peter O'Brien, Andrew Banks, Peni Garber, Peggy Koenig, Royce Yudkoff FOLEY & LARDNER By : Richard S. Davis Kenneth B. Winer Phillips Point West Tower 777 South Flagler Drive Suite 90 1 West Palm Beach, Florida Telephone: (561) Facsimile: (561) Counsel for Jeffrey J. Card WILMER, CUTLER & PICKERING By : (&UZUr/ 6, lvu.a~ L` Andrew B. Weissman Joseph K. Brenner ~, 2445 M Street, N.W. Washington, D.C Telephone: (202) Facsimile: (202) Counsel for PricewaterhouseCoopers LL P -36- ~t.1r 1 1 S~~N

38 PIPER RUDNICK LLP By : J es D. Mathias 6225 Smith Avenue Baltimore, Maryland Telephone: (410) Facsimile: (410) Counsel for the Underwriter Defendants - and - BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP Douglas M. McKeigh 1285 Avenue of the Americas 33rd Floor New York, NY Tel: (212) Fax: (212) Counsel for Plaintiff Louisiana School Employees' Retirement Syste m CAULEY GELLER BOWMAN & COATES, LLP Howard K. Coates, Jr. Jack Reise 2255 Glades Road, Suite 421A Boca Raton, FL Tel: (561) Fax: (561) WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP Fred Taylor Isquith Gregory M. Nespole 270 Madison Avenue New York, NY Tel : (212)

39 Fax: (212) LAW OFFICES OF CHARLES J. PIVEN, P.A. Charles J. Piven The World Trade Center-Baltimore Suite East Pratt Street Baltimore, MD Tel : (410) LAW OFFICES OF MARC S. HENZEL Marc S. Henzel 210 West Washington Square, Third Floor Philadelphia, PA Tel : (215) Fax: (215) LAW OFFICES OF BERNARD M. GROSS, P.C. Deborah R. Gross 1500 Walnut Street, 6th Floor Philadelphia, PA Tel : (215) Fax: (215) LAW OFFICES OF LEO W. DESMOND Leo W. Desmond 2161 Palm Beach Lakes Boulevard Suite 204 West Palm Beach, FL Tel : (561) Fax : (561) Additional Plaintiffs' Counse l -38-

40 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy ofthe foregoing was furnished by Federal Express Mail this 23rd day of September, 2002, to the following : HOLLAND & KNIGHT LLP Tracy Nichol s Dwayne William s 701 Brickell Avenue, Suite 3000 Miami, Florida Attorneys for Defendant Pinnacle Holdings, Inc. AKERMAN, SENTERFITT & EIDSON, P.A. Stanley H. Wakshlag Brian Miller SunTrust International Center One Southeast 3rd Avenue, 28th Floor Miami, Florida Attorneys for Defendants Steven R. Day and Robert Wolsey, Peter O'Brien, Andrew Banks, Peni Garber, Peggy Koenig and Royce Yudkof FOLEY & LARDNER Richard S. Davis 777 South Flagler Drive Suite West Tower West Palm Beach, Florida and FOLEY & LARDNER Kenneth B. Winer Samuel J. Winer 3000 K Street, N.W. Suite 50 0 Washington, D.C Attorneys for Defendant Jeffrey J. Card PIPER MARBURY RUDNICK & WOLF, LLP Ronald S. Holliday Christian C. Burden 101 East Kennedy Boulevard Suite 2000 Tampa, Florida PIPER MARBURY RUDNICK & WOLF, LLP David Clarke, Jr Nineteenth Street, N. W Washington, D.C PIPER MARBURY RUDNICK & WOLF, LLP James D. Mathias 6225 Smith Avenue Baltimore, MD PIPER MARBURY RUDNICK & WOLF, LL? Bruce T. Carton 1775 Wiehle Avenue Suite 400 Reston, VA Attorneys for Underwriter Defendants WILMER, CUTLER & PICKERING Andrew B. Weissman 2445 M. Street, N.W. Washington, D.C Counsel for PriceWaterhouseCoopers R. Timothy Vannatta

41 EXHIBIT A

42 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION IN RE PINNACLE HOLDINGS CORP. No. 8:01-CV-624-T-27-MS S SECURITIES LITIGATION PRELIMINARY ORDER IN CONNECTION WITH SETTLEMENT PROCEEDING S WHEREAS, on September 23, 2002, the parties to the above-entitled action (the "Action") entered into a Stipulation and Agreement of Settlement (the "Stipulation") which is subject to review under Rule 23 of the Federal Rules of Civil Procedure ("F.R.Civ.P.") and which, together with the exhibits thereto, sets forth the terms and conditions for the proposed settlemen t of the claims alleged in the Complaint on the merits and with prejudice upon the terms an d conditions set forth in the Stipulation ; and the Court having read and considered the Stipulatio n and the accompanying documents ; and the parties to the Stipulation having consented to the entr y of this Order ; and all capitalized terms used herein having the meanings defined in the Stipulation ; 2002 that : NOW, THEREFORE, IT IS HEREBY ORDERED, this day of Pursuant to F.R.Civ.P. 23(b)(3), for the purposes of settlement only, and withou t any effect whatsoever in the event that the settlement is not consummated, this Action is hereby certified as a class action on behalf of all persons who purchased or otherwise acquired th e common stock of Pinnacle Holdings Inc. ("Pinnacle") during the period from June 29, 1999 through and including August 14, 2001, including persons who acquired Pinnacle common stock pursuant to or traceable to the January 18, 2000 Offering. Excluded from the Class are Defendants in this Action, members of the immediate families ( parents, spouses, siblings, an d children) of each of the individual Defendants, any subsidiary or affiliate of Pinnacle, PwC, or the

43 Underwriter Defendants and the directors and officers of Pinnacle, PwC, the Underwriter Defendants or their subsidiaries or affiliates, or any entity in which any excluded person has a controlling interest, and the legal representatives, heirs, successors in interest or assigns of any excluded person. For the purposes of the settlement only, a Sub-Class (the "Section 11 Sub- Class") is also certified consisting of all persons who acquired Pinnacle common stock pursuant to or traceable to the January 18, 2000 Offering. Excluded from the Section 11 Sub-Class are all persons excluded from the Class. For the purposes of settlement only, and without any effect whatsoever in th e event that the settlement is not consummated, the Court finds that the prerequisites for a clas s action under F.R.Civ.P. 23(a) and (b)(3) have been satisfied in that: 1) the number of members of both the Class and the Section 11 Sub-Class are so numerous that joinder of all members thereo f is impracticable; 2) there are questions of law and fact common to the Class, and there ar e questions of law and fact common to the Section 11 Sub-Class ; 3) the claims of the named representatives are typical of the claims of the Class they seek to represent, and the claims of th e named representative of the Section 11 Sub-Class are typical of the claims of the Class it seeks t o represent; 4) the Plaintiffs will fairly and adequately represent the interests of the Class and the Section 11 Sub-Class; 5) the questions of law and fact common to the members of the Class predominate over any questions affecting only individual members of the Class, and the question s of law and fact common to the members of the Section 11 Sub-Class predominate over an y questions affecting only individual members of the Section 11 Sub-Class ; and 6) a class action i s superior to other available methods for the fair and efficient adjudication of the controversy, considering (i) the interest of the members of the Class in individually controlling the prosecutio n (M ,-'4) 2

44 of the separate actions, (ii) the extent and nature of any litigation conce rning the controversy already commenced by members of the Class, (iii) the desirability or undesirability of continuin g the litigation of these claims, and (iv) the difficulties likely to be encountered in the managemen t of the action. For the purposes of settlement only, and without any effect whatsoever in th e event that the settlement is not consummated, pursuant to F.R.Civ.P. 23, Lead Plaintiffs Carl Overton, Joseph and Anna Fallon, Ariene Jakob, William Meyers, and Craig Sands are certified as Class Representatives, and Louisiana School Employees ' Retirement System is certified as Clas s Representative of the Section 11 Sub-Class. 4. A hearing (the "Settlement Fairness Hearing") pursuant to F.R.Civ.P. 23(e) is hereby scheduled to be held before the Court on, 2002, at.m. for the following purposes : (a) to finally determine whether this Action satisfies the applicabl e prerequisites for class action treatment under F.R.Civ.P. 23(a) and (b) ; (b) to determine whether the proposed Settlement is fair, reasonable, and adequate, and should be approved by the Court ; (c) to determine whether the Order and Final Judgment as provided under the Stipulation should be entered, dismissing the Complaint filed herein, on the merits and with prejudice, and to determine whether the release by the Class of the Settled Claims, as set forth i n the Stipulation, should be provided to the Released Parties ; (d) to determine whether the proposed Plan of Allocation for the proceeds of the Settlement is fair and reasonable, and should be approved by the Court ; (M ,-;4)

