<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Davel Communications Group, Inc.
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(NAME OF ISSUER)
Common Stock, par value $.01
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(TITLE OF CLASS OF SECURITIES)
238338 10 7
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(CUSIP NUMBER)
Susan Obuchowski, Equity Group Investments, Inc.,
Two N. Riverside Plaza, Suite 600, Chicago, IL 60606 (312) 466-4010
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS)
with a copy to: Walter S. Lowry, Rosenberg & Liebentritt, P.C.
Two N. Riverside Plaza, Suite 1600, Chicago, IL 60606 (312) 466-3769
June 29, 1998
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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(b)(3) or (4), check the following box .
Page 1 of 134
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CUSIP No. 238338 10 7 13D Page 2 of 134
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1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Samstock, L.L.C.
36-4156890
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ](a)
[ ](b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF 1,623,900
SHARES ---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
1,973,900
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,973,900
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12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.6%
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14 TYPE OF REPORTING PERSON*
00
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*SEE INSTRUCTION BEFORE FILLING OUT!
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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 Group, Inc., an
Illinois 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 Samstock,
L.L.C., a Delaware limited liability company ("Samstock"). The sole
member of Samstock is SZ Investments, L.L.C., a Delaware limited
liability company ("SZ Investments"). The sole managing member of SZ
Investments is Zell General Partnership, Inc., an Illinois
corporation ("Zell Inc."). The sole stockholder of Zell Inc. is
Samuel Zell as trustee of the Samuel Zell Revocable Trust, an
Illinois trust existing pursuant to a trust agreement dated January
17, 1990, (the "Zell Trust"). The sole director of Zell Inc. and the
sole beneficiary of the Zell Trust is Samuel Zell. The executive
officers of Zell Inc. are: Samuel Zell, president; and Rod F.
Dammeyer, Donald J. Liebentritt and Sheli Z. Rosenberg, vice
presidents. Mr. Zell is Chairman of the Board of Equity Group
Investments, Inc. ("EGI"), a private investment company. Mr.
Dammeyer is a managing director of EGI Corporate Investments, the
corporate investment and oversight arm of EGI. Mr. Liebentritt is
an executive vice president and general counsel of EGI. Mrs.
Rosenberg is president and chief executive officer of EGI. Messrs.
Zell, Dammeyer and Liebentritt and Mrs. Rosenberg are citizens of the
United States of America.
The principal business of each of Samstock, SZ Investments, Zell
Inc. and Zell Trust is investments.
The principal business address for each of Samstock, SZ Investments,
Zell Inc., Zell Trust, Messrs. Zell, Dammeyer and Liebentritt and
Mrs. Rosenberg is Two North Riverside Plaza, Chicago, IL 60606.
(d) and (e) Neither Samstock nor, to the best knowledge of
Samstock, SZ Investments, Zell Inc., Zell Trust, Messrs. Zell,
Dammeyer and Liebentritt or Mrs. Rosenberg, 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 results 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.
Item 3. Source and Amount of Funds or Other Consideration
On June 29, 1998, pursuant to a Stock Purchase Agreement dated May
14, 1998 between Samstock and the Issuer ("Issuer Purchase
Agreement"), Samstock purchased 1,000,000 shares of Common Stock and
warrants to purchase 218,750 shares of Common Stock from the Issuer
at $32.00 per share (the "Issuer Warrant") for an aggregate purchase
price of $28.0 million. On June 30, 1998, pursuant to a Stock
Purchase Agreement dated May 14, 1998 between Samstock and David R.
Hill (the "Hill Purchase Agreement"), Samstock purchased 500,000
shares of Common Stock and warrants to purchase 131,250 shares of
Common Stock from David R. Hill at $32.00 per share (the "Hill
Warrant") for an aggregate purchase price of $14.0 million. On June
30, 1998, pursuant to a Stock Purchase Agreement dated May 14, 1998
among Samstock, Robert D. Hill, Michael Hayes, Theodore Rammelkamp,
Jr., Jones Yorke, Paul Demirdjian, Michael Kouri and Marlin
Turnipseed ("Management") (together with the Issuer Purchase
Agreement and the Hill Purchase Agreement,
Page 3 of 134
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the "Purchase Agreements"), Samstock purchased 123,900 shares
of Common Stock from Management for an aggregate purchase price of
$3,469,200. In each case, the aggregate purchase price was obtained
from the working capital of Samstock. The Purchase Agreements are
filed as exhibits to this Schedule 13D and are incorporated herein
by reference.
Item 4. Purpose of the Transaction
Samstock has acquired the securities of the Issuer for investment
purposes only.
The Issuer, Samstock and Mr. Hill have entered into an Investment
Agreement dated June 29, 1998 (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) 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 by the Investor Group or the
Shareholder Group to such number of Company Voting Securities that
represents or possesses greater than 33.7% of the Combined Voting
Power (as defined in the Investment Agreement), in the case of the
Investor Group, and 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 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
Samstock or Mr. Hill as a director of the Issuer pursuant to the
Investment Agreement is not
Page 4 of 134
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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 seven directors at such time as Samstock 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 first sentence of this
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 Samstock no longer has any rights under the Investment
Agreement 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 as
Samstock, together with any other members of the Investor Group,
owns at least 10% of the Combined Voting Power of all Company Voting
Securities , Samstock 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
Samstock and, following such date, Samstock and Mr. Hill shall
jointly designate the two persons to be elected as Independent
Directors, (iv) so long as Samstock 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
Samstock, Mr. Hill or the Issuer shall take any action to decrease
the size of such Board to less than seven directors or to increase
the size of such Board to more than seven directors and (v) the
Issuer has granted to Samstock the right to require the registration
under the Securities Act of 1933, as amended, of the shares of Common
Stock acquired by Samstock pursuant to the Purchase Agreements.
Mr. Samuel Zell and Mr. F. Philip Handy were elected to the Issuer's
Board of Directors, as designees of Samstock, on June 30, 1998.
Samstock, Mr. Hill and, solely for purposes of Sections 2(a), 2(b),
3, 4, 6 and 8 through 19 thereof, the Issuer have entered into a
Shareholders Agreement dated June 29, 1998 (the "Shareholders
Agreement"). Pursuant to the Shareholders Agreement, (i) Samstock
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) Samstock and
Mr.
Page 5 of 134
<PAGE> 6
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, Samstock shall vote all
Company Voting Securities owned of record by Samstock or with
respect to which Samstock 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 Samstock 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 Samstock's
nominees to the Issuer's Board of Directors and the Independent
Director nominees chosen in accordance with the terms of the
Investment Agreement.
Samstock and PhoneTel Technologies, Inc. ("PhoneTel") have
entered into two Voting Agreements, each dated June 11, 1998 (the
"PhoneTel Voting Agreements"). Pursuant to the PhoneTel Voting
Agreements, Samstock has agreed to vote (i) all shares of common
stock , par value $.01 per share, of PhoneTel owned by Samstock in
favor of the merger of PT Merger Corp. with and into PhoneTel (the
"PhoneTel Merger"), as contemplated by the Agreement and Plan of
Merger and Reorganization dated June 11, 1998 by and among the
Issuer, Davel Holdings, Inc., D Subsidiary, Inc., PT Merger Corp.
and PhoneTel (the "PhoneTel Merger Agreement"), and each of the
actions contemplated by the PhoneTel Merger Agreement to be
performed by PhoneTel in connection with the PhoneTel Merger and the
other transactions contemplated by the PhoneTel Merger Agreement and
any actions required in furtherance thereof and (ii) all shares of
Common Stock owned by Samstock in favor of the merger of D
Subsidiary, Inc. with and into the Issuer (the "Davel Merger"), as
contemplated by the PhoneTel Merger Agreement, and each of the
actions contemplated by the PhoneTel Merger Agreement to be
performed by the Issuer in connection with the Davel Merger and the
other transactions contemplated by the PhoneTel Merger Agreement and
any actions required in furtherance thereof.
Samstock intends to enter into a voting agreement with Peoples
Telephone Company, Inc. ("Peoples") pursuant to which Samstock will
agree to vote all shares of Common Stock owned by Samstock in favor
of the approval of the Agreement and Plan of Merger and
Reorganization dated as of July 5, 1998 among the Issuer, Peoples
and Davel Holdings, Inc. (the "Peoples Merger Agreement") and each of
the actions contemplated by the Peoples Merger Agreement to be
performed by Issuer in connection with the merger of a newly formed
subsidiary of Issuer with and into Peoples and the other transactions
contemplated by the Peoples Merger Agreement and any actions required
in furtherance thereof.
The Investment Agreement, the Shareholders Agreement and the PhoneTel
Voting Agreements 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, Samstock 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.
Page 6 of 134
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Item 5. Interest in Securities of the Issuer
(a) Samstock beneficially owns 1,973,900 shares of Common Stock which
represent approximately 33.6% of the shares of Common Stock outstanding
as of June 29, 1998. This number of shares of Common Stock includes
350,000 shares of Common Stock that may be acquired by Samstock pursuant
to the Issuer Warrant and the Hill Warrant.
(b) Subject to the terms of the Investment Agreement, the Shareholders
Agreement, the PhoneTel Voting Agreements and the voting agreement to be
entered into with Peoples, Samstock has the sole power to vote or to
direct the vote of 1,623,900 shares of Common Stock.
(c) As described in Item 3, on June 29 and June 30, 1998, Samstock
acquired, in the aggregate, 1,623,900 shares of Common Stock and
warrants to acquire 350,000 shares of Common Stock at an exercise price
of $32 per share.
(d) and (e) Not applicable.
Item 6 Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
In connection with the consummation of the transactions contemplated by
the Purchase Agreements, (i) the Issuer, Samstock and Mr. Hill entered
into the Investment Agreement and (ii) Samstock, Mr. Hill and, solely
for the purposes of Sections 2(a), 2(b), 3, 4, 6 and 8 through 19
thereof, the Issuer entered into the Shareholders Agreement. In
connection with the PhoneTel Merger Agreement, Samstock and PhoneTel
entered into the PhoneTel Voting Agreements. In connection with the
Peoples Merger Agreement, Samstock intends to enter into a voting
agreement, as described in Item 4. The Investment Agreement, the
Shareholders Agreement and the PhoneTel Voting Agreements are filed as
exhibits to this Schedule 13D and are incorporated herein by reference.
Item 7 Materials to be Filed as Exhibits
Exhibit 1 Stock Purchase Agreement dated May 14, 1998 by and between
Samstock, L.L.C. and Davel Communications Group, Inc.
Exhibit 2 Stock Purchase Agreement dated May 14, 1998 by and between
Samstock, L.L.C. and David R. Hill
Exhibit 3 Stock Purchase Agreement dated May 14, 1998 by and among
Samstock, L.L.C., Robert D. Hill, Michael Hayes, Theodore
Rammelkamp, Jr., Jones Yorke, Paul Demirdjian, Michael Kouri
and Marlin Turnipseed
Exhibit 4 Investment Agreement dated June 29, 1998 among Davel
Communications Group, Inc., Samstock, L.L.C. and David R.
Hill
Exhibit 5 Shareholders Agreement dated June 29, 1998 by and among
Samstock, 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 Group, Inc.
Exhibit 6 Voting Agreement dated June 11, 1998 between Samstock L.L.C.
and PhoneTel Technologies, Inc.
Exhibit 7 Voting Agreement dated June 11, 1998 between Samstock, L.L.C.
and PhoneTel Technologies, Inc.
Page 7 of 134
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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: July 9, 1998.
Samstock, L.L.C.
By: /s/ Donald J. Liebentritt,
--------------------------------
Vice President
Page 8 of 134
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------ ----
<S> <C> <C>
1 Stock Purchase Agreement dated May 14, 1998 and
between Samstock, L.L.C. and Davel Communications
Group, Inc. 10
2 Stock Purchase Agreement dated May 14, 1998 by and
between Samstock, L.L.C. and David R. Hill. 43
3 Stock Purchase Agreement dated May 14, 1998 by and
among Samstock, L.L.C., Robert D. Hill, Michael
Hayes, Theodore Rammelkamp, Jr., Jones Yorke, Paul
Demirdjian, Michael Kouri and Marlin Turnipseed. 62
4 Investment Agreement dated June 29, 1998 among
Davel Communications Group, Inc.'s, Samstock,
L.L.C. and David R. Hill. 86
5 Shareholders Agreement dated June 29, 1998 by
and among Samstock, 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
Group, Inc. 107
6 Voting Agreement dated June 11, 1998 between
Samstock L.L.C. and PhoneTel Technologies, Inc. 120
7 Voting Agreement dated June 11, 1998 between
Samstock, L.L.C. and PhoneTel Technologies, Inc. 127
</TABLE>
Page 9 of 134
<PAGE> 1
EXHIBIT 1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SAMSTOCK, L.L.C.
AND
DAVEL COMMUNICATIONS GROUP, INC.
DATED MAY 14, 1998
Page 10 of 134
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
<S> <C>
ARTICLE I - DEFINITIONS ............................................................. 1
ARTICLE II - PURCHASE AND SALE OF SHARES ............................................ 5
Section 2.1 Purchase and Sale .................................................. 5
Section 2.2 Consideration ...................................................... 5
ARTICLE III - THE CLOSING ........................................................... 5
Section 3.1 Time and Place ..................................................... 5
Section 3.2 Deliveries by the Company .......................................... 5
Section 3.3 Deliveries by the Purchaser ........................................ 6
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY .......................... 6
Section 4.1 Organization, Standing and Corporate Power ......................... 6
Section 4.2 Subsidiaries ....................................................... 7
Section 4.3 Capital Structure .................................................. 7
Section 4.4 Title to Stock and Warrants ........................................ 8
Section 4.5 Authority; Noncontravention ........................................ 8
Section 4.6 SEC Documents; Undisclosed Liabilities ............................. 9
Section 4.7 Absence of Certain Changes or Events ...............................10
Section 4.8 Litigation .........................................................10
Section 4.9 Employee Benefit Plans; ERISA ......................................11
Section 4.10 Taxes ..............................................................12
Section 4.11 Compliance with Laws ...............................................12
Section 4.12 No Other Agreements to Sell the Company or its Assets ..............13
Section 4.13 Contracts and Commitments ..........................................13
Section 4.14 Insurance ..........................................................14
Section 4.15 Affiliate Transactions .............................................14
Section 4.16 Proxy Statement ....................................................14
Section 4.17 Vote Required; Recommendation of Board .............................15
Section 4.18 Takeover Statutes ..................................................15
Section 4.19 Rights Agreement ...................................................15
Section 4.20 Brokers and Finders ................................................15
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER .............................15
Section 5.1 Organization .......................................................16
Section 5.2 Authority; Noncontravention ........................................16
Section 5.3 Investment Intent ..................................................16
Section 5.4 Proxy Statement ....................................................16
Section 5.5 Availability of Funds ..............................................17
</TABLE>
Page 11 of 134
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<TABLE>
<S> <C>
Section 5.6 Litigation .........................................................17
Section 5.7 Brokers and Finders ................................................17
ARTICLE VI - CONDUCT OF BUSINESS ....................................................17
Section 6.1 Conduct of Business ................................................17
Section 6.2 No Solicitation ....................................................19
ARTICLE VII - ADDITIONAL AGREEMENTS .................................................20
Section 7.1 Proxy Statement; Shareholder Meeting ...............................20
Section 7.2 Access to Information ..............................................20
Section 7.3 Further Action .....................................................20
Section 7.4 Notification of Certain Matters ....................................21
Section 7.5 Public Announcements ...............................................21
Section 7.6 Investment Agreement ...............................................21
Section 7.7 Fees and Expenses ..................................................21
ARTICLE VIII - CONDITIONS ...........................................................21
Section 8.1 Conditions to Each Party's Obligation ..............................21
Section 8.2 Condition to Obligations of the Company ............................22
Section 8.3 Conditions to Obligations of Purchaser .............................22
ARTICLE I - TERMINATION, AMENDMENT AND WAIVER .......................................23
Section 9.1 Termination ........................................................23
Section 9.2 Effect of Termination ..............................................24
ARTICLE X - SURVIVAL; INDEMNIFICATION ...............................................24
Section 10.1 Survival ...........................................................24
Section 10.2 Indemnification by Purchaser or the Company ........................24
Section 10.3 Third-Party Claims .................................................25
Section 10.4 Termination of Indemnification .....................................26
ARTICLE XI - MISCELLANEOUS ..........................................................26
Section 11.1 Counterparts .......................................................26
Section 11.2 Governing Law ......................................................26
Section 11.3 Entire Agreement ...................................................26
Section 11.4 Notices ............................................................26
Section 11.5 Assignment .........................................................27
Section 11.6 Interpretation .....................................................28
Section 11.7 Amendments; Waivers ................................................28
Section 11.8 Severability .......................................................28
Section 11.9 Consent to Jurisdiction ............................................28
</TABLE>
ii
Page 12 of 134
<PAGE> 4
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made this 14th day of May, 1998 by and
between Samstock, L.L.C., a Delaware limited liability company ("Purchaser"),
and Davel Communications Group, Inc., an Illinois corporation (the "Company").
WITNESSETH:
WHEREAS, the Company wishes to issue and sell to Purchaser, and Purchaser
wishes to purchase from the Company, 1,000,000 newly issued shares (the
"Shares") of common stock, no par value, of the Company ("Company Common
Stock") and warrants to purchase 218,750 shares of Company Common Stock (the
"Warrants") at an exercise price of $32.00 per share (which shall be
exercisable through the fourth anniversary of the Closing Date), upon the terms
and subject to the conditions of this Agreement.
