<PAGE> 1
(RULE 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Davel Communications, Inc.
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(Name of Issuer)
Common Stock, par value $.01
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(Title of Class of Securities)
238341 10 1
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(CUSIP Number)
Alisa M. Singer, Equity Group Investments, L.L.C.,
Two N. Riverside Plaza, Suite 600, Chicago, IL 60606 (312) 466-3196
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 24, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 238341 10 1 13D PAGE 2 OF 58 PAGES
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1 NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
EGI-DM Investments, L.L.C.
(I.R.S. Identification No. has been applied for)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC, 00 - loan from an affiliate
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
1,773,800 (1)
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
1,773,800 (1)
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,773,800 (1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.3%
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14 TYPE OF REPORTING PERSON (See Instructions)
00
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(1) Includes 299,513 shares of Issuer common stock that are issuable to EGI-DM
Investments, L.L.C. upon the exercise of warrants.
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CUSIP NO. 238341 10 1 13D PAGE 3 OF 58 PAGES
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Item 1: Security and Issuer
This Schedule 13D relates to the common stock, par value $.01 per
share (the "Common Stock"), of Davel Communications, Inc., a Delaware
corporation (the "Issuer"). The Issuer's principal executive offices
are at 1429 Massaro Blvd., Tampa, Florida 33619.
Item 2: Identity and Background
(a - c) and (f). This Schedule 13D is being filed by EGI-DM
Investments, L.L.C., a Delaware limited liability company ("EGI-DM").
The members of EGI-DM are Samstock/SIT, L.L.C., a Delaware limited
liability company ("Samstock/SIT"), Sheli Z. Rosenberg and Rod F.
Dammeyer. Samstock/SIT is the managing member of EGI-DM, with the
sole power to direct the vote and disposition of securities held by
EGI-DM. The sole member of Samstock/SIT is Sam Investment Trust, an
Illinois trust ("SIT") formed for the benefit of Samuel Zell and
members of his family. The sole trustee of SIT is Chai Trust Company,
L.L.C., an Illinois limited liability company ("Chai").
The members of the Board of Directors of Chai are Matthew Zell,
Kellie Zell, JoAnn Zell, Sheli Z. Rosenberg, Donald J. Liebentritt,
Leah Zell and Bert Cohen. The executive officers of Chai are as
follows:
Sheli Z. Rosenberg - President and Chief Executive Officer
Donald J. Liebentritt - Vice President
Robert M. Levin - Senior Trust Officer
John Zoeller - Vice President, Chief Financial Officer, Assistant
Trust Officer and Treasurer
The principal business of each of EGI-DM, Samstock/SIT and SIT is
investments. Chai is a regulated trust company and manages trusts.
Following are the principal occupations of the executive officers and
directors of Chai: Mr. Liebentritt is Chief Operating Officer of
Equity Group Investments, L.L.C., a private investment company
("EGI"). Mrs. Rosenberg is President and Chief Executive Officer of
EGI. Mr. Levin is an attorney. Mr. Zoeller is Vice President-Taxes of
EGI. Matthew Zell is President of Pro-Net Solutions, Inc., a retailer
of computer-related equipment. Kellie Zell currently is unemployed.
JoAnn Zell is a physician. Leah Zell is an investment portfolio
manager with Wanger Asset Management. Bert Cohen is a self-employed
investment executive.
The executive officers of Samstock/SIT are as follows:
Samuel Zell - President
Rod F. Dammeyer - Vice President
Sheli Z. Rosenberg - Vice President
Donald J. Liebentritt - Vice President
Greg Stegeman - Treasurer
The principal occupation of Samuel Zell is Chairman of the Board of
Directors of EGI and the principal occupation of Greg Stegeman is
Vice President and Treasurer of EGI. Mr. Dammeyer is Managing
Director-Corporate Investments of EGI. The principal occupations of
the other executive officers of Samstock/SIT are set forth above.
The principal business address for each of EGI-DM, Samstock/SIT, SIT,
Chai, each of the members of Chai's Board of Directors and each of
the executive officers of Chai is Two North Riverside Plaza, Chicago,
IL 60606.
All of the executive officers of Chai and all of the members of the
Board of Directors of Chai are citizens of the United States of
America.
(d) and (e). None of EGI-DM or, to the best knowledge of EGI-DM,
Samstock/SIT, SIT or Chai, and none of the executive officers or
directors of Chai has, during the last five years (i) been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and, as a
result of such proceeding, was, or is, subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
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CUSIP NO. 238341 10 1 13D PAGE 4 OF 58 PAGES
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Item 3. Source and Amount of Funds or Other Consideration
On November 24, 1999, EGI-DM purchased from Samstock, L.L.C., a
Delaware limited liability company ("Samstock"), an aggregate of
1,474,287 shares of Common Stock and warrants to purchase 299,513
shares of Common Stock with an exercise price of $32.00 per share.
The total purchase price paid by EGI-DM to Samstock as consideration
for such securities of the Issuer was $6,560,577.15. The purpose of
the sale by Samstock to EGI-DM was to enable Mrs. Rosenberg and Mr.
Dammeyer, two key members of EGI's executive management, to
participate, in their personal capacities, in the investment
opportunities represented by the Issuer's securities held by
Samstock. Mrs. Rosenberg and Mr. Dammeyer are both Vice Presidents of
Samstock.
The warrants purchased by EGI-DM represent the right to purchase
shares of Common Stock from the following persons, in the amounts set
forth opposite their names:
<TABLE>
<CAPTION>
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MAKER OF WARRANT NUMBER OF WARRANTS
---------------- ------------------
-------------------------------------------------------
<S> <C>
the Issuer 177,043
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David R. Hill 95,766
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Robert D. Hill 8,190
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Michael E. Hayes 1,272
-------------------------------------------------------
Theodore C. Rammelkamp, Jr. 1,724
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A. Jones Yorke 3,880
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Paul B. Demirdjian 4,860
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Michael G. Kouri 4,623
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Marlin E. Turnipseed 2,155
-------------------------------------------------------
</TABLE>
Samstock/SIT owns a 49% membership interest, and each of Mrs.
Rosenberg and Mr. Dammeyer owns a 25.5% membership interest, in
EGI-DM. Samstock/SIT has sole power to direct the vote and
disposition of the securities of the Issuer held by EGI-DM. The funds
used by EGI-DM to purchase the Issuer securities covered hereby
consisted of (i) $785,000 in capital contributions made by
Samstock/SIT, Mr. Dammeyer and Mrs. Rosenberg, which contributions
were made on a pro rata basis based upon their respective membership
interest in EGI-DM, and (ii) the proceeds of a $5,800,000 loan
obtained by EGI-DM from Alpha/ZFT General Partnership, an Illinois
general partnership ("Alpha/ZFT"). The two partners of Alpha/ZFT are
Alphabet Partners and ZFT Partnership. The partners of Alphabet
Partners and ZFT Partnership are various trusts formed for the
benefit of Samuel Zell and members of his family. The loan from
Alpha/ZFT is evidenced by a secured promissory note that matures on
November 30, 2003 and bears interest at 6.25% per annum, which is
payable monthly. Payment of the note is secured by a pledge of the
Issuer securities that were purchased by EGI-DM with the proceeds of
the loan.
Item 4. Purpose of the Transaction
EGI-DM purchased the securities of the Issuer covered hereby on
November 24, 1999 from Samstock for investment purposes. The purpose
of the sale by Samstock to EGI-DM was to enable Mrs. Rosenberg and
Mr. Dammeyer, two key members of EGI's executive
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CUSIP NO. 238341 10 1 13D PAGE 5 OF 58 PAGES
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management, to participate, in their personal capacities, in the
investment opportunities represented by the Issuer's securities held
by Samstock.
At the time the sale by Samstock to EGI-DM was completed, Samstock
was a party to an Investment Agreement and a Shareholders Agreement,
which are described below. In connection with EGI-DM's purchase of
such securities, (i) Samstock assigned to EGI-DM all of Samstock's
rights in and obligations under the Investment Agreement and the
Shareholders Agreement, and EGI-DM assumed all of such rights and
obligations, and (ii) EGI-DM executed a Joinder Agreement agreeing to
become a party to and to be bound by the Investment Agreement and the
Shareholders Agreement. In the description below, all references
contained in the agreements to Samstock have been changed to EGI-DM,
as appropriate, to reflect this assignment and assumption.
INVESTMENT AGREEMENT. Issuer, EGI-DM, David R. Hill and, solely for
the purposes of consenting to the amendment and restatement of a
previous investment agreement, Davel Communications Group, Inc. ("Old
Davel") have entered into an Investment Agreement dated April 19,
1999 (the "Investment Agreement"). Pursuant to the Investment
Agreement, prior to June 29, 2001, (a) except as the same may be
approved by a majority of the Disinterested Directors (as defined in
the Investment Agreement)prior to the taking of such action, neither
the Investor Group nor the Shareholder Group (as such terms are
defined in the Investment Agreement but which include EGI-DM and Mr.
Hill) shall, directly or indirectly, acquire, offer to acquire, agree
to acquire, make any proposal to acquire, become the beneficial owner
of or obtain any rights in respect of any Company Voting Securities
(as defined in the Investment Agreement), by purchase or otherwise,
or take any action in furtherance thereof, if the effect of such
acquisition, agreement or other action would be to increase the
aggregate beneficial ownership of Company Voting Securities of the
Investor Group or the Shareholder Group to such number of Company
Voting Securities that represents or possesses greater than 24% of
the Combined Voting Power (as defined in the Investment Agreement),
in the case of the Investor Group, or 37.0% of the Combined Voting
Power, in the case of the Shareholder Group, (b) no member of the
Investor Group or the Shareholder Group shall, in any way,
participate in, directly or indirectly, any solicitation of proxies
to vote or consent with respect to any Company Voting Securities or
become a participant in an election contest with respect to the
Issuer, except, in each case with the prior approval of the
Disinterested Directors (provided, however, that members of the
Shareholder Group may participate in the solicitation of proxies with
respect to matters recommended by the Issuer's Board of Directors),
(c) except as the same may be approved by a majority of the
Disinterested Directors prior to the taking of such action, neither
the Investor Group nor the Shareholder Group shall (i) form, join in
or participate in the formation of a group with respect to Company
Voting Securities (other than, in the case of the Investor Group, a
group consisting solely of the members of the Investor Group, in the
case of the Shareholder Group, a group consisting solely of the
members of the Shareholder Group, and any group that may be deemed to
exist by virtue of the Shareholders Agreement (as hereinafter
defined)) or (ii) deposit any Company Voting Securities into a voting
trust or subject any Company Voting Securities to any arrangement or
agreement with respect to the voting thereof (other than the
Shareholders Agreement, in the case of the Investor Group, any such
trust, arrangement or agreement the only parties to, or beneficiaries
of, which are members of the Investor Group or Permitted Transferees
(as defined in the Shareholders Agreement) of Investor, and, in the
case of the Shareholder Group, any such trust, arrangement or
agreement the only parties to, or beneficiaries of, which are members
of the Shareholder Group or Permitted Transferees of Shareholder),
(d) neither the Investor Group nor the Shareholder Group shall,
directly or indirectly, assist, encourage or induce any other person
to bid for or acquire outstanding Company Voting Securities in any
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CUSIP NO. 238341 10 1 13D PAGE 6 OF 58 PAGES
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transaction or series of related transactions, unless the
consummation of such transaction or series of related transactions
requires approval of a majority of the Issuer's Board of Directors
and (e) except as the same may be approved by a majority of the
Disinterested Directors prior to the taking of such action, neither
the Investor Group nor the Shareholder Group shall take any action,
alone or in concert with any other person to circumvent the
limitations set forth in the preceding clauses (a), (b), (c) and (d).
The Investment Agreement also provides that if, for any reason, (x)
any person designated by EGI-DM or Mr. Hill as a director of the
Issuer pursuant to the Investment Agreement is not nominated by the
Issuer's Board of Directors for election to the Issuer's Board of
Directors or the Issuer's Board of Directors does not recommend such
person to serve as a director of the Issuer, or (y) the Issuer's
Board of Directors shall change the size of such Board from eight
directors (or seven directors after such time as Justin Maccarone no
longer serves as a director) at such time as EGI-DM is entitled to
designate two directors of the Issuer's Board of Directors or Mr.
Hill is entitled to designate three directors of the Issuers' Board
of Directors, each in accordance with the provisions of the
Investment Agreement, then, upon the happening of such event, all of
the provisions of Article III of the Investment Agreement (which
includes the provisions described in the foregoing paragraph) shall
lapse and no longer be of any force or effect (provided, however,
that the obligations of a party under Article III of the Investment
Agreement shall not lapse and cease to be of any force or effect with
respect to either the Investor Group or the Shareholder Group if any
of its respective members shall have breached any provision of the
Investment Agreement and as a result thereof, one of the events
described in clause (x) or (y) above shall have occurred). The
Investment Agreement also provides that prior to the later of (a)
such time as Investors no longer has any rights to designate two
directors of the Issuer or (b) June 29, 2001, the Investor Group
shall not solicit, encourage, enter into substantive discussions or
negotiations with respect to, or effect any acquisition of any entity
the principal business of which is the operation of a network of
payphones or of any material amount of assets of any such entity;
provided, however, that (i) the Investor Group may solicit, encourage
or enter into discussions or negotiations of which the Issuer is
generally aware with respect to any such acquisition with the intent
of effecting such acquisition through the Issuer, and (ii) the
Investor Group shall not be prohibited from purchasing and owning
equity securities of any such entity so long as such securities in
the aggregate represent no more than five percent of the outstanding
equity securities of such entity.
