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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____ )*
Davel Communications, Inc.
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(NAME OF ISSUER)
Common Stock, par value $.01
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(TITLE OF CLASS OF SECURITIES)
238341 10 1
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(CUSIP NUMBER)
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: Alisa M. Singer, Rosenberg & Liebentritt, P.C.
Two N. Riverside Plaza, Suite 1600, Chicago, IL 60606 (312) 466-3196
December 22, 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 [ ].
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CUSIP No. 238341 10 1 13D Page 2 of 60
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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) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO, WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
1,395,572
NUMBER OF
SHARES ------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 293,304
PERSON WITH ------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,682,356
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10 SHARED DISPOSITIVE POWER
356,520
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,138,876
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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)
19.9%
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14 TYPE OF REPORTING PERSON*
00
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*SEE INSTRUCTION BEFORE FILLING OUT!
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CUSIP No. 238341 10 1 13D Page 3 of 60
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1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EGI - Davel investors, L.L.C.
36-4259084
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF
SHARES ------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 293,304
PERSON WITH ------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
356,520
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
356,520
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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)
3.4%
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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, Inc., a Delaware
corporation (the "Issuer"). The Issuer's principal executive offices
are at 1429 Massaro Blvd., Tampa, Florida 33619.
Item 2 Identity and Background
(a - c) and (f) This Schedule 13D is being filed by (i) Samstock,
L.L.C., a Delaware limited liability company ("Samstock"); and (ii)
EGI - Davel Investors, L.L.C., a Delaware limited liability company
("Investors").
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. The occupations of Messrs. Zell, Dammeyer and
Liebentritt and Mrs. Rosenberg are listed below.
The sole managing member of Investors is Samstock.
The principal occupations for the following individuals are: Mr.
Zell, chairman of the board of Equity Group Investments, Inc.
("EGI"); Mrs. Rosenberg, president and chief executive officer of
EGI; Mr. Dammeyer, managing director of EGI Corporate Investments;
and Mr. Liebentritt, executive vice president, chief operating
officer and general counsel of EGI. The directors of EGI are Mr.
Zell, Mrs. Rosenberg and Mark Slezak. Mr. Slezak is vice president
and chief financial officer of Lurie Investments, Inc., a private
investment company. The principal business of EGI is investments.
EGI Corporate Investments, a division of EGI, is the corporate
investment and oversight arm of EGI.
The principal business of each of Samstock, SZ Investments, Zell
Inc., Zell Trust and Investors is investments.
The principal business address for each of Samstock, SZ Investments,
Zell Inc., Zell Trust, Investors, EGI, Lurie Investments, Inc.,
Messrs. Zell, Dammeyer, Liebentritt and Slezak and Mrs. Rosenberg is
Two North Riverside Plaza, Chicago, IL 60606.
Messrs. Zell, Dammeyer, Liebentritt and Slezak and Mrs. Rosenberg are
citizens of the United States of America.
(d) and (e) None of Samstock, Investors or, to the best knowledge
of Samstock and Investors, SZ Investments, Zell Inc., Zell Trust,
Messrs. Zell, Dammeyer, Liebentritt and Slezak 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 result of
such proceeding, was, or is, subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Page 4 of 60
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Item 3. Source and Amount of Funds or Other Consideration
On December 22, 1998, pursuant an Amended and Restated Agreement and
Plan of Merger and Reorganization ("Merger Agreement") by and among
Davel Communications Group, Inc. ("Old Davel"), the Issuer, Miami
Merger Corp., D Subsidiary Inc. and Peoples Telephone Company, Inc.
("Peoples"), and the merger of Old Davel into a subsidiary of the
Issuer with Old Davel as the surviving corporation, Samstock
exchanged 1,336,696 shares of Old Davel for 1,336,696 shares of the
Issuer and Investors exchanged 293,304 shares of Old Davel for
293,304 shares of the Issuer. Also on December 22, 1998, Samstock
exchanged in the aggregate warrants to purchase 286,784 shares of Old
Davel for $32.00 per share for warrants to purchase in the aggregate
286,784 shares of the Issuer for $32.00 per share from the following:
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MAKER OF WARRANT NUMBER OF WARRANTS
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Old Davel (now the Issuer) 176,602
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David R. Hill 88,301
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Robert D. Hill 6,711
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Michael E. Hayes 1,042
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Theodore C. Rammelkamp, Jr. 1,413
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A. Jones Yorke 3,179
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Paul B. Demirdjian 3,982
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Michael G. Kouri 3,788
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Marlin E. Turnipseed 1,766
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Also on December 22, 1998, Investors exchanged in the aggregate
warrants to purchase 63,216 shares of Old Davel for $32.00 per share
for warrants to purchase in the aggregate 63,216 shares of the Issuer
for $32.00 from the following:
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MAKER OF WARRANT NUMBER OF WARRANTS
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Old Davel (now the Issuer) 38,929
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David R. Hill 19,464
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Robert D. Hill 1,479
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Michael E. Hayes 230
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Theodore C. Rammelkamp, Jr. 311
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A. Jones Yorke 701
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Paul B. Demirdjian 878
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Michael G. Kouri 835
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Marlin E. Turnipseed 389
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On December 23, 1998, pursuant to the Merger Agreement and the merger
of Peoples with and into a subsidiary of the Issuer with Peoples as
the surviving corporation, Samstock exchanged 80,325 shares of
Peoples for 18,876 shares of the Issuer.
Effective on December 23, 1998, Samstock will be deemed to have
acquired approximately 40,000 shares from EGI for $18.375 per share
using its working capital. EGI was entitled to receive the shares
from the Issuer on December 23, 1998, valued at $18.375 per share, as
payment for advisory service rendered in connection with the merger
of Peoples.
Item 4. Purpose of the Transaction
Samstock and Investors have acquired the securities of the Issuer for
investment purposes.
Page 5 of 60
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The Issuer, Samstock, Investors, David R. Hill and, solely for the
purposes of consenting to the amendment and restatement of a previous
investment agreement, Old Davel have entered into an Investment
Agreement dated December 22, 1998 (the "Investment Agreement"). (For
purposes of Item 4. only, references to Samstock shall include
Investors). Pursuant to the Investment Agreement, prior to June 29,
2001, (a) except as the same may be approved by a majority of the
Disinterested Directors (as defined in the Investment Agreement)
prior to the taking of such action, neither the Investor Group nor
the Shareholder Group (as such terms are defined in the Investment
Agreement but which include Samstock, Investors and Mr. Hill) shall,
directly or indirectly, acquire, offer to acquire, agree to acquire,
make any proposal to acquire, become the beneficial owner of or
obtain any rights in respect of any Company Voting Securities (as
defined in the Investment Agreement), by purchase or otherwise, or
take any action in furtherance thereof, if the effect of such
acquisition, agreement or other action would be to increase the
aggregate beneficial ownership of Company Voting Securities of the
Investor Group or the Shareholder Group to such number of Company
Voting Securities that represents or possesses greater than 33.7% of
the Combined Voting Power (as defined in the Investment Agreement),
in the case of the Investor Group, or 37.0% of the Combined Voting
Power, in the case of the Shareholder Group, (b) no member of the
Investor Group or the Shareholder Group shall, in any way,
participate in, directly or indirectly, any solicitation of proxies
to vote or consent with respect to any Company Voting Securities or
become a participant in an election contest with respect to the
Issuer, except, in each case with the prior approval of the
Disinterested Directors (provided, however, that members of the
Shareholder Group may participate in the solicitation of proxies with
respect to matters recommended by the Issuer's Board of Directors),
(c) except as the same may be approved by a majority of the
Disinterested Directors prior to the taking of such action, neither
the Investor Group nor the Shareholder Group shall (i) form, join in
or participate in the formation of a group with respect to Company
Voting Securities (other than, in the case of the Investor Group, a
group consisting solely of the members of the Investor Group, in the
case of the Shareholder Group, a group consisting solely of the
members of the Shareholder Group, and any group that may be deemed to
exist by virtue of the Shareholders Agreement (as hereinafter
defined)) or (ii) deposit any Company Voting Securities into a voting
trust or subject any Company Voting Securities to any arrangement or
agreement with respect to the voting thereof (other than the
Shareholders Agreement, in the case of the Investor Group, any such
trust, arrangement or agreement the only parties to, or beneficiaries
of, which are members of the Investor Group or Permitted Transferees
(as defined in the Shareholders Agreement) of Investor, and, in the
case of the Shareholder Group, any such trust, arrangement or
agreement the only parties to, or beneficiaries of, which are members
of the Shareholder Group or Permitted Transferees of Shareholder),
(d) neither the Investor Group nor the Shareholder Group shall,
directly or indirectly, assist, encourage or induce any other person
to bid for or acquire outstanding Company Voting Securities in any
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 nominated by the
Issuer's Board of Directors for election to the Issuer's Board of
Directors or the Issuer's Board of Directors does not recommend such
person to serve as a director of the Issuer or (y) the Issuer's Board
of Directors shall change the size of such Board from eight directors
(or from seven directors after such time as Justin Maccarone no
longer serves as a director) 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
Page 6 of 60
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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 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
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 eight directors or to increase
the size of such Board to more than eight 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.
Mr. Samuel Zell and Mr. F. Philip Handy are members of the Issuer's
Board of Directors, as designees of Samstock.
Samstock, Investors, David R. Hill and, solely for the purpose of
Section 2(a), 2(b), 3, 4, 6 and 8 through 19 thereof, the Issuer and,
solely for purposes of consenting to the amendment and restatement of
a previous shareholder agreement, Old Davel have entered into a
Shareholders Agreement dated December 22, 1998 (the "Shareholders
Agreement"). 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. 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
Page 7 of 60
<PAGE> 8
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.
The Investment Agreement and the Shareholders Agreement are filed as
exhibits to this Schedule 13D and are incorporated herein by
reference. The descriptions of such agreements contained in this
Schedule 13D are qualified in their entireties by reference to such
exhibits.
Subject to the terms of the Investment Agreement and the Shareholders
Agreement, Samstock and Investors reserve the right to sell or
otherwise dispose of some or all of the shares of Common Stock
beneficially owned by each of them in the open market, in privately
negotiated transactions, through derivative transactions or
otherwise, or to acquire additional shares of Common Stock, in the
open market, in privately negotiated transactions or otherwise, in
each case, depending upon market conditions and other factors.
Item 5. Interest in Securities of the Issuer
(a) Samstock beneficially owns an aggregate of approximately
1,395,572 shares of Common Stock representing approximately 19.9% of
the total outstanding shares of Common Stock (including 286,784
shares of Common Stock issuable to Samstock upon the exercise of
warrants, 293,304 shares of Common Stock beneficially owned by
Investors and 63,216 shares of Common Stock issuable to Investors
upon the exercise of warrants).
Investors beneficially owns an aggregate of 356,520 shares of Common
Stock representing approximately 3.4% of the total outstanding shares
of Common Stock (including 63,216 shares of Common Stock issuable to
Investors upon the exercise of warrants). The amounts beneficially
owned by Investors are included in the amounts beneficially owned in
the aggregate by Samstock above.
Mr. Zell is the beneficial owner of options to purchase 8,000 shares
of Common Stock at $24.375 per share which are currently exercisable.
The percentage ownership numbers expressed in this subsection (a) are
based upon approximately 10,528,242 shares of Common Stock
outstanding as told to a representative of the Reporting Persons by
the Issuer, with the adjustments described above.
Page 8 of 60
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(b) Samstock has the sole power to vote or to direct the vote of
approximately 1,395,572 shares of Common Stock and the sole power to
dispose or to direct the disposition of 1,642,356 shares of Common
Stock (assuming the exercise of warrants to purchase 286,784 shares
of Common Stock).