WHEREAS, concurrently herewith, Purchaser and David R. Hill ("Hill") have
entered into a Stock Purchase Agreement pursuant to which Hill has agreed to
sell to Purchaser, and Purchaser has agreed to purchase from Hill, 500,000
shares of Company Common Stock and warrants to purchase 131,250 shares of
Company Common Stock (the "Hill Stock Purchase Agreement"), upon the terms and
subject to the conditions set forth in such Agreement.
WHEREAS, concurrently herewith, Purchaser, on the one hand, and certain
directors and members of management of the Company (the "Management
Shareholders"), on the other, have entered into a Stock Purchase Agreement
pursuant to which the Management Shareholders have agreed to sell to Purchaser,
and Purchaser has agreed to purchase form the Management Shareholders, 123,900
shares of Company Common Stock (such Agreement, together with the Hill Stock
Purchase Agreement, the "Other Stock Purchase Agreements"), upon the terms and
subject to the conditions set forth in the Management Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Affiliate" shall mean, 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.
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Section 1.2 "Agreement" shall mean this Agreement, including the Exhibits
and Schedules attached hereto and incorporated herein by this reference.
Section 1.3 "Closing" shall have the meaning set forth in Section 3.1
hereof.
Section 1.4 "Closing Date" shall have the meaning set forth in Section 3.1
hereof.
Section 1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.6 "Company" shall mean Davel Communications Group, Inc., an
Illinois corporation.
Section 1.7 "Company Common Stock" shall have the meaning set forth in the
introductory clauses hereto.
Section 1.8 "Company Preferred Stock" shall have the meaning set forth in
Section 4.3 hereto.
Section 1.9 "Company Stock Options" shall have the meaning set forth in
Section 4.3 hereof.
Section 1.10 "Contracts" shall have the meaning set forth in Section 4.13
hereof.
Section 1.11 "Disclosure Letter" shall have the meaning set forth in the
preface of Article IV hereof.
Section 1.12 "Employee Benefit Plans" shall mean all employee benefit
plans or programs maintained for the benefit of the current or former employees
or directors of the Company or any of its Subsidiaries that are sponsored,
maintained or contributed to by the Company or any of its Subsidiaries, or with
respect to which the Company or any of its Subsidiaries has any liability that
are "employee benefit plans" as defined in Section 3(3) of ERISA.
Section 1.13 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
Section 1.14 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Section 1.15 "Filed SEC Documents" shall have the meaning set forth in
Section 4.7 hereof.
Section 1.16 "GAAP" shall mean generally accepted accounting principles as
in effect in the United States consistently applied.
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Section 1.17 "Governmental Entity" shall mean any federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency.
Section 1.18 "Hill" shall mean David R. Hill.
Section 1.19 "Hill Stock Purchase Agreement" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.20 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Section 1.21 "Investment Agreement" shall mean the Investment Agreement
substantially in the form of Exhibit A hereto.
Section 1.22 "IRS" shall mean the Internal Revenue Service.
Section 1.23 "Liens" shall mean all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever.
Section 1.24 "Losses and Expenses" shall have the meaning set forth in
Section 10.2 hereof.
Section 1.25 "Management Shareholders" shall have the meaning set forth in
the introductory clauses hereto.
Section 1.26 "Material Adverse Effect" shall mean a material adverse
effect (or any development which, insofar as reasonably can be foreseen, in the
future is likely to have a material adverse effect) on the business, assets or
financial condition of the Company and its Subsidiaries, taken as a whole,
except for the impact of any order or determination by the Federal
Communications Commission or Federal appellate court concerning compensation
paid by interexchange carriers and local exchange carriers to payphone service
providers in the Federal Communications Commission CC Docket No. 96-128,
Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996.
Section 1.27 "Material Company Subsidiary" shall mean a Subsidiary of the
Company that constitutes a significant subsidiary within the meaning of Rule
1-02 of Regulation S-X of the SEC.
Section 1.28 "Other Stock Purchase Agreements" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.29 "Permitted Liens" shall mean (i) Liens for Taxes that are not
yet due or delinquent or are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in accordance
with GAAP, (ii) mechanics' and other
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similar Liens arising in the ordinary course of business with respect to amounts
not yet overdue for a period of 45 days or amounts being contested in good faith
by appropriate proceedings if a reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made therefor, and (iii) Liens
which do not materially interfere with the use of any property or asset of the
Company or any of its Subsidiaries for its current use or which, individually or
in the aggregate, do not materially interfere with the ordinary conduct of
business of the Company and its Subsidiaries.
Section 1.30 "person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, Governmental Entity or other entity.
Section 1.31 "Proxy Statement" shall have the meaning set forth in Section
4.5 hereof.
Section 1.32 "Purchase Price shall have the meaning set forth in Section
2.2 hereof.
Section 1.33 "Purchaser" shall mean Samstock, L.L.C., a Delaware limited
liability company.
Section 1.34 "Rights Agreement" shall have the meaning set forth in
Section 4.3 hereof.
Section 1.35 "SEC" shall mean the Securities and Exchange Commission.
Section 1.36 "SEC Documents" shall have the meaning set forth in Section
4.6 hereto.
Section 1.37 "Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.38 "Shareholder Approval" shall have the meaning set forth in
Section 4.5 hereof.
Section 1.39 "Shareholders Agreement" shall mean the Shareholders
Agreement substantially in the form of Exhibit B hereto.
Section 1.40 "Shares" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.41 "Subsidiary" of any person shall mean another person, an
amount of the voting securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person.
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Section 1.42 "Surviving Provisions" shall have the meaning set forth in
Section 9.2 hereof.
Section 1.43 "takeover proposal" shall have the meaning set forth in
Section 6.2 hereof.
Section 1.44 "Taxes" shall mean all federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax or penalties
applicable thereto.
Section 1.45 "Tax Returns" shall mean all federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended tax return relating to Taxes.
Section 1.46 "Warrant Agreement" shall mean an agreement to be entered
into by the Company and Purchaser pursuant to which the Company shall issue to
Purchaser the Warrants, which agreement, in form and substance, shall be
reasonably acceptable to Purchaser.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Company shall issue
and sell, and Purchaser shall purchase from the Company, the Shares and the
Warrants.
Section 2.2 Consideration. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Buyer shall pay to the Company
$28,000,000.00 (the "Purchase Price").
ARTICLE III
THE CLOSING
Section 3.1 Time and Place. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Rosenberg &
Liebentritt, P.C., Two N. Riverside Plaza, Chicago, Illinois at 10:00 a.m.
(local time) on the fifth business day following the date on which all of the
conditions to each party's obligations hereunder have been satisfied or waived
or at such other place or time as Purchaser and the Company may agree. The
date and time at which the Closing actually occurs is hereinafter referred to
as the "Closing Date."
Section 3.2 Deliveries by the Company. At the Closing, the Company shall
deliver the following to Purchaser:
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(a)(i) one or more stock certificates representing the Shares issued in
the name of Purchaser; and (ii) any other documents that are necessary to
transfer to Purchaser good and marketable title to the Shares free and clear of
any Lien;
(b) a duly executed counterpart of the Investment Agreement;
(c) a duly executed counterpart of the Shareholders Agreement;
(d) a duly executed counterpart of the Warrant Agreement and any other
documents that are necessary to transfer to Purchaser good and marketable title
to the Warrants; and
(e) all other documents, instruments and writings required to be
delivered by the Company at or prior to the Closing Date pursuant to this
Agreement.
Section 3.3 Deliveries by the Purchaser. At the Closing, Purchaser shall
deliver the following to the Company:
(a) the Purchase Price by interbank transfer of immediately available
funds to an account designated by the Company or by such other means as may be
agreed upon in writing by the Company and Purchaser;
(b) a duly executed counterpart of the Investment Agreement;
(c) a duly executed counterpart of the Shareholders Agreement;
(d) a duly executed counterpart of the Warrant Agreement; and
(e) all other documents, instruments and writings required to be
delivered by Purchaser at or prior to the Closing Date pursuant to this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser, except as set forth in
the Disclosure Letter delivered by the Company to Purchaser concurrently with
the execution of this Agreement (the "Disclosure Letter") by specific reference
to the relevant representation and warranty, as follows:
Section 4.1 Organization, Standing and Corporate Power. Each of the
Company and each of the Material Company Subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has the requisite power
and authority to carry on its business as now being conducted. Each of the
Company and each of its Subsidiaries is duly qualified or licensed to
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do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed (individually or in the aggregate)
would not have a Material Adverse Effect. The Company has delivered to
Purchaser complete and correct copies of its Articles of Incorporation and
By-laws and the articles of incorporation and by-laws or comparable
organizational documents of each of the Material Company Subsidiaries. The
Company is not in violation of any provision of its Articles of Incorporation
or By-laws and no Material Company Subsidiary is in violation of any provision
of its articles of incorporation, by-laws or comparable organizational
documents, except to the extent that such violations would not, individually or
in the aggregate, have a Material Adverse Effect.
Section 4.2 Subsidiaries. Section 4.2 of the Disclosure Letter sets forth
each Material Company Subsidiary and the ownership or interest therein of the
Company. All the outstanding shares of capital stock of each Material Company
Subsidiary have been validly issued and are fully paid and nonassessable and
are owned by the Company, by another Subsidiary of the Company or by the
Company and another Subsidiary of the Company, free and clear of all Liens.
Except for the capital stock of the Company's Subsidiaries, the Company does
not own, directly or indirectly, any capital stock or other ownership interest
in any corporation, partnership, limited liability company, joint venture or
other entity.
Section 4.3 Capital Structure. (a) The authorized capital stock of the
Company consists of 10,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $.01 per share ("Company Preferred
Stock"). At the close of business on May 12, 1998, (i)(A) 4,647,809 shares of
Company Common Stock were outstanding, all of which were validly issued, fully
paid and nonassessable and (B) no shares of Junior Participating Preferred
Stock were outstanding, all of which were validly issued, fully paid and
nonassessable and (ii)(A) 58,000 shares of Company Common Stock were reserved
for issuance upon the exercise of warrants and (B) 500,350 shares of Company
Common Stock were reserved for issuance upon the exercise of outstanding stock
options ("Company Stock Options") granted pursuant to the Davel Communications
Group, Inc. Director Stock Option Plan and the Davel Communications Group, Inc.
Stock Option Plan. Except as set forth above, at the close of business on May
14, 1998, and except pursuant to the Rights Agreement, dated April 22, 1998, by
and between the Company and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agreement"), no shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or outstanding, and, since such
date, no shares of capital stock or other voting securities or options in
respect thereof have been issued except upon the exercise of any Company Stock
Options. Except as set forth in this Section 4.3 and except for Company Stock
Options granted in the ordinary course of business to employees and directors
of the Company or its Subsidiaries and covering not in excess of an aggregate
of 350,000 shares of Company Common Stock for all such grants during the period
from the date of this Agreement through the Closing Date, there are not now,
and at the Closing Date there will not be, any options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is
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a party or by which any of them is bound relating to the issued or unissued
capital stock of the Company or any of its Subsidiaries, or obligating the
Company or any of its Subsidiaries to issue, transfer, grant or sell any shares
of capital stock or other equity interests in, the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such option, warrant, call, right, commitment,
agreement, arrangement or understanding. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth
in the Rights Agreement, there are not any outstanding contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its Subsidiaries,
or make any material investment (in the form of a loan, capital contribution or
otherwise) in, any of the Company's Subsidiaries or any other person.
Section 4.4 Title to Stock and Warrants. The Shares and the Warrants,
upon issuance on the terms and conditions set forth in this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable. At the Closing,
Purchaser will acquire good and marketable title to the Shares and the
Warrants, free and clear of all Liens. Upon issuance of shares of Company
Common Stock pursuant to the Warrants, such shares will be duly authorized,
validly issued, fully paid and nonassessable, and Purchaser will acquire good
and marketable title to such shares.
Section 4.5 Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of the issuance of the Shares by the holders of Company Common Stock
("Shareholder Approval"), to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company, subject to Shareholder Approval. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally. The execution and delivery of this Agreement by the Company do not,
and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries under (i) the Articles of Incorporation or
By-laws of the Company or the comparable organizational documents of any of the
Company's Subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of the Material Company
Subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any
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judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of the Material Company Subsidiaries or their respective
properties or assets of which the Company is aware, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults, rights or
Liens, that individually or in the aggregate, would not (x) have a Material
Adverse Effect, (y) prevent the Company from performing its obligations under
this Agreement in any material respect or (z) prevent or delay in any material
respect the consummation of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity, is required by or with respect to the
Company or any of the Material Company Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated by this Agreement, except (i) the
filing of a notification and report form by Hill as the ultimate parent entity
of the Company under the HSR Act, (ii) the filing with the SEC of a proxy
statement relating to the meeting of the Company's shareholders to be held in
connection with the transactions contemplated by this Agreement (together with
any amendments or supplements thereto, the "Proxy Statement") and such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement and (iii)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not prevent or
delay in any material respect the consummation of the transactions contemplated
by this Agreement or otherwise prevent the Company from performing its
obligations under this Agreement in any material respect or have, individually
or in the aggregate, a Material Adverse Effect.
Section 4.6 SEC Documents; Undisclosed Liabilities. To its knowledge, the
Company has filed all required reports, schedules, forms, statements and other
documents with the SEC since December 31, 1994 (as such documents have been
amended prior to the date hereof, the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
SEC Documents, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
such statements have been modified or superseded by a later Filed SEC Document.
The consolidated financial statements of the Company included in the SEC
Documents have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and the consolidated Subsidiaries of the Company as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and the absence of footnotes). Except as set forth
in the Filed SEC Documents and for liabilities incurred in the ordinary course
of business after the date hereof or incurred as permitted by this Agreement,
neither the Company nor any of the Company's Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute,
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contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company and its consolidated Subsidiaries or in the notes
thereto and which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
Section 4.7 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents") or as specifically permitted by this
Agreement, since the date of the most recent audited financial statements
included in the Filed SEC Documents, the Company has conducted its business
only in the ordinary course, and there has not been:
(a) any change or effect (or any development that, insofar as can
reasonably be foreseen, is likely to result in a change or effect) which,
individually or in the aggregate, has had or would reasonably be expected to
have, a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock;
(c) any split, combination or reclassification of any of the Company's
capital stock or any issuance or the authorization of any issuance of any other
securities in exchange or in substitution for shares of the Company's capital
stock;
(d) (i) any granting by the Company or any of its Subsidiaries to any
executive officer of the Company or any such Subsidiary of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the
date hereof, (ii) any granting by the Company or any of its Subsidiaries to any
such executive officer of any increase in severance or termination pay, except
as was required under any employment, severance or termination agreements in
effect as of the date hereof or (iii) any entry by the Company or any of its
Subsidiaries into any employment, severance or termination agreement with any
such executive officer;
(e) any damage destruction or loss, not covered by insurance, that has
had or would reasonably be expected to have a Material Adverse Effect; or
(f) any change in accounting methods, principles or practices by the
Company or any Material Company Subsidiary materially and adversely affecting
its assets, liabilities or business, except insofar as may have been required
by a change in GAAP.
Section 4.8 Litigation. Except as disclosed in the Filed SEC Documents,
there is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
that, individually or in the aggregate, would reasonably be expected to (i)
have a Material Adverse Effect, (ii) prevent the Company from performing its
obligations under this Agreement in any material respect or (iii) prevent or
delay in any material respect the consummation of the transactions contemplated
by this
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Agreement, and there is not any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or any of
its Subsidiaries that has had or would reasonably be expected to have, a
Material Adverse Effect.
Section 4.9 Employee Benefit Plans; ERISA. (a) With respect to each
Employee Benefit Plan: (i) each Employee Benefit Plan has been administered in
compliance in all material respects with its terms including any provisions
relating to contributions thereunder, and is in compliance in all material
respects with the applicable provisions of ERISA, the Code and all other
federal, state and other applicable laws, rules and regulations, as they relate
to such Employee Benefit Plans (including funding, filing, termination,
reporting, disclosure and continuation coverage obligations pursuant to Title V
of the Consolidate Omnibus Budget Reconciliation Act of 1985, as amended; (ii)
no "employee pension benefit plan" (as defined in Section 3(2) of ERISA) has
been the subject of a "reportable event" (as defined in Section 4043 of ERISA)
and there have been no non-exempt "prohibited transactions" (as described in
Section 4975 of the Code or in Part 4 of Subtitle I of ERISA) with respect to
any Employee Benefit Plan; (iii) each Employee Benefit Plan which is intended
to be "qualified" within the meaning of Section 401(a) of the Code is so
qualified, and any trust created pursuant to any such Employee Benefit Plan is
exempt from federal income tax under Section 501(a) of the Code and the IRS has
issued each such Employee Benefit Plan a favorable determination letter which,
to the Company's knowledge, is currently applicable, except to the extent such
failure to be qualified, exempt or applicable, would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect; (iv) the
Company is not aware of any circumstances or event which would be reasonably
likely to jeopardize the tax-qualified status of any such Employee Benefit Plan
or the tax-exempt status of any related trust, or would cause the imposition of
any liability, penalty or tax under ERISA or the Code with respect to any
Employee Benefit Plan; (v) no material unsatisfied liabilities to participants,
the IRS, the United States Department of Labor, the Pension Benefit Guaranty
Corporation or to any other person or entity have been incurred as a result of
the termination of any Employee Benefit Plan; and (vi) there has been no event
with respect to an Employee Benefit Plan which would require disclosure under
Section 4062(c), 4063(a) or 4041(e) of ERISA.