45 (e) to consider Plaintiffs' Counsel's application for an award of attorneys' fee s and expenses; and (f) to rule upon such other matters as the Court may deem appropriate. 5. The Court reserves the right to approve the Settlement with or without modification and with or without further notice of any kind. The Court further reserves the right to enter its Order and Final Judgment approving the Stipulation and dismissing the Complaint on the merits and with prejudice regardless of whether it has approved the Plan of Allocation or awarded attorneys' fees and expenses. 6. The Court approves the form, substance and requirements of the Notice of Pendency of Class Action, Hearing On Proposed Settlement and Attorneys' Fee Petition an d Right to Share in Settlement Fund (the "Notice"), and the Proof of Claim and Release for m annexed hereto as Exhibits 1 and 2 respectively. 7. Plaintiffs' Co-Lead Counsel shall cause the Notice and the Proof of Claim and Release, substantially in the forms annexed hereto, to be mailed, by first class mail, postag e prepaid, on or before, 2002, to all Class Members who can be identified with reasonable effort by Plaintiffs' Co-Lead Counsel. Pinnacle shall cooperate in making Pinnacle' s transfer records and shareholder information available, without charge to any party, to Plaintiffs' Co-Lead Counsel or their agent for the purpose of identifying and giving notice to the Class. Plaintiffs' Co-Lead Counsel shall use reasonable efforts to give notice to nominee owners such a s brokerage firms and other persons or entities who purchased Pinnacle common stock during th e Class Period as record owners but not as beneficial owners. Such nominee purchasers ar e directed, within seven (7) calendar days of their receipt of such Notice and the Proof of Claim an d (MI834244;-~4) 4

46 Release form, to either (a) provide to the Claims Administrator the name and last known addres s of each person or organization for whom or which such nominee purchasers purchased such stock during the Class Period or (b) request additional copies of the Notice and the Proof of Claim and Release form, which shall be provided to such nominee purchasers free of charge, and withi n seven (7) calendar days mail the Notice and the Proof of Claim and Release form directly to the beneficial owners of the securities referred to in the Notice. If a nominee purchaser elects to follow procedure (b), the nominee purchaser shall, upon such mailing, send a statement to the Claims Administrator confirming that the mailing was made as directed. Plaintiffs and/or th e Claims Administrator shall make additional copies of the Notice and Proof of Claim and Release form available to any record holder requesting such for the purpose of distribution to beneficial owners, and such record holders shall be reimbursed from the Gross Settlement Fund as provide d in the Stipulation, upon receipt by the Claims Administrator of proper documentation, for the reasonable expense of sending the Notices and the Proofs of Claim and Releases to beneficial owners. Plaintiffs' Co-Lead Counsel shall, at or before the Settlement Fairness Hearing, file with the Court proof of mailing of the Notice and the Proof of Claim and Releas e The Court approves the form of Summary Notice of Pendency of Class Action, Proposed Settlement and Settlement Hearing ("Publication Notice") in substantially the form an d content annexed hereto as Exhibit 3 and directs that Plaintiffs' Co-Lead Counsel shall cause th e Publication Notice to be published in the national edition of The Wall Street Journal within ten days of the mailing of the Notice. Plaintiffs' Co-Lead Counsel shall, at or before the Settlement Fairness Hearing, file with the Court proof of publication of the Publication Notice. {MI834244;=4} 5

47 9. The form and method set forth herein of notifying the Class of the Settlement and its terms and conditions meet the requirements of Rule 23 of the Federal Rules of Civil Procedure, Section 21D(a)(7) of the Secu rities Exchange Act of 1934, 15 U.S.C. 78u-4(a)(7) as amended by the Private Securities Litigation Reform Act of 1995, an d due process, constitute the best notice practicable under the circumstances, and shall constitute due and sufficient notice to all person s and entities entitled thereto. 10. In order to be entitled to participate in the Net Settlement Fund, in the event th e Settlement is effected in accordance with all of the terms an d conditions set forth in th e Stipulation, each Class Member shall take the following actions and be subject to the following conditions : (a) A properly executed Proof of Claim and Release (the "Proof of Claim an d Release"), substantially in the form attached hereto as Exhibit 2, must be submitted to the Claim s Administrator, at the Post Office Box indicated in the Notice, postmarked not later than Such deadline may be further extended by Court Order. Each Proof of Claim and Release shall be deemed to have been submi tted when postmarked (if properly addressed and mailed by first class mail, postage prepaid) provided such Proof of Claim an d Release is actually received prior to the motion for an order of the Court approving distribution o f the Net Settlement Fund. Any Proof of Claim and Release submitted in any other manner shall b e deemed to have been submitted when it was actually received at the address designated in th e Notice. (b) The Proof of Claim and Release submitted by each Class Member must satisfy the following conditions: (i) it must be properly completed, signed and submitted in a (MI834244;-'4) 6

48 timely manner in accordance with the provisions of the preceding subparagraph ; (ii) it must be accompanied by adequate supporting documentation for the transactions reported therein, in th e form of broker confirmation slips, broker account statements, an authorized statement from the broker containing the transactional information found in a broker confirmation slip, or such other documentation as is deemed adequate by Plaintiffs' Co-Lead Counsel ; (iii) if the person executing the Proof of Claim and Release is acting in a representative capacity, a certification of his current authority to act on behalf of the Class Member must be included in the Proof of Claim an d Release; and (iv) the Proof of Claim and Release must be complete and contain no material deletions or modifications of any of the printed matter contained therein and must be signed under penalty of perjury. (c) As part of the Proof of Claim and Release, each Class Member shall submi t to the jurisdiction of the Court with respect to the claim submitted, and shall (subject t o effectuation of the Settlement) release all claims as provided in the Stipulation. 11. Class Members shall be bound by all determinations and judgments in this Action, whether favorable or unfavorable, unless such persons request exclusion from the Class in a timel y and proper manner, as hereinafter provided. A Class Member wishing to make such request shal l mail the request in written form by first class mail postmarked no later tha n 2002 to the address designated in the Notice. Such request for exclusion shall clearly indicate the name and address of the person seeking exclusion, that the sender requests to be excluded from the Class in the Pinnacle Holdings Corp. Securities Litigation, and must be signed by such person. Such persons requesting exclusion are also requested to state : their telephone number and the date(s), price(s), and number(s) of shares of all purchases and sales ofpinnacle common stock (MI834244;-4) 7

49 during the Class Period. The request for exclusion shall not be effective unless it provides th e required information and is made within the time stated above, or the exclusion is otherwise accepted by the Court. 12. Class Members requesting exclusion from the Class shall not be entitled to receiv e any payment out of the Net Settlement Fund as described in the Stipulation and Notice. 13. The Court will consider comments and/or objec tions to the Settlement, the Plan of Allocation, or the award of attorneys' fees and reimbursement of expenses only if such comments or objections and any supporting papers are filed in writing with the Clerk of the Court, 223 Sa m M. Gibbons U.S. Courthouse, 801 North Florida Avenue, Tampa, Florida 33602, and copies of all such papers are served, on or before, 2002, upon each of the following : Kenneth J. Vianale, Esq., Milberg Weiss Bershad Hynes & Lerach LLP, The Plaza, 5355 Tow n Center Road, Suite 900, Boca Raton, Florida and David Kessler, Esq., Schiffrin & Barroway, LLP, Three Bala Plaza East, Suite 400, Bala Cynwyd, Pennsylvania on behal f of Plaintiffs; and Tracy A. Nichols, Esq., Holland & Knight, LLP, 701 Brickell Avenue, Suite 3000, Miami, Florida 33131, James D. Mathias, Esq., Piper Rudnick LLP, 6225 Smith Avenue, Baltimore, Maryland 21209, Richard S. Davis, Esq., Foley & Lardner, 777 South Flagler Drive, Suite 901, West Palm Beach, Florida , Stanley Wakshlag, Esq., Akerman Senterfitt & Eidson, P.A., One Southeast Third Avenue, 28th Floor, Miami, Florida 33131, and Andrew B. Weissman, Esq., Wilmer, Cutler & Pickering, 2445 M Street, N.W., Washington, D.C on behalf of the Defendants. Attendance at the hearing is not necessary ; however, persons wishing to be heard orally in opposition to the approval of the Settlement, the Plan of Allocation, and/or the request for attorneys' fees are required to indicate in their written objection their (MI ;-!~4)