Samstock and Investors share the power to vote or to direct the vote
of 293,304 shares of Common Stock and share the power to dispose or
to direct the disposition of 356,520 shares of Common Stock (assuming
the exercise of warrants to purchase 63,216 shares of Common Stock).
Mr. Zell has the sole power to dispose or to direct the disposition
of 8,000 shares of Common Stock (assuming the exercise of options to
purchase 8,000 shares of Common Stock).
(c) For a description of transactions which occurred during the
last sixty days, see Item 3. above.
(d) and (e) Not applicable.
Item 6 Contracts, Arrangements, Understandings or Relationships With Respect
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to Securities of the Issuer.
----------------------------
The Issuer, Samstock, Investors, David R. Hill and, solely for the
purpose of consenting to the amendment and restatement of a previous
investment agreement, Old Davel are parties to the Investment
Agreement and Samstock, Investors, David R. Hill and, solely for the
purposes of Sections 2(a), 2(b), 3, 4, 6 and 8 through 19 thereof,
the Issuer and, solely for purposes of consenting to the amendment
and restatement of a previous shareholder agreement, Old Davel are
parties to the Shareholders Agreement. The Investment Agreement and
the Shareholders Agreement are filed as exhibits to this Schedule 13D
and are incorporated herein by reference.
The Issuer and each of Samstock and Investors have entered into
warrants to purchase Common Stock ("Issuer Warrants") as described in
Item 3. above. A form of the Issuer Warrant is filed as an exhibit
to this Schedule 13D and is incorporated herein by reference.
Each of David R. Hill, Robert D. Hill, Michael E. Hayes, Theodore C.
Rammelkamp, Jr., A. Jones Yorke, Paul B. Demirjian, Michael G.
Kouri and Marlin E. Turnipseed and each of Samstock and Investors
entered into warrants to purchase Common Stock ("Executive Warrants")
as described in Item 3. above. A form of an Executive Warrant is
filed as an exhibit to this Schedule 13D and is incorporated herein
by reference.
Item 7 Materials to be Filed as Exhibits
---------------------------------
Exhibit 1 Investment Agreement dated December 22, 1998 among
Davel Communications, Inc., Samstock, L.L.C., EGI -
Davel Investors, L.L.C., David R. Hill and, solely
for purposes of consenting to the amendment and
restatement of an Investment Agreement dated June 29,
1998, Davel Communications Group, Inc.
Exhibit 2 Shareholders Agreement dated December 22, 1998 by and
among Samstock, L.L.C., EGI - Davel Investors,
L.L.C., David R. Hill and, solely for purposes of
Sections 2(a), 2(b), 3, 4, 6 and 8 through 19
thereof, Davel Communications, Inc. and, solely for
purposes of the amendment and restatement of a
Shareholders Agreement dated June 29, 1998, Davel
Communications Group, Inc.
Exhibit 3 Form of Warrant to Purchase Shares of Common Stock
from Davel Communications, Inc.
Exhibit 4 Form of Warrant to Purchase Shares of Common Stock
from an "Executive"
Page 9 of 60
<PAGE> 10
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: January 5, 1999.
SAMSTOCK, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY
By: /s/ Donald J. Liebentritt,
----------------------------
Vice President
EGI - DAVEL INVESTORS, L.L.C., A DELAWARE LIMITED
LIABILITY COMPANY
By: /s/ Donald J. Liebentritt,
----------------------------
Vice President
Page 10 of 60
<PAGE> 11
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
------- ----------- ----
NUMBER
-------
1 Investment Agreement dated December 22, 12
1998 among Davel Communications, Inc.,
Samstock, L.L.C., EGI - Davel Investors,
L.L.C., David R. Hill and, solely for purposes
of consenting to the amendment and
restatement of an Investment Agreement dated
June 29, 1998, Davel Communications Group, Inc.
2 Shareholders Agreement dated December 22, 32
1998 by and among Samstock, L.L.C., EGI -
Davel Investors, L.L.C., David R. Hill and,
solely for purposes of Sections 2(a), 2(b), 3, 4,
6 and 8 through 19 thereof, Davel
Communications, Inc. and, solely for purposes
of consenting to the amendment and
restatement of a Shareholders Agreement dated
June 29, 1998, Davel Communications Group, Inc.
3 Form of Warrant to Purchase Shares of Common Stock 45
from Davel Communications, Inc.
4 Form of Warrant to Purchase Shares of Common Stock 53
from an "Executive"
Page 11 of 60
<PAGE> 1
(Exhibit 1)
INVESTMENT AGREEMENT
Investment Agreement dated December 22, 1998 (this "Agreement"), among
Davel Communications, Inc., a Delaware corporation (the "Company"), Samstock,
L.L.C., a Delaware limited liability company, and EGI-Davel Investors, L.L.C., a
Delaware limited liability company (collectively, "Investor"), David R. Hill, an
individual residing in the State of Florida ("Shareholder") and, solely for
purposes of consenting to the amendment and restatement of the Original
Agreement (as defined below), Davel Communications Group, Inc., an Illinois
corporation ("Old Davel"). Investor, Shareholder and Old Davel are parties to
an Investment Agreement dated as of June 29, 1998 (the "Original Agreement").
The parties desire to amend and restate the Original Agreement as set forth
herein for the purpose, among others, of substituting the Company for Old Davel
for all purposes of the Original Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Investor and Old Davel are parties to a Stock Purchase Agreement
dated May 14, 1998 (the "Company Stock Purchase Agreement") pursuant to which,
among other things, the Company issued and sold, and Investor purchased from the
Company, 1,000,000 shares of common stock, no par value, of Old Davel ("Old
Davel Common Stock");
WHEREAS, Investor and Shareholder are parties to a Stock Purchase agreement
dated May 14, 1998 (the "Shareholder Stock Purchase Agreement") pursuant to
which, among other things, Shareholder has sold, and Investor purchased from
Shareholder, 500,000 shares of Old Davel Common Stock;
WHEREAS, Investor and certain directors and members of management of the
Company (the "Management Shareholders") are parties to a Stock Purchase
Agreement pursuant to which, among other things, the Management Shareholders
sold, and Investor purchased from the Management Shareholders, 123,900 shares of
Common Stock (such Stock Purchase Agreement, together with the Company Stock
Purchase Agreement and the Shareholder Stock Purchase Agreement, the "Stock
Purchase Agreements");
WHEREAS, the closing of the transactions contemplated by each of the Stock
Purchase Agreements occurred concurrently with the execution and delivery of the
Original Agreement;
WHEREAS, concurrently with the execution and delivery of the Original
Agreement, Investor and Shareholder executed and delivered a Shareholders
Agreement of even date therewith (the "Shareholders Agreement");
WHEREAS, the Company Stock Purchase Agreement and the Shareholder Stock
Purchase Agreement require that the Original Agreement be executed and delivered
by the Company, Investor and Shareholder at or prior to the closing of the
transactions contemplated by such agreements; and
WHEREAS, as of the date of this Agreement, Old Davel has consummated a
business combination (the "Business Combination") pursuant to which it has
become an indirect, wholly owned subsidiary of the Company, all of the
outstanding shares of Old Davel Common Stock have been exchanged for shares of
common stock, par value $.01 per share, of the Company (the "Common Stock") and
the Company has succeeded to the business of Old Davel.
Page 12 of 60
<PAGE> 2
(Exhibit 1)
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Affiliate" means, with respect to any person, any other person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such first person. As used in
this definition "control" (including, with correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies, whether through the ownership of securities or partnership or other
ownership interests, by contract or otherwise.
1.2 The terms "beneficial ownership," "person" and "group" shall have
the respective meanings ascribed to such terms pursuant to Regulation 13D-G
adopted by the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof. The term "affiliate" shall have the meaning ascribed to
such term pursuant to Rule 12b-2 under the Exchange Act, as in effect on the
date hereof.
1.3 The "Combined Voting Power" at any measurement date shall mean the
total number of votes which could have been cast in an election of directors of
the Company had a meeting of the shareholders of the Company been duly held
based upon a record date as of the measurement date if all Company Voting
Securities then outstanding and entitled to vote at such meeting were present
and voted to the fullest extent possible at such meeting.
1.4 "Company Voting Securities" shall mean, collectively, Common Stock
(or any other security into which Common Stock is exchanged or converted), any
preferred stock of the Company (or any successor to the Company) that is
entitled to vote generally for the election of directors, any other class or
series of Company securities (or securities of any successor to the Company)
that is entitled to vote generally for the election of directors and any other
securities, warrants, options or rights of any nature (whether or not issued by
the Company or any successor to the Company) that are convertible into,
exchangeable for, or exercisable for the purchase of, or otherwise give the
holder thereof any rights in respect of, Common Stock (or any other security
into which Common Stock is exchanged or converted), preferred stock of the
Company (or any successor to the Company) that is entitled to vote generally for
the election of directors of the Company or any successor thereto, or any other
class or series of Company securities that is entitled to vote generally for the
election of directors of the Company or any successor thereto.
1.5 "Disinterested Director" means Independent Directors who, with
respect to any contract or transaction being considered or voted upon by the
Company's Board of Directors, have no financial interest in such contract or
transaction, either directly or by virtue of serving as an officer or director
of any other corporation, partnership, association or other organization that is
a party to such contract or transaction; provided, however, an Independent
Director shall not be deemed to have a financial interest in any contract or
transaction by virtue of holding Common Stock or options to acquire Common
Stock.
Page 13 of 60
<PAGE> 3
(Exhibit 1)
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 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, Investor beneficially owns the number of
Shares set forth opposite Investor's name on Exhibit A to the Shareholders
Agreement.
Page 14 of 60
<PAGE> 4
(Exhibit 1)
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 the number of Shares and options to purchase
Shares that are set forth opposite Shareholder's name on Exhibit A to the
Shareholders Agreement.
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.
Page 15 of 60
<PAGE> 5
(Exhibit 1)
ARTICLE III
STANDSTILL AGREEMENT
3.1 Acquisition of Company Voting Securities. Except as the same may
be approved by a majority of the Disinterested Directors in a specific
resolution to that effect adopted prior to the taking of such action, prior to
the third anniversary of the date of the Original Agreement, neither the
Investor Group nor the Shareholder Group shall, directly or indirectly, acquire,
offer to acquire, agree to acquire, make any proposal to acquire, become the
beneficial owner of or obtain any rights in respect of any Company Voting
Securities, by purchase or otherwise, or take any action in furtherance thereof,
if the effect of such acquisition, agreement or other action would be (either
immediately or upon consummation of any such acquisition, agreement or other
action, or expiration of any period of time provided in any such acquisition,
agreement or other action) to increase the aggregate beneficial ownership of
Company Voting Securities by the Investor Group or the Shareholder Group to such
number of Company Voting Securities that represents or possesses greater than
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, over
subscription 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
date of the Original Agreement, no member of the Investor Group or the
Shareholder Group shall, in any way, participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in Regulation 14A
promulgated under the Exchange Act) to vote or consent with respect to any
Company Voting Securities or become a "participant" in an "election contest" (as
such terms are used in Rule 14a-11 under the Exchange Act) with respect to the
Company, except, in each case, with the prior approval of the Disinterested
Directors; provided, however, that members of the Shareholder Group may
participate in the solicitation of proxies with respect to matters recommended
by the Company's Board of Directors.