In addition, pursuant to the Investment Agreement (i) so long EGI-DM,
together with any other members of the Investor Group, owns at least
10% of the Combined Voting Power of all Company Voting Securities,
EGI-DM shall have the right to designate two directors of the Issuer,
(ii) so long as Mr. Hill, together with any other members of the
Shareholder Group, owns at least 10% of the Combined Voting Power of
all Company Voting Securities, Mr. Hill shall have the right to
designate three directors of the Issuer, (iii) prior to June 29,
1999, Mr. Hill shall be entitled to designate two persons to be
elected as Independent Directors (as defined in the Investment
Agreement), provided that such designees are reasonably acceptable to
EGI-DM and, following such date, EGI-DM and Mr. Hill shall jointly
designate the two persons to be elected as Independent Directors,
(iv) so long as EGI-DM is entitled to designate two directors of the
Issuer's Board of Directors or Mr. Hill is entitled to designate
three directors of the Issuer's Board of Directors, each in
accordance with the terms of the Investment Agreement, none of
EGI-DM, Mr. Hill or the Issuer shall take any action to decrease the
size of such Board to less than eight directors or to increase the
size of such Board to more than eight directors and (v) the Issuer
has granted to EGI-DM the right to require
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CUSIP NO. 238341 10 1 13D PAGE 7 OF 58 PAGES
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the registration under the Securities Act of 1933, as amended, of the
shares of Common Stock acquired by EGI-DM.
Mr. Samuel Zell and Mr. F. Philip Handy are members of the Issuer's
Board of Directors. Messrs. Zell and Handy were elected to the
Issuer's Board of Directors as designees of Samstock and continue to
serve on the Issuer's Board of Directors as designees of EGI-DM.
Shareholders Agreement. Samstock, David R. Hill and, solely for the
purpose of Section 2(a), 2(b), 3, 4, 6 and 8 through 19 thereof, the
Issuer and, solely for purposes of consenting to the amendment and
restatement of a previous shareholder agreement, Old Davel, have
entered into a Shareholders Agreement dated December 22, 1998 (the
"Shareholders Agreement"). On November 24, 1999, Samstock assigned
and transferred to EGI-DM all of Samstock's rights and interests in
the Shareholders Agreement. Pursuant to the Shareholders Agreement,
(i) EGI-DM and Mr. Hill have each granted, first to the other and
then to the Issuer, certain rights of first offer with respect to
dispositions of shares of Common Stock beneficially owned by them,
(ii) EGI-DM and Mr. Hill have granted to each other certain co-sale
rights with respect to certain sales by them of Common Stock, (iii)
except as the same may be approved by a majority of the Disinterested
Directors, no member of the Investor Group or the Shareholder Group
shall, directly or indirectly, sell, transfer or otherwise dispose of
any Company Voting Securities to any person or group (other than to
another member of the Investor Group or the Shareholder Group, as the
case may be) prior to June 29, 2001 in a transaction that would, to
the knowledge of the Investor Group or the Shareholder Group, as the
case may be, upon consummation of such sale, transfer or disposition,
result in such person or group beneficially owning Company Voting
Securities that would represent 5% or more of the Combined Voting
Power of all Company Voting Securities, (iv) so long as Mr. Hill is
entitled to designate directors of the Issuer in accordance with the
Investment Agreement, EGI-DM shall vote all Company Voting Securities
owned of record by EGI-DM or with respect to which EGI-DM has voting
control in favor of the election of Mr. Hill's nominees to the
Issuer's Board of Directors and the Independent Director nominees
chosen in accordance with the terms of the Investment Agreement and
(v) so long as EGI-DM is entitled to designate directors of the
Issuer in accordance with the Investment Agreement, Mr. Hill shall
vote all Company Voting Securities owned of record by Mr. Hill or
with respect to which Mr. Hill has voting control in favor of the
election of EGI-DM's nominees to the Issuer's Board of Directors and
the Independent Director nominees chosen in accordance with the terms
of the Investment Agreement.
The Investment Agreement and the Shareholders Agreement are filed as
exhibits to this Schedule 13D and are incorporated herein by
reference. The descriptions of such agreements contained in this
Schedule 13D are qualified in their entireties by reference to such
exhibits.
Subject to the terms of the Investment Agreement and the Shareholders
Agreement, EGI-DM reserves the right to sell or otherwise dispose of
some or all of the shares of Common Stock beneficially owned by it in
the open market, in privately negotiated transactions, through
derivative transactions or otherwise, or to acquire additional shares
of Common Stock, in the open market, in privately negotiated
transactions or otherwise, in each case, depending upon market
conditions and other factors.
Item 5. Interest in Securities of the Issuer
(a) EGI-DM beneficially owns an aggregate of 1,773,800 shares of
Common Stock (including 299,513 shares of Common Stock issuable to
EGI-DM upon the exercise of warrants) representing approximately
16.3% of the total outstanding shares
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CUSIP NO. 238341 10 1 13D PAGE 8 OF 58 PAGES
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of Common Stock. The ownership percentages set forth herein assumes
that there are 10,846,176 shares of Issuer common stock issued and
outstanding, which is the number reported by the Issuer in its
Quarterly Report on Form 10-Q for the quarter ended September 30,
1999. Samstock/SIT owns a 49% membership interest, and each of Mrs.
Rosenberg and Mr. Dammeyer owns a 25.5% membership interest, in
EGI-DM. Samstock/SIT has sole power to vote and dispose of the
securities of the Issuer held by EGI-DM.
In addition to the shares of Common Stock and warrants owned by
EGI-DM, the following individuals also own securities of the Issuer,
in their personal capacities: Samuel Zell is the beneficial owner of
options to purchase 8,000 shares of Common Stock for $24.375 per
share, which options currently are exercisable. Sheli Z. Rosenberg
beneficially owns 20,000 shares of Common Stock and warrants to
purchase 4,311 shares of Common Stock from David R. Hill for $32.00
per share. Donald J. Liebentritt beneficially owns 1,071 shares of
Common Stock and warrants to purchase 231 shares of Common Stock from
David R. Hill for $32.00 per share.
(b) EGI-DM has the sole power to vote or to direct the vote of, and
the sole power to dispose or to direct the disposition of, 1,773,800
shares of Common Stock (assuming the exercise of warrants to purchase
299,513 shares of Common Stock). Sheli Z. Rosenberg has the sole
power to vote or to direct the vote of, and the sole power to dispose
or to direct the disposition of, the 20,000 shares of Common Stock
and warrants to purchase 4,311 shares of Common Stock that are owned
by her. Donald J. Liebentritt has the sole power to vote or to direct
the vote of, and the sole power to dispose or to direct the
disposition of, the 1,071 shares of Common Stock and the warrants to
purchase 231 shares of Common Stock owned by him. Samuel Zell has the
sole power to vote or to direct the vote of, and the sole power to
dispose or to direct the disposition of, 8,000 shares of Common Stock
(assuming the exercise of options to purchase 8,000 shares of Common
Stock).
(c) On November 19, 1999, Samstock received an additional 59,056
shares of Common Stock and warrants to acquire an additional 12,729
shares of Common Stock from EGI-Davel Investors, L.L.C. ("EGI-Davel")
as a pro rata liquidating distribution from EGI-Davel. As a result of
such distribution, Samstock's aggregate ownership in securities of
the Issuer consisted of 1,474,287 shares of Common Stock and warrants
to acquire an additional 299,513 shares of Common Stock, all of which
securities were sold to EGI-DM on November 24, 1999. In connection
with the November 19, 1999 pro rata liquidating distribution effected
by EGI-Davel, Sheli Z. Rosenberg received the 20,000 shares of Common
Stock and the warrants to purchase 4,311 shares of Common Stock
described in Item 5(a) above, and Donald J. Liebentritt received the
1,071 shares of Common Stock and the warrants to purchase 231 shares
of Common Stock described in Item 5(a) above. Except for the
foregoing, EGI-DM has not effected any transactions in the Common
Stock within the past 60 days.
(d) and (e). Not applicable.
Item 6 Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
The Issuer, EGI-DM (as assignee of Samstock), David R. Hill and,
solely for the purpose of consenting to the amendment and restatement
of a previous investment agreement, Old Davel are parties to the
Investment Agreement and EGI-DM (as assignee of Samstock), David R.
Hill and, solely for the purposes of Sections 2(a), 2(b), 3, 4, 6 and
8 through 19 thereof, the Issuer and, solely for purposes of
consenting to the amendment and restatement of a previous shareholder
agreement, Old Davel are parties to the Shareholders Agreement. The
Investment Agreement and the Shareholders Agreement are filed as
exhibits to this Schedule 13D and are incorporated herein by
reference.
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CUSIP NO. 238341 10 1 13D PAGE 9 OF 58 PAGES
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The Issuer and Samstock have entered into warrants to purchase Common
Stock ("Issuer Warrants") as described in Item 3. above. The Issuer
Warrants were sold, assigned and transferred to EGI-DM on November
24,1999. A form of the Issuer Warrant is filed as an exhibit to this
Schedule 13D and is incorporated herein by reference.
Each of David R. Hill, Robert D. Hill, Michael E. Hayes, Theodore C.
Rammelkamp, Jr., A. Jones Yorke, Paul B. Demirdjian, Michael G. Kouri
and Marlin E. Turnipseed and Samstock entered into warrants to
purchase Common Stock ("Executive Warrants") as described in Item 3.
above. The Executive Warrants were sold, assigned and transferred to
EGI-DM on November 24,1999. A form of an Executive Warrant is filed
as an exhibit to this Schedule 13D and is incorporated herein by
reference.
Item 7. Materials to be Filed as Exhibits
Exhibit 1 Investment Agreement dated April 19, 1999 among Davel
Communications, Inc., Samstock, L.L.C., EGI-Davel
Investors, L.L.C., David R. Hill and, solely for
purposes of consenting to the amendment and restatement
of an Investment Agreement dated December 22, 1998,
Davel Communications Group, Inc.
Exhibit 2 Shareholders Agreement dated December 22, 1998 by and
among Samstock, L.L.C., EGI - Davel Investors, L.L.C.,
David R. Hill and, solely for purposes of Sections
2(a), 2(b), 3, 4, 6 and 8 through 19 thereof, Davel
Communications, Inc. and, solely for purposes of the
amendment and restatement of a Shareholders Agreement
dated June 29, 1998, Davel Communications Group, Inc.
Exhibit 3 Form of Warrant to Purchase Shares of Common Stock from
Davel Communications, Inc.
Exhibit 4 Form of Warrant to Purchase Shares of Common Stock from
an "Executive"
SIGNATURES
----------
After reasonable inquiry, and the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
DATED: December 2, 1999.
EGI-DM INVESTMENTS, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
By: Samstock/SIT, L.L.C. its managing
member
By: /s/ Donald J. Liebentritt,
----------------------------------
its Vice President
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CUSIP NO. 238341 10 1 13D PAGE 10 OF 58 PAGES
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
NUMBER
-------
1 Investment Agreement dated April 19, 1999 among Davel
Communications, Inc., Samstock, L.L.C., EGI-Davel
Investors, L.L.C., David R. Hill and, solely for purposes
of consenting to the amendment and restatement of an
Investment Agreement dated December 22, 1998, Davel
Communications Group, Inc.
2 Shareholders Agreement dated December 22, 1998 by and among
Samstock, L.L.C., EGI - Davel Investors, L.L.C., David R.
Hill and, solely for purposes of Sections 2(a), 2(b), 3, 4,
6 and 8 through 19 thereof, Davel Communications, Inc. and,
solely for purposes of the amendment and restatement of a
Shareholders Agreement dated June 29, 1998, Davel
Communications Group, Inc.
3 Form of Warrant to Purchase Shares of Common Stock from
Davel Communications, Inc.
4 Form of Warrant to Purchase Shares of Common Stock from an
"Executive"
<PAGE> 1
EXHIBIT 1
INVESTMENT AGREEMENT
Investment Agreement dated April 19, 1999 (this "Agreement"), among
Davel Communications, Inc., a Delaware corporation (the "Company"), Samstock,
L.L.C., a Delaware limited liability company, and EGI-Davel Investors, L.L.C., a
Delaware limited liability company (collectively, "Investor"), David R. Hill, an
individual residing in the State of Florida ("Shareholder") and, solely for
purposes of consenting to the amendment and restatement of the Original Restated
Agreement (as defined below), Davel Communications Group, Inc., an Illinois
corporation ("Old Davel"). Investor, Shareholder and Old Davel are parties to an
Investment Agreement dated as of June 29, 1998 (the "Original Agreement"). The
Original Agreement was amended and restated on December 22, 1998, by an
agreement (the "Original Restated Agreement") entered into among the Company,
Investor Shareholder and Old Davel. The parties desire to amend and restate the
Original Restated Agreement as set forth herein.
W I T N E S S E T H:
WHEREAS, Investor and Old Davel are parties to a Stock Purchase
Agreement dated May 14, 1998 (the "Company Stock Purchase Agreement") pursuant
to which, among other things, the Company issued and sold, and Investor
purchased from the Company, 1,000,000 shares of common stock, no par value, of
Old Davel ("Old Davel Common Stock");
WHEREAS, Investor and Shareholder are parties to a Stock Purchase
agreement dated May 14, 1998 (the "Shareholder Stock Purchase Agreement")
pursuant to which, among other things, Shareholder has sold, and Investor
purchased from Shareholder, 500,000 shares of Old Davel Common Stock;
WHEREAS, Investor and certain directors and members of management of
the Company (the "Management Shareholders") are parties to a Stock Purchase
Agreement pursuant to which, among other things, the Management Shareholders
sold, and Investor purchased from the Management Shareholders, 123,900 shares of
Common Stock (such Stock Purchase Agreement, together with the Company Stock
Purchase Agreement and the Shareholder Stock Purchase Agreement, the "Stock
Purchase Agreements");
WHEREAS, the closing of the transactions contemplated by each of the
Stock Purchase Agreements occurred concurrently with the execution and delivery
of the Original Agreement;
WHEREAS, concurrently with the execution and delivery of the Original
Agreement, Investor and Shareholder have executed and delivered a Shareholders
Agreement of even date therewith (the "Shareholders Agreement");
WHEREAS, the Company Stock Purchase Agreement and the Shareholder Stock
Purchase Agreement required that the Original Agreement be executed and
delivered by the Company, Investor and Shareholder at or prior to the closing of
the transactions contemplated by such agreements;
WHEREAS, as of the date of the Original Agreement, Old Davel
consummated a business combination (the "Business Combination") pursuant to
which it became an indirect, wholly owned subsidiary of the Company, all of the
outstanding shares of Old Davel Common Stock were
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<PAGE> 2
exchanged for shares of common stock, par value $.01 per share, of the Company
(the "Common Stock") and the Company succeeded to the business of Old Davel;
WHEREAS, the parties entered into the Original Restated Agreement on
December 22, 1998 and also amended and restated the Shareholders Agreement on
such date (such amended and restated agreement being referred to herein as the
"Restated Shareholders Agreement"); and
WHEREAS, the parties desire to amend and restate the Original Restated
Agreement in its entirety as set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Affiliate" means, with respect to any person, any other person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such first person. As used in this
definition "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management or policies, whether
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.