50 intention to appear at the hearing. Persons who intend to object to the Settlement, the Plan of Allocation, and/or counsel's application for an award of attorneys' fees and expenses and desir e to present evidence at the Settlement Fairness Hearing must include in their written objections th e identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the Settlement Fairness Hearing. Class Members do not need to appear at the hearing or take any other action to indicate their approval. 14. All funds held by the Escrow Agent(s) shall be deemed and considered to be in the custody of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such funds shall be distributed or returned pursuant to the Stipulation and/or further order of the Court. 15. All papers in support of the Settlement, the Plan of Allocation and the applicatio n by Plaintiffs' Counsel for attorneys' fees or reimbursement of expenses shall be filed and serve d thirty (30) days prior to the Settlement Fairness Hearing. 16. Neither Defendants nor Defendants' counsel shall have any responsibility for th e Plan of Allocation or any application for attorneys' fees or reimbursement of expenses submitted by Plaintiffs' Counsel, and such matters will be considered separately from the fairness, reasonableness and adequacy of the Settlement. 17. Pending final determination of whether the Settlement should be approved, th e Plaintiffs, all Class Members, and each of them, and anyone who acts or purports to act on their behalf, shall not institute, commence or prosecute any action which asserts Settled Claims agains t any Released Party. {MI834244;=4 } 9

51 18. If the Settlement is terminated as provided in the Stipulation, then, in such event, the Stipulation, including any amendment(s) thereof, and this Preliminary Order certifying th e Class and the Class Representatives for purposes of the Settlement sh al l be null and void, of no further force or effect, and without prejudice to any party, and may not be introduced as evidenc e or referred to in any actions or proceedings by any person or entity, as set forth in the Stipulation, and each party shall be restored to his, her or its respective position as it existed prior to execution of the parties' Memorandum of Understanding as of May 16, The Court retains exclusive jurisdiction over the Action to consider all further matters arising out of or connected with the Settlement. Dated: Tampa, Florida 2002 HONORABLE JAMES D. WHITTEMORE UNITED STATES DISTRICT JUDGE {MI834244;=4 } 10

52 EXHIBIT 1

53 UNITED STATES DISTRICT COUR T MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION IN RE PINNACLE HOLDINGS CORP. SECURITIES LITIGATION No. 8 :01-CV-624 -T-27-MS S PROOF OF CLAIM AND RELEAS E DEADLINE FOR SUBMISSION:, IF YOU PURCHASED OR OTHERWISE ACQUIRED THE COMMON STOCK OF PINNACLE HOLDINGS INC. ("PINNACLE") DURING THE PERIOD FROM JUNE 29, 1999 THROUGH AND INCLUDING AUGUST 14, 2001 ("CLASS PERIOD"), INCLUDING ACQUISITION OF PINNACLE COMMON STOCK PURSUANT TO OR TRACEABLE TO THE JANUARY 18, 2000 OFFERING, YOU ARE A "CLASS MEMBER" AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT PROCEEDS. (EXCLUDED FROM THE CLASS ARE DEFENDANTS IN THIS ACTION, MEMBERS OF THE IM MEDIATE FAMILIES (PARENTS, SPOUSES, SIBLINGS, AND CHILDREN) OF EACH OF THE INDIVIDUAL DEFENDANTS, ANY SUBSIDIARY OR AFFILIATE OF PINNACLE, PWC, OR THE UNDERWRITER DEFENDANTS AND THE DIRECTORS AND OFFICERS OF PINNACLE, PWC, THE UNDERWRITER DEFENDANTS OR THEIR SUBSIDIARIES OR AFFILIATES, OR ANY ENTITY IN WHICH ANY EXCLUDED PERSON HAS A CONTROLLING INTEREST, AND THE LEGAL REPRESENTATIVES, HEIRS, SUCCESSORS IN INTEREST OR ASSIGNS OF ANY EXCLUDED PERSON. ) IF YOU ARE A CLASS MEMBER, YOU MUST COMPLETE AND SUBMIT THIS FORM IN ORDER TO BE ELIGIBLE FOR ANY SETTLEMENT BENEFITS. YOU MUST COMPLETE AND SIGN THIS PROOF OF CLAIM AND RELEASE AND MAIL IT BY FIRST CLASS MAIL, POSTMARKED NO LATER THAN, 2002 TO THE FOLLOWING ADDRESS : In re Pinnacle Holdings Corp. Securities Litigation c/o Gilardi & Co. LLC Claims Administrator Post Office Box 990 Corte Madera, CA YOUR FAILURE TO SUBMIT YOUR CLAIM BY, 2002 WILL SUBJECT YOUR CLAIM TO REJECTION AND PRECLUDE YOUR RECEIVING ANY MONEY IN CONNECTION WITH THE SETTLEMENT OF THIS LITIGATION. IF YOU ARE A CLASS MEMBER AND DO NOT SUBMIT A PROPER PROOF OF CLAIM AND RELEASE, YOU WILL NOT SHARE IN THE SETTLEMENT BUT YOU NEVERTHELESS WILL BE BOUND

54 BY THE ORDER AND FINAL JUDGMENT OF THE COURT. DO NOT MAIL OR DELIVER YOUR CLAIM TO THE COURT OR TO ANY OF THE PARTIES OR THEIR COUNSEL AS ANY SUCH CLAIM WILL BE DEEMED NOT TO HAVE BEEN SUBMITTED. SUBMIT YOUR CLAIM ONLY TO THE CLAIMS ADMINISTRATOR I purchased or otherwise acquired the common stock of Pinnacle Holdings Inc. ("Pinnacle") during the period from June 29, 1999 through and including August 14, 2001, including acquisition of Pinnacle common stock pursuant to or traceable to the January 18, 2000 Offering. (Do not submit this Proof of Claim and Release if you did not purchase Pinnacl e common stock during this period). 2. By submitting this Proof of Claim and Release, I state that I believe in good faith that I am a Class Member as defined above and in the Notice of Pendency of Class Action, Hearing on Proposed Settlement and Attorneys' Fee Petition and Right to Share in Settlement Fund (the "Notice"), or am acting for such person ; that I am not a Defendant in the Action or anyone excluded from the Class ; that I have read and understand the Notice; that I believe that I am entitled to receive a share of the Net Settlement Fund ; that I elect to participate in the proposed Settlement described in the Notice ; and that I have not filed a request for exclusion. (If you are acting in a representative capacity on behalf of a Class Member (e.g., as an executor, administrator, trustee, or other representative), you must submit evidence of your current authority to act on behalf of that Class Member. Such evidence would include, for example, letters testamentary, letters of administration, or a copy of the trust documents.) I have set forth where requested below all relevant information with respect to each purchase of Pinnacle common stock during the Class Period, and each sale, if any, of suc h securities. -2-