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
Page 16 of 60
<PAGE> 6
(Exhibit 1)
such action, prior to the third anniversary of the date of the Original
Agreement, neither the Investor Group nor the Shareholder Group shall (a) form,
join in or participate in the formation of a group with respect to any Company
Voting Securities, other than (i) in the case of the Investor Group, a group
consisting solely of the members of the Investor Group, (ii) in the case of the
Shareholder Group, a group consisting solely of the members of the Shareholder
Group, and (iii) any group that may be deemed to exist by virtue of the
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
date of the Original Agreement, neither the Investor Group nor the Shareholder
Group shall, directly or indirectly, assist, encourage or induce any other
person to bid for or acquire outstanding Company Voting Securities in any
transaction or series of related transactions, unless the consummation of such
transaction or series of related transactions requires approval of a majority of
the Board of Directors.
3.5 Non-Circumvention. Except as the same may be approved by a
majority of the Disinterested Directors in a specific resolution to that effect
adopted prior to the taking of such action, prior to the third anniversary of
the date of the Original Agreement, neither the Investor Group nor the
Shareholder Group shall take any action, alone or in concert with any other
person to circumvent the limitations set forth in Sections 3.1, 3.2, 3.3 and 3.4
of this Agreement.
3.6 Investor Nominees. If, for any reason, (i) any person designated
by Investor as a director of the Company pursuant to Article IV hereof is not
nominated by the Company's Board of Directors for election to the Company's
Board of Directors or the Company's Board of Directors does not recommend such
person to serve as a director of the Company, or (ii) the Board of Directors of
the Company shall change the size of the Board of Directors of the Company from
eight directors (or from seven directors after such time as Justin Maccarone no
longer serves as a director) at such time as Investor is entitled to designate
two directors of the Company's Board of Directors in accordance with the
provisions of Section 4.3 hereof or Shareholder is entitled to designate three
directors of such Board in accordance with Section 4.4 hereof, then, upon the
happening of such event, all of the provisions of this Article III shall lapse
and no longer be of any force or effect; provided, however, that the obligations
of a party under this Article III shall not lapse and cease to be of any force
or effect with respect to either the Investor Group or the Shareholder Group if
any of its respective members shall have breached any provision of this
Agreement and as a result thereof, one of the events described in clause (i) or
(ii) above shall have occurred.
3.7 Shareholder Nominees. If, for any reason, (i) any person
designated by Shareholder as a director of the Company pursuant to Article IV
hereof is not nominated by the Company's Board of Directors for election to the
Company's Board of Directors or the Company's Board of Directors does not
recommend such person to serve as a director of the Company, or (ii) the Board
of Directors of the Company shall change the size of the Board of Directors of
the Company from eight directors (or from seven directors after such time as
Justin Maccarone no
Page 17 of 60
<PAGE> 7
(Exhibit 1)
longer serves as a director) at such time as Investor is entitled to designate
two directors of the Company's Board of Directors in accordance with the
provisions of Section 4.3 hereof or Shareholder is entitled to designate three
directors of such Board in accordance with Section 4.4 hereof, then, upon the
happening of such event, all of the provisions of this Article III shall lapse
and no longer be of any force or effect; provided, however, that the obligations
of a party under this Article III shall not lapse and cease to be of any force
or effect with respect to either the Investor Group or the Shareholder Group if
any of its respective members shall have breached any provision of this
Agreement and as a result thereof, one of the events described in clause (i) or
(ii) above shall have occurred.
3.8 Acquisitions by Investor. Prior to the later of (i) such time as
Investor no longer has any rights under Section 4.3 or (ii) the third
anniversary of the date of the Original Agreement, the Investor Group shall not
solicit, encourage, enter into substantive discussions or negotiations with
respect to, or effect any acquisition of any entity the principal business of
which is the operation of a network of payphones or of any material amount of
assets of any such entity; provided, however, that (i) the Investor Group may
solicit, encourage or enter into discussions or negotiations of which the
Company is generally aware with respect to any such acquisition with the intent
of effecting such acquisition through the Company and (ii) the Investor Group
shall not be prohibited from purchasing and owning equity securities of any such
entity so long as such securities in the aggregate represent no more than five
percent of the outstanding equity securities of such entity. Investor
represents and warrants that from May 14, 1998 through the date of the Original
Agreement, the Investor Group did not solicit, encourage or enter into
substantive discussions or negotiations with respect to any such acquisition
except with the intent of effecting such acquisition through the Company.
ARTICLE IV
VOTING OF COMPANY VOTING SECURITIES AND RELATED MATTERS
-------------------------------------------------------
4.1 Shareholder Meetings. So long as Shareholder is entitled to
designate three directors of the Company's Board of Directors in accordance with
Section 4.4 hereof, each member of the Investor Group that is a holder of record
of Company Voting Securities shall be present, and each member of the Investor
Group that is a beneficial owner of Company Voting Securities shall cause the
holder of record of such Company Voting Securities to be present, in person or
by proxy, at all meetings of shareholders of the Company so that all Company
Voting Securities owned of record or beneficially by the Investor Group may be
counted for the purpose of determining the presence of a quorum at such
meetings. So long as Investor is entitled to designate two directors of the
Company's Board of Directors in accordance with Section 4.3 hereof, each member
of the Shareholder Group that is a holder of record of Company Voting Securities
shall be present, and each member of the Shareholder Group that is a beneficial
owner of Company Voting Securities shall cause the holder of record of such
Company Voting Securities to be present, in person or by proxy, at all meetings
of shareholders of the Company so that all Company Voting Securities owned of
record or beneficially by the Shareholder Group may be counted for the purpose
of determining the presence of a quorum at such meetings.
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.
Page 18 of 60
<PAGE> 8
(Exhibit 1)
(b) So long as Shareholder is entitled to designate three
directors of the Company's Board of Directors in accordance with the provisions
of Section 4.4 hereof, except to the extent otherwise provided herein, the
Company shall take all reasonably necessary or appropriate action to assist in
the nomination and election as directors of the three individuals specified in
Section 4.4 below designated by Shareholder to be elected as directors of the
Company.
(c) So long as Investor is entitled to designate two directors of
the Company's Board of Directors in accordance with the provisions of Section
4.3 hereof or Shareholder is entitled to designate three directors of such Board
pursuant to Section 4.4 hereof, none of Investor, Shareholder or the Company
shall take any action to decrease the size of such Board to less than eight
directors (or from seven directors at such time as Justin Maccarone no longer
serves as a director) or to increase the size of such Board to more than eight
directors (or from seven directors at such time as Justin Maccarone no longer
serves as a director).
(d) So long as Shareholder, individually, or Shareholder and
Investor, acting jointly, are entitled to designate three Independent Directors
(or two Independent Directors at such time as Justin Maccarone no longer serves
as a director) in accordance with the provisions of Section 4.5 hereof, except
to the extent otherwise provided herein, the Company shall take all necessary or
appropriate action to assist in the nomination and election as directors of the
two persons designated by Shareholder or Shareholder and Investor, as the case
may be, to be elected as Independent Directors.
(e) So long as Investor is entitled to designate two directors of
the Company's Board of Directors in accordance with the provisions of Section
4.3 hereof (each such director, an "Investor Designee") and Shareholder is
entitled to designate three directors of the Company's Board of Directors in
accordance with Section 4.4 hereof (each such director, a "Shareholder
Designee"), each committee of the Board of Directors shall consist of at least
three directors, and (other than any committee consisting entirely of
Independent Directors and other than the Executive Committee) shall include no
more than one Investor Designee and no more than one Shareholder Designee. The
Executive Committee shall include no more than one Investor Designee, but may
include more than one Shareholder Designee.
4.3 Investor Board Nominees. So long as the Investor Group
beneficially owns at least 10% of the Combined Voting Power of all Company
Voting Securities, Investor shall have the right to designate two directors of
the Company; provided, however, that at such time as the Investor Group shall no
longer beneficially own at least 10% of the Combined Voting Power of all Company
Voting Securities, (i) Investor shall cease to have the right to designate any
directors of the Company, (ii) Investor's rights under this Article IV shall
terminate and (iii) Investor shall cause its two designees to resign from the
Board of Directors of the Company.
4.4 Shareholder Board Nominees. So long as the Shareholder Group
beneficially owns at least 10% of the Combined Voting Power of all Company
Voting Securities, Shareholder shall 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.
Page 19 of 60
<PAGE> 9
(Exhibit 1)
4.5 Independent Directors. Prior to the first anniversary of the date
of the Original Agreement, Shareholder shall be entitled to designate two
persons to be elected as Independent Directors, provided that such designees are
reasonably acceptable to Investor (it being understood that at least one
non-employee director of the Company holding such position as of May 14, 1998
shall be acceptable to Investor). Following the first anniversary of the date
of the Original Agreement, Investor and Shareholder shall jointly designate the
two persons to be elected as Independent Directors. Investor and Shareholder
shall cause their designees on the Board of Directors of the Company to take all
reasonably necessary or appropriate action to assist in the nomination and
election as directors of all such nominees as may be selected to serve as
Independent Directors in the manner described above. From and after the date of
this Agreement and until the first anniversary of the date of this Agreement,
Justin Maccarone will serve as a third Independent Director as a designee of UBS
Capital II LLC.
ARTICLE V
REGISTRATION RIGHTS
5.1 Definitions. For purposes of this Article V:
(a) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act").
(b) The term "Registrable Securities" means shares of Common Stock
held, from time to time, by any member of the Investor Group.
(c) The term "Holder" means any member of the Investor Group or (other
than for purposes of Section 5.2) the Shareholder Group that owns of record
Registrable Securities.
(d) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Act.
(e) The term "Shelf Registration Statement" means a registration
statement intended to effect a shelf registration in connection with a Rule 415
Offering.
Page 20 of 60
<PAGE> 10
(Exhibit 1)
5.2 Shelf Registrations. No later than ninety (90) days after the
Company becomes eligible to use Form S-3 under the Act to register Shares for
resale by shareholders, the Company shall, upon the written request of Investor,
prepare and file with the SEC a Shelf Registration Statement (which shall
include pledgees of any selling shareholder under the caption "plan of
distribution" contained in such Shelf Registration Statement) with respect to
all Shares acquired by Investor pursuant to the Purchase Agreements and use its
reasonable efforts to cause such Shelf Registration Statement to become
effective and keep such registration statement effective until such time as such
Shares have been sold or disposed of thereunder or sold, transferred or
otherwise disposed of (other than pursuant to a pledge of such Registrable
Securities) to a person that is not a Holder. Notwithstanding the foregoing, if
the Company shall furnish to Investor a certificate signed by the Chief
Executive, Chief Operating, or Chief Financial Officer of the Company stating
that, in the good faith judgment of a majority of the Disinterested Directors,
it would be materially detrimental to the Company for such registration
statement to be filed, the Company shall have the right to defer such filing for
a period of not more than 120 days after receipt of Investor's request;
provided, however, that the Company may not utilize this right more than once in
any 12-month period.
5.3 Incidental Registration. If the Company proposes to register any
of its voting securities ("Other Securities") for public sale under the
Securities Act, on a form and in a manner which would permit registration of
Registrable Securities for sale to the public under the Securities Act, it will
give prompt written notice to each Holder of its intention to do so, and upon
the written request of a Holder delivered to the Company within fifteen Business
Days after the giving of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of disposition thereof) the Company will use its best efforts to
effect, in connection with the registration of the Other Securities, the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by such Holder, to the extent required
to permit the disposition (in accordance with the intended method or methods
thereof as aforesaid) of the Registrable Securities so to be registered,
provided that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date
of the registration statement filed in connection with such registration,
the managing underwriters of such offering or offerings determine that the
aggregate amount of shares to be registered by the Holders of the
Registrable Securities could materially and adversely affect such offering,
then the Company may reduce the number of Registrable Securities of such
Holders to be included in such offering; provided, that such Holders will
be entitled to register the maximum number of Registrable Securities,
together with those shares of Common Stock held by any other person
exercising registration rights, which the underwriters deem advisable and
the Company will allocate the number of Registrable Shares to be registered
for each such Holder on a pro rata basis in accordance with the number of
shares each Holder initially requested to be sold;
(b) the Company shall not be required to effect any registration of
Registrable Securities under this Section 5.3 incidental to the
registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option
or other employee benefit plans; and
(c) Holder, cumulatively, shall have the right to exercise
registration rights pursuant to this Section 5.3 without limit during the
term hereof.