1.2 The terms "beneficial ownership," "person" and "group" shall have
the respective meanings ascribed to such terms pursuant to Regulation 13D-G
adopted by the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof. The term "affiliate" shall have the meaning ascribed to such
term pursuant to Rule 12b-2 under the Exchange Act, as in effect on the date
hereof.
1.3 The "Combined Voting Power" at any measurement date shall mean the
total number of votes which could have been cast in an election of directors of
the Company had a meeting of the shareholders of the Company been duly held
based upon a record date as of the measurement date if all Company Voting
Securities then outstanding and entitled to vote at such meeting were present
and voted to the fullest extent possible at such meeting.
1.4 "Company Voting Securities" shall mean, collectively, Common Stock
(or any other security into which Common Stock is exchanged or converted), any
preferred stock of the Company (or any successor to the Company) that is
entitled to vote generally for the election of directors, any other class or
series of Company securities (or securities of any successor to the Company)
that is entitled to vote generally for the election of directors and any other
securities, warrants, options or rights of any nature (whether or not issued by
the Company or any successor to the Company) that are convertible into,
exchangeable for, or exercisable for the purchase of, or otherwise give the
holder thereof any rights in respect of, Common Stock (or any other security
into which Common Stock is exchanged or converted), preferred stock of the
Company (or any successor to the Company) that is entitled to vote generally for
the election of directors of the Company or any successor thereto, or
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<PAGE> 3
any other class or series of Company securities that is entitled to vote
generally for the election of directors of the Company or any successor thereto.
1.5 "Disinterested Director" means Independent Directors who, with
respect to any contract or transaction being considered or voted upon by the
Company's Board of Directors, have no financial interest in such contract or
transaction, either directly or by virtue of serving as an officer or director
of any other corporation, partnership, association or other organization that is
a party to such contract or transaction; provided, however, an Independent
Director shall not be deemed to have a financial interest in any contract or
transaction by virtue of holding Common Stock or options to acquire Common
Stock.
1.6 "Effective Date" means the date of this Agreement.
1.7 "Independent Director" means a director of the Company who (i) is
not a current or former employee or officer of the Company, (ii) is not serving
as a designee of Investor or Shareholder pursuant to Section 4.3 or 4.4 hereof,
and (iii) does not beneficially own 5% or more of any class of capital stock of
the Company.
1.8 "Investor Group" means (i) Investor, (ii) any member of Investor
and (iii) any Affiliate of Investor (other than the Company) or any member of
Investor; provided, however, that publicly-held entities that would otherwise
fall within this definition (a "Public Investor Affiliate") shall not be treated
as members of the Investor Group hereunder unless any member of the Investor
Group (which, for purposes hereof, shall exclude such publicly-held entity) took
any action, directly or indirectly, to assist, encourage or induce such entity
in taking the relevant action to be attributed to the Investor Group hereunder.
1.9 "Shareholder Group" means (i) Shareholder and (ii) any Affiliate
or Shareholder Family Entity (as defined in the Shareholder's Agreement) of
Shareholder (other than the Company).
1.10 "Shares" means all shares of Company Voting Securities, whether
now owned or hereafter acquired.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Investor represents and warrants to the Company and Shareholder as
follows:
(a) Investor is a limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized. Investor has the requisite power and authority to enter into this
Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized by all necessary action on
the part of Investor, duly executed and delivered by Investor and constitutes
the legal, valid and binding obligation of Investor, enforceable against it in
accordance with its terms hereof.
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<PAGE> 4
(c) Neither the execution and delivery of this Agreement nor the
performance by Investor of its obligations hereunder will conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under (i) the organizational documents of Investor, or (ii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Investor or its properties or assets, other than, in the case of clause (ii),
any such conflicts, violations or defaults that, individually or in the
aggregate, would not prevent Investor from performing its obligations under this
Agreement in any material respect.
(d) As of the Effective Date, Investor beneficially owns the number of
Shares set forth opposite Investor's name on Exhibit A attached hereto.
2.2 Shareholder represents and warrants to the Company and Investor as
follows:
(a) This Agreement has been duly authorized by all necessary action on
the part of Shareholder, duly executed and delivered by Shareholder and
constitutes a valid and binding obligation of Investor, enforceable against him
in accordance with its terms.
(b) Neither the execution and delivery of this Agreement nor the
performance by Shareholder of his obligations hereunder will conflict with, or
result in any violation of, or default (with or without notice or lapse or time,
or both) under any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Shareholder or his properties or assets, other than any
such conflicts, violations or defaults that, individually or in the aggregate,
would not prevent Shareholder from performing his obligations under this
Agreement in any material respect.
(c) As of the Effective Date, Shareholder beneficially owned the number
of Shares and options to purchase Shares that are set forth opposite
Shareholder's name on Exhibit A attached hereto.
2.3 The Company represents and warrants to Investor and Shareholder as
follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is organized.
The Company has the requisite power and authority to enter into this Agreement
and perform its obligations hereunder.
(b) This Agreement has been duly authorized by all necessary action on
the part of the Company, duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
it in accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder will conflict with, or
result in any violation of, or default (with or without notice or lapse or time,
or both) under any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or its properties or assets, other than any
such conflicts, violations or defaults that, individually or in the aggregate,
would not prevent the Company from performing its obligations under this
Agreement in any material respect.
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<PAGE> 5
ARTICLE III
STANDSTILL AGREEMENT
3.1 Acquisition of Company Voting Securities. Except as the same may be
approved by a majority of the Disinterested Directors in a specific resolution
to that effect adopted prior to the taking of such action, prior to the third
anniversary of the date of the Original Agreement, neither the Investor Group
nor the Shareholder Group shall, directly or indirectly, acquire, offer to
acquire, agree to acquire, make any proposal to acquire, become the beneficial
owner of or obtain any rights in respect of any Company Voting Securities, by
purchase or otherwise, or take any action in furtherance thereof, if the effect
of such acquisition, agreement or other action would be (either immediately or
upon consummation of any such acquisition, agreement or other action, or
expiration of any period of time provided in any such acquisition, agreement or
other action) to increase the aggregate beneficial ownership of Company Voting
Securities by the Investor Group or the Shareholder Group to such number of
Company Voting Securities that represents or possesses greater than 24.0 percent
of the Combined Voting Power, in the case of the Investor Group, and 37.0
percent of the Combined Voting Power of all Company Voting Securities, in the
case of the Shareholder Group. Notwithstanding the foregoing maximum
limitations, (a) no member of the Investor Group or the Shareholder Group shall
be obligated to dispose of any Company Voting Securities beneficially owned that
exceed such maximum limitations if, and solely to the extent that, its
beneficial ownership is or will be increased solely as a result of (i) a
repurchase of any Company Voting Securities by the Company or any of its
subsidiaries if such repurchase was approved by a majority of the Disinterested
Directors or (ii) in the case of any member of the Investor Group, the purchase
of Company Voting Securities by any Public Investor Affiliate unless any member
of the Investor Group took any action, directly or indirectly, to assist,
encourage or induce such Public Investor Affiliate to make such purchase and (b)
the foregoing shall not prohibit any purchase of Company Voting Securities
directly from the Company pursuant to the exercise of any rights,
oversubscription rights or standby purchase obligations in connection with
rights offerings by the Company or exercise of any stock options granted by the
Company or pursuant to any rights set forth in the Restated Shareholders
Agreement. For purposes of calculating the maximum limitations specified above,
all Company Voting Securities that are the subject of an agreement, arrangement
or understanding pursuant to which the Investor Group (or any member thereof) or
the Shareholder Group (or any member thereof) has the right to obtain beneficial
ownership of such securities in the future shall also be deemed to be
outstanding and beneficially owned by the Investor Group (or the applicable
member thereof) or the Shareholder Group (or the applicable member thereof),
respectively.
3.2 Proxy Solicitations, Etc. Prior to the third anniversary of the
date of the Original Agreement, no member of the Investor Group or the
Shareholder Group shall, in any way, participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in Regulation 14A
promulgated under the Exchange Act) to vote or consent with respect to any
Company Voting Securities or become a "participant" in an "election contest" (as
such terms are used in Rule 14a-11 under the Exchange Act) with respect to the
Company, except, in each case, with the prior approval of the Disinterested
Directors; provided, however, that members of the Shareholder Group may
participate in the solicitation of proxies with respect to matters recommended
by the Company's Board of Directors.
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<PAGE> 6
3.3 No Groups, Voting Trusts, Etc. Except as the same may be approved
by a majority of the Disinterested Directors in a specific resolution to that
effect adopted prior to the taking of such action, prior to the third
anniversary of the date of the Original Agreement, neither the Investor Group
nor the Shareholder Group shall (a) form, join in or participate in the
formation of a group with respect to any Company Voting Securities, other than
(i) in the case of the Investor Group, a group consisting solely of the members
of the Investor Group, (ii) in the case of the Shareholder Group, a group
consisting solely of the members of the Shareholder Group, and (iii) any group
that may be deemed to exist by virtue of the Restated Shareholders Agreement; or
(b) deposit any Company Voting Securities into a voting trust or subject any
Company Voting Securities to any arrangement or agreement with respect to the
voting thereof, other than (i) the Restated Shareholders Agreement, (ii) in the
case of the Investor Group, any such trust, arrangement or agreement the only
parties to, or beneficiaries of, which are members of the Investor Group or
Permitted Transferees (as defined in the Restated Shareholders Agreement) of
Investor and (iii) in the case of the Shareholder Group, any such trust,
arrangement or agreement the only parties to, or beneficiaries of, which are
members of the Shareholder Group or Permitted Transferees of Shareholder.
3.4 No Solicitation of Bidders. Prior to the third anniversary of the
date of the Original Agreement, neither the Investor Group nor the Shareholder
Group shall, directly or indirectly, assist, encourage or induce any other
person to bid for or acquire outstanding Company Voting Securities in any
transaction or series of related transactions, unless the consummation of such
transaction or series of related transactions requires approval of a majority of
the Board of Directors.
3.5 Non-Circumvention. Except as the same may be approved by a majority
of the Disinterested Directors in a specific resolution to that effect adopted
prior to the taking of such action, prior to the third anniversary of the date
of the Original Agreement, neither the Investor Group nor the Shareholder Group
shall take any action, alone or in concert with any other person to circumvent
the limitations set forth in Sections 3.1, 3.2, 3.3 and 3.4 of this Agreement.
3.6 Investor Nominees. If, for any reason, (i) any person designated by
Investor as a director of the Company pursuant to Article IV hereof is not
nominated by the Company's Board of Directors for election to the Company's
Board of Directors or the Company's Board of Directors does not recommend such
person to serve as a director of the Company, or (ii) the Board of Directors of
the Company shall change the size of the Board of Directors of the Company from
eight directors (or from seven directors after such time as Justin Maccarone no
longer serves as a director) at such time as Investor is entitled to designate
two directors of the Company's Board of Directors in accordance with the
provisions of Section 4.3 hereof or Shareholder is entitled to designate three
directors of such Board in accordance with Section 4.4 hereof, then, upon the
happening of such event, all of the provisions of this Article III shall lapse
and no longer be of any force or effect; provided, however, that the obligations
of a party under this Article III shall not lapse and cease to be of any force
or effect with respect to either the Investor Group or the Shareholder Group if
any of its respective members shall have breached any provision of this
Agreement and as a result thereof, one of the events described in clause (i) or
(ii) above shall have occurred.
3.7 Shareholder Nominees. If, for any reason, (i) any person designated
by Shareholder as a director of the Company pursuant to Article IV hereof is not
nominated by the Company's Board of Directors for election to the Company's
Board of Directors or the Company's Board of Directors
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<PAGE> 7
does not recommend such person to serve as a director of the Company, or (ii)
the Board of Directors of the Company shall change the size of the Board of
Directors of the Company from eight directors (or from seven directors after
such time as Justin Maccarone no longer serves as a director) at such time as
Investor is entitled to designate two directors of the Company's Board of
Directors in accordance with the provisions of Section 4.3 hereof or Shareholder
is entitled to designate three directors of such Board in accordance with
Section 4.4 hereof, then, upon the happening of such event, all of the
provisions of this Article III shall lapse and no longer be of any force or
effect; provided, however, that the obligations of a party under this Article
III shall not lapse and cease to be of any force or effect with respect to
either the Investor Group or the Shareholder Group if any of its respective
members shall have breached any provision of this Agreement and as a result
thereof, one of the events described in clause (i) or (ii) above shall have
occurred.
3.8 Acquisitions by Investor. Prior to the later of (i) such time as
Investor no longer has any rights under Section 4.3 or (ii) the third
anniversary of the date of the Original Agreement, the Investor Group shall not
solicit, encourage, enter into substantive discussions or negotiations with
respect to, or effect any acquisition of any entity the principal business of
which is the operation of a network of payphones or of any material amount of
assets of any such entity; provided, however, that (i) the Investor Group may
solicit, encourage or enter into discussions or negotiations of which the
Company is generally aware with respect to any such acquisition with the intent
of effecting such acquisition through the Company and (ii) the Investor Group
shall not be prohibited from purchasing and owning equity securities of any such
entity so long as such securities in the aggregate represent no more than five
percent of the outstanding equity securities of such entity. Investor represents
and warrants that from May 14, 1998 through the date of the Original Agreement,
the Investor Group did not solicit, encourage or enter into substantive
discussions or negotiations with respect to any such acquisition except with the
intent of effecting such acquisition through the Company.