55 4. I have enclosed photocopies of the stockbroker's confirmation slips, stockbroker's statements, relevant portions of my tax returns or other documents evidencing each purchase, sal e or retention of Pinnacle common stock listed below in support of my claim. (IF ANY SUCH DOCUMENTS ARE NOT IN YOUR POSSESSION, PLEASE OBTAIN A COPY OR EQUIVALENT DOCUMENTS FROM YOUR BROKER OR TAX ADVISOR BECAUS E THESE DOCUMENTS ARE NECESSARY TO PROVE AND PROCESS YOUR CLAIM.) 5. I understand that the information contained in this Proof of Claim and Release is subject to such verification as the Court may direct, and I agree to cooperate in any such verification. 6. Upon the occurrence of the Effective Date (as defined in the Notice) my signatur e hereto will constitute a full and complete release, remise, discharge, and injunction from prosecution, by me or, if I am submitting this Proof of Claim and Release on behalf of a corporation, partnership, trust, estate or one or more other persons, by it, him, her or them, and by my, its, his, her or their heirs, executors, administrators, successors, and assigns of any and al l claims, demands, rights, causes of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory or common law, or any other law, rule or regulation, including both known claims and Unknown Claims, that have been o r could have been asserted in any forum by me, or the successors or assigns of me, whether directly, indirectly, representatively or in any other capacity, against any of the Released Parties, which arise out of, or relate in any way, directly or indirectly, to the allegations, transactions, facts, events, matters, occurrences, acts, representations or omissions involved in, set forth in, referred to, or that could have been asserted in this Securities Action, including without limitation, -3-

56 claims for negligence, gross negligence, breach of duty of care, breach of duty of loyalty, breac h of duty of candor, fraud, negligent misrepresentation, an d breach of fiduciary duty, arising out of, based upon or related in any way to the purchase or acquisition of Pinnacle securities by any Clas s Member during the Class Period or in the January 18, 2000 Offering. 7. Upon the occurrence of the Effective Date (as defined in the Notice) my signatur e hereto will constitute a covenant to refrain from instituting, commencing or prosecuting eithe r directly, indirectly, representatively, or in any other capacity, by me or, if I am submitting thi s Proof of Claim and Release on behalf of a corporation, partnership, trust, estate or one or more other persons, by it, him, her or them, and by my, its, his, her or their heirs, executors, administrators, successors, an d assigns of any and all claims, demands, rights, causes of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory or common law, or any other law, rule or regulation, including both know n claims and Unknown Claims, that have been or could have been asserted in any forum by me, or the successors or assigns of me, whether directly, indirectly, representatively or in any other capacity, against any of the Released Parties, which arise out of, or relate in any way, directly o r indirectly, to, or could have been asserted based upon, the allegations, transactions, facts, events, matters, occurrences, acts, representations or omissions involved in, set forth in, referred to, or which relate directly or indirectly to this Secu rities Action, including, without limitation, claim s for negligence, gross negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of fiduciary duty. 8. "Released Parties" means defendants Pinnacle Holdings, Inc., Robert Wolsey, Steven Day, Jeffrey Card, Peter O'Brien, Andrew Banks, Peni Garber, Peggy Koenig, Royce -4-

57 Yudkoff, PricewaterhouseCoopers LLP, Deutsche Bank Securities, Inc., Goldman Sachs & Co., Merrill Lynch & Company, Raymond James & Associates, Inc., Salomon Smith Barney, and Banc of America Securities LLC (collectively, "Defendants"), their past or present affiliates, subsidiaries, parents, successors and predecessors, shareholders, creditors, partners, principals, officers, directors, agents, employees, insurers, reinsurers, professional advisors, attorneys, auditors, accountants and any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any of the Defendants, and the legal representatives, heirs, successors in interest or assigns of the Defendants. 9. "Unknown Claims" means any and all claims released hereby that any releasin g party does not know or suspect to exist in his, her, or its favor at the time of the release, which, i f known by him, her, or it might have affected his, her or its decision(s) with respect to the Stipulation. With respect to any and all claims released hereby, I stipulate and agree that upon the Effective Date, I expressly waive any and all provisions, rights, and benefits conferred by any law of any sate or territory of the United States, or principle of common law, which is similar, comparable, or equivalent to Cal. Civ. Code Section 1542, which provides : A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. I acknowledge that the inclusion of "Unknown Claims " in the definition of claims released hereby was separately bargained for and is a material element of this release. 10. Statement of Claim -5-

58 Name(s) of Beneficial Owner(s) : Name Name Street No. City State ( ) Telephone No. (Day) Check one : Individual Estate Corporation ( ) Telephone No. (Night) IRA Account Trustee/Custodi an Other (specify) Joint Owner's Name (if any) common stock. 11. At the close of business on June 28, 1999, I owned shares of Pinnacle 12. I made the following purchases of Pinnacle common stock during the period fro m June 29, 1999 through and including August 14, 2001 (list date of trade, not date of settlement) : Trade Date(s) of Number of Shares of Purchase Price Per Aggregate Cost Purchase (List Common Stock Share of Common ( i n c l u d i n g Chronologically) Purchased Stock commissions, taxes, (Month/Day/Year) and fees ) 13. I made the following purchase of Pinnacle common stock on, or traceable to, the January 18, 2000 Offering: Number of shares purchased on the Offering at $

59 per share; Number of shares claimed to be traceable to the Offering (attach supportin g documentation demonstrating that there shares can be traced to the January 18, 2000 Offering). 14. I made the following sales of Pinnacle common stock during the period from Jun e 29, 1999 through and including August 14, 2001 : Date(s) of Sale (List Chronologically) (Month/Day/Year) Number of Shares of Sale Price Per Share of Common Stock Sold Common Stock Amount Received (net of commissions, taxes, and fees ) / / 15. At the close of business on August 14, 2001, I still owned shares of Pinnacle common stock. 16. Substitute Form W-9 Request for Taxpayer Identification Number : Enter taxpayer identification number below for the Beneficial Owner(s). For most individuals, this is your Social Security Number. The Internal Revenue Se rvice ("I.R.S.") requires such taxpayer identification number. If you fail to provide this information, your claim may b e rej ected. Social Security Number (for individuals) o r Employer Identification Number (for estates, trusts, corporations, etc.) 17. Certification I submit this Proof of Claim and Release under the terms of the Stipulation and Agreemen t of Settlement described in the Notice. I also submit to the jurisdiction of the United States -7-

60 District Court for the Middle District of Florida, with respect to my claim as a Class member an d for purposes of enforcing the release and covenant not to sue set forth herein. I further acknowledge that I am bound by and subject to the terms of any judgment that may be entered i n this litigation. I have not submitted any other claim covering the same purchases or sales of Pinnacle common stock during the Class Period and know of no other Person having done so o n my behalf. UNDER THE PENALTIES OF PERJURY, I (WE) CERTIF Y THAT ALL OF THE INFORMATION PROVIDED ON THI S FORM IS TRUE, CORRECT AND COMPLETE. I (We) certify that I am (we are) NOT subject to backup withholding under the provision s of Section 3406 (a)(1)(c) of the Internal Revenue Code because : (a) I am (We are) exempt from backup withholding, or (b) I (We) have not been notified by the I.R.S. that I am (we are) subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the I.R.S. has notified me (us ) that I am (we are) no longer subject to backup withholding. NOTE: If you have been notified by the I.R.S. that you are subject to backup withholding, please strike out the language that you are not subject to backup withholding in the certification above. Signature of Claimant (If this claim is being made on behalf of Joint Claimants, then each must sign) (Signature) Date : (Signature) THIS PROOF OF CLAIM AND RELEASE MUST BE SUBMITTED NO LATER THAN, 2002, AND MUST BE MAILED TO : -8-

61 In re Pinnacle Holdings Corp. Securities Litigation c/o Gilardi & Co. LLC Claims Administrator Post Office Box 99 0 Corte Madera, CA A Proof of Claim and Release received by the Claims Administrator shall be deemed to have been submitted when posted, if mailed by, 2002, and if a postmark i s indicated on the envelope and it is mailed first class, and addressed in accordance with the above instructions. In all other cases, a Proof of Claim and Release shall be deemed to have bee n submitted when actually received by the Claims Administrator. If you wish to be assured that your Proof of Claim and Release is actually received by th e Claims Administrator, then you should send it by Certified Mail, Return Receipt Requested. No acknowledgment will be made as to the receipt of claim forms. You should be aware that it will take a significant amount of time to process fully all of the Proofs of Claim and to administer th e Settlement. This work will be completed as promptly as time permits, given the need to investigate and tabulate each Proof of Claim and Release. Please notify the Claims Administrator of any change of address. -9-