Page 21 of 60
<PAGE> 11
(Exhibit 1)
No registration of Registrable Securities effected under this Section 5.3 shall
relieve the Company of its obligation to effect registrations of Registrable
Securities pursuant to Section 5.2.
5.4 Additional Obligations of the Company. Whenever the Company is
required to effect a registration statement pursuant to Section 5.2 or 5.3, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered thereby.
(b) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities covered by such
registration statement owned by them.
(c) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such states or other jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions where it is not so subject.
(d) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and then
use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section 5.4, each Holder acknowledges that the Company shall have the right to
suspend the use of the prospectus forming a part of a registration statement if
such offering would interfere with a pending corporate transaction or for other
reasons until such time as an amendment to the registration statement has been
filed by the Company and declared effective by the SEC, or until such time as
the Company has filed an appropriate report with the SEC pursuant to the
Exchange Act. Each Holder hereby covenants that it will (a) keep any such
notice strictly confidential, and (b) not sell any shares of Common Stock
pursuant to such prospectus during the period commencing at the time at which
the Company gives the Holder notice of the suspension of the use of such
prospectus and ending at the time the Company gives the Holder notice that it
may thereafter effect sales pursuant to such prospectus. The Company shall only
be able to suspend the use of such prospectus for periods aggregating no more
than 90 days in respect of any registration.
5.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, 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.
Page 22 of 60
<PAGE> 12
(Exhibit 1)
5.6 Expenses of Registration. All expenses incurred by or on behalf of
the Company in connection with registrations, filings or qualifications pursuant
to Section 5.3 including, without limitation, all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company, shall be borne by the Company. In no event shall the
Company be obligated to bear any underwriting discounts or commissions or
brokerage fees or commissions relating to Registrable Securities or the fees and
expenses of counsel to the selling Holders.
5.7 Indemnification. In the event registration of any Registrable
Securities hereunder:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and the affiliates of such Holder, and their respective
directors, officers, general and limited partners, agents and representatives
(and the directors, officers, affiliates and controlling persons thereof), and
each other person, if any, who controls such Holder within the meaning of the
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus (but only if
such statement is not corrected in the final prospectus) contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such omission is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, affiliate or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 5.7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
or on behalf of any such Holder or its Affiliates or controlling person. Each
indemnified party shall furnish such information regarding itself or the claim
in question as an indemnifying party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other 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
Page 23 of 60
<PAGE> 13
(Exhibit 1)
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this Section 5.7(b) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 5.7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this Section 5.7(b) exceed the gross proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
5.7 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5.7, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 5.7 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 5.7.
The indemnified party shall have the right, but not the obligation, to
participate in the defense of any action referred to above through counsel of
its own choosing and shall have the right, but not the obligation, to assert any
and all separate defenses, cross claims or counterclaims which it may have, and
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel has been
specifically authorized in advance by the indemnifying party, (ii) there is a
conflict of interest that prevents counsel for the indemnifying party from
adequately representing the interests of the indemnified party or there are
defenses available to the indemnified party that are different from, or
additional to, the defenses that are available to the indemnifying party, (iii)
the indemnifying party does not employ counsel that is reasonably satisfactory
to the indemnified party within a reasonable period of time, or (iv) the
indemnifying party fails to assume the defense or does not reasonably contest
such action in good faith, in which case, if the indemnified party notifies the
indemnifying party that it elects to employ separate counsel, the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the indemnified party and the reasonable fees and expenses of such separate
counsel shall be borne by the indemnifying party; provided, however, that, the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to, to the extent
reasonably necessary to employ local counsel, one firm acting as local counsel)
for all indemnified parties.
(d) The obligations of the Company and the Holders under this Section
5.7 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article V.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
Page 24 of 60
<PAGE> 14
(Exhibit 1)
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.
Page 25 of 60
<PAGE> 15
(Exhibit 1)
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 December 22,
1998 and a Shareholders Agreement dated December 22, 1998, in each case, by
and among the Company and certain of its shareholders, copies of which may
be obtained from the Company upon request."
The Company agrees to remove promptly all legends and stop transfer orders with
respect to the transfer of Company Voting Securities being made to a person who
is not then a member of the Investor Group or the Shareholder Group in
compliance with the provisions of this Agreement.
6.3 Remedies.
(a) Each party recognizes and acknowledges that a breach by it of
Article III, Article IV or Article V of this Agreement would cause the other
parties to sustain damages for which they would not have an adequate remedy at
law for money damages, and therefore each party agrees that 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.
Page 26 of 60
<PAGE> 16
(Exhibit 1)
(b) In addition to any other remedy the Company may have under this
Agreement or in law or equity, if any member of the Investor Group or the
Shareholder Group, as the case may be, shall acquire or transfer any Company
Voting Securities in violation of this Agreement, such Company Voting Securities
which are in excess of the number permitted to be owned or controlled by the
Investor Group or Shareholder Group, as the case may be, or which have been
transferred by a member of the Investor Group or the Shareholder Group in
violation of the provisions of this Agreement, will not be voted with respect to
any matter by such member either in person or by proxy.
6.4 Additional Investor Group Parties; Several Obligations. Each
member of the Investor Group or the Shareholder Group that shall become or have
the right to become the record owner of Company Voting Securities shall,
promptly upon becoming such record owner, execute and deliver to the Company a
joinder agreement, agreeing to be legally bound by the terms of this Agreement
to the same extent as if it had signed this Agreement as an original signatory
as Investor or Shareholder, as the case may be; provided that failure to execute
such an agreement
Page 27 of 60
<PAGE> 17
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: President
Telecopy Number: (312) 454-0335
if to the Company:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Robert D. Hill
Telecopy Number: (813) 626-9610
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk
Telecopy Number: (312) 861-2200
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
Page 28 of 60
<PAGE> 18
(Exhibit 1)
If to Shareholder:
David R. Hill
1429 Massaro Boulevard
Tampa, Florida 33619
Telecopy Number: (813) 626-9610
6.6 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
6.7 Amendments; Waivers. (a) This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by each party
hereto.
(b) The failure of any party hereto to comply with any
representation, warranty, covenant or agreement contained in this Agreement may
be waived only by a written instrument signed by the party granting such waiver.
No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty, covenant or
agreement contained in this Agreement, and no failure by any party to take any
action with respect to any breach of this Agreement or default by any other
party shall constitute a waiver of such party's right to enforce any provision
hereof or to take any such action. The waiver by any party hereto of a breach
of any provision hereunder shall not operate as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
6.8 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Illinois regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
6.9 Interpretation. The headings contained in this Agreement are
inserted for convenience of reference only and shall not affect in anyway the
meaning or interpretation of this Agreement. All references to a Section,
Article, Schedule or Exhibit contained herein mean Sections, Articles, Schedules
or Exhibits of this Agreement unless otherwise stated. All capitalized terms
defined herein are equally applicable to both the singular and plural forms of
such terms.
Whenever the words "include", includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
6.10 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same Agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
6.11 Assignability. 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
Page 29 of 60
<PAGE> 19
(Exhibit 1)
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.
Page 30 of 60
<PAGE> 20
(Exhibit 1)
IN WITNESS WHEREOF, each of Investor, Shareholder, the Company and Old
Davel have executed this Investment Agreement as of the date first above
written.
INVESTOR:
SAMSTOCK, L.L.C.
_______________________________________
By:
EGI-DAVEL INVESTORS, L.L.C.
_______________________________________
By:
SHAREHOLDER:
_______________________________________
David R. Hill, individually
COMPANY:
DAVEL COMMUNICATIONS, INC.
_______________________________________
By:
OLD DAVEL:
DAVEL COMMUNICATIONS GROUP, INC.
_______________________________________
By:
Page 31 of 60
<PAGE> 1
Exhibit 2
SHAREHOLDERS AGREEMENT
----------------------
This SHAREHOLDERS AGREEMENT ("Agreement") is dated as of December 22, 1998,
by and among Samstock, L.L.C., a Delaware limited liability company, and
EGI-Davel Investors, L.L.C., a Delaware limited liability company (collectively,
"Investor"), David R. Hill, an individual residing in the State of Florida
("Shareholder"), and, solely for purposes of Sections 2(a), 2(b), 3, 4, 6 and 8
through 19 of this Agreement, Davel Communications, Inc., a Delaware corporation
(the "Company"), and, solely for purposes of consenting to the amendment and
restatement of the Original Agreement (as defined below), Davel Communications
Group, Inc., an Illinois corporation ("Old Davel"). Investor, Shareholder and
Old Davel are parties to a Shareholders Agreement dated as of June 29, 1998 (the
"Original Agreement"). The parties desire to amend and restate the Original
Agreement as set forth herein for the purpose, among others, of substituting the
Company for Old Davel for all purposes of the Original Agreement.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Investor and Old Davel are parties to a Stock Purchase Agreement
dated May 14, 1998 (the "Company Stock Purchase Agreement") pursuant to which,
among other things, Old Davel issued and sold, and Investor purchased from Old
Davel, 1,000,000 shares of common stock, no par value, of Old Davel ("Old Davel
Common Stock");
WHEREAS, Investor and Shareholder are parties to a Stock Purchase Agreement
dated May 14, 1998 (the "Shareholder Stock Purchase Agreement") pursuant to
which, among other things, Shareholder sold, and Investor purchased from
Shareholder, 500,000 shares of Old Davel Common Stock;
WHEREAS, Investor and certain directors and members of management of the
Company (the "Management Shareholders") are parties to a Stock Purchase
Agreement pursuant to which, among other things, the Management Shareholders
sold, and Investor purchased from the Management Shareholders, 123,900 shares of
Old Davel Common Stock (such Stock Purchase Agreement, together with the Company
Stock Purchase Agreement and the Shareholder Stock Purchase Agreement, the
"Stock Purchase Agreements");
WHEREAS, the closing of the transactions contemplated by each of the Stock
Purchase Agreements occurred concurrently with the execution and delivery of the
Original Agreement;
WHEREAS, it was a condition to the obligations of Investor to effect the
transactions contemplated by the Company Stock Purchase Agreement that the
Original Agreement be executed and delivered by Investor and Shareholder;
WHEREAS, as of the date of this Agreement, Old Davel has consummated a
business combination (the "Business Combination") pursuant to which it has
become an indirect, wholly owned subsidiary of the Company, all of the
outstanding shares of Old Davel Common Stock have been exchanged for shares of
common stock, par value $.01 per share, of the Company (the "Common Stock") and
the Company has succeeded to the business of Old Davel;
WHEREAS, giving effect to the closing of the Business Combination, each of
Investor and Shareholder beneficially owns the number of shares of Common Stock,
and options to purchase shares of Common Stock, set forth opposite its name on
Exhibit A hereto; and
Page 32 of 60
<PAGE> 2
(Exhibit 2)
WHEREAS, capitalized terms used and not otherwise defined herein shall have
the meanings assigned thereto in the Investment Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
Section 1. Certain Definitions
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such first Person. As used in
this definition "control" (including, with correlative meanings, "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies, whether through the ownership of securities or partnership or other
ownership interests, by contract or otherwise.