(b) No Employee Benefit Plan would result in the payment to any employee,
officer or director of the Company or any of its Subsidiaries of any money or
other property or rights or accelerate or provide any other rights or benefits
to any such employee, officer or director as a direct result of the
transactions contemplated by this Agreement.
(c) Except as disclosed in the Filed SEC Documents, since the date of the
most recent audited financial statements included in the most recent Filed SEC
Documents, there has not been any adoption or amendment in any material respect
by the Company or any of its Subsidiaries of any Employee Benefit Plan or
collective bargaining agreement providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries.
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(d) The Company has not promised or vested, by plan document or written
or oral communication, the right of any employee, former employee, retiree,
beneficiary or other person to lifetime benefits under any "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA.
(e) No Employee Benefit Plan excludes from participation in such plan any
individual performing services for the Company or an ERISA Affiliate on the
basis of such individual's status as an independent contractor, unless such
individual actually meets the requirements for status as an independent
contractor based on Internal Revenue Service Revenue Ruling 87-41, 1987-1 C.B.
296, except to the extent any such exclusion would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(f) No "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) is a multi-employer plan within the meaning of Sections 3(37) or
4001(a)(3) of ERISA. The Company has not withdrawn or partially withdrawn from
any multi-employer plan, or has any liability, jointly or otherwise, for any
withdrawal liability demanded or yet to be demanded under Title IV of ERISA by
any multi-employer plan for a complete or partial withdrawal.
Section 4.10 Taxes. (a) The Company and each of its Subsidiaries have
timely filed (or have had timely filed on their behalf) or will file or cause
to be timely filed, all material Tax Returns required by applicable law to be
filed by any of them prior to or as of the Closing Date. All such Tax Returns
are, or will be at the time of filing, true, complete and correct in all
material respects, except where the failure to be true, complete and correct
would not be reasonably likely to have a Material Adverse Effect.
(b) The Company and each of its Subsidiaries have paid (or have had paid
on their behalf), or where payment is not yet due, have established (or have
had established on their behalf and for their sole benefit and recourse), or
will establish or cause to be established on or before the Closing Date, an
adequate accrual for the payment of, all material Taxes due with respect to any
period ending prior to or as of the Closing Date. The Company and each of its
Subsidiaries have made all material deposits required by law to be made with
respect to employee withholding and other employment Taxes.
(c) No audit by any Governmental Entity is presently in progress, or, to
the knowledge of the Company, threatened, with respect to any Tax Returns filed
by, or Taxes due from the Company or any of its Subsidiaries. There are no Tax
Liens other than Permitted Liens on any of the assets or properties of the
Company or any of its Subsidiaries.
Section 4.11 Compliance with Laws. Neither the Company nor any of its
Subsidiaries has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business or operations, except for violations and failures to
comply that could not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
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Section 4.12 No Other Agreements to Sell the Company or its Assets. Other
than this Agreement, the Company has no legal obligation, absolute or
contingent, to any other person to sell any material portion of the assets or
properties of the Company or any of its Subsidiaries, to sell any material
portion of the capital stock or other ownership interests of the Company or any
of its Subsidiaries or to effect any merger, consolidation or other
reorganization of the Company or any of its Subsidiaries or to enter into any
agreement with respect thereto.
Section 4.13 Contracts and Commitments. (a) Section 4.13 of the
Disclosure Letter contains a complete and accurate list of all written
contracts, plans or agreements ("Contracts") of the following categories to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound as of the date of this Agreement:
(i) employment Contracts pursuant to which any person
receives annual compensation in excess of $125,000, including
contracts to employ executive officers and other contracts with
officers, directors or shareholders of the Company, and all severance,
change in control or similar arrangements with any executive officers
of the Company;
(ii) Contracts with executive officers of the Company or any
of its Subsidiaries pursuant to which any such officer or employee
would be entitled to receive any severance, change in control or
similar payment upon Hill ceasing to own a stated amount or percentage
of outstanding Company Common Stock or other voting securities of the
Company, (whether or not the receipt of such payment by any such
executive officer would also require the termination of employment of
such executive officer);
(iii) promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments providing for the
lending of money, whether as borrower, lender or guarantor, in excess
of $1 million;
(iv) Contracts for the purchase of inventory or equipment which
are not cancelable (without material penalty, cost or other liability)
within one year and other Contracts, whether or not made in the
ordinary course of business, involving annual expenditures or
liabilities in excess of $2 million which are not cancelable (without
material penalty, cost or other liability) within 90 days;
(v) Contracts pursuant to which the Company or any of its
Subsidiaries receives annual revenues in excess of $1,000,000;
(vi) Contracts containing covenants limiting the freedom of the
Company or any of the Material Company Subsidiaries to engage in any
line of business or compete with any person;
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(vii) any Contract restricting the ownership or voting of the
capital stock of the Company or any of its Subsidiaries, other than as
contemplated by this Agreement or the exhibits hereto;
(viii) joint venture or partnership agreements; and
(ix) any Contract pending for the acquisition, directly or
indirectly (by merger or otherwise) of material assets or capital
stock of another person.
True and complete copies of the written Contracts identified in Section 4.13 of
the Disclosure Letter have been delivered or made available to Purchaser or its
representatives.
Section 4.14 Insurance. All material fire and casualty, general
liability, business interruption, product liability, workers' compensation,
vehicular and other insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, provide adequate coverage
for normal risks incident to the businesses of the Company and its Subsidiaries
and their respective properties and assets, and are in character and amount
substantially equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards, except for any
such failures to maintain insurance policies that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Section 4.15 Affiliate Transactions. Except as set forth in the Filed SEC
Documents, from December 31, 1997 through the date of this Agreement there have
been no transactions, agreements, arrangements or understandings between the
Company or any of its Subsidiaries, on the one hand, and Affiliates of the
Company or any of it Subsidiaries or other persons, on the other hand, that
would be required to be disclosed under Item 404 of Regulation S-K under the
Securities Act.
Section 4.16 Proxy Statement. None of the information included or
incorporated by reference by the Company in the Proxy Statement, will, at the
date it is first mailed to the Company's shareholders and at the time of the
meeting of the Company's shareholders held for the purpose of obtaining
Shareholder Approval, contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by the Company with
respect to statements made therein based on information supplied by Purchaser
and its Affiliates for inclusion in the Proxy Statement. The Proxy Statement
will comply in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no representation is made
by the Company with respect to statements made therein based on information
supplied by Purchaser and its Affiliates for inclusion in the Proxy Statement.
Section 4.17 Vote Required; Recommendation of Board. The affirmative vote
of a majority of the outstanding shares of Company Common Stock is the only
vote of the holders
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of any class or series of the Company's capital stock necessary to approve the
issuance of the Shares by the Company to Purchaser as contemplated by this
Agreement. The Board of Directors of the Company, or an authorized Committee
of such Board, at a meeting duly called and held has (i) unanimously approved
this Agreement and the transactions contemplated hereby, (ii) determined that
the transactions contemplated by this Agreement are fair to the Company and its
shareholders and (iii) resolved to recommend to such holders that they approve
the issuance of the Shares by the Company to Purchaser as contemplated by this
Agreement and that such matter be submitted to the Company's shareholders. The
Company hereby agrees to the inclusion in the Proxy Statement of the
recommendations of the Board of Directors of the Company described in this
Section 4.17.
Section 4.18 Takeover Statutes. To the knowledge of the Company, no "fair
price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation enacted under state or federal law
applicable to the Company is applicable to the transactions contemplated by
this Agreement.
Section 4.19 Rights Agreement. The Company's Board of Directors has taken
all necessary action to provide that Purchaser will not become an "Acquiring
Person," that no "Triggering Event, "Share Acquisition Date" or "Distribution
Date" (as such terms are defined in the Rights Agreement), will occur, and that
the Rights Agreement will not be applicable to the execution or delivery of
this Agreement or any amendment hereto or the consummation of the transactions
contemplated by this Agreement. The Company has provided to Purchaser written
evidence, reasonably satisfactory to Purchaser, of the foregoing.
Section 4.20 Brokers and Finders. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The fees incurred and to be incurred by the Company
in connection with this Agreement and the transactions contemplated by this
Agreement for the persons listed in Section 4.20 of the Disclosure Letter are
set forth in Section 4.20 of the Disclosure Letter. The Company has furnished
to Purchaser true and complete copies of all the agreements referred to in
Section 4.20 of the Disclosure Letter and all indemnification and other
agreements related to the engagement of the persons so listed.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
Section 5.1 Organization. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
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Section 5.2 Authority; Noncontravention. Purchaser has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally. The execution and delivery of this Agreement by Purchaser do not,
and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, 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 Purchaser or (ii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment , order, decree, statute, law, ordinance, rule
or regulation applicable to Purchaser 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 (x) prevent Purchaser from
performing its obligations under this Agreement in any material respect or (y)
prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity, is
required by or with respect to Purchaser in connection with the execution and
delivery of this Agreement by Purchaser or the consummation by Purchaser of the
transactions contemplated by this Agreement, except (i) the filing of a
notification and report form by Purchaser under the HSR Act and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of the transactions contemplated by this
Agreement or otherwise prevent Purchaser from performing its obligations under
this Agreement in any material respect.
Section 5.3 Investment Intent. Purchaser is purchasing the Shares for
investment, and not with a view toward, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the Shares. Purchaser is an "accredited investor" as defined in Rule 501 of
Regulation D adopted by the SEC under the Securities Act.
Section 5.4 Proxy Statement. None of the information supplied by
Purchaser for inclusion in the Proxy Statement will, at the date it is first
mailed to the Company's shareholders and at the time of the meeting of the
Company's shareholders held for the purpose of obtaining Shareholder Approval,
contain any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 5.5 Availability of Funds. Purchaser has sufficient funds
available to pay the Purchase Price on the Closing Date.
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Section 5.6 Litigation. There is no suit, action or proceeding pending
or, to the knowledge of Purchaser, threatened against or affecting Purchaser
that, individually or in the aggregate, would reasonably be expected to (i)
prevent Purchaser from performing its obligations under this Agreement in any
material respect or (ii) prevent or delay in any material respect the
consummation of the transactions contemplated by this Agreement.
Section 5.7 Brokers and Finders. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS
Section 6.1 Conduct of Business. During the period from the date of this
Agreement to the Closing Date, the Company shall, and shall cause each of its
Subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and in
compliance in all material respects with all applicable laws and regulations
and, to the extent consistent therewith, use commercially reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers and others having business dealings
with them. Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Closing Date, the Company shall not, and
shall not permit any of its Subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly owned
Subsidiary of the Company to its parent, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
Subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than the issuance of shares of Company Common Stock reserved
for issuance as described in the second sentence of Section 4.3);
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(iii) amend its articles of incorporation, by-laws or
comparable organizational documents in a manner that would be
reasonably likely to adversely affect Purchaser;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, limited liability company, joint venture, association or
other business organization or division thereof other than
acquisitions not exceeding $50 million in the aggregate or (y) any
assets that are material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole;
(v) enter into any agreement with respect to a takeover
proposal;
(vi) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien (other than Permitted Liens) or otherwise dispose
of any of its properties or assets, other than in the ordinary course
of business;
(vii) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except as otherwise permitted by the Company's
existing senior credit facility, or (z) make any loans, advances
(other than advances to employees in the ordinary course of business
consistent with prior practice) or capital contributions to, or
investments in , any other person, other than to the Company or any
direct or indirect wholly owned Subsidiary of the Company;
(viii) make or agree to make any new capital expenditures
outside the ordinary course of business which, in the aggregate,
exceed $2.5 million;
(ix) except in the ordinary course of business pursuant to
existing employment agreements or Employee Benefit Plans, as described
in the Disclosure Letter or as required by applicable laws, (A)
increase the compensation payable or to become payable to its
executive officers or employees, (B) grant any severance or
termination pay to, or enter into any employment or severance
agreement with, any director, executive officer or employee of the
Company or any of its Subsidiaries or (C) establish, adopt, enter into
or amend in any material respect or take action to accelerate any
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rights or benefits under any collective bargaining agreement or any
Employee Benefit Plan, except as contemplated by this Agreement;
(x) without limiting the generality of clause (ix) above, make
any amendment to any Employee Benefit Plan solely as a result of this
Agreement or in contemplation of the issuance of Shares contemplated
by this Agreement; or
(xi) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 6.2 No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize any officer, director
or employee of or any investment banker, attorney or other advisor or
representative of, the Company or any of the Company's Subsidiaries to, (i)
solicit, initiate or encourage the submission of any takeover proposal (as
defined below), (ii) enter into any agreement with respect to any takeover
proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any takeover proposal; provided;
however, that the Company or its Board of Directors may comply with Rule 14e-2
promulgated under the Exchange Act with regard to a takeover proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any executive officer of the Company or
any of the Company's Subsidiaries or any investment banker, attorney or other
advisor or representative of the Company or any of the Company's Subsidiaries
at the direction of the Company or acting within the scope of his, her or its
authority, whether or not such person is purporting to act on behalf of the
Company or any of the Company's Subsidiaries or otherwise, shall be deemed to
be a breach of this Section 6.2(a) by the Company. For purposes of this
Agreement, "takeover proposal" means any proposal for a merger, consolidation
or other business combination involving the Company or any of its Subsidiaries
or any proposal or offer to acquire from the Company or Hill in any manner,
directly or indirectly, more than 10% of any class of voting securities of the
Company or any of the Company's Subsidiaries, or assets representing more than
20% of the total assets of the Company and its Subsidiaries, taken as a whole,
as reflected on the Company's balance sheet as of March 31, 1998, other than
the transactions contemplated by this Agreement. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations by the Company or any of its officers, investment bankers,
attorneys or other advisors or representatives with any parties conducted
heretofore on the Company's behalf with respect to any of the foregoing.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Purchaser, the adoption, approval or recommendation by the
Company's Board of Directors or
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any such committee of this Agreement or (ii) approve or recommend, or propose
to approve or recommend, any takeover proposal.
(c) The Company promptly shall advise Purchaser orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. The Company will keep Purchaser promptly and fully informed
in all material respects of the status and details of any such takeover proposal
or inquiry.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Proxy Statement; Shareholder Meeting. (a) As soon as
practicable following the date of this Agreement, the Company shall prepare and
file with the SEC the Proxy Statement. The Company will use its reasonable
best efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable thereafter.
(b) The Company will, as soon as practicable following SEC clearance of
the Proxy Statement, duly call, give notice of, convene and hold a meeting of
its shareholders for the purpose of obtaining Shareholder Approval. The
Company will, through its Board of Directors, recommend to its shareholders
approval of the issuance of the Shares by the Company to Purchaser, as
contemplated by this Agreement. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 7.1(b) shall not be altered by the commencement,
public proposal, public disclosure or communication to the Company of any
takeover proposal.
Section 7.2 Access to Information. The Company shall, and shall cause
each of its Subsidiaries to, afford to Purchaser and to the officers,
employees, accountants, counsel, financial advisors and other representatives
of Purchaser, reasonable access during normal business hours during the period
prior to the Closing Date to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each of its Subsidiaries to, furnish promptly to Purchaser (a)
a copy of each report, schedule, registration statement or other document filed
by it during such period pursuant to the requirements of federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as Purchaser may reasonably request.
Section 7.3 Further Action. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. From time to time
after the Closing Date, without further consideration, the Company will, at its
own expense,
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execute and deliver such documents to Purchaser as Purchaser may reasonably
request in order more effectively to vest in Purchaser good and marketable
title to the Shares.
Section 7.4 Notification of Certain Matters. The Company shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Company or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 7.4 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 7.5 Public Announcements. The Company and Purchaser shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by
the rules and regulations of the National Association of Securities Dealers,
Inc.
Section 7.6 Investment Agreement. The Company and Purchaser shall execute
and deliver each of the Investment Agreement and the Shareholders Agreement at
or prior to the Closing.
Section 7.7 Fees and Expenses. All fees and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not such transactions
are consummated.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation. The respective
obligation of each party to effect the transactions contemplated by this
Agreement is subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) Shareholder Approval. The Company shall have obtained
Shareholder Approval.
(b) Antitrust. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the
HSR Act shall have been terminated or shall have expired.
(c) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, ruling, injunction or other order (whether
temporary, preliminary or permanent) shall have been enacted, promulgated
or enforced by any Governmental Entity of
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competent jurisdiction which prohibits, restrains, enjoins or restricts
the consummation of the transactions contemplated by this Agreement;
provided, however, that each of the parties shall have used its
reasonable best efforts to cause any such decree, ruling, injunction or
other order to be vacated or lifted.
(d) There shall not be pending any suit, action or proceeding by
any Governmental Entity seeking to impose, and neither the Company nor
Purchaser shall be subject to any order, decree, ruling or injunction
(whether temporary, preliminary or permanent) which would impose,
limitations on the ability of Purchaser to acquire or hold, or exercise
full rights of ownership of, the Shares, including the right to vote the
Shares on all matters properly presented to the shareholders of the
Company.
(e) The closing of the transactions contemplated by the Other Stock
Purchase Agreements shall be occurring concurrently with the Closing.