ARTICLE IV
VOTING OF COMPANY VOTING SECURITIES AND RELATED MATTERS
4.1 Shareholder Meetings. So long as Shareholder is entitled to
designate three directors of the Company's Board of Directors in accordance with
Section 4.4 hereof, each member of the Investor Group that is a holder of record
of Company Voting Securities shall be present, and each member of the Investor
Group that is a beneficial owner of Company Voting Securities shall cause the
holder of record of such Company Voting Securities to be present, in person or
by proxy, at all meetings of shareholders of the Company so that all Company
Voting Securities owned of record or beneficially by the Investor Group may be
counted for the purpose of determining the presence of a quorum at such
meetings. So long as Investor is entitled to designate two directors of the
Company's Board of Directors in accordance with Section 4.3 hereof, each member
of the Shareholder Group that is a holder of record of Company Voting Securities
shall be present, and each member of the Shareholder Group that is a beneficial
owner of Company Voting Securities shall cause the holder of record of such
Company Voting Securities to be present, in person or by proxy, at all meetings
of shareholders of the Company so that all Company Voting Securities owned of
record or beneficially by the Shareholder Group may be counted for the purpose
of determining the presence of a quorum at such meetings.
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<PAGE> 8
4.2 Election of Board of Directors. (a) So long as Investor is entitled
to designate two directors of the Company's Board of Directors in accordance
with the provisions of Section 4.3 hereof, except to the extent otherwise
provided herein, the Company shall take all reasonably necessary or appropriate
action to assist in the nomination and election as directors of the two
individuals designated by Investor to be elected as directors of the Company.
(b) So long as Shareholder is entitled to designate three directors of
the Company's Board of Directors in accordance with the provisions of Section
4.4 hereof, except to the extent otherwise provided herein, the Company shall
take all reasonably necessary or appropriate action to assist in the nomination
and election as directors of the three individuals specified in Section 4.4
below designated by Shareholder to be elected as directors of the Company.
(c) So long as Investor is entitled to designate two directors of the
Company's Board of Directors in accordance with the provisions of Section 4.3
hereof or Shareholder is entitled to designate three directors of such Board
pursuant to Section 4.4 hereof, none of Investor, Shareholder or the Company
shall take any action to decrease the size of such Board to less than eight
directors (or from seven directors at such time as Justin Maccarone no longer
serves as a director) or to increase the size of such Board to more than eight
directors (or from seven directors at such time as Justin Maccarone no longer
serves as a director).
(d) So long as Shareholder, individually, or Shareholder and Investor,
acting jointly, are entitled to designate three Independent Directors (or two
Independent Directors at such time as Justin Maccarone no longer serves as a
director) in accordance with the provisions of Section 4.5 hereof, except to the
extent otherwise provided herein, the Company shall take all necessary or
appropriate action to assist in the nomination and election as directors of the
two persons designated by Shareholder or Shareholder and Investor, as the case
may be, to be elected as Independent Directors.
(e) So long as Investor is entitled to designate two directors of the
Company's Board of Directors in accordance with the provisions of Section 4.3
hereof (each such director, an "Investor Designee") and Shareholder is entitled
to designate three directors of the Company's Board of Directors in accordance
with Section 4.4 hereof (each such director, a "Shareholder Designee"), each
committee of the Board of Directors shall consist of at least three directors,
and (other than any committee consisting entirely of Independent Directors and
other than the Executive Committee) shall include no more than one Investor
Designee and no more than one Shareholder Designee. The Executive Committee
shall include no more than one Investor Designee, but may include more than one
Shareholder Designee.
4.3 Investor Board Nominees. So long as the Investor Group beneficially
owns at least 10% of the Combined Voting Power of all Company Voting Securities,
Investor shall have the right to designate two directors of the Company;
provided, however, that at such time as the Investor Group shall no longer
beneficially own at least 10% of the Combined Voting Power of all Company Voting
Securities, (i) Investor shall cease to have the right to designate any
directors of the Company, (ii) Investor's rights under this Article IV shall
terminate and (iii) Investor shall cause its two designees to resign from the
Board of Directors of the Company.
4.4 Shareholder Board Nominees. So long as the Shareholder Group
beneficially owns at least 10% of the Combined Voting Power of all Company
Voting Securities, Shareholder shall
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<PAGE> 9
have the right to designate three directors of the Company; provided, however,
that at such time as the Shareholder Group shall no longer beneficially own at
least 10% of the Combined Voting Power of all Company Voting Securities, (i)
Shareholder shall cease to have the right to designate any directors of the
Company, (ii) Shareholder's rights under this Article IV shall terminate and
(iii) Shareholder shall cause its three designees to resign from the Board of
Directors of the Company.
4.5 Independent Directors. Prior to the first anniversary of the date
of the Original Agreement, Shareholder shall be entitled to designate two
persons to be elected as Independent Directors, provided that such designees are
reasonably acceptable to Investor (it being understood that at least one
non-employee director of the Company holding such position as of May 14, 1998
shall be acceptable to Investor). Following the first anniversary of the date of
the Original Agreement, Investor and Shareholder shall jointly designate the two
persons to be elected as Independent Directors. Investor and Shareholder shall
cause their designees on the Board of Directors of the Company to take all
reasonably necessary or appropriate action to assist in the nomination and
election as directors of all such nominees as may be selected to serve as
Independent Directors in the manner described above. From and after the date of
the Original Restated Agreement and until the first anniversary of the date of
the Original Restated Agreement, Justin Maccarone will serve as a third
Independent Director as a designee of UBS Capital II LLC.
ARTICLE V
REGISTRATION RIGHTS
5.1 Definitions. For purposes of this Article V:
(a) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act").
(b) The term "Registrable Securities" means shares of Common Stock
held, from time to time, by any member of the Investor Group.
(c) The term "Holder" means any member of the Investor Group or (other
than for purposes of Section 5.2) the Shareholder Group that owns of record
Registrable Securities.
(d) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Act.
(e) The term "Shelf Registration Statement" means a registration
statement intended to effect a shelf registration in connection with a Rule 415
Offering.
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5.2 Shelf Registrations. No later than ninety (90) days after the
Company becomes eligible to use Form S-3 under the Act to register Shares for
resale by shareholders, the Company shall, upon the written request of Investor,
prepare and file with the SEC a Shelf Registration Statement (which shall
include pledgees of any selling shareholder under the caption "plan of
distribution" contained in such Shelf Registration Statement) with respect to
all Shares acquired by Investor pursuant to the Purchase Agreements and use its
reasonable efforts to cause such Shelf Registration Statement to become
effective and keep such registration statement effective until such time as such
Shares have been sold or disposed of thereunder or sold, transferred or
otherwise disposed of (other than pursuant to a pledge of such Registrable
Securities) to a person that is not a Holder. Notwithstanding the foregoing, if
the Company shall furnish to Investor a certificate signed by the Chief
Executive, Chief Operating, or Chief Financial Officer of the Company stating
that, in the good faith judgment of a majority of the Disinterested Directors,
it would be materially detrimental to the Company for such registration
statement to be filed, the Company shall have the right to defer such filing for
a period of not more than 120 days after receipt of Investor's request;
provided, however, that the Company may not utilize this right more than once in
any 12-month period.
5.3 Incidental Registration. If the Company proposes to register any of
its voting securities ("Other Securities") for public sale under the Securities
Act, on a form and in a manner which would permit registration of Registrable
Securities for sale to the public under the Securities Act, it will give prompt
written notice to each Holder of its intention to do so, and upon the written
request of a Holder delivered to the Company within fifteen Business Days after
the giving of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such Holder and the intended method of
disposition thereof) the Company will use its best efforts to effect, in
connection with the registration of the Other Securities, the registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register by such Holder, to the extent required to permit the
disposition (in accordance with the intended method or methods thereof as
aforesaid) of the Registrable Securities so to be registered, provided that:
(a) if, at any time after giving such written notice of its intention
to register any Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, the managing
underwriters of such offering or offerings determine that the aggregate amount
of shares to be registered by the Holders of the Registrable Securities could
materially and adversely affect such offering, then the Company may reduce the
number of Registrable Securities of such Holders to be included in such
offering; provided, that such Holders will be entitled to register the maximum
number of Registrable Securities, together with those shares of Common Stock
held by any other person exercising registration rights, which the underwriters
deem advisable and the Company will allocate the number of Registrable Shares to
be registered for each such Holder on a pro rata basis in accordance with the
number of shares each Holder initially requested to be sold;
(b) the Company shall not be required to effect any registration of
Registrable Securities under this Section 5.3 incidental to the registration of
any of its securities in connection with mergers, acquisitions, exchange offers,
dividend reinvestment plans or stock option or other employee benefit plans; and
Page 20 of 58
<PAGE> 11
(c) Holder, cumulatively, shall have the right to exercise registration
rights pursuant to this Section 5.3 without limit during the term hereof.
No registration of Registrable Securities effected under this Section 5.3 shall
relieve the Company of its obligation to effect registrations of Registrable
Securities pursuant to Section 5.2.
5.4 Additional Obligations of the Company. Whenever the Company is
required to effect a registration statement pursuant to Section 5.2 or 5.3, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered thereby.
(b) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities covered by such
registration statement owned by them.
(c) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such states or other jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions where it is not so subject.
(d) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and then
use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section 5.4, each Holder acknowledges that the Company shall have the right to
suspend the use of the prospectus forming a part of a registration statement if
such offering would interfere with a pending corporate transaction or for other
reasons until such time as an amendment to the registration statement has been
filed by the Company and declared effective by the SEC, or until such time as
the Company has filed an appropriate report with the SEC pursuant to the
Exchange Act. Each Holder hereby covenants that it will (a) keep any such notice
strictly confidential, and (b) not sell any shares of Common Stock pursuant to
such prospectus during the period commencing at the time at which the Company
gives the Holder notice of the suspension of the use of such prospectus and
ending at the time the Company gives the Holder notice that it may thereafter
effect sales pursuant to such prospectus. The Company shall only be able to
suspend the use of such prospectus for periods aggregating no more than 90 days
in respect of any registration.
5.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself,
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<PAGE> 12
the Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities and as may be required from time to time to keep such
registration current.
5.6 Expenses of Registration. All expenses incurred by or on behalf of
the Company in connection with registrations, filings or qualifications pursuant
to Section 5.3 including, without limitation, all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company, shall be borne by the Company. In no event shall the
Company be obligated to bear any underwriting discounts or commissions or
brokerage fees or commissions relating to Registrable Securities or the fees and
expenses of counsel to the selling Holders.
5.7 Indemnification. In the event registration of any Registrable
Securities hereunder:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and the affiliates of such Holder, and their respective
directors, officers, general and limited partners, agents and representatives
(and the directors, officers, affiliates and controlling persons thereof), and
each other person, if any, who controls such Holder within the meaning of the
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus (but only if such
statement is not corrected in the final prospectus) contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such omission is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, affiliate or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 5.7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
or on behalf of any such Holder or its Affiliates or controlling person. Each
indemnified party shall furnish such information regarding itself or the claim
in question as an indemnifying party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other
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<PAGE> 13
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.7(b) in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 5.7(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of such
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this Section 5.7(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
5.7 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5.7, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 5.7 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 5.7.
The indemnified party shall have the right, but not the obligation, to
participate in the defense of any action referred to above through counsel of
its own choosing and shall have the right, but not the obligation, to assert any
and all separate defenses, cross claims or counterclaims which it may have, and
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel has been
specifically authorized in advance by the indemnifying party, (ii) there is a
conflict of interest that prevents counsel for the indemnifying party from
adequately representing the interests of the indemnified party or there are
defenses available to the indemnified party that are different from, or
additional to, the defenses that are available to the indemnifying party, (iii)
the indemnifying party does not employ counsel that is reasonably satisfactory
to the indemnified party within a reasonable period of time, or (iv) the
indemnifying party fails to assume the defense or does not reasonably contest
such action in good faith, in which case, if the indemnified party notifies the
indemnifying party that it elects to employ separate counsel, the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the indemnified party and the reasonable fees and expenses of such separate
counsel shall be borne by the indemnifying party; provided, however, that, the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to, to the extent
reasonably necessary to employ local counsel, one firm acting as local counsel)
for all indemnified parties.
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<PAGE> 14
(d) The obligations of the Company and the Holders under this Section
5.7 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article V.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
5.8 Reports Under the Exchange Act. With a view to making available to
the holders the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) use its reasonable best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144;
(b) use its reasonable best efforts to file with the SEC in a timely
manner all reports and other documents required under the Act and the Exchange
Act; and
(c) furnish to any Holder forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144, or as to whether it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information (and the Company shall take such
action) as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
5.9 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Article V may only be
assigned by a Holder to a transferee or assignee of any Registrable Securities
if such transferee or assignee is a member of the Investor Group or the
Shareholder Group, as the case may be.
5.10 Waiver Procedures. The observance by the Company of any provision
of this Article V may be waived (either generally or in a particular instance
and either retroactively or prospectively) with the written consent of the
Holders of a majority of the Registrable Securities, and any waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities.
5.11 "Market Stand-off" Agreement. Any Holder of Registrable
Securities, if requested by an underwriter of any registered public offering of
Company securities being sold in a firm commitment underwriting, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other Company
Voting Securities) held by such Holder other than shares of Registrable
Securities included in the registration during the seven days prior to, and
during a period of up to 180 days following, the effective date of the
registration statement. Such agreement shall be in writing in a form reasonably
satisfactory to the Company and such underwriter. The Company may impose
Page 24 of 58
<PAGE> 15
stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of the required stand-off period.
ARTICLE VI
MISCELLANEOUS
6.1 Term of Agreement; Certain Provisions Regarding Termination. Unless
this Agreement specifically provides for earlier or later termination with
respect to any particular right or obligation, this Agreement shall terminate
(a) in the case of the Investor Group, if the Investor Group beneficially owns
Company Voting Securities in the aggregate representing less than 5% of the
Combined Voting Power of all Company Voting Securities, and (b) in the case of
the Shareholder Group, if the Shareholder Group beneficially owns Company Voting
Securities in the aggregate representing less than 5% of the Combined Voting
Power of all Company Voting Securities.