62 EXHIBIT 2

63 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION IN RE PINNACLE HOLDINGS CORP. No. 8:01-CV-624-T-27-MSS SECURITIES LITIGATION NOTICE OF PENDENCY OF CLASS ACTION, HEARING ON PROPOSED SETTLEMENT AND ATTORNEYS' FEE PETITION AND RIGHT TO SHARE IN SETTLEMENT FUND TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED THE COMMON STOCK OF PINNACLE HOLDINGS INC. ("PINNACLE") DURING THE PERIOD FROM JUNE 29, 1999 THROUGH AND INCLUDING AUGUST 14, 2001, INCLUDING PERSONS WHO ACQUIRED PINNACLE COMMON STOCK PURSUANT TO OR TRACEABLE TO THE JANUARY 18, 2000 OFFERING. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY PROCEED INGS IN THIS ACTION. IF YOU ARE A CLASS MEMBER, YOU ULTIMATELY MAY BE ENTITLED TO RECEIVE BENEFITS PURSUANT TO THE PROPOSED SETTLEMENT DESCRIBED HEREIN. CLAIMS DEADLINE: CLAIMANTS MUST SUBMIT PROOFS OF CLAIM, ON THE FORM ACCOMPANYING THIS NOTICE, POSTMARKED ON OR BEFORE, EXCLUSION DEADLINE: REQUESTS FOR EXCLUSION MUST BE SUBMITTED POSTMARKED ON OR BEFORE, SECURITIES BROKERS AND OTHER NOMINEES : PLEASE SEE INSTRUCTIONS AT PARAGRAPH 78 HEREIN. SUMMARY OF SETTLEMENT AND RELATED MATTER S I. Purpose of this Notice 1. This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the Court dated, The purpose of this Notice is to inform you that this Action, and the proposed Settlement, will affect all Class Members' rights. This Notice describes rights you may have under the proposed Settlement and what steps you may take in relation to this Action. This Notice is not an expression of any opinion by the Court as to the merits of any claims or any defenses asserted by any party in this Action, or the fairness or

64 adequacy of the proposed Settlement. All defined terms used herein have the definitions given them in the parties' Stipulation and Agreement of Settlement dated September 23, 2002 (the "Stipulation"). II. Statement of Plaintiff Recover y 2. Pursuant to the Settlement described herein, a Gross Settlement Fund consistin g of Eleven Million Dollars ($11,000,000), plus interest, has been established. Plaintiffs estimate that there were approximately million shares of Pinnacle common stock traded during the Class Period which may have been damaged as a result of the alleged wrongdoing describe d at paragraphs 17 to 21 below. Plaintiffs estimate that the average recovery per damaged share of Pinnacle common stock under the Settlement is $ per damaged share before deduction of Court-awarded attorneys' fees and expenses. Depending on the number of claims submi tted, when during the Class Period a Class Member purchased his or her shares of Pinnacle common stock, and whether those shares were held at the end of the Class Period or sold during the Clas s Period, and if sold, when they were sold, an individual Class Member may receive more or les s than this average amount. 3. Under the relevant securities laws, a claimant's recoverable damages are limited to the losses attributable to the alleged fraud. Losses which resulted from factors other than the alleged fraud are not recoverable from the Gross Settlement Fund. For purposes of the Settlement herein, a Class Member's distribution from the Net Settlement Fund will be governed by the proposed Plan of Allocation described below at paragraphs 38 to 43, or such other Plan o f Allocation as may be approved by the Court. -2-

65 III. Statement of Potential Outcome of Case 4. The parties disagreed on both liability an d damages and do not agree on th e average amount of damages per share that would be recoverable if Plaintiffs were to hav e prevailed on each claim alleged. The issues on which the parties disagree include 1) th e appropriate economic model for determining the amount by which Pinnacle common stock was allegedly artificially inflated (if at all) during the Class Period; 2) the amount by which Pinnacle common stock was allegedly artificially inflated (if at all) during the Cl ass Period; 3) the effect of various market forces influencing the trading price of Pinnacle common stock at various time s during the Class Period; 4) the extent to which external factors, such as general market and industry conditions, influenced the trading price of Pinnacle common stock at various time s during the Class Period; 5) the extent to which the various matters that Plaintiffs alleged were materially false or misleading influenced (if at all) the trading price of Pinnacle common stock at various times during the Class Period ; 6) the extent to which the various allegedly adverse material facts that Plaintiffs alleged were omitted influenced (if at all) the trading price of Pinnacle common stock at various times during the Class Period; and 7) whether the statements made or facts allegedly omitted were material or otherwise actionable under the federal securities laws. 5. Plaintiffs' Counsel considered that there was a substantial risk that Plaintiffs and the Class might not have prevailed on all their claims and that there were risks that the decline in the price of Pinnacle common stock could be attributed, in whole or in part, to other factors. This risk was compounded by the risk that even if Plaintiffs succeeded in proving liability and proving damages the judgment might not be collectible. Therefore, Plaintiffs could hav e recovered nothing or substantially less than the amount of the Settlement. -3-

66 6. Defendants have denied, and continue to deny, each and every claim and contention alleged by plaintiffs in this litigation. Defendants have expressly denied, an d continue to deny, all charges of wrongdoing or liability against them arising out of any of th e conduct, statements, acts or omissions alleged, or that could have been alleged, in the litigation. Defendants also have denied, and continue to deny, among other things, the allegations that plaintiffs or the Class have suffered damage, that the price of Pinnacle common stock wa s artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise, or that plaintiffs or the Class were harmed by the conduct alleged in the litigation. Nonetheless, Defendants have concluded that further conduct of this litigation would be protracted and expensive, and that it is desirable that the litigation be fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation. Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like thi s litigation. Defendants have therefore determined that it is desirable and beneficial to them that this litigation be settled in the manner and upon the terms and conditions set forth in thi s Stipulation. N. Statement of Attorneys' Fees and Costs Sough t 7. Plaintiffs' Counsel intend to apply for fees of up to one-third (33 %) of the Gross Settlement Fund, and for reimbursement of expenses incurred in connection with the prosecutio n of this Action in the approximate amount of $. The requested fees and expenses would amount to an average of $ per damaged share in total for fees and expenses. Plaintiffs' Counsel have expended considerable time and effort in the prosecution of thi s litigation on a contingent fee basis, and have advanced the expenses of the litigation, in the expectation that if they were successful in obtaining a recovery for the Class they would be pai d -4-

67 from such recovery. In this type of litigation it is customary for counsel to be awarded a percentage of the common fund recovery as their attorneys' fees. V. Further Information 8. Further information regarding the Action and this Notice may be obtained by contacting Plaintiffs' Co-Lead Counsel: Kenneth J. Vianale, Esq., Milberg Weiss Bershad Hynes & Lerach LLP, The Plaza, 5355 Town Center Road, Suite 900, Boca Raton, Florida 33486, Telephone (561) ; or David Kessler, Esq., SchifTrin & Barroway, LLP, Three Bala Plaza East, Suite 400, Bala Cynwyd, Pennsylvania 19004, Telephone (610) VI. Reasons for the Settlement 9. The principal reason for the Settlement is the benefit to be provided to the Class now. This benefit must be compared to the risk that no recovery might be achieved after a contested trial and likely appeals, possibly years into the future. Pinnacle has filed a petition in bankruptcy. A Plan of Reorganization for Pinnacle has been confirmed which Plan authorize s this Pinnacle's Officers and Director's Insurer to fund this Settlement on behalf of Pinnacle and the Officer and Director Defendants but which Plan also provides for the release of Pinnacle an d its officers and directors and PricewaterhouseCoopers LLP from claims of the nature alleged i n the Complaint herein. Absent this Settlement, any recovery from the parties granted a release in the bankruptcy court would be problematic. NOTICE OF SETTLEMENT FAIRNESS ARING 10. NOTICE IS HEREBY GIVEN, pursuant to Rule 23 of the Federal Rules of Civi l Procedure and an Order of the United States District Court for the Middle District of Florida, Tampa Division (the "Court") dated, 2002, that a hearing will be held before the Honorable James D. Whittemore in the Sam M. Gibbons U.S. Courthouse, 801 North Florida Avenue, Tampa, Florida 33602, at.m., on, 2002 (the -5-