"business day" means any day that is not a Saturday, a Sunday or a legal
holiday on which banking institutions in the State of Illinois are not required
to be open.
"Investment Agreement" means the Investment Agreement dated as of the date
hereof among the Company, Investor, Shareholder and Old Davel.
"Market Price" means the average of the closing prices of the Common Stock
on the NASDAQ Stock Market (or, if not trading on the NASDAQ Stock Market, such
other securities exchange or over the counter market on which the Common Stock
is then trading) on the 20 consecutive Trading Days immediately preceding the
date of determination.
"Permitted Transferee" means:
(i) with respect to the Transfer of Shares by Investor, any person that
is an Affiliate of Samuel Zell or an Affiliate of any one or more trusts
established for the benefit of Samuel Zell and/or members of his family;
and
(ii) with respect to any Transfer of Shares by Shareholder, (A) any
Shareholder Family Entity, (B) any charitable organization as defined under
Section 501(c)(3) of the Internal revenue Code of 1986, as amended, and (C)
any other charitable organization(s), provided Shareholder does not
Transfer to any such other charitable organization(s) in the aggregate over
the term of this Agreement more than ten percent (10%) of the Shares in any
single Transfer or series (related or unrelated) of Transfers.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, governmental entity or other entity.
"Public Sale" means a bona fide sale of Shares either (i) in "broker's
transactions" within the meaning of Section 4(4) of the Securities Act of 1933,
as amended (the "Securities Act"), (ii) in transactions directly with a "market
maker" as that term in defined in Section 3(a)(38) of the Securities Exchange
Act of 1934, as amended, (iii) otherwise pursuant to Rule 144 of the Securities
Act, or (iv) through a registered offering pursuant to an effective registration
statement under the Securities Act.
Page 33 of 60
<PAGE> 3
(Exhibit 2)
"Shares" means all shares of Company Voting Securities, whether now owned
or hereafter acquired.
"Shareholder Family Entity" means Shareholder's spouse and descendants and
any corporation, partnership, limited liability company, trust, or other legal
entity controlled by Shareholder and wholly owned beneficially and of record by
Shareholder and/or Shareholder's spouse, children, grandchildren, parents,
siblings, in-laws, nieces and/or nephews or a trust established for any of their
benefit, provided such trust is controlled by Shareholder or Shareholder's
representative, or principal heir or legatee.
"Trading Day" means any day on which the NASDAQ Stock Market is open for
trading.
"Transfer" means any voluntary or involuntary, direct or indirect,
transfer, sale, assignment, donation, pledge, hypothecation, issuance, grant of
a security interest in or other disposition or attempted disposition of Shares
or any right or interest whatsoever therein, including, without limitation, by
operation of law or otherwise, whether with or without consideration or value,
and whether for cash, other securities or other property and specifically
including any share for share or similar exchange; provided, however, that:
(i) any pledge or hypothecation of or grant of security interest in
Shares by Shareholder which is either approved by Investor in writing prior
to the pledge, hypothecation or grant of security interest or is effected
by Investor or any Affiliate of Investor shall not constitute a "Transfer"
of Shares for any purpose under this Agreement; and
(ii) any Transfer effected as a result of Shareholder's death,
pursuant to the laws of descent and distribution, by operation of law or
otherwise, to Shareholder's spouse, children, grandchildren, parents,
siblings, in-laws, nieces and/or nephews or a trust established for any of
their benefit, shall not constitute a "Transfer" of Shares for any purpose
under this Agreement, provided each transferee of Shares executes a
counterpart to this Agreement, whereupon such transferee shall hold such
Shares subject to all of the provisions of this Agreement, as if the
transferor were the holder of Shares held by the transferee.
Page 34 of 60
<PAGE> 4
(Exhibit 2)
Section 2. Restrictions on Transfer and Related Matters/Permitted
------------------------------------------------------
Transferees
-----------
(a) Neither Investor nor Shareholder shall Transfer any Shares
except for a Transfer to a Permitted Transferee pursuant to Section 2(b) or,
subject to Section 6, a Transfer pursuant to Section 3, 4, or 5, as applicable,
or pursuant to the exercise of registration rights under Section 5.3 of the
Investment Agreement. If any Transfer is made or attempted contrary to the
provisions of this Agreement, such purported Transfer shall be void ab initio;
and the Company shall refuse to recognize any such purported transferee of
Shares as a holder of such Shares for any purpose. Notwithstanding anything to
the contrary in this Agreement, the rights of Investor and Shareholder to
acquire any Shares pursuant to their respective rights in Section 3 and 4 shall
be subject to compliance with their respective obligations under Article III of
the Investment Agreement.
(b) Notwithstanding anything to the contrary in Section 2(a)
hereof, for purposes of this Agreement, Shareholder and Investor may Transfer
Shares to a Permitted Transferee of Shareholder and Investor, respectively,
without complying with the provisions of Sections 3, 4, 5 or 6. As a condition
to the effectiveness of any Transfer of Shares to a Permitted Transferee, the
Permitted Transferee shall execute a counterpart to this Agreement, whereupon
the Permitted Transferee shall hold Shares subject to all of the provisions of
this Agreement, as if the Permitted Transferee was the Person who transferred
the Shares actually held by the Permitted Transferee.
Section 3. Right of First Offer on Private Transfer. In the event
either Shareholder or Investor (in either case, the "Offeror") wishes to sell
for cash in a bona fide transaction with an independent third party, whether or
not any third party has made an offer to purchase any of the Offeror's Shares,
all or any portion of the Shares now owned or hereafter acquired by the Offeror,
other than in a Public Sale, the Offeror shall first notify Investor or
Shareholder, as the case may be (in either case, the "Offeree") and the Company
in writing (the "Notice of Intended Sale") of the number of Shares for sale by
the Offeror (the "Offered Shares") and the terms of sale other than the purchase
price. The Offeree shall promptly engage in discussions with the Offeror, for a
period not to exceed ten (10) business days from the date of receipt by the
Offeree and the Company of the Notice of Intended Sale, to mutually agree on a
purchase price for the Offered Shares. No later than the end of such ten (10)
business day period, the Offeree shall notify the Offeror in writing of the
price the Offeree proposes to pay for all, but not less than all, of the Offered
Shares (the "Offeree Proposed Price"). Within two (2) business days of the
receipt of notice of the Offeree Proposed Price, the Offeror shall notify the
Offeree in writing whether it or he will sell the Offered Shares to the Offeree
at the Offeree Proposed Price in cash and on the other proposed terms of sale.
If, within three (3) business days of receipt by the Offeree and the Company of
the Notice of Intended Sale, the Offeree notifies the Offeror and the Company
that it or he does not wish to purchase the Offered Shares, then the Company
shall promptly (i) notify the Offeror that it does not wish to purchase the
Offered Shares, or (ii) engage in discussions with the Offeror, for a period not
to exceed ten (10) business days from the date of receipt of such notice from
the Offeree, to mutually agree on a purchase price for the Offered Shares. No
later than the end of such ten (10) business day period, the Company shall
notify the Offeror in writing of the price the Company proposes to pay for all,
but not less than all, of the Offered Shares (the "Company Proposed Price").
Within two (2) business days of the receipt of notice of the Company Proposed
Price, the Offeror shall have the right to notify the Company in writing whether
it or he will sell the Offered Shares to the Company at the Company Proposed
Price in cash and on the other proposed terms of sale. If the Company
Page 35 of 60
<PAGE> 5
(Exhibit 2)
notifies the Offeror that it does not wish to purchase the Offered Shares or if
the Company does wish to purchase the Offered Shares, and the Offeror does not
wish to sell all (and not less than all) of the Offered Shares to the Company at
the Company Offered Price, the Offeror shall be free for a period of ninety (90)
days thereafter to complete a sale of all (but not less than all) of the Offered
Shares to any Person at a price that exceeds either the Offeree Proposed Price
or the Company Proposed Price, as the case may be, if any, in cash and on
substantially the same terms as set forth in the Offeror's Notice of Intended
Sale. If such a sale is not consummated within such ninety (90) day period by
the Offeror, the Offered Shares shall again be subject to a right of first offer
by the Offeree and the Company under the provisions of this Section 3. Except
as provided herein, Investor and Shareholder shall be bound by the restrictions
and limitations imposed by this Agreement after any Notice of Intended Sale is
given and whether or not any sale pursuant thereto actually occurs. In the
event any Offeree exercises its or his rights to purchase shares of Common Stock
pursuant to any Notice of Intended Sale, the Offeree and the Offeror shall, as
promptly as practicable and as a condition to their respective obligations
hereunder, enter into such agreements and deliver such documents to one another
as shall be necessary for the sale of Shares as contemplated hereby.
Section 4. Right of First Offer on Public Sale In the event that either
Investor or Shareholder (in either case, the "Offeror") wishes to sell for cash
in a Public Sale all or any portion of the Shares now owned or hereafter
acquired by the Offeror, whether or not any third party has made an offer to
purchase any of the Offeror's Shares, the Offeror shall first notify Investor or
Shareholder, as the case may be (the "Offeree"), and the Company in writing (the
"Notice of Intended Sale") of the number of Shares for sale by the Offeror (the
"Offered Shares"). The Offeree thereupon shall have the right to purchase all
or any part of the Offered Shares for cash at their Market Price determined as
of the last Trading Day immediately prior to the date of the Offeree's receipt
of the Notice of Intended Sale. In order to exercise the purchase rights,
within three (3) business days (one (1) business day in the event of a proposed
Public Sale of no more than 10,000 Shares in the aggregate) after receiving the
Notice of Intended Sale from the Offeror, the Offeree shall deliver to the
Offeror and the Company a written election ("Election Notice") to purchase so
many of the Offered Shares as it or he may desire to purchase. If the Offeree
does not exercise the purchase rights with respect to all of the Offered Shares
within the time period as provided herein or fails to deliver the Election
Notice within the time period provided, the Company shall have the right to
purchase all (but not less than all) of the Offered Shares at the proposed price
in cash and on the other proposed terms of sale. In order to exercise its
purchase rights, within three (3) business days (one (1) business day in the
event of a proposed sale of no more than 10,000 Shares in the aggregate) after
the expiration of the time period applicable to the Offeree, the Company shall
deliver to the Offeror a written election (the "Election Notice") to purchase
all of the Offered Shares. If the Company does not exercise its purchase rights
with respect to all (and not less than all) of the Offered Shares within the
time period as provided herein with respect to all of the Offered Shares, or
fails to deliver the Election Notice within the time period provided, the
Offeror shall be free for a period of twenty (20) Trading Days thereafter to
complete a Public Sale of that number of Offered Shares with respect to which
the Offeree and the Company failed to exercise their purchase rights. If such
Public Sale is not consummated within such twenty (20) Trading Day period by the
Offeror, the Offered Shares shall again be subject to a right of first offer by
the Offeree and the Company under the provisions of this Section 4. Except as
provided herein, Investor and Shareholder shall be bound by the restrictions and
limitations imposed by this Agreement after any Notice of Intended Sale is given
and whether or not any sale pursuant thereto actually occurs. In the event any
Offeree exercises its or his rights to purchase shares of Common Stock pursuant
to any Notice of
Page 36 of 60
<PAGE> 6
(Exhibit 2)
Intended Sale, the Offeree and the Offeror shall, as promptly as practicable and
as a condition to their respective obligations hereunder, enter into such
agreements and deliver such documents to one another as shall be necessary for
the sale of Shares as contemplated hereby. Notwithstanding anything to the
contrary in this Section 4, in the event that after the Offeree's receipt of the
Notice of Intended Sale and prior to the earlier of (i) the Offeror's receipt of
the Election Notice or (ii) 5:00 p.m. Eastern Time on the fourth (4th) day
following the Offeree's receipt of the Notice of Intended Sale, the Market Price
of the Shares increases or decreases by ten percent (10%) or more as compared to
the Market Price on the last Trading Day immediately prior to the date of the
Offeree's receipt of the Notice of Intended Sale, the Offeror shall have the
right to withdraw its Notice of Intended Sale by written notice to the Offeree
and the Company, in which event the Notice of Intended Sale actually delivered
by the Offeror to the Offeree and the Company shall be deemed for all purposes
under this Section 4 as never having been delivered to the Offeree and the
Company.