6.2 Legend and Stop Transfer Order. To assist in effectuating the
provisions of this Agreement, each of Investor and Shareholder hereby consents
to the placement, in connection with the transactions contemplated by the
Purchase Agreement or otherwise within 10 business days after any Company Voting
Securities become subject to the provisions of this Agreement, of the legend set
forth below on all certificates representing ownership of Company Voting
Securities owned of record or beneficially by any member of the Investor Group
or the Shareholder Group, until such shares are sold, transferred or disposed in
a manner permitted hereby to a person who is not then a member of either such
group:
"The shares represented by this certificate have not been registered
under the Federal Securities Act of 1933, as amended (the "Act") or any
state securities laws of any jurisdiction. No sale, offer to sell,
assignment, pledge, hypothecation, gift, transfer or other disposition
of the shares represented by this certificate may be made unless a
registration statement under the Act with respect to such shares is
then in effect or an exemption from the registration requirements of
the Act is available with respect to said transfer and the requirements
of applicable state laws are satisfied.
The sale, assignment, pledge, hypothecation, gift, transfer or other
disposition of the shares represented by this certificate is subject to
certain restrictions pursuant to an Investment Agreement dated April
19, 1999 and a Shareholders Agreement dated December 22, 1998, in each
case, by and among the Company and certain of its shareholders, copies
of which may be obtained from the Company upon request."
The Company agrees to remove promptly all legends and stop transfer orders with
respect to the transfer of Company Voting Securities being made to a person who
is not then a member of the Investor Group or the Shareholder Group in
compliance with the provisions of this Agreement.
6.3 Remedies.
(a) Each party recognizes and acknowledges that a breach by it of
Article III, Article IV or Article V of this Agreement would cause the other
parties to sustain damages for which they would not have an adequate remedy at
law for money damages, and therefore each party agrees that
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<PAGE> 16
in the event of any such breach any of the other parties shall be entitled to
seek the remedy of specific performance of such Article III, Article IV or
Article V and injunctive relief and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(b) In addition to any other remedy the Company may have under this
Agreement or in law or equity, if any member of the Investor Group or the
Shareholder Group, as the case may be, shall acquire or transfer any Company
Voting Securities in violation of this Agreement, such Company Voting Securities
which are in excess of the number permitted to be owned or controlled by the
Investor Group or Shareholder Group, as the case may be, or which have been
transferred by a member of the Investor Group or the Shareholder Group in
violation of the provisions of this Agreement, will not be voted with respect to
any matter by such member either in person or by proxy.
6.4 Additional Investor Group Parties; Several Obligations. Each member
of the Investor Group or the Shareholder Group that shall become or have the
right to become the record owner of Company Voting Securities shall, promptly
upon becoming such record owner, execute and deliver to the Company a joinder
agreement, agreeing to be legally bound by the terms of this Agreement to the
same extent as if it had signed this Agreement as an original signatory as
Investor or Shareholder, as the case may be; provided that failure to execute
such an agreement shall not excuse such member's non-compliance with any
provision of this Agreement. No member of the Investor Group or the Shareholder
Group shall transfer securities to another member of its group unless the
transferee shall agree to be bound by this Agreement in the manner specified
above in this Section 7.4.
6.5 Notices. All notices, and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy, to
the appropriate address or telecopy number set forth below (or at such other
address or telecopy number for a party as shall be specified by like notice):
if to Investor:
Samstock, L.L.C.
Two N. Riverside Plaza
Chicago, IL 60606
Attention: F. Philip Handy
Telecopy Number: (312) 454-1671
with a copy to:
Rosenberg & Liebentritt, P.C.
Two N. Riverside Plaza
Chicago, IL 60606
Attention: Jonathan D. Wasserman
Telecopy Number: (312) 454-0335
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<PAGE> 17
if to the Company:
Davel Communications, Inc.
10120 Windhorst Road
Tampa, Florida 33619
Attention: Robert D. Hill
Telecopy Number: (813) 626-9610
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk
Telecopy Number: (312) 861-2200
with an additional copy to:
Davel Communications, Inc.
10120 Windhorst Road
Tampa, Florida 33619
Attention: Theodore C. Rammelkamp, Jr.
Telecopy Number: (813) 740-9406
If to Shareholder:
David R. Hill
10120 Windhorst Road
Tampa, Florida 33619
Telecopy Number: (813) 626-9610
6.6 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
6.7 Amendments; Waivers. (a) This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by each party
hereto.
(b) The failure of any party hereto to comply with any representation,
warranty, covenant or agreement contained in this Agreement may be waived only
by a written instrument signed by the party granting such waiver. No action
taken pursuant to this Agreement, including any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained in this Agreement, and no failure by any party to take any action with
respect to any breach of this Agreement or default by any other party shall
constitute a waiver of such party's right to enforce any provision hereof or to
take any such action. The waiver by any party hereto of a breach of any
provision hereunder shall not operate as a waiver of any prior or subsequent
breach of the same or any other provision hereunder.
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<PAGE> 18
6.8 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Illinois regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
6.9 Interpretation. The headings contained in this Agreement are
inserted for convenience of reference only and shall not affect in anyway the
meaning or interpretation of this Agreement. All references to a Section,
Article, Schedule or Exhibit contained herein mean Sections, Articles, Schedules
or Exhibits of this Agreement unless otherwise stated. All capitalized terms
defined herein are equally applicable to both the singular and plural forms of
such terms.
Whenever the words "include", includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
6.10 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same Agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
6.11 Neither this Agreement nor any of the rights, interest or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Investor may assign any of or all of
its rights and obligations under this Agreement to any person that is an
Affiliate of Samuel Zell or an Affiliate of any one or more trusts established
for the benefit of Samuel Zell and/or members of his family without the consent
of any other party and Shareholder may assign any or all of his rights and
obligations under this Agreement to one or more Affiliates of Shareholder
(including any Shareholder Family Entity) without the consent of any other
party; provided that, in each case, such person or persons shall have executed
and delivered a joinder to this Agreement and agreed to be bound by the terms
and conditions hereof. Subject to the preceding sentence, this Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
6.12 Consent to Jurisdiction. Each party hereto irrevocably submits to
the nonexclusive jurisdiction of (a) the state courts of the State of Illinois
and (b) any federal district court located in the State of Illinois for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby.
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<PAGE> 19
IN WITNESS WHEREOF, each of Investor, Shareholder, the Company and Old
Davel have executed this Investment Agreement as of the date first above
written.
INVESTOR:
SAMSTOCK, L.L.C.
By:
--------------------------------
EGI-DAVEL INVESTORS, L.L.C.
By:
--------------------------------
SHAREHOLDER:
-----------------------------------
David R. Hill, individually
COMPANY:
DAVEL COMMUNICATIONS, INC.
-----------------------------------
By:
OLD DAVEL:
DAVEL COMMUNICATIONS GROUP, INC.
-----------------------------------
By:
Page 29 of 58
<PAGE> 1
Exhibit 2
SHAREHOLDERS AGREEMENT
----------------------
This SHAREHOLDERS AGREEMENT ("Agreement") is dated as of December 22, 1998,
by and among Samstock, L.L.C., a Delaware limited liability company, and
EGI-Davel Investors, L.L.C., a Delaware limited liability company (collectively,
"Investor"), David R. Hill, an individual residing in the State of Florida
("Shareholder"), and, solely for purposes of Sections 2(a), 2(b), 3, 4, 6 and 8
through 19 of this Agreement, Davel Communications, Inc., a Delaware corporation
(the "Company"), and, solely for purposes of consenting to the amendment and
restatement of the Original Agreement (as defined below), Davel Communications
Group, Inc., an Illinois corporation ("Old Davel"). Investor, Shareholder and
Old Davel are parties to a Shareholders Agreement dated as of June 29, 1998 (the
"Original Agreement"). The parties desire to amend and restate the Original
Agreement as set forth herein for the purpose, among others, of substituting the
Company for Old Davel for all purposes of the Original Agreement.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Investor and Old Davel are parties to a Stock Purchase Agreement
dated May 14, 1998 (the "Company Stock Purchase Agreement") pursuant to which,
among other things, Old Davel issued and sold, and Investor purchased from Old
Davel, 1,000,000 shares of common stock, no par value, of Old Davel ("Old Davel
Common Stock");
WHEREAS, Investor and Shareholder are parties to a Stock Purchase Agreement
dated May 14, 1998 (the "Shareholder Stock Purchase Agreement") pursuant to
which, among other things, Shareholder sold, and Investor purchased from
Shareholder, 500,000 shares of Old Davel Common Stock;
WHEREAS, Investor and certain directors and members of management of the
Company (the "Management Shareholders") are parties to a Stock Purchase
Agreement pursuant to which, among other things, the Management Shareholders
sold, and Investor purchased from the Management Shareholders, 123,900 shares of
Old Davel Common Stock (such Stock Purchase Agreement, together with the Company
Stock Purchase Agreement and the Shareholder Stock Purchase Agreement, the
"Stock Purchase Agreements");
WHEREAS, the closing of the transactions contemplated by each of the Stock
Purchase Agreements occurred concurrently with the execution and delivery of the
Original Agreement;
WHEREAS, it was a condition to the obligations of Investor to effect the
transactions contemplated by the Company Stock Purchase Agreement that the
Original Agreement be executed and delivered by Investor and Shareholder;
WHEREAS, as of the date of this Agreement, Old Davel has consummated a
business combination (the "Business Combination") pursuant to which it has
become an indirect, wholly owned subsidiary of the Company, all of the
outstanding shares of Old Davel Common Stock have been exchanged for shares of
common stock, par value $.01 per share, of the Company (the "Common Stock") and
the Company has succeeded to the business of Old Davel;
WHEREAS, giving effect to the closing of the Business Combination, each of
Investor and Shareholder beneficially owns the number of shares of Common Stock,
and options to purchase shares of Common Stock, set forth opposite its name on
Exhibit A hereto; and
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<PAGE> 2
(Exhibit 2)
WHEREAS, capitalized terms used and not otherwise defined herein shall have
the meanings assigned thereto in the Investment Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
Section 1. Certain Definitions
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such first Person. As used in
this definition "control" (including, with correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies, whether through the ownership of securities or partnership or other
ownership interests, by contract or otherwise.
"business day" means any day that is not a Saturday, a Sunday or a legal
holiday on which banking institutions in the State of Illinois are not required
to be open.
"Investment Agreement" means the Investment Agreement dated as of the date
hereof among the Company, Investor, Shareholder and Old Davel.
"Market Price" means the average of the closing prices of the Common Stock
on the NASDAQ Stock Market (or, if not trading on the NASDAQ Stock Market, such
other securities exchange or over the counter market on which the Common Stock
is then trading) on the 20 consecutive Trading Days immediately preceding the
date of determination.
"Permitted Transferee" means:
(i) with respect to the Transfer of Shares by Investor, any person that
is an Affiliate of Samuel Zell or an Affiliate of any one or more trusts
established for the benefit of Samuel Zell and/or members of his family;
and
(ii) with respect to any Transfer of Shares by Shareholder, (A) any
Shareholder Family Entity, (B) any charitable organization as defined under
Section 501(c)(3) of the Internal revenue Code of 1986, as amended, and (C)
any other charitable organization(s), provided Shareholder does not
Transfer to any such other charitable organization(s) in the aggregate over
the term of this Agreement more than ten percent (10%) of the Shares in any
single Transfer or series (related or unrelated) of Transfers.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, governmental entity or other entity.
"Public Sale" means a bona fide sale of Shares either (i) in "broker's
transactions" within the meaning of Section 4(4) of the Securities Act of 1933,
as amended (the "Securities Act"), (ii) in transactions directly with a "market
maker" as that term in defined in Section 3(a)(38) of the Securities Exchange
Act of 1934, as amended, (iii) otherwise pursuant to Rule 144 of the Securities
Act, or (iv) through a registered offering pursuant to an effective registration
statement under the Securities Act.
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<PAGE> 3
(Exhibit 2)
"Shares" means all shares of Company Voting Securities, whether now owned
or hereafter acquired.
"Shareholder Family Entity" means Shareholder's spouse and descendants and
any corporation, partnership, limited liability company, trust, or other legal
entity controlled by Shareholder and wholly owned beneficially and of record by
Shareholder and/or Shareholder's spouse, children, grandchildren, parents,
siblings, in-laws, nieces and/or nephews or a trust established for any of their
benefit, provided such trust is controlled by Shareholder or Shareholder's
representative, or principal heir or legatee.
"Trading Day" means any day on which the NASDAQ Stock Market is open for
trading.
"Transfer" means any voluntary or involuntary, direct or indirect,
transfer, sale, assignment, donation, pledge, hypothecation, issuance, grant of
a security interest in or other disposition or attempted disposition of Shares
or any right or interest whatsoever therein, including, without limitation, by
operation of law or otherwise, whether with or without consideration or value,
and whether for cash, other securities or other property and specifically
including any share for share or similar exchange; provided, however, that:
(i) any pledge or hypothecation of or grant of security interest in
Shares by Shareholder which is either approved by Investor in writing prior
to the pledge, hypothecation or grant of security interest or is effected
by Investor or any Affiliate of Investor shall not constitute a "Transfer"
of Shares for any purpose under this Agreement; and
(ii) any Transfer effected as a result of Shareholder's death,
pursuant to the laws of descent and distribution, by operation of law or
otherwise, to Shareholder's spouse, children, grandchildren, parents,
siblings, in-laws, nieces and/or nephews or a trust established for any of
their benefit, shall not constitute a "Transfer" of Shares for any purpose
under this Agreement, provided each transferee of Shares executes a
counterpart to this Agreement, whereupon such transferee shall hold such
Shares subject to all of the provisions of this Agreement, as if the
transferor were the holder of Shares held by the transferee.
Page 32 of 58
<PAGE> 4
(Exhibit 2)
Section 2. Restrictions on Transfer and Related Matters/Permitted
------------------------------------------------------
Transferees
-----------
(a) Neither Investor nor Shareholder shall Transfer any Shares
except for a Transfer to a Permitted Transferee pursuant to Section 2(b) or,
subject to Section 6, a Transfer pursuant to Section 3, 4, or 5, as applicable,
or pursuant to the exercise of registration rights under Section 5.3 of the
Investment Agreement. If any Transfer is made or attempted contrary to the
provisions of this Agreement, such purported Transfer shall be void ab initio;
and the Company shall refuse to recognize any such purported transferee of
Shares as a holder of such Shares for any purpose. Notwithstanding anything to
the contrary in this Agreement, the rights of Investor and Shareholder to
acquire any Shares pursuant to their respective rights in Section 3 and 4 shall
be subject to compliance with their respective obligations under Article III of
the Investment Agreement.