68 "Settlement Fairness Hearing") to determine whether a proposed settlement (the "Settlement") of the above-captioned action (the "Action") as set forth in the Stipulation and Agreement of Settlement dated September 23, 2002 (the "Stipulation"), is fair, reasonable and adequate and to consider the proposed Plan of Allocation for the Settlement proceeds and the application of Plaintiffs' Counsel for attorneys' fees and reimbursement of expenses. 11. The Court, by Preliminary Order In Connection With Settlement Proceedings, dated, 2002, has certified a Plaintiff Class for purposes of this Settlement consisting of. "all persons who purchased or otherwise acquired the common stock of Pinnacl e Holdings Inc. ("Pinnacle") during the period from June 29, 1999 through and including Augus t 14, 2001, including persons who acquired Pinnacle common stock pursuant to or traceable to the January 18, 2000 Offering." Excluded from the Class are Defendants in this Action, members of the immediate families (parents, spouses, siblings, and children) of Robert Wolsey ("Wolsey"), Steven Day ("Day"), Jeffrey Card ("Card") (together the "Individual Defendants") or Peter O'Brien, Andrew Banks, Peni Garber, Peggy Koenig, and Royce Yudkoff (collectively with the Individual Defendants, the "Officer and Director Defendants"), any subsidiary or affiliate o f Pinnacle, Deutsche Bank Securities, Inc. (originally sued as "Deutsche Bank Alex. Brown"), Goldman Sachs & Co., Merrill Lynch & Company, Raymond James & Associates, Inc., Salomon Smith Barney, and Banc of America Securities LLC (collectively, the "Underwriter Defendants") and PricewaterhouseCoopers LLP ("PwC") and the directors and officers of Pinnacle, PwC, the Underwriter Defendants or their subsidiaries or affiliates, or any entity in which any excluded person has a controlling interest, and the legal representatives, heirs, successors in interest or assigns of any excluded person. The Court further certified a Sub-Clas s (the "Section 11 Sub-Class") consisting of "all persons who acquired Pinnacle common stoc k -6-

69 Motorola Acquisition and the independence of PwC as Pinnacle' s auditor. After this announcement, the trading price of Pinnacle common stock fell approximately $7.00 per share. 14. On October 11, 2000, Pinnacle issued another press release discussing the status of the SEC investigation. After the October 11 press release, the trading price of Pinnacle common stock fell from $ per share at the close of trading on October 11, 2000 to $ per share at the close of trading on October 12, 2000 on heavy volume. 15. On November 9, 2000, Pinnacle issued a press release reporting revenues and cash flow for the quarter ended September 30, After the November 9, 2000 press release, the trading price of Pinnacle common stock again fell approximately $7.00 per share. pursuant to or traceable to the January 18, 2000 Offering." Excluded from the Section 11 Sub- Class are all persons excluded from the Class. BACKGROUND OF THE LITIGATIO N 12. Throughout the Class Period, Pinnacle was engaged in the business of providing wireless communications site rental space to providers of wireless communications services suc h as PCS, cellular, paging, wireless data transmission, and radio and television broadcasting. Part of Pinnacle's business strategy was to increase its cash flow through marketing, acquisitions of existing towers, and selective construction of new towers. On June 29, 1999, the start of the Class Period, Pinnacle announced the acquisition of over 1,800 antenna towers, managemen t agreements and leases from Motorola, Inc. (the "Motorola Acquisition"). On January 18, 2000, Pinnacle completed a secondary public offering, registering 8,000,000 shares at an offering price of $ per share. During the Class Period, Pinnacle common stock traded as high as $ per share on March 31, In an August 7, 2000 press release, Pinnacle revealed that the SEC had opened an investigation into "certain accounting issues" associated with Pinnacle's accounting for the -7-

70 16. On March 17, 2001, Pinnacle announced that its previously issued financial statements for the fiscal year ended December 31, 1999 and its quarterly reports for the three months ended September 30, 1999, March 31, 2000, June 30, 2000, and September 30, 2000 would be restated. Pinnacle also announced that the restatements would be necessary to revis e its accounting for the Motorola Acquisition. Thereafter, on or about March 23, 2001, when Pinnacle common stock was trading at about $9.00 per share, lawsuits were commenced against Pinnacle and certain of the other defendants herein alleging violations of the federal securitie s laws. 17. Further, as of March 31, 2001, Pinnacle had acquired five carrier neutral colocation facilities for an aggregate purchase price of $68.8 million (the "Colocation Acquisitions"). On August 14, 2001, the end of the Class Period, Pinnacle filed its quarterl y report for the three months ended June 30, 2001 with the Securities and Exchange Commission ("SEC"), in which Pinnacle announced a charge related to the colocation facilities in the amount of $34.6 million. The market price of Pinnacle common stock dropped from $2.75 per share on August 14, 2001 to $1.30 per share at the close of trading on August 15, 2001, a 53% decline. 18. The Second Consolidated Amended Complaint (the "Complaint") alleges, amon g other things, that Pinnacle, the Officer and Director Defendants (other than Card) and th e Underwriter Defendants violated Sections 11 and 15 of the Securities Act of 1933 by disseminating to the public a false and misleading Registration Statement and Prospectus (collectively hereinafter referred to as the "Prospectus") relating to the secondary offering o f shares of Pinnacle common stock (the "January 18, 2000 Offering"). The Complaint also alleges that the false and misleading information in the Prospectus caused the price of the stock issued -8-

71 under the Prospectus to be artificially inflated. The Section 11 claims are brought on behalf of all persons who bought Pinnacle shares on, or traceable to, the January 18, 2000 Offering. 19. The Complaint also alleges that Pinnacle, Day, Wolsey, Card and PwC (the "Section 10(b) Defendants") violated Section 10(b) of the Securities Exchange Act of 1934, and Rule lob-5 promulgated thereunder, by disseminating false and misleading statements and/o r concealing material adverse facts regarding Pinnacle' s business operations and financial condition between June 29, 1999 and August 14, 2001, inclusive (the "Class Period"). The Complaint alleges that the false and misleading information caused the price of Pinnacle' s common stock to be artificially inflated during the Class Period. The Section 10(b) claims are brought on behalf of all persons who purchased Pinnacle's common stock during the Clas s Period. The Complaint also alleges that Day, Wolsey and Card are liable as control person s under Section 20(a) of the Securities Exchange Act of Plaintiffs alleged that a principal part of Defendants' alleged scheme to artificially inflate the value of Pinnacle 's securities included the overstatement of income and the understatement of expenses during the Class Period. It was alleged that accurately reporting such financial information would have, among other things, harmed Pinnacle's ability to meet securities analysts' consensus revenue and earnings expectations, reduced Pinnacle's access to capital (including credit lines and Pinnacle's ability to successfully complete the January 18, 2000 Offering), decreased Pinnacle's common stock price (including the price received on stock sales by certain Pinnacle directors and officers, including Officer and Director Defendants Wolsey and Day), and harmed Pinnacle's ability to acquire additional towers. 21. Plaintiffs alleged that Defendants materially misled the investing public by publicly issuing materially false and misleading statements and by concealing and/or failing t o -9-

72 disclose material facts necessary to correct such statements, including, inter alia, that: 1) that Pinnacle's EBITDA ( earnings before interest, taxes other than real estate, depreciation and amortization) for the third and fourth quarters of 1999 and the first, second, and third quarters of 2000 had been materially overstated and that Defendants were required to restate downward th e income for those periods; 2) that these overstatements primarily resulted from several violation s of generally accepted accounting principles ("GAAP") involving acquisition accounting and deferral of expenses ; 3) that the financial statements violated GAAP due to improper accounting practices which made Defendants' representations that the financial statements were prepared "in accordance with generally accepted accounting principles" materially false and misleading; 4) that the audited financial statements for the 1999 fiscal year included in the January 18, 2000 Registration Statement and Prospectus were not presented in accordance with GAAP and the audits were not performed in accordance with generally accepted auditing standards ("GAAS") ; 5) that from March 31, 2001 through the end of the Class Period, Pinnacle represented that its Colocation Acquisition assets were not impaired and continued to account for their value as at least $68.8 million on Pinnacle's balance sheet when their actual value was over 50% less than the $68.8 million carrying value; 6) that Pinnacle' s income statements fraudulently exclude d ordinary operating expenses by improperly capitalizing them as costs of acquiring communication sites in violation of GAAP; 7) that the Prospectus overstated Pinnacle 's EBITDA (earnings before interest, taxes other than real estate, depreciation and amortization) and understated corporate development expenses for the quarter ended September 30, 1999 i n violation of GAAP; 8) that the Prospectus contained materially false information regarding Pinnacle's acquisitions, including the Motorola Acquisition, including Pinnacle's assurances tha t it was performing ongoing monitoring of its newly acquired sites and integrating the due -10-