Section 5. Co-Sale Rights In addition to the rights of Investor,
Shareholder and the Company set forth in Section 3 above, in the event that
either Investor or Shareholder (in either case, the "Selling Holder") enters
into an agreement to sell to any person other than a Permitted Transferee (and
other than with the Company pursuant to Section 3 or Section 4) or group of any
such persons, in a single transaction or related series of transactions, other
than a Public Sale, such number of Shares as equals or exceeds more than ten
percent (10%) of the Shares held by the Selling Holder as of the date hereof
(giving effect to the closing of the transactions contemplated by the Stock
Purchase Agreements), the Selling Holder shall first notify Investor or
Shareholder, as the case may be (the "Tag-Along Holder"), in writing, of the
identity of the proposed purchaser(s), the number of Shares proposed to be sold,
the proposed purchase price and terms of sale and an estimate of the Transaction
Costs (as defined below) (which estimate shall be a reasonably determined
estimate but otherwise shall not be binding on the Selling Holder and shall have
no effect on Investor's or Shareholder's rights or obligations under this
Section 5). The Tag-Along Holder thereupon shall have the right to participate
in the proposed sale at the same net price per share and other terms and
conditions of sale as offered to the Selling Holder. In order to exercise the
co-sale rights, the Tag-Along Holder, within ten (10) business days after
receiving notice from the Selling Holder, shall deliver to the Selling Holder a
written election to participate in the sale to the extent allowed by this
Section 5. If the Tag-Along Holder has elected to participate in the proposed
sale, the Tag-Along Holder shall be entitled to sell in the proposed sale a
number of Shares equal to the product of (i) the quotient (the "Co-Sale
Fraction") determined by dividing the number of Shares owned by the Tag-Along
Holder by the aggregate number of Shares owned by the Selling Holder and the
Tag-Along Holder multiplied by (ii) the total number of Shares to be sold by
them in the proposed sale. Notwithstanding anything to the contrary in this
Section 5, the sale proceeds to which the Tag-Along Holder would otherwise be
entitled by reason of its or his participation in a sale pursuant to this
Section 5 shall be reduced by an amount equal to the product of the Tag-Along
Holder's Co-Sale Fraction multiplied by the sum of any costs, fees and expenses,
including, without limitation, attorneys', accountants' and investment bankers'
fees and expenses (collectively, "Transaction Costs"), reasonably incurred by
the Selling Holder in connection with the sale or the exercise of the Tag-Along
Holder's rights under this Section 5. The Tag-Along Holder shall, as promptly
as practicable and as a condition to its or his participation, enter into such
agreements as shall be reasonably requested by the Selling Holder for the sale
of its or his Shares in the proposed sale; provided that the Selling Holder
shall use reasonable efforts to negotiate indemnities on a several, and not
joint, basis, and that in all events any indemnity by the Tag-Along Holder will
be limited to the net proceeds received by the Tag-Along Holder (it being
Page 37 of 60
<PAGE> 7
(Exhibit 2)
understood that if either or both of these points are not successfully
negotiated, the Tag-Along Holder may withdraw its notice of its election to
participate in the sale).
Section 6. Transfers of Company Voting Securities. (a) Except as the
same may be approved by a majority of the Disinterested Directors in a specific
resolution to such effect adopted prior to the taking of such action, no member
of the Investor Group shall, directly or indirectly, sell, transfer or otherwise
dispose of any Company Voting Securities to any person or group (other than to
another member of the Investor Group) prior to the third anniversary of the date
of the Original Agreement in a transaction that would, to the knowledge of the
Investor Group, upon consummation of such sale, transfer or disposition, result
in such person or group beneficially owning Company Voting Securities that would
represent 5% or more of the Combined Voting Power of all Company Voting
Securities; provided, however, that any member of the Investor Group shall be
entitled to pledge or hypothecate any number of Company Voting Securities to any
bank or other financial institution in connection with any bona fide financing
transaction involving any member of the Investor Group or any of its Affiliates
and, upon any realization of the collateral represented by such pledge or
hypothecation, the pledgee shall take and own such Company Voting Securities
free and clear of, and not subject to any of the restrictions set forth in, this
agreement. Notwithstanding the foregoing, on and after the eleventh business
day following commencement of a tender or exchange offer made by a person who is
not a member of the Investor Group for outstanding Company Voting Securities,
any member of the Investor Group may tender or exchange any Company Voting
Securities beneficially owned by it pursuant to such tender or exchange offer if
such tender or exchange offer shall have been approved or recommended by a
majority of the Disinterested Directors.
(b) Except as the same may be approved by a majority of the
Disinterested Directors in a specific resolution to such effect adopted prior to
the taking of such action, no member of the Shareholder Group shall, directly or
indirectly, sell, transfer or otherwise dispose of any Company Voting Securities
to any person or group (other than to another member of the Shareholder Group)
prior to the third anniversary of the date of the Original Agreement in a
transaction that would, to the knowledge of the Shareholder Group, upon
consummation of such sale, transfer or disposition, result in such person or
group beneficially owning Company Voting Securities that would represent 5% or
more of the Combined Voting Power of all Company Voting Securities; provided,
however, that any member of the Shareholder Group shall be entitled to pledge or
hypothecate any number of Company Voting Securities to any bank or other
financial institution in connection with any bona fide financing transaction
involving any member of the Shareholder Group or any of its Affiliates and, upon
any realization of the collateral represented by such pledge or hypothecation,
the pledgee shall take and own such Company Voting Securities free and clear of,
and not subject to any of the restrictions set forth in, this Agreement.
Notwithstanding the foregoing, on and after the eleventh business day following
commencement of a tender or exchange offer made by a person who is not a member
of the Shareholder Group for outstanding Company Voting Securities, any member
of the Shareholder Group may tender or exchange any Company Voting Securities
beneficially owned by it pursuant to such tender or exchange offer if such
tender or exchange offer shall have been approved or recommended by a majority
of the Disinterested Directors.
Section 7. Board Seats. So long as Shareholder is entitled to designate
directors in accordance with the provisions of Section 4.5 of the Investment
Agreement, Investor shall
Page 38 of 60
<PAGE> 8
(Exhibit 2)
vote all Company Voting Securities owned of record by Investor or with respect
to which Investor has voting control in favor of the election of Shareholder's
nominees to the Company's Board of Directors and the Independent Director
nominees chosen in accordance with the terms of the Investment Agreement. So
long as Investor is entitled to designate directors in accordance with the
provisions of Section 4.4 of the Investment Agreement, Shareholder shall vote
all Company Voting Securities owned of record by Shareholder or with respect to
which Shareholder has voting control in favor of the election of Investor's
nominees to the Company's Board of Directors and the Independent Director
nominees chosen in accordance with the terms of the Investment Agreement.
Section 8. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, to the appropriate address or telecopy number set forth below (or at
such other address or telecopy number for a party as shall be specified by like
notice):
if to Investor:
Samstock, L.L.C.
Two N. Riverside Plaza
Chicago, IL 60606
Attention: F. Philip Handy
Telecopy Number: (312) 454-1671
with a copy to:
Rosenberg & Liebentritt, P.C.
Two N. Riverside Plaza
Chicago, IL 60606
Attention: President
Telecopy Number: (312) 454-0335
if to the Company:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Robert D. Hill
Telecopy Number: (813) 626-9610
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: R. Scott Falk
Telecopy Number: (312) 861-2200
Page 39 of 60
<PAGE> 9
(Exhibit 2)
with an additional copy to:
Davel Communications Group, Inc.
1429 Massaro Boulevard
Tampa, Florida 33619
Attention: Theodore C. Rammelkamp, Jr.
Telecopy Number: (813) 626-9610
If to Shareholder:
Mr. David R. Hill
1429 Massaro Boulevard
Tampa, Florida 33619
Telecopy Number: (813) 626-9610
Section 9. Termination. Unless this Agreement specifically provides for
earlier or later termination with respect to any particular right or obligation,
this Agreement shall terminate and be of no further force and effect (i) in the
case of Investor, if Investor and its Permitted Transferees shall, at any time,
cease to own in the aggregate Company Voting Securities representing at least
five percent (5%) of all Company Voting Securities outstanding or (ii) in the
case of Shareholder, if Shareholder and its Permitted Transferees shall, at any
time, cease to own in the aggregate Company Voting Securities representing at
least five percent (5%) of all Company Voting Securities outstanding.
Section 10. Remedies. Any party having rights under this Agreement may
enforce such rights specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement and,
accordingly, in addition to all other remedies available to any party, such
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief in
order to enforce, or prevent any violation of, the provisions of this Agreement.
Section 11. Entire Agreement. This Agreement (including the documents
referred to herein) (a) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement and (b) is not intended to
confer upon any Person other than the parties rights or remedies. Without
limiting the generality of the foregoing, this agreement amends and restates the
Original Agreement in its entirety.
Section 12. Amendments; Waivers. (a) This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by each of
Investor, Shareholder and the Company.
(b) The failure of any party hereto to comply with any
representation, warranty, covenant or agreement contained in this Agreement may
be waived only by a written instrument signed by the party granting such waiver.
No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation,
Page 40 of 60
<PAGE> 10
(Exhibit 2)
warranty, covenant or agreement contained in this Agreement, and no failure by
any party to take any action with respect to any breach of this Agreement or
default by any other party shall constitute a waiver of such party's right to
enforce any provision hereof or to take any such action. The waiver by any
party hereto of a breach of any provision hereunder shall not operate as a
waiver of any prior or subsequent breach of the same or any other provision
hereunder.
Section 13. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same Agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 14. Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 15. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
Section 16. Binding Effect; Benefit, Non-Circumvention. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, and their
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the parties hereto, and
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. No shareholder
shall take any action, alone or in concert with any other Person, to circumvent
any of the provisions of this Agreement.
Section 17. Assignment. Neither this Agreement nor any of the rights,
interest or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Investor may assign any of or
all of its rights and obligations under this Agreement to any person that is an
Affiliate of Samuel Zell or an Affiliate of any one or more trusts established
for the benefit of Samuel Zell and/or members of his family without the consent
of any other party, and Shareholder may assign any of or all of his rights and
obligations under this Agreement to one or more Affiliates of Shareholder
(including any Shareholder Family Entity) without the consent of any other
party; provided that, in each case, such person or persons shall have executed
and delivered a joinder to this Agreement and agreed to be bound by the terms
and conditions hereof. Subject to the preceding sentence, this Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
Page 41 of 60
<PAGE> 11
(Exhibit 2)
Section 18. Interpretation. The headings contained in this Agreement are
inserted for convenience of reference only and shall not affect in anyway the
meaning or interpretation of this Agreement. All references to a Section,
Article, Schedule or Exhibit contained herein mean Sections, Articles, Schedules
or Exhibits of this Agreement unless otherwise stated. All capitalized terms
defined herein are equally applicable to both the singular and plural forms of
such terms.