(b) Notwithstanding anything to the contrary in Section 2(a)
hereof, for purposes of this Agreement, Shareholder and Investor may Transfer
Shares to a Permitted Transferee of Shareholder and Investor, respectively,
without complying with the provisions of Sections 3, 4, 5 or 6. As a condition
to the effectiveness of any Transfer of Shares to a Permitted Transferee, the
Permitted Transferee shall execute a counterpart to this Agreement, whereupon
the Permitted Transferee shall hold Shares subject to all of the provisions of
this Agreement, as if the Permitted Transferee was the Person who transferred
the Shares actually held by the Permitted Transferee.
Section 3. Right of First Offer on Private Transfer. In the event
either Shareholder or Investor (in either case, the "Offeror") wishes to sell
for cash in a bona fide transaction with an independent third party, whether or
not any third party has made an offer to purchase any of the Offeror's Shares,
all or any portion of the Shares now owned or hereafter acquired by the Offeror,
other than in a Public Sale, the Offeror shall first notify Investor or
Shareholder, as the case may be (in either case, the "Offeree") and the Company
in writing (the "Notice of Intended Sale") of the number of Shares for sale by
the Offeror (the "Offered Shares") and the terms of sale other than the purchase
price. The Offeree shall promptly engage in discussions with the Offeror, for a
period not to exceed ten (10) business days from the date of receipt by the
Offeree and the Company of the Notice of Intended Sale, to mutually agree on a
purchase price for the Offered Shares. No later than the end of such ten (10)
business day period, the Offeree shall notify the Offeror in writing of the
price the Offeree proposes to pay for all, but not less than all, of the Offered
Shares (the "Offeree Proposed Price"). Within two (2) business days of the
receipt of notice of the Offeree Proposed Price, the Offeror shall notify the
Offeree in writing whether it or he will sell the Offered Shares to the Offeree
at the Offeree Proposed Price in cash and on the other proposed terms of sale.
If, within three (3) business days of receipt by the Offeree and the Company of
the Notice of Intended Sale, the Offeree notifies the Offeror and the Company
that it or he does not wish to purchase the Offered Shares, then the Company
shall promptly (i) notify the Offeror that it does not wish to purchase the
Offered Shares, or (ii) engage in discussions with the Offeror, for a period not
to exceed ten (10) business days from the date of receipt of such notice from
the Offeree, to mutually agree on a purchase price for the Offered Shares. No
later than the end of such ten (10) business day period, the Company shall
notify the Offeror in writing of the price the Company proposes to pay for all,
but not less than all, of the Offered Shares (the "Company Proposed Price").
Within two (2) business days of the receipt of notice of the Company Proposed
Price, the Offeror shall have the right to notify the Company in writing whether
it or he will sell the Offered Shares to the Company at the Company Proposed
Price in cash and on the other proposed terms of sale. If the Company
Page 33 of 58
<PAGE> 5
(Exhibit 2)
notifies the Offeror that it does not wish to purchase the Offered Shares or if
the Company does wish to purchase the Offered Shares, and the Offeror does not
wish to sell all (and not less than all) of the Offered Shares to the Company at
the Company Offered Price, the Offeror shall be free for a period of ninety (90)
days thereafter to complete a sale of all (but not less than all) of the Offered
Shares to any Person at a price that exceeds either the Offeree Proposed Price
or the Company Proposed Price, as the case may be, if any, in cash and on
substantially the same terms as set forth in the Offeror's Notice of Intended
Sale. If such a sale is not consummated within such ninety (90) day period by
the Offeror, the Offered Shares shall again be subject to a right of first offer
by the Offeree and the Company under the provisions of this Section 3. Except
as provided herein, Investor and Shareholder shall be bound by the restrictions
and limitations imposed by this Agreement after any Notice of Intended Sale is
given and whether or not any sale pursuant thereto actually occurs. In the
event any Offeree exercises its or his rights to purchase shares of Common Stock
pursuant to any Notice of Intended Sale, the Offeree and the Offeror shall, as
promptly as practicable and as a condition to their respective obligations
hereunder, enter into such agreements and deliver such documents to one another
as shall be necessary for the sale of Shares as contemplated hereby.
Section 4. Right of First Offer on Public Sale In the event that either
Investor or Shareholder (in either case, the "Offeror") wishes to sell for cash
in a Public Sale all or any portion of the Shares now owned or hereafter
acquired by the Offeror, whether or not any third party has made an offer to
purchase any of the Offeror's Shares, the Offeror shall first notify Investor or
Shareholder, as the case may be (the "Offeree"), and the Company in writing (the
"Notice of Intended Sale") of the number of Shares for sale by the Offeror (the
"Offered Shares"). The Offeree thereupon shall have the right to purchase all
or any part of the Offered Shares for cash at their Market Price determined as
of the last Trading Day immediately prior to the date of the Offeree's receipt
of the Notice of Intended Sale. In order to exercise the purchase rights,
within three (3) business days (one (1) business day in the event of a proposed
Public Sale of no more than 10,000 Shares in the aggregate) after receiving the
Notice of Intended Sale from the Offeror, the Offeree shall deliver to the
Offeror and the Company a written election ("Election Notice") to purchase so
many of the Offered Shares as it or he may desire to purchase. If the Offeree
does not exercise the purchase rights with respect to all of the Offered Shares
within the time period as provided herein or fails to deliver the Election
Notice within the time period provided, the Company shall have the right to
purchase all (but not less than all) of the Offered Shares at the proposed price
in cash and on the other proposed terms of sale. In order to exercise its
purchase rights, within three (3) business days (one (1) business day in the
event of a proposed sale of no more than 10,000 Shares in the aggregate) after
the expiration of the time period applicable to the Offeree, the Company shall
deliver to the Offeror a written election (the "Election Notice") to purchase
all of the Offered Shares. If the Company does not exercise its purchase rights
with respect to all (and not less than all) of the Offered Shares within the
time period as provided herein with respect to all of the Offered Shares, or
fails to deliver the Election Notice within the time period provided, the
Offeror shall be free for a period of twenty (20) Trading Days thereafter to
complete a Public Sale of that number of Offered Shares with respect to which
the Offeree and the Company failed to exercise their purchase rights. If such
Public Sale is not consummated within such twenty (20) Trading Day period by the
Offeror, the Offered Shares shall again be subject to a right of first offer by
the Offeree and the Company under the provisions of this Section 4. Except as
provided herein, Investor and Shareholder shall be bound by the restrictions and
limitations imposed by this Agreement after any Notice of Intended Sale is given
and whether or not any sale pursuant thereto actually occurs. In the event any
Offeree exercises its or his rights to purchase shares of Common Stock pursuant
to any Notice of
Page 34 of 58
<PAGE> 6
(Exhibit 2)
Intended Sale, the Offeree and the Offeror shall, as promptly as practicable and
as a condition to their respective obligations hereunder, enter into such
agreements and deliver such documents to one another as shall be necessary for
the sale of Shares as contemplated hereby. Notwithstanding anything to the
contrary in this Section 4, in the event that after the Offeree's receipt of the
Notice of Intended Sale and prior to the earlier of (i) the Offeror's receipt of
the Election Notice or (ii) 5:00 p.m. Eastern Time on the fourth (4th) day
following the Offeree's receipt of the Notice of Intended Sale, the Market Price
of the Shares increases or decreases by ten percent (10%) or more as compared to
the Market Price on the last Trading Day immediately prior to the date of the
Offeree's receipt of the Notice of Intended Sale, the Offeror shall have the
right to withdraw its Notice of Intended Sale by written notice to the Offeree
and the Company, in which event the Notice of Intended Sale actually delivered
by the Offeror to the Offeree and the Company shall be deemed for all purposes
under this Section 4 as never having been delivered to the Offeree and the
Company.
Section 5. Co-Sale Rights In addition to the rights of Investor,
Shareholder and the Company set forth in Section 3 above, in the event that
either Investor or Shareholder (in either case, the "Selling Holder") enters
into an agreement to sell to any person other than a Permitted Transferee (and
other than with the Company pursuant to Section 3 or Section 4) or group of any
such persons, in a single transaction or related series of transactions, other
than a Public Sale, such number of Shares as equals or exceeds more than ten
percent (10%) of the Shares held by the Selling Holder as of the date hereof
(giving effect to the closing of the transactions contemplated by the Stock
Purchase Agreements), the Selling Holder shall first notify Investor or
Shareholder, as the case may be (the "Tag-Along Holder"), in writing, of the
identity of the proposed purchaser(s), the number of Shares proposed to be sold,
the proposed purchase price and terms of sale and an estimate of the Transaction
Costs (as defined below) (which estimate shall be a reasonably determined
estimate but otherwise shall not be binding on the Selling Holder and shall have
no effect on Investor's or Shareholder's rights or obligations under this
Section 5). The Tag-Along Holder thereupon shall have the right to participate
in the proposed sale at the same net price per share and other terms and
conditions of sale as offered to the Selling Holder. In order to exercise the
co-sale rights, the Tag-Along Holder, within ten (10) business days after
receiving notice from the Selling Holder, shall deliver to the Selling Holder a
written election to participate in the sale to the extent allowed by this
Section 5. If the Tag-Along Holder has elected to participate in the proposed
sale, the Tag-Along Holder shall be entitled to sell in the proposed sale a
number of Shares equal to the product of (i) the quotient (the "Co-Sale
Fraction") determined by dividing the number of Shares owned by the Tag-Along
Holder by the aggregate number of Shares owned by the Selling Holder and the
Tag-Along Holder multiplied by (ii) the total number of Shares to be sold by
them in the proposed sale. Notwithstanding anything to the contrary in this
Section 5, the sale proceeds to which the Tag-Along Holder would otherwise be
entitled by reason of its or his participation in a sale pursuant to this
Section 5 shall be reduced by an amount equal to the product of the Tag-Along
Holder's Co-Sale Fraction multiplied by the sum of any costs, fees and expenses,
including, without limitation, attorneys', accountants' and investment bankers'
fees and expenses (collectively, "Transaction Costs"), reasonably incurred by
the Selling Holder in connection with the sale or the exercise of the Tag-Along
Holder's rights under this Section 5. The Tag-Along Holder shall, as promptly
as practicable and as a condition to its or his participation, enter into such
agreements as shall be reasonably requested by the Selling Holder for the sale
of its or his Shares in the proposed sale; provided that the Selling Holder
shall use reasonable efforts to negotiate indemnities on a several, and not
joint, basis, and that in all events any indemnity by the Tag-Along Holder will
be limited to the net proceeds received by the Tag-Along Holder (it being
Page 35 of 58
<PAGE> 7
(Exhibit 2)
understood that if either or both of these points are not successfully
negotiated, the Tag-Along Holder may withdraw its notice of its election to
participate in the sale).
Section 6. Transfers of Company Voting Securities. (a) Except as the
same may be approved by a majority of the Disinterested Directors in a specific
resolution to such effect adopted prior to the taking of such action, no member
of the Investor Group shall, directly or indirectly, sell, transfer or otherwise
dispose of any Company Voting Securities to any person or group (other than to
another member of the Investor Group) prior to the third anniversary of the date
of the Original Agreement in a transaction that would, to the knowledge of the
Investor Group, upon consummation of such sale, transfer or disposition, result
in such person or group beneficially owning Company Voting Securities that would
represent 5% or more of the Combined Voting Power of all Company Voting
Securities; provided, however, that any member of the Investor Group shall be
entitled to pledge or hypothecate any number of Company Voting Securities to any
bank or other financial institution in connection with any bona fide financing
transaction involving any member of the Investor Group or any of its Affiliates
and, upon any realization of the collateral represented by such pledge or
hypothecation, the pledgee shall take and own such Company Voting Securities
free and clear of, and not subject to any of the restrictions set forth in, this
agreement. Notwithstanding the foregoing, on and after the eleventh business
day following commencement of a tender or exchange offer made by a person who is
not a member of the Investor Group for outstanding Company Voting Securities,
any member of the Investor Group may tender or exchange any Company Voting
Securities beneficially owned by it pursuant to such tender or exchange offer if
such tender or exchange offer shall have been approved or recommended by a
majority of the Disinterested Directors.
(b) Except as the same may be approved by a majority of the
Disinterested Directors in a specific resolution to such effect adopted prior to
the taking of such action, no member of the Shareholder Group shall, directly or
indirectly, sell, transfer or otherwise dispose of any Company Voting Securities
to any person or group (other than to another member of the Shareholder Group)
prior to the third anniversary of the date of the Original Agreement in a
transaction that would, to the knowledge of the Shareholder Group, upon
consummation of such sale, transfer or disposition, result in such person or
group beneficially owning Company Voting Securities that would represent 5% or
more of the Combined Voting Power of all Company Voting Securities; provided,
however, that any member of the Shareholder Group shall be entitled to pledge or
hypothecate any number of Company Voting Securities to any bank or other
financial institution in connection with any bona fide financing transaction
involving any member of the Shareholder Group or any of its Affiliates and, upon
any realization of the collateral represented by such pledge or hypothecation,
the pledgee shall take and own such Company Voting Securities free and clear of,
and not subject to any of the restrictions set forth in, this Agreement.
Notwithstanding the foregoing, on and after the eleventh business day following
commencement of a tender or exchange offer made by a person who is not a member
of the Shareholder Group for outstanding Company Voting Securities, any member
of the Shareholder Group may tender or exchange any Company Voting Securities
beneficially owned by it pursuant to such tender or exchange offer if such
tender or exchange offer shall have been approved or recommended by a majority
of the Disinterested Directors.