73 diligence data because the vast majority of the towers acquired were ancient, junk or suffered from clouded title; 9) that the Prospectus did not adequately warn investors of the material adverse effects of Pinnacle's failure to bring its acquired towers into compliance with local and state regulations and in fact many of the acquired tower sites faced either demolition or complet e rebuilding in order to obtain the necessary operating permits from governmental authorities; and 10) that proper due diligence had not been performed prior to Pinnacle's tower acquisitions and in fact most of the due diligence review of the assets acquired during the Class Period was performed well after the Class Period ended. 22. The Complaint further alleges that Plaintiffs and other Class Members purchased the common stock of Pinnacle during the Class Period and/or pursuant or traceable to th e Prospectus issued in connection with the January 18, 2000 Offering during the Class Period and were damaged as a result thereof. SUBSEQUENT EVENTS 23. Pinnacle has filed a petition under Chapter 11 of Title 11 of the United State s Code, 11 U.S.C. 101, et seq. (the "Bankruptcy Code"). On July 30, 2002, the United State s Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") entered an order (the "Confirmation Order") confirming the First Amended Plan of Reorganization of Pinnacle Towers III Inc., Pinnacle Holdings Inc., Pinnacle Towers Inc. and Pinnacle San Antoni o LLC, debtors and debtors-in-possession (collectively "Debtors"), dated June 27, 2002 (th e "Plan"). In the Confirmation Order, the Bankruptcy Court approved the payment by Pinnacle' s Directors and Officers' insurer, Genesis Insurance Company ("Genesis") of $8,200,000 on behalf of Pinnacle and the Officer and Director Defendants to the plaintiff Class. Pursuant to the confirmed Plan, effective as of the Confirmation Date, but subject to the occurrence of the effective date of the Plan, certain creditors and equity holders of Pinnacle are deemed to hav e -11-

74 given releases to Pinnacle, the Officer and Director Defendants and PwC of all claims which any of such parties may be entitled to assert based in whole or in part upon any act or omission, transaction or other occurrence taking place on or before the Confirmation Date in any way relating to the Debtors, their business, their governance, their securities disclosure practices, the purchase or sale of any of Debtors' debt securities or equity securities. The releases of nondebtor Defendants under the Plan are contingent on this Settlement becoming effective. BACKGROUND TO THE SETTLEMEN T 24. The Defendants (as defined below) have denied all averments of wrongdoing o r liability in the Action and all other accusations of wrongdoing or violations of law. The Stipulation is not and shall not be construed or be deemed to be evidence or an admission or a concession on the part of any of the Defendants of any fault or liability or damages whatsoever, and Defendants do not concede any infirmity in the defenses which they have asserted or intended to assert in the Action. 25. Prior to entering into the Stipulation, Plaintiffs' Counsel represent that they conducted a pre-filing investigation relating to the events and transactions underlying Plaintiffs ' claims, including, inter alia, review and analysis of Pinnacle's SEC financial filings, pres s releases and analysts' first call reports, consulting with accounting experts and interviews wit h former employees. Subsequent to entering into the Settlement Plaintiffs' Counsel conducted a review and an alysis, with the help of forensic accounting experts, of Confirmatory Discovery o n the merits, including, inter alia, analysis of thousands of pages of documents produced by Pinnacle, which included documents prepared by PwC and the Underwriter Defendants. Plaintiffs' Counsel's decision to recommend that the Lead Plaintiffs enter into this Settlement was made with knowledge of the facts and circumstances underlying Plaintiffs' claims and the strengths and weaknesses of those claims. In determining to settle the Action, they have -12-

75 evaluated the pre-trial investigation and Confirmatory Discovery taken in the Action and taken into account the substantial expense and length of time necessary to prosecute the Action through trial, post-trial motions, and likely appeals, taking into consideration the significant uncertainties in predicting the outcome of this complex litigation, including Pinnacle's bankruptcy. Counsel for Plaintiffs believe that the Settlement described herein confers very substantial benefits upon the Class. Based upon their consideration of all of these factors, Plaintiffs and their counsel have concluded that it is in the best interest of Plaintiffs and the Class to settle the Action on the term s described herein. 26. Plaintiffs recognize the uncertainty and the risk of the outcome of any litigation, especially complex litigation such as this, and the difficulties and risks inherent in the trial o f such an action. Plaintiffs desire to settle the claims of the Class against Defendants on the term s and conditions described herein which provide substantial benefits to the Class. Plaintiffs' Counsel deem such settlement to be fair, reasonable and adequate, and in the best interests of the members of the Class. 27. The Defendants, while continuing to deny all allegations of wrongdoing or liability whatsoever, desired to settle and terminate all existing or potential claims against them, without in any way acknowledging any fault or liability. 28. The amount of damages, if any, that Plaintiffs could prove was also a matter of serious dispute, and the Settlement's use of a Recognized Claim formula for distributing the Settlement proceeds does not constitute a finding, admission or concession that provabl e damages could be measured by the Recognized Claim formula. No determination has been made by the Court as to liability or the amount, if any, of damages suffered by the Class, nor on the proper measure of any such damages. The determination of damages, like the determination o f -13-

76 liability, is a complicated and uncertain process, typically involving conflicting expert opinions. During the course of the Action, Defendants, in addition to denying any liability, disputed that Plaintiffs and the Class were damaged by any wrongful conduct on the part of Defendants. The Settlement herein provides an immediate and substantial cash benefit and avoids the risks that liability or damages might not have been proven at trial. 29. The Court has not determined the merits of the Plaintiffs' claims or the defenses thereto. This Notice does not imply that there has been or would be any finding of violation of the law or that recovery could be had in any amount if the Action were not settled. TERMS OF THE SETTLEMENT 30. The Settlement provides a total of Eleven Million Dollars ($11,000,000) for settlement of the claims of the Class : (a) Subject to the terms and conditions of the Stipulation, Defendants Pinnacle and the Officer and Director Defendants have caused Pinnacle's directors and officers liability insurance carrier, Genesis Insurance Company, to pay into escrow $8,200,000 (the "Genesis Cash Settlement Amount"), which has been earning interest for the benefit of the Class sinc e June 14, (b) Subject to the terms and conditions of the Stipulation, PwC has paid into escrow $2,600,000 (the "PwC Cash Settlement Amount"), which has been earning interest for the benefit of the Class since June 14, (c) Subject to the terms and conditions of the Stipulation, Defendants have paid into escrow $200,000 (the "Underwriter Cash Settlement Amount"), which has been earning interes t for the benefit of the Class since June 12, Pursuant to the Settlement, Plaintiffs and other members of the Class on behalf of themselves, their heirs, executors, administrators, successors, and assigns shall release and -14-

77 forever discharge, and shall forever be enjoined fr om prosecuting, the Released Parties (defined below) with respect to each and every Settled Claim (defined below). 32. The "Defendants" include the following, each of whom will be released from all Settled Claims: 1) Pinnacle; 2) the Officer and Director Defendants; 3) the Underwriter Defendants; and 4) PwC. In addition, the Settlement will release all Class Members' Settled Claims against Defendants, their past or present affiliates, subsidiaries, parents, successors and predecessors, shareholders, creditors, partners, principals, officers, directors, agents, employees, insurers, reinsurers, professional advisors, attorneys, auditors, accountants and any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any of the Defendants, and the legal representatives, heirs, successors in interest or assigns of the Defendants (collectively, the "Released Parties"). 33. "Settled Claims" means any and all claims, demands, rights, causes of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory or common law, or any other law, rule or regulation, including both known claims and Unknown Claims, that have been or could have been asserted in any forum b y Class Members, or any of them, or the successors or assigns of any of them, whether directly, indirectly, representatively or in any other capacity, against any of the Released Parties, which arise out of, or relate in any way, directly or indirectly, to the allegations, transactions, facts, events, matters, occurrences, acts, representations or omissions involved in, set forth in, referre d to, or that could have been asserted in this Securities Action, including without limitation, claims for negligence, gross negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of fiduciary duty, arising out of, based -15-