Section 8.2 Condition to Obligations of the Company. The obligations of
the Company to effect the transactions contemplated by this Agreement are
further subject to the satisfaction or waiver at or prior to the Closing Date
of the following additional conditions:
(a) Purchaser shall have performed in all material respects all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date, and the representations and
warranties of Purchaser contained in this Agreement that are qualified as
to materiality shall be true and correct and the representations and
warranties of Purchaser contained in this Agreement that are not so
qualified shall be true and correct in all material respects (except to
the extent that such failures to be true and correct in the aggregate
shall not have had and shall not be reasonably likely to have a Material
Adverse Effect), in each case as of the date of this Agreement and as of
the Closing Date, except to the extent any such representation or
warranty expressly relates to an earlier date (in which case as of such
date), and Purchaser shall have received a certificate signed on behalf
of Purchaser by an executive officer thereof to such effect.
(b) The Company shall have received an opinion of Rosenberg &
Liebentritt, in form and substance reasonably satisfactory to the
Company.
Section 8.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated by this Agreement are further
subject to the satisfaction or waiver at or prior to the Closing Date of the
following additional conditions:
(a) The Company shall have performed in all material respects all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date, and the representations and
warranties of the Company contained in this Agreement that are qualified
as to materiality shall be true and correct and the
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representations and warranties of the Company contained in this Agreement
that are not so qualified shall be true and correct in all material
respects (except to the extent that such failures to be true and correct
in the aggregate shall not have had and shall not be reasonably likely to
have a Material Adverse Effect), in each case as of the date of this
Agreement and as of the Closing Date, except to the extent any such
representation or warranty expressly relates to an earlier date (in which
case as of such date), and the Company shall have received a certificate
signed on behalf of the Company by an executive officer thereof to such
effect.
(b) The modifications to the employment agreements referenced in
Section 4.7(iii) of the Disclosure Letter shall have been made, as
described in such Section of the Disclosure Letter.
(c) Purchaser shall have received an opinion of Kirkland & Ellis,
in form and substance reasonably satisfactory to Purchaser.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of Purchaser and the Company; or
(b) by either Purchaser or the Company:
(i) if, at a duly held shareholders meeting of the Company
or any adjournment thereof at which Shareholder Approval is voted
upon, Shareholder Approval shall not have been obtained;
(ii) if the transactions contemplated by this Agreement
shall not have been consummated by October 31, 1998 (other than due
to the failure of the party seeking to terminate this Agreement to
perform its obligations under this Agreement required to be
performed at or prior to the Closing Date);
(iii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Agreement which (A)
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would give rise to the failure of a condition set forth in Section
8.2(a) or 8.3(a), as applicable, and (B) cannot be or has not been
cured within 30 days after the giving of written notice to the
breaching party of such breach (provided that the terminating party
is not then in breach of any representation, warranty, covenant or
other agreement that would give rise to a failure of a condition as
described in clause (A) above); or
(v) in the event that (A) all the conditions to the
obligation of such party to effect the transactions contemplated by
this Agreement set forth in Section 8.1 shall have been satisfied
and (B) any condition to the obligation of such party to effect such
transactions set forth in Section 8.2 (in the case of the Company)
or Section 8.3 (in the case of Purchaser) is not capable of being
satisfied prior to the end of the period referred to in subsection
(b)(ii) above.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement by either Purchaser or the Company as provided in Section 9.1 hereof,
this Agreement shall forthwith become void (except as set forth in this Section
9.2, in Section 7.5 and Article XI (other than Section 11.5) hereof, which
shall survive such termination (the "Surviving Provisions")) and there shall be
no liability on the part of Purchaser or the Company except for any breach of
any of its obligations under the Surviving Provisions. Notwithstanding the
foregoing, no party hereto shall be relieved from liability for any material
breach of this Agreement.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.1 Survival. The representations and warranties given by the
Company to Purchaser in this Agreement, and the representations and warranties
given by Purchaser to the Company in this Agreement, shall survive the Closing
until the second anniversary of the Closing Date; provided, however, that the
representations and warranties given by the Company to Purchaser in Sections
4.1, 4.4 and 4.5, and by Purchaser to the Company in Sections 5.1, 5.2 and 5.3,
shall survive the Closing indefinitely and shall not terminate.
Section 10.2 Indemnification by Purchaser or the Company. (a) From and
after the Closing Date, Purchaser shall indemnify and hold harmless the
Company, the Company's Affiliates, each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors
and assigns of any of the foregoing from and against any and all damages,
claims, losses, expenses, costs, obligations and liabilities including without
limiting the generality of the foregoing, liabilities for all reasonable
attorneys' fees and expenses (including attorney and expert fees and expenses
incurred to enforce the terms of this Agreement) (collectively, "Losses and
Expenses") suffered or incurred by any such indemnified person arising from,
relating to or otherwise in respect of, (i) any breach of, or inaccuracy in,
any representation or warranty of Purchaser contained in this Agreement or in
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the certificate delivered pursuant to Section 8.2(a) of this Agreement; and
(ii) any breach of any covenant of Purchaser contained in this Agreement.
(b) From and after the closing date, the Company shall indemnify and
hold harmless Purchaser, Purchaser's Affiliates, each of their respective
directors, officers, employees and agents, and each of the heirs, executors,
successors and assigns of any of the foregoing from and against any and all
Losses and Expenses suffered or incurred by any such indemnified person arising
from, relating to or otherwise in respect of, (i) any breach of, or inaccuracy
in, any representation or warranty of the Company contained in this Agreement or
in the certificate delivered pursuant to section 8.3(a) of this Agreement, and
(ii) any breach of any covenant of the Company contained in this Agreement.
Section 10.3 Third-Party Claims. If a claim by a third party is made
against an indemnified person hereunder, and if such indemnified person intends
to seek indemnity with respect thereto under this Article, such indemnified
person shall promptly notify the indemnifying person in writing of such claims
setting forth such claims in reasonable detail, provided that failure of such
indemnified person to give prompt notice as provided herein shall not relieve
the indemnifying person of any of its obligations hereunder, except to the
extent that the indemnifying person is materially prejudiced by such failure.
The indemnifying person shall have twenty (20) days after receipt of such
notice to undertake, through counsel of its own choosing, subject to the
reasonable approval of such indemnified person, and at its own expense, the
settlement or defense thereof, and the indemnified person shall cooperate with
it in connection therewith; provided, however, that the indemnified person may
participate in such settlement or defense through counsel chosen by such
indemnified person, provided that the fees and expenses of such counsel shall
be borne by such indemnified person. If the indemnifying person shall assume
the defense of a claim, it shall not settle such claim without the prior
written consent of the indemnified person, (i) unless such settlement includes
as an unconditional term thereof the giving by the claimant of a release of the
indemnified person from all liability with respect to such claim or (ii) if
such settlement involves the imposition of equitable remedies or the imposition
of any material obligations on such indemnified person other than financial
obligations for which such indemnified party will be indemnified hereunder. If
the indemnifying person shall assume the defense of a claim, the fees of any
separate counsel retained by the indemnified person shall be borne by such
indemnified person unless there exists a conflict between them as to their
respective legal defenses (other than one that is of a monetary nature), in
which case the indemnified person shall be entitled to retain separate counsel,
the reasonable fees and expenses of which shall be reimbursed by the
indemnifying person. If the indemnifying person does not notify the
indemnified person within thirty (30) days after the receipt of the indemnified
person's notice of a claim of indemnity hereunder that it elects to undertake
the defense thereof, the indemnified person shall have the right to contest,
settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
25
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<PAGE> 29
Section 10.4 Termination of Indemnification. The obligations to indemnify
and hold harmless a party hereto, (a) with respect to any breach of, or
inaccuracy in, any representation or warranty contained in this Agreement shall
terminate when the applicable representation or warranty terminates and (b)
with respect to any breach of covenant or agreement set forth in this Agreement
shall not terminate; provided, however, that as to clause (a) above such
obligation to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the
indemnifying party.
ARTICLE XI
MISCELLANEOUS
Section 11.1 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 11.2 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 laws thereof.
Section 11.3 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 any rights or remedies.
Section 11.4 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):
(a) If to Purchaser:
Samstock, L.L.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: F. Philip Handy
Telecopy Number: 312.454.1671
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<PAGE> 30
with a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Walter S. Lowry
Telecopy Number: 312.454.0335
(b) If to Company, to:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Theodore C. Rammelkamp, Jr.
Telecopy: 813.626.9610
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: R. Scott Falk
Telecopy Number: 312.861.2200
Section 11.5 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 Purchaser 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; provided that such assignment shall not relieve
Purchaser of its obligations hereunder. 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.
Section 11.6 Interpretation. The table of contents and headings contained
in this Agreement are inserted for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement. All
references to a Section, articles, Schedule or Exhibit contained herein mean
Sections or Articles 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".
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<PAGE> 31
Section 11.7 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.
Section 11.8 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 11.9 Consent to Jurisdiction. Each party hereto irrevocably
submits to the nonexclusive jurisdiction of (a) the state courts of the State
of Illinois and (b) the federal district courts 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> 32
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By: /s/ Rod Dammeyer
-------------------------------------
Name:
Title:
DAVEL COMMUNICATIONS GROUP, INC.
By:
--------------------------------------
Name:
Title:
29
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<PAGE> 33
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By:
-------------------------------------
Name:
Title:
DAVEL COMMUNICATIONS GROUP, INC.
By: /s/ David Hill
--------------------------------------
Name:
Title:
29
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<PAGE> 1
EXHIBIT 2
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SAMSTOCK, L.L.C.
AND
DAVID R. HILL
DATED MAY 14, 1998
Page 43 of 134
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
<S> <C>
ARTICLE I - DEFINITIONS........................................ 1
ARTICLE II - PURCHASE AND SALE OF SHARES....................... 3
Section 2.1 Purchase and Sale........................... 3
Section 2.2 Consideration............................... 3
ARTICLE III - THE CLOSING...................................... 4
Section 3.1 Time and Place.............................. 4
Section 3.2 Deliveries by Shareholder................... 4
Section 3.3 Deliveries by the Purchaser................. 4
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER..... 5
Section 4.1 Title to Stock.............................. 5
Section 4.2 Authority; Noncontravention................. 5
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER........ 6
Section 5.1 Organization................................ 6
Section 5.2 Authority; Noncontravention................. 6
Section 5.3 Investment Intent........................... 6
ARTICLE VI - CERTAIN AGREEMENTS................................ 7
Section 6.1 No Solicitation............................. 7
Section 6.2 Further Action.............................. 7
Section 6.3 Notification of Certain Matters............. 7
Section 6.4 Public Announcements........................ 8
Section 6.5 Other Agreements............................ 8
Section 6.6 Fees and Expenses........................... 8
ARTICLE VII - CONDITIONS....................................... 8
Section 7.1 Conditions to Each Party's Obligation....... 8
Section 7.2 Condition to Obligations of Shareholder..... 9
Section 7.3 Conditions to Obligations of Purchaser...... 9
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER............... 9
Section 8.1 Termination................................. 9
Section 8.2 Effect of Termination....................... 10
ARTICLE IX - SURVIVAL; INDEMNIFICATION......................... 10
Section 9.1 Survival.................................... 10
</TABLE>
Page 44 of 134
<PAGE> 3
<TABLE>
<S> <C>
Section 9.2 Indemnification by Purchaser............... 11
Section 9.3 Third-Party Claims......................... 11
Section 9.4 Termination of Indemnification............. 12
ARTICLE X - MISCELLANEOUS..................................... 12
Section 10.1 Counterparts............................... 12
Section 10.2 Governing Law.............................. 12
Section 10.3 Entire Agreement........................... 12
Section 10.4 Notices.................................... 12
Section 10.5 Assignment................................. 13
Section 10.6 Interpretation............................. 14
Section 10.7 Amendments; Waivers........................ 14
Section 10.8 Severability............................... 14
Section 10.9 Consent to Jurisdiction.................... 14
</TABLE>
ii
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<PAGE> 4
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made this 14th day of May, 1998 by and
between Samstock, L.L.C., a Delaware limited liability company ("Purchaser"),
and David R. Hill, an individual residing in the State of Illinois
("Shareholder").
WITNESSETH:
WHEREAS, Shareholder wishes to sell to Purchaser, and Purchaser wishes to
purchase from Shareholder, 500,000 shares (the "Shares") of common stock, no
par value, of Davel Communications Group, Inc., an Illinois corporation (the
"Company") (such common stock being referred to as "Company Common Stock") and
warrants to purchase 131,250 shares of Company Common Stock (the "Warrants"),
upon the terms and subject to the conditions of this Agreement.
WHEREAS, concurrently herewith, Purchaser and the Company have entered
into a Stock Purchase Agreement pursuant to which the Company has agreed to
issue and sell to Purchaser, and Purchaser has agreed to purchase from the
Company, 1,000,000 newly issued shares of Company Common Stock and warrants to
purchase 218,750 shares of Company Common Stock at an exercise price of $32.00
per share (which shall be exercisable through the fourth anniversary of the
Closing Date) (the "Company Stock Purchase Agreement"), upon the terms and
subject to the conditions set forth in such Agreement.
WHEREAS, concurrently herewith, Purchaser, on the one hand, and certain
directors and members of management of the Company (the "Management
Shareholders"), on the other, have entered into a Stock Purchase Agreement
pursuant to which the Management Shareholders have agreed to sell to Purchaser,
and Purchaser has agreed to purchase from the Management Shareholders, 123,900
shares of Company Common Stock (such Agreement, together with the Company Stock
Purchase Agreement, the "Other Stock Purchase Agreements"), upon the terms and
subject to the conditions set forth in the Management Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Affiliate" shall mean, 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
Page 46 of 134
<PAGE> 5
of management or policies, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
Section 1.2 "Agreement" shall mean this Agreement.
Section 1.3 "Closing" shall have the meaning set forth in Section 3.1
hereof.
Section 1.4 "Closing Date" shall have the meaning set forth in Section
3.1 hereof.
Section 1.5 "Company" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.6 "Company Common Stock" shall have the meaning set forth in the
introductory clauses hereto.
Section 1.7 "Company Stock Purchase Agreement" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.8 "Governmental Entity" shall mean any federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency.
Section 1.9 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Section 1.10 "Investment Agreement" shall mean the Investment Agreement
substantially in the form of Exhibit A to the Company Stock Purchase Agreement.
Section 1.11 "Liens" shall mean all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever.
Section 1.12 "Losses and Expenses" shall have the meaning set forth in
Section 10.2 hereof.
Section 1.13 "Management Shareholders" shall have the meaning set forth in
the introductory clauses hereto.
Section 1.14 "Other Stock Purchase Agreements" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.15 "person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, Governmental Entity or other entity.
Section 1.16 "Purchase Price shall have the meaning set forth in Section
2.2 hereof.
2
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<PAGE> 6
Section 1.17 "Purchaser" shall have the meaning set forth in the
introductory clauses hereto.
Section 1.18 "SEC" shall mean the Securities and Exchange Commission.
Section 1.19 "Shareholder" shall have the meaning set forth in the
introductory clauses hereto.
Section 1.20 "Shareholder Agreement" shall mean the Shareholders Agreement
substantially in the form of Exhibit B to the Company Stock Purchase Agreement.
Section 1.21 "Shares" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.22 "Subsidiary" of any person shall mean another person, an
amount of the voting securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person.
Section 1.23 "Surviving Provisions" shall have the meaning set forth in
Section 9.2 hereof.
Section 1.24 "takeover proposal" shall have the meaning set forth in
Section 6.2 hereof.
Section 1.25 "Warrant Agreement" shall mean an agreement to be entered
into by Purchaser and Shareholder pursuant to which Shareholder shall issue to
Purchaser the Warrants, which agreement, in form and substance, shall be
reasonably acceptable to Purchaser.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Shareholder shall sell,
and Purchaser shall purchase from Shareholder, the Shares and the Warrants.
Section 2.2 Consideration. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Purchaser shall pay to Shareholder
$14,000,000 (the "Purchase Price").
3
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<PAGE> 7
ARTICLE III
THE CLOSING
Section 3.1 Time and Place. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Rosenberg &
Liebentritt, P.C., 2 N. Riverside Plaza, Chicago, Illinois at 10:00 a.m. (local
time) on the fifth business day following the date on which all of the
conditions to each party's obligations hereunder have been satisfied or waived
or at such other place or time as Purchaser and Shareholder may agree. The
date and time at which the Closing actually occurs is hereinafter referred to
as the "Closing Date."
Section 3.2 Deliveries by Shareholder. At the Closing, Shareholder shall
deliver the following to Purchaser.
(a) (i) one or more stock certificates representing the Shares; and
(ii) any other documents that are necessary to transfer to Purchaser good
and marketable title to the Shares free and clear of any Lien;
(b) a duly executed counterpart of the Investment Agreement;
(c) a duly executed counterpart of the Shareholders Agreement;
(d) a duly executed counterpart of the Warrant Agreement; and (ii)
any other documents that are necessary to transfer to Purchaser good and
marketable title to the Warrants free and clear of any Lien; and
(e) all other documents, instruments and writings required to be
delivered by Shareholder at or prior to the Closing Date pursuant to this
Agreement.
Section 3.3 Deliveries by the Purchaser. At the Closing, Purchaser shall
deliver the following to Shareholder:
(a) the Purchase Price by interbank transfer of immediately
available funds to an account designated by Shareholder or by such other
means as may be agreed upon in writing by Shareholder and Purchaser;
(b) a duly executed counterpart of the Investment Agreement;
(c) a duly executed counterpart of the Shareholders Agreement;
(d) a duly executed counterpart of the Warrant Agreement; and
(e) all other documents, instruments and writings required to be
delivered by Purchaser at or prior to the Closing Date pursuant to this
Agreement.