Section 7. Board Seats. So long as Shareholder is entitled to designate
directors in accordance with the provisions of Section 4.5 of the Investment
Agreement, Investor shall
Page 36 of 58
<PAGE> 8
(Exhibit 2)
vote all Company Voting Securities owned of record by Investor or with respect
to which Investor has voting control in favor of the election of Shareholder's
nominees to the Company's Board of Directors and the Independent Director
nominees chosen in accordance with the terms of the Investment Agreement. So
long as Investor is entitled to designate directors in accordance with the
provisions of Section 4.4 of the Investment Agreement, Shareholder shall vote
all Company Voting Securities owned of record by Shareholder or with respect to
which Shareholder has voting control in favor of the election of Investor's
nominees to the Company's Board of Directors and the Independent Director
nominees chosen in accordance with the terms of the Investment Agreement.
Section 8. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, to the appropriate address or telecopy number set forth below (or at
such other address or telecopy number for a party as shall be specified by like
notice):
if to Investor:
Samstock, L.L.C.
Two N. Riverside Plaza
Chicago, IL 60606
Attention: F. Philip Handy
Telecopy Number: (312) 454-1671
with a copy to:
Rosenberg & Liebentritt, P.C.
Two N. Riverside Plaza
Chicago, IL 60606
Attention: President
Telecopy Number: (312) 454-0335
if to the Company:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Robert D. Hill
Telecopy Number: (813) 626-9610
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk
Telecopy Number: (312) 861-2200
Page 37 of 58
<PAGE> 9
(Exhibit 2)
with an additional copy to:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Theodore C. Rammelkamp, Jr.
Telecopy Number: (813) 626-9610
If to Shareholder:
Mr. David R. Hill
1429 Massaro Boulevard
Tampa, Florida 33619
Telecopy Number: (813) 626-9610
Section 9. Termination. Unless this Agreement specifically provides for
earlier or later termination with respect to any particular right or obligation,
this Agreement shall terminate and be of no further force and effect (i) in the
case of Investor, if Investor and its Permitted Transferees shall, at any time,
cease to own in the aggregate Company Voting Securities representing at least
five percent (5%) of all Company Voting Securities outstanding or (ii) in the
case of Shareholder, if Shareholder and its Permitted Transferees shall, at any
time, cease to own in the aggregate Company Voting Securities representing at
least five percent (5%) of all Company Voting Securities outstanding.
Section 10. Remedies. Any party having rights under this Agreement may
enforce such rights specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement and,
accordingly, in addition to all other remedies available to any party, such
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief in
order to enforce, or prevent any violation of, the provisions of this Agreement.
Section 11. Entire Agreement. This Agreement (including the documents
referred to herein) (a) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement and (b) is not intended to
confer upon any Person other than the parties rights or remedies. Without
limiting the generality of the foregoing, this agreement amends and restates the
Original Agreement in its entirety.
Section 12. Amendments; Waivers. (a) This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by each of
Investor, Shareholder and the Company.
(b) The failure of any party hereto to comply with any
representation, warranty, covenant or agreement contained in this Agreement may
be waived only by a written instrument signed by the party granting such waiver.
No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation,
Page 38 of 58
<PAGE> 10
(Exhibit 2)
warranty, covenant or agreement contained in this Agreement, and no failure by
any party to take any action with respect to any breach of this Agreement or
default by any other party shall constitute a waiver of such party's right to
enforce any provision hereof or to take any such action. The waiver by any
party hereto of a breach of any provision hereunder shall not operate as a
waiver of any prior or subsequent breach of the same or any other provision
hereunder.
Section 13. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same Agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 14. Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 15. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
Section 16. Binding Effect; Benefit, Non-Circumvention. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, and their
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the parties hereto, and
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. No shareholder
shall take any action, alone or in concert with any other Person, to circumvent
any of the provisions of this Agreement.
Section 17. Assignment. Neither this Agreement nor any of the rights,
interest or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Investor may assign any of or
all of its rights and obligations under this Agreement to any person that is an
Affiliate of Samuel Zell or an Affiliate of any one or more trusts established
for the benefit of Samuel Zell and/or members of his family without the consent
of any other party, and Shareholder may assign any of or all of his rights and
obligations under this Agreement to one or more Affiliates of Shareholder
(including any Shareholder Family Entity) without the consent of any other
party; provided that, in each case, such person or persons shall have executed
and delivered a joinder to this Agreement and agreed to be bound by the terms
and conditions hereof. Subject to the preceding sentence, this Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
Page 39 of 58
<PAGE> 11
(Exhibit 2)
Section 18. Interpretation. The headings contained in this Agreement are
inserted for convenience of reference only and shall not affect in anyway the
meaning or interpretation of this Agreement. All references to a Section,
Article, Schedule or Exhibit contained herein mean Sections, Articles, Schedules
or Exhibits of this Agreement unless otherwise stated. All capitalized terms
defined herein are equally applicable to both the singular and plural forms of
such terms.
Whenever the words "include", includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
Section 19. Consent to Jurisdiction. Each party hereto irrevocably
submits to the nonexclusive jurisdiction of (a) the state courts of the State of
Illinois and (b) any federal district court in the State of Illinois for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby.
Page 40 of 58
<PAGE> 12
(Exhibit 2)
IN WITNESS WHEREOF, the undersigned have executed this Shareholders
Agreement as of the day and year first above written.
SAMSTOCK, L.L.C.
____________________________________
By:
EGI-DAVEL INVESTORS, L.L.C.
____________________________________
By:
____________________________________
David R. Hill, individually
DAVEL COMMUNICATIONS, INC.
____________________________________
By:
DAVEL COMMUNICATION GROUP, INC.
____________________________________
By:
Page 41 of 58
<PAGE> 13
(Exhibit 2)
EXHIBIT A
---------
OWNERSHIP OF DAVEL COMMUNICATIONS, INC.
COMMON STOCK AND OPTIONS
Investor Shares:
Samstock, L.L.C.:
EGI-Davel Investors, L.L.C.:
Shareholder Shares:
Shareholder Options Schedule
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Options Date Option Price Shares Shares
------------ Exp. Date ------------ Outstanding Exercisable
--------- ----------- -----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 42 of 58
<PAGE> 1
EXHIBIT 3
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES OR (II) SUCH SALE,
TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISPOSITION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
DAVEL COMMUNICATIONS, INC.
WARRANT TO PURCHASE ________ SHARES OF COMMON STOCK
VOID AFTER JUNE 29, 2002
THIS CERTIFIES THAT, for value received, ______________________________
(the "HOLDER"), is entitled to subscribe for and purchase from Davel
Communications, Inc., an Illinois corporation (the "COMPANY"), an aggregate of
_______ shares (as adjusted pursuant to Section 3 hereof) of fully paid and
nonassessable Common Stock of the Company (the "SHARES"), at an exercise price
of $32.00 per share (the "EXERCISE PRICE") (as adjusted pursuant to Section 3
hereof), and subject to the provisions and upon the terms and conditions
hereinafter set forth.
1. Exercise; Payment.
(a) Time of Exercise; Expiration. This Warrant is immediately
exercisable. This Warrant shall expire at, and shall no longer be exercisable
after, 5:00 p.m., Chicago local time, on June 29, 2002.
(b) Method of Exercise.
(i) Cash Exercise. The purchase rights represented by
this Warrant may be exercised by the Holder, at any time, in whole, or from time
to time, in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit 1 duly executed) at the principal office of the
Company, and by the payment to the Company, by certified, cashier's or other
check acceptable to the Company, of an amount equal to the aggregate Exercise
Price of the Shares being purchased.
(ii) Net Issue Exercise. In lieu of exercising this
Warrant, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder a number of Shares computed
using the following formula:
Page 43 of 58
<PAGE> 2
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares purchasable under this Warrant.
A = the fair market value of one Share.
B = the Exercise Price (as adjusted to the date of such calculation).
(iii) Fair Market Value. For purposes of this Warrant, the fair
market value of the Shares shall mean:
A. The average closing price of the Shares on the
Nasdaq National Market or in the event that the Shares are not then
traded on the Nasdaq National Market, the average closing price quoted
on the New York Stock Exchange, the American Stock Exchange or any
other Nasdaq market, as published in the Mid-Western Edition of the
Wall Street Journal for the twenty consecutive trading days prior to
the date of determination of fair market value.
B. If the Shares are not then traded on the Nasdaq
National Market or on any other exchange described in clause A. above,
the per share fair market value of the Shares shall be the fair market
value price per share as determined by mutual agreement of the
Company and Holder, and, absent timely mutual agreement of the Company
and Holder, by the Board of Directors of the Company after taking into
account the advice of a third party valuation expert selected by the
Company and any concurrent warrant valuations.
(c) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant of identical terms and
provisions as those hereof, representing the Shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Warrant may be exercised,
the Company shall at all times have authorized and reserved for issuance
sufficient Shares to provide for the exercise of the rights represented by this
Warrant.
3. Adjustment of Exercise Price and Number of Shares. The number and
kind of Shares purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
Page 44 of 58
<PAGE> 3
(a) Reclassification. In case of any reclassification or change of
outstanding securities of the class issuable upon exercise of
this Warrant (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a
result of a subdivision or combination), the Company shall, as a
condition precedent to such transaction, execute a new Warrant
providing that the Holder shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each
Share theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification or change which
such Holder would have received had such Holder exercised this
Warrant in full immediately prior to such reclassification or
change. Such new Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of
this Section 3(a) shall similarly apply to successive
reclassifications or changes.
(b) Subdivision or Combination of Warrant Shares. If the Company at
any time or from time to time while this Warrant remains
outstanding and unexpired shall subdivide or combine its stock,
the Exercise Price shall be proportionately decreased in the case
of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time or from time to time
while this Warrant is outstanding and unexpired shall pay a
dividend with respect to Shares payable in, or make any other
distribution with respect to, Shares (except any distribution
specifically provided for in the foregoing Section 3(a) and 3(b))
of stock, then the Exercise Price shall be adjusted, from and
after the date of determination of stockholders entitled to
receive such dividend or distribution, to that price determined
by multiplying the Exercise Price in effect immediately prior to
such date of determination by a fraction (i) the numerator of
which shall be the total number of Shares outstanding immediately
prior to such dividend or distribution, and (ii) the denominator
of which shall be the total number of Shares outstanding
immediately after such dividend or distribution.
(d) Other Dividends. If the Company at any time or from time to time
while this Warrant is outstanding and unexpired shall pay a
dividend with respect to Shares other than in the form of stock,
then the Exercise Price shall be adjusted, from and after the
record date fixed for the determination of holders of Shares
entitled to receive such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect
immediately prior to such date of determination by a fraction (i)
the numerator of which shall be the fair market value of a Share
as of such record date less the amount of such dividend or
distribution applicable to one Share, and (ii) the denominator of
which shall be the fair market value of a Share as of such record
date; provided, however, that no such adjustment shall be made in
the event that such dividend per share as so determined, combined
with all dividends per share declared or paid during the
preceding twelve-month period is less than 10% of the fair market
value per share as of the
Page 45 of 58
<PAGE> 4
date of such payment; provided, further, however, that if the
amount of a dividend that would otherwise require adjustment
pursuant to this Section 3(d) is equal to or greater than such
fair market value, in lieu of the foregoing adjustment, adequate
provision shall be made so that the holder of this Warrant shall
receive a pro rata share of such dividend based upon the maximum
number of shares issueable to such holder.
(e) Merger or Consolidation. If at any time there shall be a merger
or a consolidation of the Company with or into another
corporation or other entity when the Company is not the surviving
corporation or when the Company shall be the surviving
corporation but, in connection with such consolidation or merger,
the Shares shall be changed into or exchanged for stock, other
securities or property of any other corporation or other entity,
then, as part of such merger or consolidation, lawful provision
shall be made so that the Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period
specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation
resulting from such merger or consolidation (or the corporation
or entity whose shares of stock, securities or other property
were issued in exchange for Shares in such merger or
consolidation), to which the Holder of the shares deliverable
upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such
case, appropriate adjustment shall be made in the application of
the provisions of this Warrant with respect to the rights and
interests of the Holder of this Warrant after the merger or
consolidation. This provision shall apply to successive mergers
or consolidations.
(f) Adjustment of Number of Warrant Shares. Upon each adjustment in
the Exercise Price, the number of shares of stock purchasable
hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price
immediately prior to such adjustment and the denominator of which
shall be the Exercise Price immediately thereafter.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide written notice in accordance with Section 11
hereof, to the holder of this Warrant setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the number of Shares which may be
purchased and the Exercise Price therefor after giving effect to such
adjustment. The Company shall also provide to the Holder a copy of any notice
which the Company provides to any other holder of warrants, at the same time as
such notice is provided to such other holder.
Page 46 of 58
<PAGE> 5
5. Fractional Shares. No fractional Shares will be issued in connection
with any exercise hereunder. In lieu of such fractional shares the Company
shall make a cash payment therefor based upon the Exercise Price then in effect.
6. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants will represent such
portion of such rights as is designated by the Holder at the time of such
surrender. All Warrants representing portions of the rights hereunder are
referred to herein as the "Warrant."
7. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company (it being acknowledged by the Company that an affidavit by an executive
officer of the Holder is deemed to be reasonably satisfactory) of the ownership
and the loss, theft, destruction or mutilation of this Warrant, and in the case
of any such loss, theft or destruction, upon the receipt of indemnity reasonably
satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such Warrant, the Company will (at its expense, except for the cost
of any lost security indemnity bond required which shall be paid for by the
Holder) execute and deliver in lieu of such Warrant a new Warrant of like kind
representing the same rights represented by such lost, stolen, destroyed or
mutilated Warrant and dated the date of such lost, stolen, destroyed or
mutilated Warrant.
8. Restrictive Legend. The Shares issuable upon exercise of this Warrant
(unless registered under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise disposed of unless (i) there
is an effective registration statement under such Act and such laws
covering such securities or (ii) such sale, transfer, assignment,
offer, pledge or other disposition is exempt from the registration and
prospectus delivery requirements of such Act and such laws."
9. Restrictions on Transfer. Neither this Warrant, nor any interest
herein, may be transferred to any party without the Company's prior written
consent; provided, however, that this Warrant may be transferred to any
affiliate of Samuel Zell or an affiliate of any one or more trusts established
for the benefit of Samuel Zell and/or members of his family at any time, in
whole, or from time to time, in part, without the Company's consent, upon
delivery to the Company of the Notice of Transfer in the form of Exhibit 2
hereto.