78 upon or related in any way to the purchase or acquisition of Pinnacle secu rities by any Class Member during the Class Period or in the Pinnacle January 18, 2000 Secondary Offering. 34. If the Settlement is approved by the Court, pursuant to the Order and Fina l Judgment, Plaintiffs and members of the Class on behalf of themselves, their heirs, executors, administrators, successors, and assigns, with respect to each and every Barred Claim, release and forever discharge, and shall forever be enjoined from prosecuting, and shall covenant to refrain from instituting, commencing or prosecuting, either directly, indirectly, representatively, or i n any other capacity, all Barred Claims against any of the Released Parties. "Barred Claims" means any and all claims, demands, rights, causes of action or liabilities, of every nature and description whatsoever, whether based in law or equity, on federal, state, local, statutory o r common law, or any other law, rule or regulation, including both known claims and unknow n claims, that have been or could have been asserted in any forum by the Class Members, or any of them, or the successors or assigns of any of them, whether directly, indirectly, representative or in any other capacity, against any of the Released Parties, which arise out of, or relate in any way, directly or indirectly, to, or could have been asserted based upon, the allegations, transactions, facts, events, matters, occurrences, acts, representations or omissions involved in, set forth in, referred to, or which relate directly or indirectly to this Securities Action, including, without limitation, claims for negligence, gross negligence, breach of duty of care, breach o f duty of loyalty, breach of duty of candor, fraud, negligent misrepresentation, and breach of fiduciary duty. 35. If the Settlement is approved by the Court, pursuant to the Order and Final Judgment, to the full extent provided by Section 21D(f)(7) of the Securities Exchange Act o f 1934, 15 U.S.C. 78u-4 (f)(7), and the common law of the U.S. Court of Appeals for the Eleventh -16-

79 Circuit, all claims, including, but not limited to, claims for contribution, or equitable indemnification against any party or third person, including but not limited to, any trustee appointed in a Chapter 7 or 11 bankruptcy proceeding, related, directly or indirectly, to the facts of this action shall be barred; provided, however, that certain claims excluded from the definitio n of Inter-Defendant Claims shall not be barred. 36. Pursuant to the Settlement and the Order and Final Judgment, the Defendants shall be deemed to have exchanged mutual releases of certain Inter-Defendant Claims as against Inter-Defendant Released Parties. 37. The Stipulation provides that the Defendants may withdraw from and terminat e the Settlement in the event that in excess of a certain amount of claimants exclude themselves from the Class. In the event of a withdrawal by any Defendant(s) from the Stipulation pursuant to the Supplemental Agreement, all other parties shall have the right to withdraw from th e Stipulation during the period beginning five (5) calendar days and ending twenty (20) calendar days after the first such withdrawal, in accordance with the terms of the Supplementa l Agreement. In the event that either (a) Plaintiffs' Co-Lead Counsel or (b) all Defendants withdraw from the Stipulation pursuant to the terms of the Supplemental Agreement, the Settlement will be terminated. 38. The Settlement will become effective at such time as an Order entered by the Court approving the Settlement shall become final and not subject to appeal and other conditions specified in the Stipulation are satisfied (the "Effective Date"). ALLOCATION OF SETTLEMENT PROCEEDS AMONG CLASS MEMBERS 39. The $11,000,000 cash settlement amount and the interest earned thereon, shall b e the "Gross Settlement Fund." The Gross Settlement Fund, less all taxes, approved costs, fees and expenses (the "Net Settlement Fund") shall be distributed to members of the Class who file -17-

80 acceptable Proofs of Claim ("Authorized Claimants") in proportion to their "Weighte d Recognized Claims" as defined below. 40. The Weighted Recognized Claim formula is not intended to be an estimate of the amount that a Class Member might have been able to recover after a trial; nor is it an estimate of the amount that will be paid to Authorized Claimants pursuant to the Settlement. The Weighted Recognized Claim formula is the basis upon which the Net Settlement Fund will b e proportionately allocated to the Authorized Claimants. A Class Member's Weighted Recognized Claim is determined first by calculating the Recognized Claim and then applying a Weighting factor. 41. An Authorized Claimant's "Recognized Claim" shall mean (a) With respect to each share of Pinnacle common stock acquired during the Clas s Period (June 29, 1999 through August 14, 2001) other than shares pursuant to or traceable to the January 18, 2000 Offering, the Recognized Claim amount shall be calculated as follows : (i) for each share of Pinnacle common stock purchased on the open market during the Class Period which an Authorized Claimant continued to hold as of the close of trading on August 14, 2001 (the end of the Class Period), th e Recognized Claim shall be equal to the "Plaintiffs' Contention Of The Estimated Inflation Per Share" on the date of purchase of the Pinnacle common stock (a s shown on the table set forth below); (ii) for each share of Pinnacle common stock purchased on the open market during the Class Period which an Authorized Claimant sold at a loss prio r to the close of trading on August 14, 2001, the Recognized Claim shall be equa l to the lesser of -18-

81 (A) the difference, if a loss, between the "Plaintiffs' Contention Of The Estimated Inflation Per Share" on the date of purchase of the Pinnacle common stock during the Class Period and the "Plaintiffs' Contention Of The Estimated Inflation Per Share" on the date of sale of th e Pinnacle common stock ; or (B) the difference, if a loss, between the purchase price paid (including commissions etc.) and the proceeds received on sale (net of commissions etc.). (b) With respect to for each share of Pinnacle common stock acquired pursuant to or traceable to the January 18, 2000 Offering, the Recognized Clam amount shall be the greater of the amount calculated under (i) or (ii) below : (i) (Section 11 calculation) for each share of Pinnacle common stock acquired pursuant to or traceable to the January 18, 2000 Offering, th e Recognized Claim shall be equal to (A) for shares sold on or before March 23, 2001, the difference, if a loss, between $41.00 [$40.375] and the sum for which said shares were sold at a loss (net of brokerage commissions and transaction charges) on or before March 23, 2001 ; or (B) for such shares still owned at the close of trading on March 23, 2001, $32.00 [$31.375] per share (this is the difference between the secondary offering price ($41.00 [40.375]) and the $9.00 market value at the date suit was commenced); or (ii) (Section 10(b) calculation) the amount calculated in accordanc e with the formula set forth in paragraph 41(a) above. -19-

82 PLAINTIFFS' CONTENTION OF THE ESTIMATED INFLATION PER SHARE 42. The Claims Administrator shall determine each Authorized Claimant's fro rata share of the Net Settlement Fund based upon each Authorized Claimant's "Weighted Recognized Claim." An Authorized Claimant's Weighted Recognized Claim shall mean [100%] of th e Recognized Claim amount calculated under paragraph 41(a) above and [125%]1 of the 1. In addition to the claims asserted by all Class Members under Section 10(b) of the Securities Exchange Act of 1934, Class Members who acquired shares pursuant to or traceable to the January 18, 2000 Offering have claims under Section 11 of the Securities Act of Accordingly, the Recognized Claims of Class Members who purchased on the J anuary 18, 2000 Offering are given a greater "Weighting." Recognized amount calculated under paragraph 41(b) above. 43. Class Members who do not submit acceptable Proofs of Claim will not share in the settlement proceeds. Class Members who do not either submit a request for exclusion or submit an acceptable Proof of Claim and Release will nevertheless be bound by the Settlement and the Order and Final Judgment of the Court dismissing this Action. 44. Checks will be distributed to Authorized Claimants after all claims have been processed and after the Court has finally approved the Settlement. If any funds remain in the Net Settlement Fund by reason of uncashed checks or otherwise, then, after the Claims Administrato r has made reasonable and diligent efforts to have Class Members who are entitled to participate i n the distribution of the Net Settlement Fund cash their distribution checks, any balance remainin g in the Net Settlement Fund one (1) year after the initial distribution of such funds shall be re- -20-