4
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<PAGE> 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to Purchaser as follows:
Section 4.1 Title to Stock. Shareholder owns the Shares free and clear of
all Liens. At the Closing, Purchaser will acquire good and marketable title to
the Shares and the Warrants, free and clear of all Liens. Upon issuance of
shares of Company Common Stock pursuant to the Warrants, such shares will be
duly authorized, validly issued, fully paid and non-assessable, and Purchaser
will acquire good and marketable title to such shares.
Section 4.2 Authority; Noncontravention. Shareholder has the requisite
power and authority to enter into this Agreement and, subject to Shareholder
Approval (as defined in the Company Stock Purchase Agreement), to consummate
the transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by Shareholder and constitutes a valid and binding
obligation of Shareholder, enforceable against Shareholder in accordance with
its terms, subject to general principles of equity as may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally. The execution and delivery of this Agreement by Shareholder do not,
and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Shareholder under (i) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Shareholder or his properties or assets or (ii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Shareholder or his properties or assets of which
Shareholder is aware, other than, in the case of clauses (ii) and (ii), any
such conflicts, violations, defaults, rights or Liens, that individually or in
the aggregate, would not (y) prevent Shareholder from performing his
obligations under this Agreement in any material respect or (z) prevent or
delay in any material respect the consummation of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to Shareholder in connection with the execution and delivery
of this Agreement by Shareholder or the consummation by Shareholder of the
transactions contemplated by this Agreement, except (i) the filing of a
notification and report form by Shareholder as the ultimate parent entity of
the Company under the HSR Act, (ii) the filing with the SEC of such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby and (iii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of the
5
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<PAGE> 9
transactions contemplated by this Agreement or otherwise prevent Shareholder
from performing his obligations under this Agreement in any material respect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Shareholder as follows:
Section 5.1 Organization. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
Section 5.2 Authority; Noncontravention. Purchaser has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to general principles of equity as may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally.
The execution and delivery of this Agreement by Purchaser do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, 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 Purchaser or (ii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment , order, decree, statute, law, ordinance, rule or regulation
applicable to Purchaser or its properties or assets of which Purchaser is
aware, other than, in the case of clause (ii), any such conflicts, violations
or defaults that, individually or in the aggregate, would not (x) prevent
Purchaser from performing its obligations under this Agreement in any material
respect or (y) prevent or delay in any material respect the consummation of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity, is required by or with respect to Purchaser in connection with the
execution and delivery of this Agreement by Purchaser or the consummation by
Purchaser of the transactions contemplated by this Agreement, except (i) the
filing of a notification and report form by Purchaser under the HSR Act and
(ii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not prevent or
delay in any material respect the consummation of the transactions contemplated
by this Agreement or otherwise prevent Purchaser from performing its
obligations under this Agreement in any material respect.
Section 5.3 Investment Intent. Purchaser is purchasing the Shares for
investment, and not with a view toward, or for sale in connection with, any
distribution thereof, nor with
6
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<PAGE> 10
any present intention of distributing or selling the Shares. Purchaser is an
"accredited investor" as defined in Rule 501 of Regulation D adopted by the SEC
under the Securities Act of 1993, as amended.
ARTICLE VI
CERTAIN AGREEMENTS
Section 6.1 No Solicitation Shareholder agrees that he shall not, and
shall not authorize any investment banker, attorney or other advisor or
representative of Shareholder, to (i) solicit, initiate or encourage the
submission of any takeover proposal (as defined below), (ii) enter into any
agreement with respect to any takeover proposal or (iii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any takeover proposal. For purposes of this Agreement, "takeover proposal"
means any proposal for a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries or any proposal or offer to
acquire from the Company or Shareholder in any manner, directly or indirectly,
more than 10% of any class of voting securities of the Company or any of the
Company's Subsidiaries, or assets representing more than 20% of the total
assets of the Company and its Subsidiaries, taken as a whole, as reflected on
the Company's balance sheet as of March 31, 1998, other than the transactions
contemplated by this Agreement. Shareholder will immediately cease and cause
to be terminated any existing activities, discussions or negotiations by
Shareholder or any investment bankers, attorneys or other advisors or
representatives of Shareholder with any parties conducted heretofore on
Shareholder's behalf with respect to any of the foregoing.
Section 6.2 Further Action. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. From time to time
after the Closing Date, without further consideration, Shareholder will, at his
own expense, execute and deliver such documents to Purchaser as Purchaser may
reasonably request in order more effectively to vest in Purchaser good and
marketable title to the Shares.
Section 6.3 Notification of Certain Matters. Shareholder shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to
Shareholder, of (i) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of Shareholder or Purchaser, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it or him hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.2 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
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Section 6.4 Public Announcements. Shareholder and Purchaser shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by
the rules and regulations of the National Association of Securities Dealers,
Inc.
Section 6.5 Other Agreements. Shareholder and Purchaser shall execute and
deliver each of the Investment Agreement and the Shareholders Agreement at or
prior to the Closing.
Section 6.6 Fees and Expenses. All fees and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not such transactions
are consummated; provided that Shareholder's fees and expenses may be paid by
the Company.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation. The respective
obligation of each party to effect the transactions contemplated by this
Agreement is subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) The waiting periods (and any extensions thereof) applicable to
the transactions contemplated by this Agreement under the HSR Act shall
have been terminated or shall have expired.
(b) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, promulgated or enforced by any Governmental
Entity of competent jurisdiction which prohibits, restrains, enjoins or
restricts the consummation of the transactions contemplated by this
Agreement; provided, however, that each of the parties shall have used
its reasonable best efforts to cause any such decree, ruling, injunction
or other order to be vacated or lifted.
(c) There shall not be pending any suit, action or proceeding by any
Governmental Entity seeking to impose, and neither Shareholder nor
Purchaser shall be subject to any order, decree, ruling or injunction
(whether temporary, preliminary or permanent) which would impose,
limitations on the ability of Purchaser to acquire or hold, or exercise
full rights of ownership of, the Shares, including the right to vote the
Shares on all matters properly presented to the shareholders of the
Company.
(d) The closing of the transactions contemplated by the Other Stock
Purchase Agreements shall be occurring concurrently with the Closing.
8
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<PAGE> 12
Section 7.2 Condition to Obligations of Shareholder. The obligations of
Shareholder to effect the transactions contemplated by this Agreement are
further subject to the satisfaction or waiver at or prior to the Closing Date
of the following additional conditions:
(a) Purchaser shall have performed in all material respects all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date, and the representations and
warranties of Purchaser contained in this Agreement that are qualified as
to materiality shall be true and correct and the representations and
warranties of Purchaser contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date, except
to the extent any such representation or warranty expressly relates to an
earlier date (in which case as of such date), and Shareholder shall have
received a certificate signed on behalf of Purchaser by an executive
officer thereof to such effect.
(b) Shareholder shall have received an opinion of Rosenberg &
Liebentritt, P.C., in form and substance reasonably satisfactory to
Shareholder.
Section 7.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated by this Agreement are further
subject to the satisfaction or waiver at or prior to the Closing Date of the
following additional conditions:
(a) Shareholder shall have performed in all material respects all
agreements and covenants required to be performed by him under this
Agreement at or prior to the Closing Date, and the representations
and warranties of Shareholder contained in this Agreement that are
qualified as to materiality shall be true and correct and the
representations and warranties of Shareholder contained in this
Agreement that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this
Agreement and as of the Closing Date, except to the extent any such
representation or warranty expressly relates to an earlier date (in
which case as of such date), and Purchaser shall have received a
certificate signed by Shareholder to such effect.
(b) Purchaser shall have received an opinion of Kirkland & Ellis, in
form and substance reasonably satisfactory to Purchaser.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of Purchaser and Shareholder; or
9
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<PAGE> 13
(b) by either Purchaser or Shareholder:
(i) if the transactions contemplated by this Agreement shall
not have been consummated by October 31, 1998 (other than due to
the failure of the party seeking to terminate this Agreement to
perform its or his obligations under this Agreement required to be
performed at or prior to the Closing Date);
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable;
(iii) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Agreement which (A) would give rise to the failure of a
condition set forth in Section 7.2(a) or 7.3(a), as applicable, and
(B) cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach (provided
that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement that would
give rise to a failure of a condition as described in clause (A)
above); or
(iv) in the event that (A) all the conditions to the
obligation of such party to effect the transactions contemplated by
this Agreement set forth in Section 7.1 shall have been satisfied
and (B) any condition to the obligation of such party to effect
such transactions set forth in Section 7.2 (in the case of
Shareholder) or Section 7.3 (in the case of Purchaser) is not
capable of being satisfied prior to the end of the period referred
to in subsection (b)(ii) above.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by either Purchaser or Shareholder as provided in Section 8.1 hereof,
this Agreement shall forthwith become void (except as set forth in this Section
8.2, in Section 6.3 and Article X (other than Section 10.5) hereof, which shall
survive such termination (the "Surviving Provisions")) and there shall be no
liability on the part of Purchaser or Shareholder except for any breach of any
of its obligations under the Surviving Provisions. Notwithstanding the
foregoing, no party hereto shall be relieved from liability for any material
breach of this Agreement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival. The representations and warranties given by
Shareholder to Purchaser in this Agreement and the representations and
warranties given by Purchaser to Shareholder in this Agreement shall survive
the Closing indefinitely and shall not terminate.
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<PAGE> 14
Section 9.2 Indemnification by Purchaser or Shareholder: (a) From and
after the Closing Date, Purchaser shall indemnify and hold harmless Shareholder
and each of Shareholder's heirs, executors, successors and assigns from and
against any and all damages, claims, losses, expenses, costs, obligations and
liabilities including without limiting the generality of the foregoing,
liabilities for all reasonable attorneys' fees and expenses (including attorney
and expert fees and expenses incurred to enforce the terms of this Agreement)
(collectively, "Losses and Expenses") suffered or incurred by any such
indemnified person arising from, relating to or otherwise in respect of, (i)
any breach of, or inaccuracy in, any representation or warranty of Purchaser
contained in this Agreement or in the certificate delivered pursuant to Section
7.2(a) of this Agreement; and (ii) any breach of any covenant of Purchaser
contained in this Agreement.
(b) From and after the closing date, Shareholder shall indemnify and hold
harmless Purchaser, Purchaser's Affiliates, each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors
and assigns of any of the foregoing from and against any and all Losses and
Expenses suffered or incurred by any such indemnified person arising from,
relating to or otherwise in respect of, (i) any breach of, or inaccuracy in,
any representation or warranty of Shareholder contained in this Agreement or in
the certificate delivered pursuant to Section 7.3(a) of this Agreement and (ii)
any breach of any covenant of Shareholder contained in this Agreement.
Section 9.3 Third-Party Claims. If a claim by a third party is made
against an indemnified person hereunder, and if such indemnified person intends
to seek indemnity with respect thereto under this Article, such indemnified
person shall promptly notify the indemnifying person in writing of such claims
setting forth such claims in reasonable detail, provided that failure of such
indemnified person to give prompt notice as provided herein shall not relieve
the indemnifying person of any of its obligations hereunder, except to the
extent that the indemnifying person is materially prejudiced by such failure.
The indemnifying person shall have twenty (20) days after receipt of such
notice to undertake, through counsel of its own choosing, subject to the
reasonable approval of such indemnified person, and at its own expense, the
settlement or defense thereof, and the indemnified person shall cooperate with
it in connection therewith; provided, however, that the indemnified person may
participate in such settlement or defense through counsel chosen by such
indemnified person, provided that the fees and expenses of such counsel shall
be borne by such indemnified person. If the indemnifying person shall assume
the defense of a claim, it shall not settle such claim without the prior
written consent of the indemnified person, (i) unless such settlement includes
as an unconditional term thereof the giving by the claimant of a release of the
indemnified person from all liability with respect to such claim or (ii) if
such settlement involves the imposition of equitable remedies or the imposition
of any material obligations on such indemnified person other than financial
obligations for which such indemnified party will be indemnified hereunder. If
the indemnifying person shall assume the defense of a claim, the fees of any
separate counsel retained by the indemnified person shall be borne by such
indemnified person unless there exists a conflict between them as to their
respective legal defenses (other than one that is of a monetary nature), in
which case the
11
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<PAGE> 15
indemnified person shall be entitled to retain separate counsel, the reasonable
fees and expenses of which shall be reimbursed by the indemnifying person. If
the indemnifying person does not notify the indemnified person within thirty
(30) days after the receipt of the indemnified person's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
indemnified person shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.
Section 9.4 Termination of Indemnification. The obligations to indemnify
and hold harmless a party hereto, (a) with respect to any breach of, or
inaccuracy in, any representation or warranty contained in this Agreement shall
terminate when the applicable representation or warranty terminates and (b)
with respect to any breach of covenant or agreement set forth in this Agreement
shall not terminate; provided, however, that as to clause (a) above such
obligation to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the
indemnifying party.
ARTICLE X
MISCELLANEOUS
Section 10.1 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 10.2 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 laws thereof.
Section 10.3 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 any rights or remedies.
Section 10.4 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):
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<PAGE> 16
(a) If to Purchaser:
Samstock, L.L.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: F. Philip Handy
Telecopy Number: 312.454.1671
with a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Walter S. Lowry
Telecopy Number: 312.454.0335
(b) If to Shareholder, to:
David R. Hill
601 West Morgan
Jacksonville, IL 62650
Telecopy: 217.243.6016
With a copy to:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Theodore C. Rammelkamp, Jr.
Telecopy Number: 813.626.9610
Section 10.5 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 Purchaser 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 Shareholder Family
Entities (as defined in the Shareholders Agreement) that executes a joinder at
the time of transfer; provided, in each case, that such assignment shall not
relieve Purchaser or Shareholder, as the case may be, of its or his obligations
hereunder. 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.
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<PAGE> 17
Section 10.6 Interpretation. The table of contents and headings contained
in this Agreement are inserted for convenience of reference only and shall not
affect in any way 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 10.7 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.
Section 10.8 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 10.9 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> 18
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By: /s/ Rod Dammeyer
--------------------------------
Name:
Title:
DAVID R. HILL
-----------------------------------
David R. Hill, individually
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<PAGE> 19
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By:
--------------------------------
Name:
Title:
DAVID R. HILL
/s/ David R. Hill
-----------------------------------
David R. Hill, individually
Page 61 of 134
<PAGE> 1
EXHIBIT 3
STOCK PURCHASE AGREEMENT
BY AND AMONG
SAMSTOCK, L.L.C.,
ROBERT D. HILL,
MICHAEL HAYES,
THEODORE RAMMELKAMP, JR.,
JONES YORKE,
PAUL DEMIRDJIAN,
MICHAEL KOURI,
AND
MARLIN TURNIPSEED
DATED MAY 14, 1998
Page 62 of 134
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
<S> <C>
ARTICLE I - DEFINITIONS................................................ 1
ARTICLE II - PURCHASE AND SALE OF SHARES............................... 3
Section 2.1 Purchase and Sale.................................... 3
Section 2.2 Consideration........................................ 3
ARTICLE III - THE CLOSING.............................................. 3
Section 3.1 Time and Place....................................... 3
Section 3.2 Deliveries by Management Shareholders................ 4
Section 3.3 Deliveries by the Purchaser.......................... 4
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF MANAGEMENT SHAREHOLDERS. 4
Section 4.1 Title to Stock....................................... 4
Section 4.2 Authority; Noncontravention.......................... 4
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER................ 5
Section 5.1 Organization......................................... 5
Section 5.2 Authority; Noncontravention.......................... 5
Section 5.3 Investment Intent.................................... 6
ARTICLE VI - CERTAIN AGREEMENTS........................................ 6
Section 6.1 No Solicitation...................................... 6
Section 6.2 Further Action....................................... 7
Section 6.3 Notification of Certain Matters...................... 7
Section 6.4 Public Announcements................................. 7
Section 6.5 Fees and Expenses.................................... 7
ARTICLE VII - CONDITIONS............................................... 8
Section 7.1 Conditions to Each Party's Obligation................ 8
Section 7.2 Condition to Obligations of Management Shareholders.. 8
Section 7.3 Conditions to Obligations of Purchaser............... 9
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER....................... 9
Section 8.1 Termination.......................................... 9
Section 8.2 Effect of Termination................................ 10
ARTICLE IX - SURVIVAL; INDEMNIFICATION................................. 10
Section 9.1 Survival.............................................. 10
Section 9.2 Indemnification by Purchaser.......................... 10
Section 9.3 Third-Party Claims.................................... 11
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Section 9.4 Termination of Indemnification....................... 12
ARTICLE X - MISCELLANEOUS.............................................. 12
Section 10.1 Counterparts......................................... 12
Section 10.2 Governing Law........................................ 12
Section 10.3 Entire Agreement..................................... 12
Section 10.4 Notices.............................................. 12
Section 10.5 Assignment........................................... 13
Section 10.6 Interpretation....................................... 13
Section 10.7 Amendments; Waivers.................................. 14
Section 10.8 Severability......................................... 14
Section 10.9 Consent to Jurisdiction.............................. 14
SCHEDULE I
</TABLE>
ii
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<PAGE> 4
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made this 14th day of May, 1998 by and
among Samstock, L.L.C., a Delaware limited liability company ("Purchaser"),
Robert D. Hill, Michael Hayes, Theodore Rammelkamp Jr., Jones Yorke, Paul
Demirdjian, Michael Kouri and Marlin Turnipseed (each such individual being
referred to herein as a "Management Shareholder" and all such individuals being
referred to herein, collectively, as the "Management Shareholders").