Whenever the words "include", includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
Section 19. Consent to Jurisdiction. Each party hereto irrevocably
submits to the nonexclusive jurisdiction of (a) the state courts of the State of
Illinois and (b) any federal district court in the State of Illinois for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby.
Page 42 of 60
<PAGE> 12
(Exhibit 2)
IN WITNESS WHEREOF, the undersigned have executed this Shareholders
Agreement as of the day and year first above written.
SAMSTOCK, L.L.C.
____________________________________
By:
EGI-DAVEL INVESTORS, L.L.C.
____________________________________
By:
____________________________________
David R. Hill, individually
DAVEL COMMUNICATIONS, INC.
____________________________________
By:
DAVEL COMMUNICATION GROUP, INC.
____________________________________
By:
Page 43 of 60
<PAGE> 13
(Exhibit 2)
EXHIBIT A
---------
OWNERSHIP OF DAVEL COMMUNICATIONS, INC.
COMMON STOCK AND OPTIONS
Investor Shares:
Samstock, L.L.C.:
EGI-Davel Investors, L.L.C.:
Shareholder Shares:
Shareholder Options Schedule
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Options Date Option Price Shares Shares
------------ Exp. Date ------------ Outstanding Exercisable
--------- ----------- -----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 44 of 60
<PAGE> 1
EXHIBIT 3
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES OR (II) SUCH SALE,
TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISPOSITION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
DAVEL COMMUNICATIONS, INC.
WARRANT TO PURCHASE ________ SHARES OF COMMON STOCK
VOID AFTER JUNE 29, 2002
THIS CERTIFIES THAT, for value received, ______________________________
(the "HOLDER"), is entitled to subscribe for and purchase from Davel
Communications, Inc., an Illinois corporation (the "COMPANY"), an aggregate of
_______ shares (as adjusted pursuant to Section 3 hereof) of fully paid and
nonassessable Common Stock of the Company (the "SHARES"), at an exercise price
of $32.00 per share (the "EXERCISE PRICE") (as adjusted pursuant to Section 3
hereof), and subject to the provisions and upon the terms and conditions
hereinafter set forth.
1. Exercise; Payment.
(a) Time of Exercise; Expiration. This Warrant is immediately
exercisable. This Warrant shall expire at, and shall no longer be exercisable
after, 5:00 p.m., Chicago local time, on June 29, 2002.
(b) Method of Exercise.
(i) Cash Exercise. The purchase rights represented by
this Warrant may be exercised by the Holder, at any time, in whole, or from time
to time, in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit 1 duly executed) at the principal office of the
Company, and by the payment to the Company, by certified, cashier's or other
check acceptable to the Company, of an amount equal to the aggregate Exercise
Price of the Shares being purchased.
(ii) Net Issue Exercise. In lieu of exercising this
Warrant, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder a number of Shares computed
using the following formula:
Page 45 of 60
<PAGE> 2
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares purchasable under this Warrant.
A = the fair market value of one Share.
B = the Exercise Price (as adjusted to the date of such calculation).
(iii) Fair Market Value. For purposes of this Warrant, the fair
market value of the Shares shall mean:
A. The average closing price of the Shares on the
Nasdaq National Market or in the event that the Shares are not then
traded on the Nasdaq National Market, the average closing price quoted
on the New York Stock Exchange, the American Stock Exchange or any
other Nasdaq market, as published in the Mid-Western Edition of the
Wall Street Journal for the twenty consecutive trading days prior to
the date of determination of fair market value.
B. If the Shares are not then traded on the Nasdaq
National Market or on any other exchange described in clause A. above,
the per share fair market value of the Shares shall be the fair market
value price per share as determined by mutual agreement of the
Company and Holder, and, absent timely mutual agreement of the Company
and Holder, by the Board of Directors of the Company after taking into
account the advice of a third party valuation expert selected by the
Company and any concurrent warrant valuations.
(c) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant of identical terms and
provisions as those hereof, representing the Shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Warrant may be exercised,
the Company shall at all times have authorized and reserved for issuance
sufficient Shares to provide for the exercise of the rights represented by this
Warrant.
3. Adjustment of Exercise Price and Number of Shares. The number and
kind of Shares purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
Page 46 of 60
<PAGE> 3
(a) Reclassification. In case of any reclassification or change of
outstanding securities of the class issuable upon exercise of
this Warrant (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a
result of a subdivision or combination), the Company shall, as a
condition precedent to such transaction, execute a new Warrant
providing that the Holder shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each
Share theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification or change which
such Holder would have received had such Holder exercised this
Warrant in full immediately prior to such reclassification or
change. Such new Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of
this Section 3(a) shall similarly apply to successive
reclassifications or changes.
(b) Subdivision or Combination of Warrant Shares. If the Company at
any time or from time to time while this Warrant remains
outstanding and unexpired shall subdivide or combine its stock,
the Exercise Price shall be proportionately decreased in the case
of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time or from time to time
while this Warrant is outstanding and unexpired shall pay a
dividend with respect to Shares payable in, or make any other
distribution with respect to, Shares (except any distribution
specifically provided for in the foregoing Section 3(a) and 3(b))
of stock, then the Exercise Price shall be adjusted, from and
after the date of determination of stockholders entitled to
receive such dividend or distribution, to that price determined
by multiplying the Exercise Price in effect immediately prior to
such date of determination by a fraction (i) the numerator of
which shall be the total number of Shares outstanding immediately
prior to such dividend or distribution, and (ii) the denominator
of which shall be the total number of Shares outstanding
immediately after such dividend or distribution.
(d) Other Dividends. If the Company at any time or from time to time
while this Warrant is outstanding and unexpired shall pay a
dividend with respect to Shares other than in the form of stock,
then the Exercise Price shall be adjusted, from and after the
record date fixed for the determination of holders of Shares
entitled to receive such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect
immediately prior to such date of determination by a fraction (i)
the numerator of which shall be the fair market value of a Share
as of such record date less the amount of such dividend or
distribution applicable to one Share, and (ii) the denominator of
which shall be the fair market value of a Share as of such record
date; provided, however, that no such adjustment shall be made in
the event that such dividend per share as so determined, combined
with all dividends per share declared or paid during the
preceding twelve-month period is less than 10% of the fair market
value per share as of the
Page 47 of 60
<PAGE> 4
date of such payment; provided, further, however, that if the
amount of a dividend that would otherwise require adjustment
pursuant to this Section 3(d) is equal to or greater than such
fair market value, in lieu of the foregoing adjustment, adequate
provision shall be made so that the holder of this Warrant shall
receive a pro rata share of such dividend based upon the maximum
number of shares issueable to such holder.
(e) Merger or Consolidation. If at any time there shall be a merger
or a consolidation of the Company with or into another
corporation or other entity when the Company is not the surviving
corporation or when the Company shall be the surviving
corporation but, in connection with such consolidation or merger,
the Shares shall be changed into or exchanged for stock, other
securities or property of any other corporation or other entity,
then, as part of such merger or consolidation, lawful provision
shall be made so that the Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period
specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation
resulting from such merger or consolidation (or the corporation
or entity whose shares of stock, securities or other property
were issued in exchange for Shares in such merger or
consolidation), to which the Holder of the shares deliverable
upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such
case, appropriate adjustment shall be made in the application of
the provisions of this Warrant with respect to the rights and
interests of the Holder of this Warrant after the merger or
consolidation. This provision shall apply to successive mergers
or consolidations.
(f) Adjustment of Number of Warrant Shares. Upon each adjustment in
the Exercise Price, the number of shares of stock purchasable
hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price
immediately prior to such adjustment and the denominator of which
shall be the Exercise Price immediately thereafter.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide written notice in accordance with Section 11
hereof, to the holder of this Warrant setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the number of Shares which may be
purchased and the Exercise Price therefor after giving effect to such
adjustment. The Company shall also provide to the Holder a copy of any notice
which the Company provides to any other holder of warrants, at the same time as
such notice is provided to such other holder.
Page 48 of 60
<PAGE> 5
5. Fractional Shares. No fractional Shares will be issued in connection
with any exercise hereunder. In lieu of such fractional shares the Company
shall make a cash payment therefor based upon the Exercise Price then in effect.
6. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants will represent such
portion of such rights as is designated by the Holder at the time of such
surrender. All Warrants representing portions of the rights hereunder are
referred to herein as the "Warrant."
7. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company (it being acknowledged by the Company that an affidavit by an executive
officer of the Holder is deemed to be reasonably satisfactory) of the ownership
and the loss, theft, destruction or mutilation of this Warrant, and in the case
of any such loss, theft or destruction, upon the receipt of indemnity reasonably
satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such Warrant, the Company will (at its expense, except for the cost
of any lost security indemnity bond required which shall be paid for by the
Holder) execute and deliver in lieu of such Warrant a new Warrant of like kind
representing the same rights represented by such lost, stolen, destroyed or
mutilated Warrant and dated the date of such lost, stolen, destroyed or
mutilated Warrant.
8. Restrictive Legend. The Shares issuable upon exercise of this Warrant
(unless registered under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise disposed of unless (i) there
is an effective registration statement under such Act and such laws
covering such securities or (ii) such sale, transfer, assignment,
offer, pledge or other disposition is exempt from the registration and
prospectus delivery requirements of such Act and such laws."
9. Restrictions on Transfer. Neither this Warrant, nor any interest
herein, may be transferred to any party without the Company's prior written
consent; provided, however, that this Warrant may be transferred to any
affiliate of Samuel Zell or an affiliate of any one or more trusts established
for the benefit of Samuel Zell and/or members of his family at any time, in
whole, or from time to time, in part, without the Company's consent, upon
delivery to the Company of the Notice of Transfer in the form of Exhibit 2
hereto.
10. Rights of Shareholders. No holder of this Warrant shall be entitled,
as a Warrant holder, to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization,
Page 49 of 60
<PAGE> 6
issuance of stock, reclassification of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
11. Notices, Etc. All notices and other communications between the
Company and the Holder shall be deemed given if delivered personally, sent by
documented overnight delivery service or telecopied with confirmation of
receipt (i) if to the Company, at the Company's executive offices, and (ii) if
to the Holder, at such address as may have been furnished to the Company in
writing by the Holder.
12. Governing Law, Headings. This Warrant is being delivered in the State
of Illinois and shall be construed and enforced in accordance with and governed
by the laws of such State. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
13. Conditional Exercise. Notwithstanding any other provision hereof, if
an exercise of all or any portion of this Warrant is to be made in connection
with a transaction affecting the Company, such exercise may at the election of
the Holder be conditioned upon the consummation of such transaction, in which
case such exercise shall not be deemed to be effective until immediately prior
to the consummation of such transaction.
Issued as of the 22nd day of December, 1998 in replacement of warrants
originally issued on the 29th day of June, 1998..
DAVEL COMMUNICATIONS, INC.
By:
Its:
Page 50 of 60
<PAGE> 7
EXHIBIT 1
---------
NOTICE OF EXERCISE
- ------------------
TO: DAVEL COMMUNICATIONS, INC.
` 1429 Massaro Boulevard
Tampa, Florida 33619
Attention: General Counsel
1. The undersigned hereby elects to purchase __________ shares of Common
Stock of DAVEL COMMUNICATIONS, INC. pursuant to the terms of the attached
Warrant.
2. Method of Exercise (Please mark the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in full
for the purchase price of the shares being purchased.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b)(ii) of
the Warrant.