10. Rights of Shareholders. No holder of this Warrant shall be entitled,
as a Warrant holder, to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization,
Page 47 of 58
<PAGE> 6
issuance of stock, reclassification of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
11. Notices, Etc. All notices and other communications between the
Company and the Holder shall be deemed given if delivered personally, sent by
documented overnight delivery service or telecopied with confirmation of
receipt (i) if to the Company, at the Company's executive offices, and (ii) if
to the Holder, at such address as may have been furnished to the Company in
writing by the Holder.
12. Governing Law, Headings. This Warrant is being delivered in the State
of Illinois and shall be construed and enforced in accordance with and governed
by the laws of such State. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Conditional Exercise. Notwithstanding any other provision hereof, if
an exercise of all or any portion of this Warrant is to be made in connection
with a transaction affecting the Company, such exercise may at the election of
the Holder be conditioned upon the consummation of such transaction, in which
case such exercise shall not be deemed to be effective until immediately prior
to the consummation of such transaction.
Issued as of the 22nd day of December, 1998 in replacement of warrants
originally issued on the 29th day of June, 1998..
DAVEL COMMUNICATIONS, INC.
By:
Its:
Page 48 of 58
<PAGE> 7
EXHIBIT 1
---------
NOTICE OF EXERCISE
- ------------------
TO: DAVEL COMMUNICATIONS, INC.
` 1429 Massaro Boulevard
Tampa, Florida 33619
Attention: General Counsel
1. The undersigned hereby elects to purchase __________ shares of Common
Stock of DAVEL COMMUNICATIONS, INC. pursuant to the terms of the attached
Warrant.
2. Method of Exercise (Please mark the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in full
for the purchase price of the shares being purchased.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b)(ii) of
the Warrant.
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(Signature)
Title:
(Date)
Page 49 of 58
<PAGE> 8
EXHIBIT 2
---------
NOTICE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the right represented by the attached
Warrant to purchase _______* shares of Common Stock of DAVEL COMMUNICATIONS,
INC., to which the attached Warrant relates, and appoints ________________
Attorney-in-Fact to transfer such right on the books of DAVEL COMMUNICATIONS,
INC., with full power of substitution in the premises.
Dated:
By:
(Address)
___________________
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
Page 50 of 58
<PAGE> 1
EXHIBIT 4
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES OR (II) SUCH SALE,
TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISPOSITION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
WARRANT TO PURCHASE _________ SHARES OF COMMON STOCK
OF
DAVEL COMMUNICATIONS, INC.
VOID AFTER JUNE 29, 2002
THIS CERTIFIES THAT, for value received, ______________________________
(the "HOLDER"), is entitled to subscribe for and purchase from __________ (the
"EXECUTIVE"), an aggregate of 107,765 shares (as adjusted pursuant to Section 3
hereof) of fully paid and nonassessable Common Stock of Davel Communications,
Inc. (the "Company") (the "SHARES"), at an exercise price of $32.00 per share
(the "EXERCISE PRICE") (as adjusted pursuant to Section 3 hereof), and subject
to the provisions and upon the terms and conditions hereinafter set forth.
1. Exercise; Payment.
(a) Time of Exercise; Expiration. This Warrant is immediately
exercisable. This Warrant shall expire at, and shall no longer be exercisable
after, 5:00 p.m., Chicago local time, on June 29, 2002.
(b) Method of Exercise.
(i) Cash Exercise. The purchase rights represented by this
Warrant may be exercised by the Holder, at any time, in whole, or from time to
time, in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit 1 duly executed) to Executive, and by the
payment to Executive, by certified, cashier's or other check acceptable to
Executive, of an amount equal to the aggregate Exercise Price of the Shares
being purchased.
(ii) Net Issue Exercise. In lieu of exercising this Warrant, the
Holder may elect to receive Shares equal to the value of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant to Executive
together with notice of such election, in which event Executive shall issue to
the Holder a number of Shares computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
Page 51 of 58
<PAGE> 2
Y = the number of Shares purchasable under this Warrant.
A = the fair market value of one Share.
B = the Exercise Price (as adjusted to the date of such calculation).
(iii) Fair Market Value. For purposes of this Warrant, the fair
market value of the Shares shall mean:
A. The average closing price of the Shares on the Nasdaq
National Market or in the event that the Shares are not then traded
on the Nasdaq National Market, the average closing price quoted on
the New York Stock Exchange, the American Stock Exchange or any
other Nasdaq market, as published in the Mid-Western Edition of the
Wall Street Journal for the twenty consecutive trading days prior
to the date of determination of fair market value.
B. If the Shares are not then traded on the Nasdaq
National Market or on any other exchange described in clause A.
above, the per share fair market value of the Shares shall be the
fair market value price per share as determined by mutual agreement
of the Company and Holder, and, absent timely mutual agreement of
the Company and Holder, by the Board of Directors of the Company
after taking into account the advice of a third party valuation
expert selected by the Company and any concurrent warrant
valuations.
(c) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered by Executive to the Holder within a reasonable time and, unless this
Warrant has been fully exercised or has expired, a new Warrant of identical
terms and provisions as those hereof, representing the Shares with respect to
which this Warrant shall not have been exercised shall also be issued to the
Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable upon
the exercise of the rights represented by this Warrant will, upon issuance and
receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof.
3. Adjustment of Exercise Price and Number of Shares. The number and kind
of Shares purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification. In case of any reclassification or change of
outstanding securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination), Executive shall, as soon as
practicable following such transaction, execute a new Warrant
providing that the Holder shall have the right to exercise such new
Warrant and upon such exercise to receive, in lieu of each Share
theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property
receivable upon such reclassification or change which
Page 52 of 58
<PAGE> 3
such Holder would have received had such Holder exercised this
Warrant in full immediately prior to such reclassification or
change. Such new Warrant shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 3. The provisions of this Section 3(a)
shall similarly apply to successive reclassifications or changes.
(b) Subdivision or Combination of Warrant Shares. If the Company at any
time or from time to time while this Warrant remains outstanding
and unexpired shall subdivide or combine its stock, the Exercise
Price shall be proportionately decreased in the case of a
subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time or from time to time
while this Warrant is outstanding and unexpired shall pay a
dividend with respect to Shares payable in, or make any other
distribution with respect to, Shares (except any distribution
specifically provided for in the foregoing Section 3(a) and 3(b))
of stock, then the Exercise Price shall be adjusted, from and after
the date of determination of stockholders entitled to receive such
dividend or distribution, to that price determined by multiplying
the Exercise Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the
total number of Shares outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall
be the total number of Shares outstanding immediately after such
dividend or distribution.
(d) Other Dividends. If Executive at any time or from time to time
while this Warrant is outstanding and unexpired shall receive or be
entitled to receive a dividend with respect to Shares, other than
in the form of stock, then the Exercise Price shall be adjusted,
from and after the record date fixed for the determination of
holders of Shares entitled to receive such dividend or
distribution, to that price determined by multiplying the Exercise
Price in effect immediately prior to such date of determination by
a fraction (i) the numerator of which shall be the fair market
value of a Share as of such record date less the amount of such
dividend or distribution applicable to one Share, and (ii) the
denominator of which shall be the fair market value of a Share as
of such record date; provided, however, that no such adjustment
shall be made in the event that such dividend per share as so
determined, combined with all dividends per share declared or paid
during the preceding twelve-month period is less than 10% of the
fair market value per share as of the date of such payment;
provided, further, however, that in the event of an exercise of
this Warrant, in whole or in part, by the holder of this Warrant at
any time when Executive is prohibited by law or the rules or
policies of the Company or its principle exchanges from, or subject
to economic forfeiture under Section 16 of the Securities Exchange
Act of 1934, as amended, for, acquiring additional Shares, then
such adjustment hereunder shall not be deemed effective until such
time that Executive is not so prohibited or subject to economic
forfeiture, at which time the applicable number of additional
Shares will be delivered to the person exercising this Warrant;
provided, further, however, that if the amount of a dividend that
would otherwise require adjustment pursuant to this Section 3(d) is
equal to or greater than such
Page 53 of 58
<PAGE> 4
fair market value, in lieu of the foregoing adjustment, adequate
provision shall be made so that the holder of this Warrant shall
receive a pro rata share of such dividend based upon the maximum
number of shares issueable to such holder.
(e) Merger or Consolidation. If at any time there shall be a merger or
a consolidation of the Company with or into another corporation or
other entity when the Company is not the surviving corporation or
when the Company shall be the surviving corporation but, in
connection with such consolidation or merger, the Shares shall be
changed into or exchanged for stock, other securities or property
of any other corporation or other entity, then the Holder shall
thereafter be entitled to receive from Executive upon exercise of
this Warrant, during the period specified herein and upon payment
of the aggregate Exercise Price then in effect, the number of
shares of stock or other securities or property (including cash) of
the successor corporation resulting from such merger or
consolidation (or the corporation or entity whose shares of stock,
securities or other property were issued in exchange for Shares in
such merger or consolidation), to which the Holder of the shares
deliverable upon exercise of this Warrant would have been entitled
in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case,
appropriate adjustment shall be made by Executive in the
application of the provisions of this Warrant with respect to the
rights and interests of the Holder of this Warrant after the merger
or consolidation. This provision shall apply to successive mergers
or consolidations.
(f) Adjustment of Number of Warrant Shares. Upon each adjustment in the
Exercise Price, the number of shares of stock purchasable hereunder
shall be adjusted, to the nearest whole share, to the product
obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price
immediately prior to such adjustment and the denominator of which
shall be the Exercise Price immediately thereafter.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, Executive shall provide written notice in accordance with Section 11
hereof, to the holder of this Warrant setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the number of Shares which may be
purchased and the Exercise Price therefor after giving effect to such
adjustment. Any such notice provided by the Company to the Holder pursuant to
any substantially similar warrants shall constitute notice by Executive
hereunder, provided that such notice makes reference hereto.
5. Fractional Shares. No fractional Shares will be issued in connection
with any exercise hereunder. In lieu of such fractional shares Executive shall
make a cash payment therefor based upon the Exercise Price then in effect.
6. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder to Executive, for new
Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants will represent such portion of such
Page 54 of 58
<PAGE> 5
rights as is designated by the Holder at the time of such surrender. All
Warrants representing portions of the rights hereunder are referred to herein as
the "Warrant."
7. Replacement. Upon receipt of evidence reasonably satisfactory to
Executive (it being acknowledged by Executive that an affidavit by an executive
officer of the Holder is deemed to be reasonably satisfactory) of the ownership
and the loss, theft, destruction or mutilation of this Warrant, and in the case
of any such loss, theft or destruction, upon the receipt of indemnity reasonably
satisfactory to Executive, or, in the case of any such mutilation upon surrender
of such Warrant, Executive will (at its expense, except for the cost of any lost
security indemnity bond required which shall be paid for by the Holder) execute
and deliver in lieu of such Warrant a new Warrant of like kind representing the
same rights represented by such lost, stolen, destroyed or mutilated Warrant and
dated the date of such lost, stolen, destroyed or mutilated Warrant.
8. Restrictive Legend. The Shares issuable upon exercise of this Warrant
(unless registered under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or applicable state securities laws and may not be sold,
transferred, assigned, offered, pledged or otherwise disposed of
unless (i) there is an effective registration statement under such
Act and such laws covering such securities or (ii) such sale,
transfer, assignment, offer, pledge or other disposition is exempt
from the registration and prospectus delivery requirements of such
Act and such laws."
9. Restrictions on Transfer. Neither this Warrant, nor any interest herein,
may be transferred to any party without Executive's prior written consent;
provided, however, that this Warrant may be transferred to any affiliate of
Samuel Zell or an affiliate of any one or more trusts established for the
benefit of Samuel Zell and/or members of his family at any time, in whole, or
from time to time, in part, without Executive's consent, upon delivery to
Executive of the Notice of Transfer in the form of Exhibit 2 hereto.
10. Rights of Shareholders. No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
11. Notices, Etc. All notices and other communications between Executive
and the Holder shall be deemed given if delivered personally, sent by documented
overnight delivery service or telecopied with confirmation of receipt (i) if to
Executive, at the Company's executive offices, and (ii) if to the Holder, at
such address as may have been furnished to the Company in writing by the Holder.
Page 55 of 58
<PAGE> 6
12. Governing Law, Headings. This Warrant is being delivered in the State
of Illinois and shall be construed and enforced in accordance with and governed
by the laws of such State. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Conditional Exercise. Notwithstanding any other provision hereof, if an
exercise of all or any portion of this Warrant is to be made in connection with
a transaction affecting the Company, such exercise may at the election of the
Holder be conditioned upon the consummation of such transaction, in which case
such exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction, except to the extent that Executive would be
unduly prejudiced thereby, and so advises the Holder in writing promptly.
Issued as of the 22nd day of December, 1998 in replacement of warrant originally
issued on the 29th day of June, 1998.
-----------------------
----------------
Page 56 of 58
<PAGE> 7
EXHIBIT 1
---------
NOTICE OF EXERCISE
- ------------------
TO:
----------------------------------------
c/o DAVEL COMMUNICATIONS, INC.
` 1429 Massaro Boulevard
Tampa, Florida 33619
1. The undersigned hereby elects to purchase __________ shares of Common
Stock of DAVEL COMMUNICATIONS, INC. pursuant to the terms of the attached
Warrant.
2. Method of Exercise (Please mark the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in
full for the purchase price of the shares being purchased.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b)(ii) of
the Warrant.
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-----------------------------------
(Name)
-----------------------------------
(Address)
-----------------------------------
(Signature)
Title:
- ------------------------- -----------------------------
(Date)
Page 57 of 58
<PAGE> 8
EXHIBIT 2
---------
NOTICE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the right represented by the attached
Warrant to purchase _______* shares of Common Stock of DAVEL COMMUNICATIONS,
INC., to which the attached Warrant relates.
Dated:
-------------------------------
By:
----------------------------------
----------------------------------
(Address)
- -------------------
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
Page 58 of 58