WITNESSETH:
WHEREAS, each of the Management Shareholders wishes to sell to Purchaser,
and Purchaser wishes to purchase from each of the Management Shareholders, that
number of shares set forth next to such Management Shareholder's name on
Schedule I hereto (collectively, the "Shares") of common stock, no par value,
of Davel Communications Group, Inc., an Illinois corporation (the "Company")
(such common stock being referred to as "Company Common Stock"), upon the terms
and subject to the conditions of this Agreement.
WHEREAS, concurrently herewith, Purchaser and the Company have entered
into a Stock Purchase Agreement pursuant to which the Company has agreed to
issue and sell to Purchaser, and Purchaser has agreed to purchase from the
Company, 1,000,000 newly issued shares of Company Common Stock and warrants to
purchase 218,750 shares of Company Common Stock at an exercise price of $32.00
per share (which shall be exercisable through the fourth anniversary of the
Closing Date) (the "Company Stock Purchase Agreement"), upon the terms and
subject to the conditions set forth in such Agreement.
WHEREAS, concurrently herewith, Purchaser and David R. Hill ("Hill") have
entered into a Stock Purchase Agreement pursuant to which Hill has agreed to
sell to Purchaser, and Purchaser has agreed to purchase from Hill, 500,000
shares of Company Common Stock and warrants to purchase 131,250 shares of
Company Common Stock (the "Hill Stock Purchase Agreement" and, together with
the Company Stock Purchase Agreement, the "Other Stock Purchase Agreements"),
upon the terms and subject to the conditions set forth in the Hill Stock
Purchase Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE IDEFINITIONS
Section 1.1 "Affiliate" shall mean, 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"
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<PAGE> 5
(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.
Section 1.2 "Agreement" shall mean this Agreement, including the Schedule
attached hereto and incorporated herein by this reference.
Section 1.3 "Closing" shall have the meaning set forth in Section 3.1
hereof.
Section 1.4 "Closing Date" shall have the meaning set forth in Section
3.1 hereof.
Section 1.5 "Company" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.6 "Company Common Stock" shall have the meaning set forth in the
introductory clauses hereto.
Section 1.7 "Company Stock Purchase Agreement" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.8 "Governmental Entity" shall mean any federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency.
Section 1.9 "Hill" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.10 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Section 1.11 "Liens" shall mean all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever.
Section 1.12 "Losses and Expenses" shall have the meaning set forth in
Section 10.2 hereof.
Section 1.13 "Management Shareholders" shall have the meaning set forth in
the introductory clauses hereto.
Section 1.14 "Other Stock Purchase Agreements" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.15 "person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, Governmental Entity or other entity.
2
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<PAGE> 6
Section 1.16 "Purchase Price shall have the meaning set forth in Section
2.2 hereof.
Section 1.17 "Purchaser" shall have the meaning set forth in the
introductory clauses hereto.
Section 1.18 "SEC" shall mean the Securities and Exchange Commission.
Section 1.19 "Shares" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.20 "Subsidiary" of any person shall mean another person, an
amount of the voting securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person.
Section 1.21 "Surviving Provisions" shall have the meaning set forth in
Section 9.2 hereof.
Section 1.22 "takeover proposal" shall have the meaning set forth in
Section 6.2 hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Management
Shareholders shall sell, and Purchaser shall purchase from the Management
Shareholders, the Shares.
Section 2.2 Consideration. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Purchaser shall pay to the
Management Shareholders $3,469,200 in the aggregate, in the individual amounts
set forth next to such Management Shareholder's name on Schedule I hereto (the
"Purchase Price").
ARTICLE III
THE CLOSING
Section 3.1 Time and Place. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Rosenberg &
Liebentritt, P.C., 2 N. Riverside Plaza, Chicago, Illinois at 10:00 a.m. (local
time) on the fifth business day following the date on which all of the
conditions to each party's obligations hereunder have been satisfied or waived
or at such other place or time as Purchaser and the Management Shareholders may
agree. The date and time at which the Closing actually occurs is hereinafter
referred to as the "Closing Date."
3
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<PAGE> 7
Section 3.2 Deliveries by Management Shareholders. At the Closing, the
Management Shareholders shall deliver the following to Purchaser.
(a) (i) stock certificates representing the Shares; and (ii)
any other documents that are necessary to transfer to Purchaser good
and marketable title to the Shares free and clear of any Lien; and
(b) all other documents, instruments and writings required to
be delivered by the Management Shareholders at or prior to the
Closing Date pursuant to this Agreement.
Section 3.3 Deliveries by the Purchaser. At the Closing, Purchaser shall
deliver the following to the Management Shareholders:
(a) the Purchase Price, allocated among the Management
Shareholders as set forth on Schedule I hereto, by interbank
transfer of immediately available funds to accounts designated by
each Management Shareholder, respectively; and
(b) all other documents, instruments and writings required to
be delivered by Purchaser at or prior to the Closing Date pursuant
to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MANAGEMENT SHAREHOLDERS
Each of the Management Shareholders, severally and not jointly, represents
and warrants to Purchaser as follows:
Section 4.1 Title to Stock. On the Closing Date, such Management
Shareholder will own the Shares to be transferred by such Management
Shareholder hereunder, free and clear of all Liens. At the Closing, Purchaser
will acquire good and marketable title to the Shares being transferred by such
Management Shareholder, free and clear of all Liens.
Section 4.2 Authority; Noncontravention. Such Management Shareholder has
the requisite power and authority to enter into this Agreement and, subject to
Shareholder Approval (as defined in the Company Stock Purchase Agreement), to
consummate the transactions contemplated by this Agreement. This Agreement has
been duly executed and delivered by such Management Shareholder and constitutes
a valid and binding obligation of such Management Shareholder, enforceable
against such Management Shareholder in accordance with its terms, subject to
general principles of equity as may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally. The execution
and delivery of this Agreement by such Management Shareholder do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination,
4
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<PAGE> 8
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of such Management Shareholder under (i) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to such Management Shareholder or
such Management Shareholder's properties or assets or (ii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to such Management Shareholder or such Management Shareholder's
properties or assets of which such Management Shareholder is aware, other than,
in the case of clauses and (ii), any such conflicts, violations, defaults,
rights or Liens, that individually or in the aggregate, would not (y) prevent
such Management Shareholder from performing his obligations under this
Agreement in any material respect or (z) prevent or delay in any material
respect the consummation of the transactions contemplated by this Agreement.
No consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity, is required by or with respect to such
Management Shareholder in connection with the execution and delivery of this
Agreement by such Management Shareholder or the consummation by such Management
Shareholder of the transactions contemplated by this Agreement, except (i) the
filing of a notification and report form by Hill as the ultimate parent entity
of the Company under the HSR Act, (ii) the filing with the SEC of such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby and (iii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of the transactions contemplated by this
Agreement or otherwise prevent such Management Shareholder from performing such
Management Shareholder's obligations under this Agreement in any material
respect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Management Shareholders as
follows:
Section 5.1 Organization. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
Section 5.2 Authority; Noncontravention. Purchaser has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to general
5
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<PAGE> 9
principles of equity as may be limited by bankruptcy, insolvency, moratorium or
similar laws affecting creditors' rights generally. The execution and delivery
of this Agreement by Purchaser do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, 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 Purchaser or (ii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment , order, decree,
statute, law, ordinance, rule or regulation applicable to Purchaser or its
properties or assets of which Purchaser is aware, other than, in the case of
clause (ii), any such conflicts, violations or defaults that, individually or
in the aggregate, would not (x) prevent Purchaser from performing its
obligations under this Agreement in any material respect or (y) prevent or
delay in any material respect the consummation of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to Purchaser in connection with the execution and delivery
of this Agreement by Purchaser or the consummation by Purchaser of the
transactions contemplated by this Agreement, except (i) the filing of a
notification and report form by Purchaser under the HSR Act and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of the transactions contemplated by this
Agreement or otherwise prevent Purchaser from performing its obligations under
this Agreement in any material respect.
Section 5.3 Investment Intent. Purchaser is purchasing the Shares for
investment, and not with a view toward, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the Shares. Purchaser is an "accredited investor" as defined in Rule 501 of
Regulation D adopted by the SEC under the Securities Act of 1933, as amended.
ARTICLE VI
CERTAIN AGREEMENTS
Section 6.1 No Solicitation. Each Management Shareholder agrees that he
shall not, and shall not authorize any investment banker, attorney or other
advisor or representative of such Management Shareholder, to (i) solicit,
initiate or encourage the submission of any takeover proposal (as defined
below), (ii) enter into any agreement with respect to any takeover proposal or
(iii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal. For purposes of this
Agreement, "takeover proposal" means any proposal for a merger, consolidation
or other business combination involving the Company or any of its Subsidiaries
or any proposal or offer to acquire from the Company or Hill in any manner,
directly or indirectly, more than 10% of any class of voting securities of the
Company or any of the Company's Subsidiaries, or assets representing more than
20% of the total assets of the
6
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<PAGE> 10
Company and its Subsidiaries, taken as a whole, as reflected on the Company's
balance sheet as of March 31, 1998, other than the transactions contemplated by
this Agreement. Each of the Management Shareholders will immediately cease and
cause to be terminated any existing activities, discussions or negotiations by
such Management Shareholder or any investment bankers, attorneys or other
advisors or representatives of such Management Shareholder with any parties
conducted heretofore on such Management Shareholder's behalf with respect to
any of the foregoing.
Section 6.2 Further Action. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. From time to time
after the Closing Date, without further consideration, each of the Management
Shareholders will, at such Management Shareholder's own expense, execute and
deliver such documents to Purchaser as Purchaser may reasonably request in
order more effectively to vest in Purchaser good and marketable title to the
Shares.
Section 6.3 Notification of Certain Matters. The Management Shareholders
shall give prompt notice to Purchaser, and Purchaser shall give prompt notice
to the Management Shareholders, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of any Management Shareholder or Purchaser, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it or him hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.2 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 6.4 Public Announcements. The Management Shareholders and
Purchaser shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law or by the rules and regulations of the National Association of
Securities Dealers, Inc.
Section 6.5 Fees and Expenses. All fees and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not such transactions
are consummated; provided that the fees and expenses of the Management
Shareholders may be paid by the Company.
7
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<PAGE> 11
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation. The respective
obligation of each party to effect the transactions contemplated by this
Agreement is subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) The waiting periods (and any extensions thereof) applicable to the
transactions contemplated by this Agreement under the HSR Act shall have been
terminated or shall have expired.
(b) No statute, rule, regulation, executive order, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent) shall
have been enacted, promulgated or enforced by any Governmental Entity of
competent jurisdiction which prohibits, restrains, enjoins or restricts the
consummation of the transactions contemplated by this Agreement; provided,
however, that each of the parties shall have used its reasonable best efforts
to cause any such decree, ruling, injunction or other order to be vacated or
lifted.
(c) There shall not be pending any suit, action or proceeding by any
Governmental Entity seeking to impose, and no Management Shareholder or
Purchaser shall be subject to any order, decree, ruling or injunction (whether
temporary, preliminary or permanent) which would impose, limitations on the
ability of Purchaser to acquire or hold, or exercise full rights of ownership
of, the Shares, including the right to vote the Shares on all matters properly
presented to the shareholders of the Company.
(d) The closing of the transactions contemplated by the Other Stock
Purchase Agreements shall be occurring concurrently with the Closing.
Section 7.2 Condition to Obligations of Management Shareholders. The
obligations of the Management Shareholders to effect the transactions
contemplated by this Agreement are further subject to the satisfaction or
waiver at or prior to the Closing Date of the following additional conditions:
(a) Purchaser shall have performed in all material respects all agreements
and covenants required to be performed by it under this Agreement at or prior
to the Closing Date, and the representations and warranties of Purchaser
contained in this Agreement that are qualified as to materiality shall be true
and correct and the representations and warranties of Purchaser contained in
this Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing Date, except to the extent any such representation or warranty
expressly relates to an earlier date (in which case as of such
8
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<PAGE> 12
date), and the Management Shareholders shall have received a certificate
signed on behalf of Purchaser by an executive officer thereof to such
effect.
(b) The Management Shareholders shall have received an opinion of
Rosenberg & Liebentritt, P.C., in form and substance reasonably
satisfactory to the Management Shareholders.
Section 7.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated by this Agreement are further
subject to the satisfaction or waiver at or prior to the Closing Date of the
following additional conditions:
(a) The Management Shareholders shall have performed in all material
respects all agreements and covenants required to be performed by the
Management Shareholders under this Agreement at or prior to the Closing
Date, and the representations and warranties of each Management
Shareholder contained in this Agreement that are qualified as to
materiality shall be true and correct and the representations and
warranties of each Management Shareholder contained in this Agreement that
are not so qualified shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the Closing Date,
except to the extent any such representation or warranty expressly relates
to an earlier date (in which case as of such date), and Purchaser shall
have received a certificate signed by each of the Management Shareholders
to such effect.
(b) Purchaser shall have received an opinion of Kirkland & Ellis, in
form and substance reasonably satisfactory to Purchaser.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of Purchaser and the Management
Shareholders; or
(b) by either Purchaser or the Management Shareholders:
(i) if the transactions contemplated by this Agreement shall
not have been consummated by October 31, 1998 (other than due to the
failure of the party seeking to terminate this Agreement to perform
its or his obligations under this Agreement required to be performed
at or prior to the Closing Date);
9
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<PAGE> 13
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall
have become final and non-appealable;
(iii) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Agreement which (A) would give rise to the failure of a
condition set forth in Section 7.2(a) or 7.3(a), as applicable, and
(B) cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach (provided
that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement that would give
rise to a failure of a condition as described in clause (A) above);
or
(iv) in the event that (A) all the conditions to the obligation
of such party to effect the transactions contemplated by this
Agreement set forth in Section 7.1 shall have been satisfied and (B)
any condition to the obligation of such party to effect such
transactions set forth in Section 7.2 (in the case of the Management
Shareholders) or Section 7.3 (in the case of Purchaser) is not
capable of being satisfied prior to the end of the period referred to
in subsection (b)(ii) above.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by either Purchaser or the Management Shareholders as provided in
Section 8.1 hereof, this Agreement shall forthwith become void (except as set
forth in this Section 8.2, in Section 6.3 and Article X (other than Section
10.5) hereof, which shall survive such termination (the "Surviving
Provisions")) and there shall be no liability on the part of Purchaser or any
of the Management Shareholders except for any breach of any of its obligations
under the Surviving Provisions. Notwithstanding the foregoing, no party hereto
shall be relieved from liability for any material breach of this Agreement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival. The representations and warranties given by the
Management Shareholders to Purchaser in this Agreement and the representations
and warranties given by Purchaser to the Management Shareholders in this
Agreement shall survive the Closing indefinitely and shall not terminate.
Section 9.2 Indemnification by Purchaser or Management Shareholders: (a)
From and after the Closing Date, Purchaser shall indemnify and hold harmless
the Management Shareholders and each of the Management Shareholders' heirs,
executors, successors and assigns from and against any and all damages, claims,
losses, expenses, costs, obligations and
10
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<PAGE> 14
liabilities including without limiting the generality of the foregoing,
liabilities for all reasonable attorneys' fees and expenses (including attorney
and expert fees and expenses incurred to enforce the terms of this Agreement)
(collectively, "Losses and Expenses") suffered or incurred by any such
indemnified person arising from, relating to or otherwise in respect of, (i)
any breach of, or inaccuracy in, any representation or warranty of Purchaser
contained in this Agreement or in the certificate delivered pursuant to Section
7.2(a) of this Agreement; and (ii) any breach of any covenant of Purchaser
contained in this Agreement.
(b) From and after the closing date, the Management Shareholders shall
indemnify and hold harmless Purchaser, Purchaser's Affiliates, each of their
respective directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Purchaser Group") from and against any and all Losses and Expenses suffered or
incurred by any such indemnified person arising from, relating to or otherwise
in respect of, (i) any breach of, or inaccuracy in, any representation or
warranty of any Management Shareholder contained in this Agreement or in the
certificate delivered pursuant to Section 7.3(a) of this Agreement and (ii) any
breach of any covenant of any Management Shareholder contained in this
Agreement. Notwithstanding the foregoing, in no event shall any Management
Shareholder be required to indemnify and hold harmless any member of the
Purchaser Group for a breach of any representation, warranty, covenant or
agreement of any other Management Shareholder.
Section 9.3 Third-Party Claims. If a claim by a third party is made
against an indemnified person hereunder, and if such indemnified person intends
to seek indemnity with respect thereto under this Article, such indemnified
person shall promptly notify the indemnifying person in writing of such claims
setting forth such claims in reasonable detail, provided that failure of such
indemnified person to give prompt notice as provided herein shall not relieve
the indemnifying person of any of its obligations hereunder, except to the
extent that the indemnifying person is materially prejudiced by such failure.