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(Signature)
Title:
(Date)
Page 51 of 60
<PAGE> 8
EXHIBIT 2
---------
NOTICE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the right represented by the attached
Warrant to purchase _______* shares of Common Stock of DAVEL COMMUNICATIONS,
INC., to which the attached Warrant relates, and appoints ________________
Attorney-in-Fact to transfer such right on the books of DAVEL COMMUNICATIONS,
INC., with full power of substitution in the premises.
Dated:
By:
(Address)
___________________
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
Page 52 of 60
<PAGE> 1
EXHIBIT 4
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES OR (II) SUCH SALE,
TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISPOSITION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
WARRANT TO PURCHASE _________ SHARES OF COMMON STOCK
OF
DAVEL COMMUNICATIONS, INC.
VOID AFTER JUNE 29, 2002
THIS CERTIFIES THAT, for value received, ______________________________
(the "HOLDER"), is entitled to subscribe for and purchase from __________ (the
"EXECUTIVE"), an aggregate of 107,765 shares (as adjusted pursuant to Section 3
hereof) of fully paid and nonassessable Common Stock of Davel Communications,
Inc. (the "Company") (the "SHARES"), at an exercise price of $32.00 per share
(the "EXERCISE PRICE") (as adjusted pursuant to Section 3 hereof), and subject
to the provisions and upon the terms and conditions hereinafter set forth.
1. Exercise; Payment.
(a) Time of Exercise; Expiration. This Warrant is immediately
exercisable. This Warrant shall expire at, and shall no longer be exercisable
after, 5:00 p.m., Chicago local time, on June 29, 2002.
(b) Method of Exercise.
(i) Cash Exercise. The purchase rights represented by this
Warrant may be exercised by the Holder, at any time, in whole, or from time to
time, in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit 1 duly executed) to Executive, and by the
payment to Executive, by certified, cashier's or other check acceptable to
Executive, of an amount equal to the aggregate Exercise Price of the Shares
being purchased.
(ii) Net Issue Exercise. In lieu of exercising this
Warrant, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant to
Executive together with notice of such election,
Page 53 of 60
<PAGE> 2
in which event Executive shall issue to the Holder a number of Shares computed
using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares purchasable under this Warrant.
A = the fair market value of one Share.
B = the Exercise Price (as adjusted to the date of such calculation).
(iii) Fair Market Value. For purposes of this Warrant, the fair
market value of the Shares shall mean:
A. The average closing price of the Shares on the
Nasdaq National Market or in the event that the Shares are not then
traded on the Nasdaq National Market, the average closing price
quoted on the New York Stock Exchange, the American Stock Exchange
or any other Nasdaq market, as published in the Mid-Western Edition
of the Wall Street Journal for the twenty consecutive trading days
prior to the date of determination of fair market value.
B. If the Shares are not then traded on the Nasdaq
National Market or on any other exchange described in clause A.
above, the per share fair market value of the Shares shall be the
fair market value price per share as determined by mutual
agreement of the Company and Holder, and, absent timely mutual
agreement of the Company and Holder, by the Board of Directors of
the Company after taking into account the advice of a third party
valuation expert selected by the Company and any concurrent
warrant valuations.
(c) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the Shares so purchased
shall be delivered by Executive to the Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new Warrant of
identical terms and provisions as those hereof, representing the Shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof.
3. Adjustment of Exercise Price and Number of Shares. The number and
kind of Shares purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
Page 54 of 60
<PAGE> 3
(a) Reclassification. In case of any reclassification or change of
outstanding securities of the class issuable upon exercise of
this Warrant (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a
result of a subdivision or combination), Executive shall, as soon
as practicable following such transaction, execute a new Warrant
providing that the Holder shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each
Share theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification or change which
such Holder would have received had such Holder exercised this
Warrant in full immediately prior to such reclassification or
change. Such new Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of
this Section 3(a) shall similarly apply to successive
reclassifications or changes.
(b) Subdivision or Combination of Warrant Shares. If the Company at
any time or from time to time while this Warrant remains
outstanding and unexpired shall subdivide or combine its stock,
the Exercise Price shall be proportionately decreased in the case
of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time or from time to time
while this Warrant is outstanding and unexpired shall pay a
dividend with respect to Shares payable in, or make any other
distribution with respect to, Shares (except any distribution
specifically provided for in the foregoing Section 3(a) and 3(b))
of stock, then the Exercise Price shall be adjusted, from and
after the date of determination of stockholders entitled to
receive such dividend or distribution, to that price determined
by multiplying the Exercise Price in effect immediately prior to
such date of determination by a fraction (i) the numerator of
which shall be the total number of Shares outstanding immediately
prior to such dividend or distribution, and (ii) the denominator
of which shall be the total number of Shares outstanding
immediately after such dividend or distribution.
(d) Other Dividends. If Executive at any time or from time to time
while this Warrant is outstanding and unexpired shall receive or
be entitled to receive a dividend with respect to Shares, other
than in the form of stock, then the Exercise Price shall be
adjusted, from and after the record date fixed for the
determination of holders of Shares entitled to receive such
dividend or distribution, to that price determined by multiplying
the Exercise Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be
the fair market value of a Share as of such record date less the
amount of such dividend or distribution applicable to one Share,
and (ii) the denominator of which shall be the fair market value
of a Share as of such record date; provided, however, that no
such adjustment shall be made in the event that such dividend per
share as so determined, combined with all dividends per share
declared or paid during the preceding twelve-month period is less
than 10% of the fair market
Page 55 of 60
<PAGE> 4
value per share as of the date of such payment; provided,
further, however, that in the event of an exercise of this
Warrant, in whole or in part, by the holder of this Warrant at
any time when Executive is prohibited by law or the rules or
policies of the Company or its principle exchanges from, or
subject to economic forfeiture under Section 16 of the Securities
Exchange Act of 1934, as amended, for, acquiring additional
Shares, then such adjustment hereunder shall not be deemed
effective until such time that Executive is not so prohibited or
subject to economic forfeiture, at which time the applicable
number of additional Shares will be delivered to the person
exercising this Warrant; provided, further, however, that if the
amount of a dividend that would otherwise require adjustment
pursuant to this Section 3(d) is equal to or greater than such
fair market value, in lieu of the foregoing adjustment, adequate
provision shall be made so that the holder of this Warrant shall
receive a pro rata share of such dividend based upon the maximum
number of shares issueable to such holder.
(e) Merger or Consolidation. If at any time there shall be a merger
or a consolidation of the Company with or into another
corporation or other entity when the Company is not the surviving
corporation or when the Company shall be the surviving
corporation but, in connection with such consolidation or merger,
the Shares shall be changed into or exchanged for stock, other
securities or property of any other corporation or other entity,
then the Holder shall thereafter be entitled to receive from
Executive upon exercise of this Warrant, during the period
specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation
resulting from such merger or consolidation (or the corporation
or entity whose shares of stock, securities or other property
were issued in exchange for Shares in such merger or
consolidation), to which the Holder of the shares deliverable
upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such
case, appropriate adjustment shall be made by Executive in the
application of the provisions of this Warrant with respect to the
rights and interests of the Holder of this Warrant after the
merger or consolidation. This provision shall apply to
successive mergers or consolidations.
(f) Adjustment of Number of Warrant Shares. Upon each adjustment in
the Exercise Price, the number of shares of stock purchasable
hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price
immediately prior to such adjustment and the denominator of which
shall be the Exercise Price immediately thereafter.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof,
Page 56 of 60
<PAGE> 5
Executive shall provide written notice in accordance with Section 11 hereof, to
the holder of this Warrant setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the number of Shares which may be purchased and
the Exercise Price therefor after giving effect to such adjustment. Any such
notice provided by the Company to the Holder pursuant to any substantially
similar warrants shall constitute notice by Executive hereunder, provided that
such notice makes reference hereto.
5. Fractional Shares. No fractional Shares will be issued in
connection with any exercise hereunder. In lieu of such fractional shares
Executive shall make a cash payment therefor based upon the Exercise Price then
in effect.
6. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder to Executive, for new
Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants will represent such portion of such
rights as is designated by the Holder at the time of such surrender. All
Warrants representing portions of the rights hereunder are referred to herein as
the "Warrant."
7. Replacement. Upon receipt of evidence reasonably satisfactory to
Executive (it being acknowledged by Executive that an affidavit by an executive
officer of the Holder is deemed to be reasonably satisfactory) of the ownership
and the loss, theft, destruction or mutilation of this Warrant, and in the case
of any such loss, theft or destruction, upon the receipt of indemnity reasonably
satisfactory to Executive, or, in the case of any such mutilation upon surrender
of such Warrant, Executive will (at its expense, except for the cost of any lost
security indemnity bond required which shall be paid for by the Holder) execute
and deliver in lieu of such Warrant a new Warrant of like kind representing the
same rights represented by such lost, stolen, destroyed or mutilated Warrant and
dated the date of such lost, stolen, destroyed or mutilated Warrant.
8. Restrictive Legend. The Shares issuable upon exercise of this
Warrant (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or applicable state securities laws and may not be sold,
transferred, assigned, offered, pledged or otherwise disposed of
unless (i) there is an effective registration statement under such
Act and such laws covering such securities or (ii) such sale,
transfer, assignment, offer, pledge or other disposition is exempt
from the registration and prospectus delivery requirements of such
Act and such laws."
9. Restrictions on Transfer. Neither this Warrant, nor any interest
herein, may be transferred to any party without Executive's prior written
consent; provided, however, that this Warrant may be transferred to any
affiliate of Samuel Zell or an affiliate of any one or more trusts established
for the benefit of Samuel Zell and/or members of his family at any time, in
whole, or from time to time, in part, without Executive's consent, upon delivery
to Executive of the Notice of Transfer in the form of Exhibit 2 hereto.
Page 57 of 60
<PAGE> 6
10. Rights of Shareholders. No holder of this Warrant shall be
entitled, as a Warrant holder, to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
11. Notices, Etc. All notices and other communications between
Executive and the Holder shall be deemed given if delivered personally, sent by
documented overnight delivery service or telecopied with confirmation of
receipt (i) if to Executive, at the Company's executive offices, and (ii) if to
the Holder, at such address as may have been furnished to the Company in writing
by the Holder.
12. Governing Law, Headings. This Warrant is being delivered in the
State of Illinois and shall be construed and enforced in accordance with and
governed by the laws of such State. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof.
13. Conditional Exercise. Notwithstanding any other provision hereof,
if an exercise of all or any portion of this Warrant is to be made in connection
with a transaction affecting the Company, such exercise may at the election of
the Holder be conditioned upon the consummation of such transaction, in which
case such exercise shall not be deemed to be effective until immediately prior
to the consummation of such transaction, except to the extent that Executive
would be unduly prejudiced thereby, and so advises the Holder in writing
promptly.
Issued as of the 22nd day of December, 1998 in replacement of warrant originally
issued on the 29th day of June, 1998.
_______________________
________________
Page 58 of 60
<PAGE> 7
EXHIBIT 1
---------
NOTICE OF EXERCISE
- ------------------
TO: ___________________
c/o DAVEL COMMUNICATIONS, INC.
` 1429 Massaro Boulevard
Tampa, Florida 33619
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of DAVEL COMMUNICATIONS, INC. pursuant to the terms of the attached
Warrant.
2. Method of Exercise (Please mark the applicable blank):
___ The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in
full for the purchase price of the shares being purchased.
___ The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b)(ii) of
the Warrant.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(Signature)
Title:
(Date)
Page 59 of 60
<PAGE> 8
EXHIBIT 2
---------
NOTICE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the right represented by the attached
Warrant to purchase _______* shares of Common Stock of DAVEL COMMUNICATIONS,
INC., to which the attached Warrant relates.
Dated:
By:
(Address)
___________________
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
Page 60 of 60