The indemnifying person shall have twenty (20) days after receipt of such
notice to undertake, through counsel of its own choosing, subject to the
reasonable approval of such indemnified person, and at its own expense, the
settlement or defense thereof, and the indemnified person shall cooperate with
it in connection therewith; provided, however, that the indemnified person may
participate in such settlement or defense through counsel chosen by such
indemnified person, provided that the fees and expenses of such counsel shall
be borne by such indemnified person. If the indemnifying person shall assume
the defense of a claim, it shall not settle such claim without the prior
written consent of the indemnified person, (i) unless such settlement includes
as an unconditional term thereof the giving by the claimant of a release of the
indemnified person from all liability with respect to such claim or (ii) if
such settlement involves the imposition of equitable remedies or the imposition
of any material obligations on such indemnified person other than financial
obligations for which such indemnified party will be indemnified hereunder. If
the indemnifying person shall assume the defense of a claim, the fees of any
separate counsel retained by the indemnified person shall be borne by such
indemnified person unless there exists a conflict between them as to their
respective legal defenses (other than one that is of a monetary nature), in
which case the
11
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<PAGE> 15
indemnified person shall be entitled to retain separate counsel, the reasonable
fees and expenses of which shall be reimbursed by the indemnifying person. If
the indemnifying person does not notify the indemnified person within thirty
(30) days after the receipt of the indemnified person's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
indemnified person shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.
Section 9.4 Termination of Indemnification. The obligations to indemnify
and hold harmless a party hereto, (a) with respect to any breach of, or
inaccuracy in, any representation or warranty contained in this Agreement shall
terminate when the applicable representation or warranty terminates and (b)
with respect to any breach of covenant or agreement set forth in this Agreement
shall not terminate; provided, however, that as to clause (a) above such
obligation to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the
indemnifying party.
ARTICLE X
MISCELLANEOUS
Section 10.1 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 10.2 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 laws thereof.
Section 10.3 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 any rights or remedies.
Section 10.4 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):
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<PAGE> 16
(a) If to Purchaser:
Samstock, L.L.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: F. Philip Handy
Telecopy Number: 312.454.1671
with a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Walter S. Lowry
Telecopy Number: 312.454.0335
(b) If to the Management Shareholders, to:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Theodore C. Rammelkamp, Jr.
Telecopy Number: 813.626.9610
Section 10.5 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 Purchaser 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; provided that such assignment shall not relieve
Purchaser of its obligations hereunder. 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.
Section 10.6 Interpretation. The table of contents and 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".
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<PAGE> 17
Section 10.7 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.
Section 10.8 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 10.9 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> 18
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By: /s/ Rod Dammeyer
--------------------------------
Name:
Title:
ROBERT D. HILL
-----------------------------------
Robert D. Hill, individually
MICHAEL HAYES
-----------------------------------
Michael Hayes, individually
THEODORE RAMMELKAMP, JR.
-----------------------------------
Theodore Rammelkamp, Jr.,
individually
JONES YORKE
-----------------------------------
Jones Yorke, individually
PAUL DEMIRDJIAN
-----------------------------------
Paul Demirdjian, individually
MICHAEL KOURI
-----------------------------------
Michael Kouri, individually
MARLIN TURNIPSEED
-----------------------------------
Marlin Turnipseed, individually
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<PAGE> 19
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By:
--------------------------------
Name:
Title:
ROBERT D. HILL
/s/ Robert D. Hill
-----------------------------------
Robert D. Hill, individually
MICHAEL HAYES
/s/ Michael Hayes
-----------------------------------
Michael Hayes, individually
THEODORE RAMMELKAMP, JR.
/s/ Theodore Rammelkamp, Jr.
-----------------------------------
Theodore Rammelkamp, Jr.,
individually
JONES YORKE
-----------------------------------
Jones Yorke, individually
PAUL DEMIRDJIAN
-----------------------------------
Paul Demirdjian, individually
MICHAEL KOURI
-----------------------------------
Michael Kouri, individually
MARLIN TURNIPSEED
-----------------------------------
Marlin Turnipseed, individually
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<PAGE> 20
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By:
--------------------------------
Name:
Title:
ROBERT D. HILL
-----------------------------------
Robert D. Hill, individually
MICHAEL HAYES
-----------------------------------
Michael Hayes, individually
THEODORE RAMMELKAMP, JR.
-----------------------------------
Theodore Rammelkamp, Jr.,
individually
JONES YORKE
/s/ Jones Yorke
-----------------------------------
Jones Yorke, individually
PAUL DEMIRDJIAN
-----------------------------------
Paul Demirdjian, individually
MICHAEL KOURI
-----------------------------------
Michael Kouri, individually
MARLIN TURNIPSEED
-----------------------------------
Marlin Turnipseed, individually
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<PAGE> 21
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By:
--------------------------------
Name:
Title:
ROBERT D. HILL
-----------------------------------
Robert D. Hill, individually
MICHAEL HAYES
-----------------------------------
Michael Hayes, individually
THEODORE RAMMELKAMP, JR.
-----------------------------------
Theodore Rammelkamp, Jr.,
individually
JONES YORKE
-----------------------------------
Jones Yorke, individually
PAUL DEMIRDJIAN
/s/ Paul Demirdjian
-----------------------------------
Paul Demirdjian, individually
MICHAEL KOURI
-----------------------------------
Michael Kouri, individually
MARLIN TURNIPSEED
-----------------------------------
Marlin Turnipseed, individually
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<PAGE> 22
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By:
--------------------------------
Name:
Title:
ROBERT D. HILL
-----------------------------------
Robert D. Hill, individually
MICHAEL HAYES
-----------------------------------
Michael Hayes, individually
THEODORE RAMMELKAMP, JR.
-----------------------------------
Theodore Rammelkamp, Jr.,
individually
JONES YORKE
-----------------------------------
Jones Yorke, individually
PAUL DEMIRDJIAN
-----------------------------------
Paul Demirdjian, individually
MICHAEL KOURI
/s/ Michael Kouri
-----------------------------------
Michael Kouri, individually
MARLIN TURNIPSEED
-----------------------------------
Marlin Turnipseed, individually
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<PAGE> 23
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Zell General Partnership, Inc.
By:
--------------------------------
Name:
Title:
ROBERT D. HILL
-----------------------------------
Robert D. Hill, individually
MICHAEL HAYES
-----------------------------------
Michael Hayes, individually
THEODORE RAMMELKAMP, JR.
-----------------------------------
Theodore Rammelkamp, Jr.,
individually
JONES YORKE
-----------------------------------
Jones Yorke, individually
PAUL DEMIRDJIAN
-----------------------------------
Paul Demirdjian, individually
MICHAEL KOURI
-----------------------------------
Michael Kouri, individually
MARLIN TURNIPSEED
/s/ Marlin Turnipseed
-----------------------------------
Marlin Turnipseed, individually
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<PAGE> 24
SCHEDULE I
<TABLE>
<CAPTION>
Name No. of Shares Purchase Price
- ---- ------------- --------------
<S> <C> <C>
Robert D. Hill 38,000 $1,064,000
Michael Hayes 5,900 165,200
Theodore Rammelkamp Jr. 8,000 224,000
Jones Yorke 18,000 504,000
Paul Demirdjian 22,550 631,400
Michael Kouri 21,450 600,600
Marlin Turnipseed 10,000 280,000
------------- --------------
Total 123,900 $3,469,200
</TABLE>
Page 85 of 134
<PAGE> 1
EXHBIT 4
INVESTMENT AGREEMENT
Investment Agreement dated June 29, 1998 (this "Agreement"), among Davel
Communications Group, Inc., an Illinois corporation (the "Company"), Samstock,
L.L.C., a Delaware limited liability company ("Investor"), and David R. Hill,
an individual residing in the State of Illinois ("Shareholder").
W I T N E S S E T H:
WHEREAS, Investor and the Company are parties to a Stock Purchase
Agreement dated May 14, 1998 (the "Company Stock Purchase Agreement") pursuant
to which, among other things, the Company has agreed to issue and sell, and
Investor has agreed to purchase from the Company, 1,000,000 shares of common
stock, no par value, of the Company ("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 agreed to sell, and
Investor has agreed to purchase from Shareholder, 500,000 shares of 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
have agreed to sell, and Investor has agreed to purchase 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 is occurring concurrently with the execution and delivery
of this Agreement;
WHEREAS, concurrently herewith, Investor and Shareholder have executed and
delivered a Shareholders Agreement of even date herewith (the "Shareholders
Agreement");
WHEREAS, the Company Stock Purchase Agreement and the Shareholder Stock
Purchase Agreement require that this Agreement be executed and delivered by the
Company, Investor and Shareholder at or prior to the closing of the
transactions contemplated by such agreements.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
PAGE 86 OF 134
<PAGE> 2
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 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,
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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.
(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
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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 date hereof, no Shares are beneficially owned by Investor.
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 date hereof (and giving effect to the closing of the
transactions contemplated by the Shareholder Stock Purchase Agreement),
Shareholder beneficially owns 2,585,729 Shares (including 234,196 Shares that
may be acquired pursuant to outstanding options either currently, within the
next 60 days or at any time thereafter).
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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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 Effective Date, 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 33.7
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 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
Effective Date, 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
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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.
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 Effective Date, 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 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
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
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
Effective Date, 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
Effective Date, 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
seven directors 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
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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 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
seven directors 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 Effective Date, 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 Effective Date, the
Investor Group has not solicited, encouraged or entered into substantive
discussions or negotiations with respect to any such acquisition except with
the intent of effecting such acquisition through the Company.
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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.
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 seven
directors or to increase the size of such Board to more than seven directors.
(d) So long as Shareholder, individually, or Shareholder and Investor,
acting jointly, are entitled to designate two Independent Directors 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
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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 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
Effective Date, 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 Effective
Date, 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.
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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.
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
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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
(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.
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(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, 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:
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(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 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,
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<PAGE> 14
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.
(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.
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<PAGE> 15
(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
stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of the required stand-off period.
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<PAGE> 16
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 June 29, 1998
and a Shareholders Agreement dated June 29, 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,
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<PAGE> 17
and therefore each party agrees that 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
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<PAGE> 18
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: Walter S. Lowry
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
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<PAGE> 19
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:
David R. Hill
601 West Morgan
Jacksonville, IL 62650
Telecopy Number: (217) 243-6016
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.
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".
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<PAGE> 20
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> 21
IN WITNESS WHEREOF, each of Investor, Shareholder and the Company have
executed this Investment Agreement as of the date first above written.
INVESTOR:
SAMSTOCK, L.L.C.
_____________________________________
By:
SHAREHOLDER:
_____________________________________
David R. Hill, individually
COMPANY:
DAVEL COMMUNICATIONS GROUP, INC.
_____________________________________
By:
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<PAGE> 1
EXHIBIT 5
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT ("Agreement") is dated as of June 29, 1998, by
and among Samstock, L.L.C., a Delaware limited liability company ("Investor"),
David R. Hill, an individual residing in the State of Illinois ("Shareholder"),
and, solely for purposes of Sections 2(a), 2(b), 3, 4, 6 and 8 through 19 of
this Agreement, Davel Communications Group, Inc., an Illinois corporation (the
"Company").
W I T N E S S E T H
WHEREAS, Investor and the Company are parties to a Stock Purchase
Agreement dated May 14, 1998 (the "Company Stock Purchase Agreement") pursuant
to which, among other things, the Company has agreed to issue and sell, and
Investor has agreed to purchase from the Company, 1,000,000 shares of common
stock, no par value, of the Company ("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 agreed to sell, and
Investor has agreed to purchase from Shareholder, 500,000 shares of 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
have agreed to sell, and Investor has agreed to purchase 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 is occurring concurrently with the execution and delivery
of this Agreement;
WHEREAS, it is a condition to the obligations of Investor to effect the
transactions contemplated by the Company Stock Purchase Agreement that this
Agreement be executed and delivered by Investor and Shareholder;
WHEREAS, giving effect to the closing of the transactions contemplated by
each of the Stock Purchase Agreements, 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
WHEREAS, capitalized terms used and not otherwise defined herein shall
have the meanings assigned thereto in the Investment Agreement.
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<PAGE> 2
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 and Shareholder.
"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
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<PAGE> 3
registered offering pursuant to an effective registration statement under the
Securities Act.
"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.
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<PAGE> 4
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
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<PAGE> 5
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 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,
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<PAGE> 6
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 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
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<PAGE> 7
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 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 Effective Date 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
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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
Effective Date 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 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
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<PAGE> 9
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: Walter S. Lowry
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
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<PAGE> 10
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
601 West Morgan
Jacksonville, IL 62650
Telecopy Number: (217) 243-6016
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.
Section 12. Amendments; Waivers. (a) This Agreement may not be
modified or amended except by an instrument or instruments in writing
signed by each party hereto.
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<PAGE> 11
(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.
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
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<PAGE> 12
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.
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.
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<PAGE> 13
IN WITNESS WHEREOF, the undersigned have executed this Shareholders
Agreement as of the day and year first above written.
SAMSTOCK, L.L.C.
By:____________________________________
_______________________________________
David R. Hill, individually
DAVEL COMMUNICATIONS GROUP, INC.
____________________________________
By:
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<PAGE> 1
Exhibit 6
VOTING AGREEMENT
VOTING AGREEMENT, dated June 11, 1998, between Samstock, L.L.C, a Delaware
limited liability company ("Samstock"), and PhoneTel Technologies, Inc., an
Ohio corporation (the "Company").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company, Davel, an Illinois corporation ("Old Davel"), Davel Holdings,
Inc., a Delaware corporation and a wholly owned subsidiary of Old Davel ("New
Davel"), D Subsidiary, Inc., an Illinois corporation and a wholly owned
subsidiary of New Davel ("D Sub"), and PT Merger Corp., an Ohio corporation and
a wholly owned subsidiary of New Davel ("P Sub"), have entered into an
Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), dated
the date hereof, pursuant to which (i) D Sub will be merged with and into Old
Davel with Old Davel surviving as a wholly owned subsidiary of New Davel (the
"Davel Merger") and (ii) P Sub will be merged with and into the Company with
the Company surviving as a wholly owned subsidiary of New Davel (the "PhoneTel
Merger").
WHEREAS, the consummation of the Davel Merger, the PhoneTel Merger and the
other transactions contemplated by the Merger Agreement (the "Transaction") is
subject to certain conditions, including the approval of the Merger Agreement
and the PhoneTel Merger by the holders of at least a majority of the
outstanding shares of common stock, par $.01 per share, of the Company
("PhoneTel Common Stock").
WHEREAS, Samstock is the record and beneficial owner of 350,000 shares of
PhoneTel Common Stock, representing approximately 2.1% of the shares of
PhoneTel Common Stock outstanding as of June 1, 1998 (such 350,000 shares of
PhoneTel Common Stock, together with any other shares of capital stock of the
Company acquired by Samstock after the date hereof and during the term of this
Agreement being collectively referred to herein as the "Shares").
WHEREAS, as a condition to the willingness of the Company to enter into
the Merger Agreement, and as an inducement to the Company to do so, Samstock
has agreed for the benefit of the Company as set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
COVENANTS OF SAMSTOCK
Section 1.1 Agreement to Vote. At any meeting of the shareholders of the
Company held prior to the Termination Date (as defined in Section 4.4), however
called, and at every reconvened meeting following any adjournment thereof prior
to the Termination Date, or in connection with any written consent of the
shareholders of the Company executed prior to the Termination Date, Samstock
shall vote the Shares in favor of the approval of the Merger
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<PAGE> 2
Agreement, the PhoneTel Merger and each of the actions contemplated by the
Merger Agreement to be performed by the Company in connection with the
Transaction and any actions required in furtherance thereof. Prior to the
Termination Date and subject to Section 1.3, Samstock shall not enter into any
agreement or understanding with any person, directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of the Shares
in any manner inconsistent with the preceding sentence.
Section 1.2 Proxies. (a) Samstock hereby revokes any and all previous
proxies granted with respect to matters set forth in Section 1.1 for the
Shares.
(b) Prior to the Termination Date, Samstock shall not grant any proxies or
powers of attorney with respect to matters set forth in Section 1.1, deposit
any of the Shares into a voting trust or enter into a voting agreement, with
respect to any of the Shares, in each case with respect to such matters.
Section 1.3 Transfer of Shares by Samstock. Prior to the Termination
Date, Samstock shall not or (a) transfer, sell, exchange or otherwise dispose
of any Shares unless such transferee, purchaser or acquiror enters into a
voting agreement with the Company containing substantially the same terms as
this Agreement or (b) pledge or place any encumbrance on any Shares, other than
pursuant to this Agreement and other than a pledge or encumbrance of any Shares
to any bank or other financial institution in connection with any bona fide
financing transaction by Samstock or any such transferee, purchaser or
acquiror, provided, that such bank or financial institution, as a condition to
exercising its rights to seize and vote such Shares, enters into a voting
agreement with the Company containing substantially the same terms as this
Agreement.
Section 1.4 Action in Shareholder Capacity Only. Samstock makes no
agreement or understanding herein in any capacity other than its capacity as a
record holder and beneficial owner of the Shares, and nothing herein shall
limit or affect any actions taken in any other capacity.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND
ADDITIONAL COVENANTS OF SAMSTOCK
Samstock represents, warrants and covenants to Old Davel that:
Section 2.1 Ownership. Samstock is, as of the date hereof, the beneficial
and record owner of 350,000 shares of PhoneTel Common Stock and has the sole
right to vote such shares, and there are no restrictions on rights of
disposition or other liens pertaining to such shares. None of such shares is
subject to any voting trust or other agreement, arrangement or restriction with
respect to the voting of such shares.
Section 2.2 Authority and Non-Contravention. Samstock has the right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this
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<PAGE> 3
Agreement. This Agreement has been duly executed and delivered by Samstock and
constitutes a valid and binding obligation of Samstock, enforceable against
Samstock in accordance with its terms, subject to general principles of equity
and as may be limited by bankruptcy, insolvency, moratorium, or similar laws
affecting creditors' rights generally. Neither the execution and delivery of
this Agreement by Samstock nor the consummation by Samstock of the transactions
contemplated hereby will (i) materially violate, or require any consent,
approval or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to Samstock or the Shares or (ii)
constitute a material violation of or default under any contract, commitment,
agreement, understanding, arrangement or other restriction of any kind to which
Samstock is a party or by which Samstock or its assets are bound.
Section 2.3 Total Shares. Samstock does not have any option to purchase
or right to subscribe for or otherwise acquire any securities of the Company
and has no other interest in or voting rights with respect to any other
securities of the Company.
Section 2.4 Reasonable Efforts. Prior to the Termination Date, Samstock
shall use reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the Company in doing,
all things reasonably necessary, proper or advisable to consummate and make
effective, in the most expeditious manner reasonably practicable, the
Transaction.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE COMPANY
The Company represents, warrants and covenants to Samstock that:
Section 3.1 Authority and Non-Contravention. The Company has the right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to general principles of equity and as may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally.
Neither the execution and delivery of this Agreement nor the consummation by
the Company of the transactions contemplated hereby will (i) materially
violate, or require any consent, approval or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to the
Company or (ii) violate or conflict with the articles of incorporation or code
of regulations of the Company or constitute a material violation of or default
under any contract, commitment, agreement, understanding, arrangement or other
restriction of any kind to which the Company is a party or by which the Company
or its assets are bound.
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<PAGE> 4
ARTICLE IV
MISCELLANEOUS
Section 4.1 Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such costs or expenses.
Section 4.2 Further Assurances. From time to time, at the request of the
Company, in the case of Samstock, or at the request of Samstock, in the case of
the Company, and without further consideration, each party shall execute and
deliver or cause to be executed and delivered such additional documents and
instruments and take all such further action as may be reasonably necessary or
desirable to consummate the transactions contemplated by this Agreement.
Section 4.3 Specific Performance. Samstock agrees that the Company would
be irreparably damaged if for any reason Samstock fails to perform any of
Samstock's obligations under this Agreement, and that the Company would not
have an adequate remedy at law for money damages in such event. Accordingly,
the Company shall be entitled to seek specific performance and injunctive and
other equitable relief to enforce the performance of this Agreement by
Samstock. This provision is without prejudice to any other rights that the
Company may have against Samstock for any failure to perform its obligations
under this Agreement.
Section 4.4 Amendments, Termination. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by each
party hereto. The representations, warranties, covenants and agreements set
forth in Article I, Article II and Article III shall terminate, except with
respect to liability for prior breaches thereof, upon the earliest to occur of
(i) termination of the Merger Agreement in accordance with its terms, (ii) the
Closing Date and (iii) the date, if any, upon which the Company's Board of
Directors withdraws, modifies or changes its recommendation or approval of the
Merger Agreement or the PhoneTel Merger in a manner adverse to Old Davel (the
"Termination Date").
Section 4.5 Assignment. Subject to Section 1.3 hereof, neither this
Agreement nor any of the rights, interests 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. 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.
Section 4.6 Certain Events. Samstock agrees that this Agreement and the
obligations hereunder shall attach to the Shares and shall be binding upon any
person to which legal or beneficial ownership of such shares shall pass,
whether by operation of law or otherwise.
Section 4.7 Entire Agreement. This Agreement (including the documents
referred to herein) (a) constitutes the entire agreement, and supersedes all
prior agreements and understanding, both oral and written 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 hereto any
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<PAGE> 5
rights or remedies.
Section 4.8 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 telecopied with confirmation of
receipt, to the parties at the addresses specified below (or at such other
address or telecopy or telex number for a party as shall be specified by like
notice):
If to the Company to:
PhoneTel Technologies, Inc.
1001 Lakeside Avenue, 7th Floor
Cleveland, Ohio 44114
Attention: General Counsel
Telecopy number: 216.875.4337
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Stephen M. Banker, Esq.
Telecopy number: 212.735.2000
If to Samstock, to:
Samstock, L.L.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: F. Philip Handy
Telecopy number: 312.454.1671
with a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Walter S. Lowry, Esq.
Telecopy number: 312.454.0335
Section 4.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 4.10 Counterparts. This Agreement may be executed in two or more
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<PAGE> 6
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 in original or facsimile
form.
Section 4.11 Interpretation. The headings contained in this Agreement
are inserted for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 4.12 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 4.13 Consent to Jurisdiction. Each party hereto irrevocably
submits to the nonexclusive jurisdiction of (a) the state courts of the State
of Ohio and (b) the United States federal district courts located in the State
of Ohio for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby.
Section 4.14 Attorney's Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
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<PAGE> 7
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
By SZ Investments, L.L.C., its sole member
By Zell General Partnership, Inc., its managing
member
By:
Name:
Title:
PHONETEL TECHNOLOGIES, INC.
By:
Name:
Title:
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<PAGE> 1
Exhibit 7
VOTING AGREEMENT
VOTING AGREEMENT, dated June 11, 1998, between Samstock, L.L.C., a
Delaware limited liability company ("Samstock"), and PhoneTel Technologies,
Inc., an Ohio corporation (the "Company").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company, Davel Communications Group, Inc., an Illinois corporation ("Old
Davel"), Davel Holdings, Inc., a Delaware corporation and a wholly owned
subsidiary of Old Davel ("New Davel"), D Subsidiary, Inc., an Illinois
corporation and a wholly owned subsidiary of New Davel ("D Sub"), and PT Merger
Corp., an Ohio corporation and a wholly owned subsidiary of New Davel ("P
Sub"), have entered into an Agreement and Plan of Merger and Reorganization
(the "Merger Agreement"), dated the date hereof, pursuant to which (i) D Sub
will be merged with and into Old Davel with Old Davel surviving as a wholly
owned subsidiary of New Davel (the "Davel Merger") and (ii) P Sub will be
merged with and into the Company with the Company surviving as a wholly owned
subsidiary of New Davel (the "PhoneTel Merger").
WHEREAS, the consummation of the Davel Merger, the PhoneTel Merger and the
other transactions contemplated by the Merger Agreement (the "Transaction") is
subject to certain conditions, including the approval of the Merger Agreement
and the Davel Merger by the holders of at least two-thirds of the outstanding
shares of common stock, no par value, of Old Davel ("Old Davel Common Stock").
WHEREAS, Samstock is a party to (i) a Stock Purchase Agreement by and
between Samstock and Old Davel dated May 14, 1998 (the "Davel Stock Purchase
Agreement"), (ii) a Stock Purchase Agreement by and between Samstock and David
R. Hill dated May 14, 1998 (the "Hill Stock Purchase Agreement") and (iii) a
Stock Purchase Agreement by and between Samstock and certain directors and
members of management of Old Davel (such agreement, together with the Davel
Stock Purchase Agreement and the Hill Stock Purchase Agreement, the "Stock
Purchase Agreements"). Pursuant to the Stock Purchase Agreements, and upon the
terms and subject to the conditions set forth therein, Samstock has the right
to acquire, in the aggregate, 1,623,900 shares of Old Davel Common Stock,
representing approximately 28.75% of the outstanding shares of Old Davel Common
Stock, based on the number of shares of Old Davel Common Stock outstanding on
June 1, 1998 and after giving effect to the issuance by Old Davel of the shares
of Old Davel Common Stock to be purchased by Samstock pursuant to the Davel
Stock Purchase Agreement (such 1,623,900 shares of Old Davel Common Stock, upon
acquisition thereof by Samstock, the "Purchased Shares" and, together with any
other shares of capital stock of Old Davel acquired by Samstock after the date
hereof and during the term of this Agreement being collectively referred to
herein as the "Shares").
WHEREAS, as a condition to the willingness of the Company to enter into
the Merger Agreement, and as an inducement to the Company to do so, Samstock
has agreed for the benefit of the Company as set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and
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<PAGE> 2
agreements contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 The terms "Investment Agreement" and "Shareholders Agreement"
shall have the meanings set forth in the Davel Stock Purchase Agreement.
ARTICLE II
COVENANTS OF SAMSTOCK
Section 2.1 Agreement to Vote. At any meeting of the shareholders of Old
Davel held prior to the Termination Date (as defined in Section 5.4), however
called, and at every reconvened meeting following any adjournment thereof prior
to the Termination Date, or in connection with any written consent of the
shareholders of Old Davel executed prior to the Termination Date, Samstock
shall vote the Shares (a) in favor of the approval of the Merger Agreement, the
Davel Merger and each of the actions contemplated by the Merger Agreement to be
performed by Old Davel or New Davel in connection with the Transaction and any
actions required in furtherance thereof; and (b) in favor of the election of
Mr. Peter Graf as a member of the Board of Directors of New Davel to serve
until the first anniversary of the Closing Date. Prior to the Termination Date
and subject to Section 2.3, other than the Stock Purchase Agreements, the
Investment Agreement and the Shareholders Agreement, Samstock shall not enter
into any agreement or understanding with any person, directly or indirectly, to
vote, grant any proxy or give instructions with respect to the voting of the
Shares in any manner inconsistent with the preceding sentence.
Section 2.2 Proxies. (a) Samstock hereby revokes any and all previous
proxies granted with respect to matters set forth in Section 2.1 for the
Shares.
(b) Prior to the Termination Date, Samstock shall not grant any proxies or
powers of attorney with respect to matters set forth in Section 2.1, deposit
any of the Shares into a voting trust or enter into a voting agreement, other
than this Agreement, the Stock Purchase Agreements, the Investment Agreement
and the Shareholders Agreement, with respect to any of the Shares, in each case
with respect to such matters.
Section 2.3 Transfer of Shares by Samstock. Prior to the Termination
Date, Samstock shall not (a) transfer, sell, exchange or otherwise dispose of
any Shares unless such transferee, purchaser or acquiror enters into a voting
agreement with the Company containing substantially the same terms as this
Agreement or (b) pledge or place any encumbrance on any Shares, other than
pursuant to this Agreement and other than a pledge or encumbrance of any Shares
to any bank or other financial institution in connection with any bona fide
financing transaction by Samstock or any such transferee, purchaser or
acquiror, provided that such bank or financial institution, as a condition to
exercising its rights to seize and vote such Shares, enters into a
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<PAGE> 3
voting agreement with the Company containing substantially the same terms as
this Agreement.
Section 2.4 Action in Shareholder Capacity Only. Samstock makes no
agreement or understanding herein in any capacity other than, prior to
consummation of the transactions contemplated by the Stock Purchase Agreements,
as a holder of rights to acquire the Purchased Shares and, following
consummation of such transactions, in its capacity as a record holder and
beneficial owner of the Shares, and nothing herein shall limit or affect any
actions taken in any other capacity.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
ADDITIONAL COVENANTS OF SAMSTOCK
Samstock represents, warrants and covenants to the Company that:
Section 3.1 Ownership. As of the date hereof, Samstock has the right,
upon the terms and subject to the conditions set forth in the Stock Purchase
Agreements, to acquire, in the aggregate, 1,623,900 shares of Old Davel Common
Stock. Upon consummation of the transactions contemplated by the Stock
Purchase Agreements, Samstock will be the beneficial and record owner of such
shares and, subject to Section 2.3, Samstock will have the sole right to vote
the Shares and there will be no restrictions on rights of disposition or other
liens pertaining to the Shares, other than as contemplated by the Stock
Purchase Agreements, the Investment Agreement and the Shareholders Agreement.
Samstock has not agreed to subject any Shares to any voting trust or other
agreement, arrangement or restriction with respect to the voting of the Shares
other than pursuant to the Investment Agreement and the Shareholders Agreement.
Section 3.2 Authority and Non-Contravention. Samstock has the right,
power and authority to enter into this Agreement and, subject to the
acquisition by Samstock of the Purchased Shares upon consummation of the
transactions contemplated by the Stock Purchase Agreements, to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Samstock and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
action on the part of Samstock. This Agreement has been duly executed and
delivered by Samstock and constitutes a valid and binding obligation of
Samstock, enforceable against Samstock in accordance with its terms, subject to
general principles of equity and as may be limited by bankruptcy, insolvency,
moratorium, or similar laws affecting creditors' rights generally. Neither the
execution and delivery of this Agreement by Samstock nor the consummation by
Samstock of the transactions contemplated hereby will (i) materially violate,
or require any consent, approval or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to
Samstock or, upon acquisition thereof by Samstock, the Purchased Shares or
(ii) violate or conflict with the limited liability company agreement of
Samstock or constitute a material violation of or default under any contract,
commitment, agreement, understanding, arrangement or other restriction of any
kind to which Samstock is a party or by which Samstock or its assets are bound.
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<PAGE> 4
Section 3.3 Total Shares. As of the date hereof, Samstock does not own,
beneficially (except by virtue of the Stock Purchase Agreements) or of record,
any shares of capital stock of Old Davel. Except as contemplated by the Stock
Purchase Agreements and the Shareholders Agreement, Samstock does not have any
option to purchase or right to subscribe for or otherwise acquire any
securities of Old Davel and has no other interest in or voting rights with
respect to any other securities of Old Davel.
Section 3.4 Reasonable Efforts. Prior to the Termination Date, Samstock
shall use reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with Old Davel in doing,
all things reasonably necessary, proper or advisable to consummate and make
effective, in the most expeditious manner reasonably practicable, the
Transaction.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE COMPANY
The Company represents, warrants and covenants to Samstock that:
Section 4.1 Authority and Non-Contravention. The Company has the right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to general principles of equity and as may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally.
Neither the execution and delivery of this Agreement nor the consummation by
the Company of the transactions contemplated hereby will (i) materially
violate, or require any consent, approval or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to the
Company or (ii) violate or conflict with the articles of incorporation or code
of regulations of the Company or constitute a material violation of or default
under any contract, commitment, agreement, understanding, arrangement or other
restriction of any kind to which the Company is a party or by which the Company
or its assets are bound.
ARTICLE V
MISCELLANEOUS
Section 5.1 Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such costs or expenses.
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<PAGE> 5
Section 5.2 Further Assurances. From time to time, at the request of the
Company, in the case of Samstock, or at the request of Samstock, in the case of
the Company, and without further consideration, each party shall execute and
deliver or cause to be executed and delivered such additional documents and
instruments and take all such further action as may be reasonably necessary or
desirable to consummate the transactions contemplated by this Agreement.
Section 5.3 Specific Performance. Samstock agrees that the Company would
be irreparably damaged if for any reason Samstock fails to perform any of
Samstock's obligations under this Agreement, and that the Company would not
have an adequate remedy at law for money damages in such event. Accordingly,
the Company shall be entitled to seek specific performance and injunctive and
other equitable relief to enforce the performance of this Agreement by
Samstock. This provision is without prejudice to any other rights that the
Company may have against Samstock for any failure to perform its obligations
under this Agreement.
Section 5.4 Amendments, Termination. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by each
party hereto. The representations, warranties, covenants and agreements set
forth in Article II, Article III and Article IV shall terminate, except with
respect to liability for prior breaches thereof, upon the earliest to occur of
(i) termination of the Merger Agreement in accordance with its terms, (ii) the
Closing Date and (iii) the date, if any, upon which the Company's Board of
Directors withdraws, modifies or changes its recommendation or approval of the
Merger Agreement or the PhoneTel Merger in a manner adverse to Old Davel (the
"Termination Date"); provided, however, that with respect to clause (b) of
Section 2.1, "Termination Date" shall mean the first anniversary of the Closing
Date.
Section 5.5 Assignment. Subject to Section 2.3 hereof, neither this
Agreement nor any of the rights, interests 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. 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.
Section 5.6 Certain Events. Samstock agrees that this Agreement and the
obligations hereunder shall attach to the Shares and shall be binding upon any
person to which legal or beneficial ownership of such shares shall pass,
whether by operation of law or otherwise.
Section 5.7 Entire Agreement. This Agreement (including the documents
referred to herein) (a) constitutes the entire agreement, and supersedes all
prior agreements and understanding, both oral and written 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 hereto any rights or remedies.
Section 5.8 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 telecopied with confirmation of
receipt, to the parties at the addresses specified below
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<PAGE> 6
(or at such other address or telecopy or telex number for a party as shall be
specified by like notice):
If to the Company, to:
PhoneTel Technologies, Inc.
1001 Lakeside Avenue, 7th Floor
Cleveland, Ohio 44114
Attention: General Counsel
Telecopy number: 216.875.4337
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Stephen M. Banker, Esq.
Telecopy number: 212.735.2000
If to Samstock, to:
Samstock, L.L.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Mr. F. Philip Handy
Telecopy number: 312.454.1671
with a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Walter S. Lowry, Esq.
Telecopy number: 312.454.0335
Section 5.9 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 laws thereof.
Section 5.10 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 in original or facsimile
form.
Section 5.11 Interpretation. The headings contained in this Agreement are
inserted for
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<PAGE> 7
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 5.12 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 5.13 Consent to Jurisdiction. Each party hereto irrevocably
submits to the nonexclusive jurisdiction of (a) the state courts of the State
of Illinois and (b) the United States federal district courts 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.
Section 5.14 Attorney's Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
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<PAGE> 8
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
SAMSTOCK, L.L.C.
By SZ Investments, L.L.C., its sole member
By Zell General Partnership, Inc., its managing member
By:
Name:
Title:
PHONETEL TECHNOLOGIES, INC.
By:
Name:
Title:
Page 134 of 134
