EXHIBIT 2.2
EXECUTION COPY
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EXCHANGE AGREEMENT
Dated as of February 19, 2002
Among
DAVEL COMMUNICATIONS, INC.,
DAVEL FINANCING COMPANY, L.L.C.,
DF MERGER CORP.
and
PHONETEL TECHNOLOGIES, INC.,
CHEROKEE COMMUNICATIONS, INC.
and
THE PERSONS IDENTIFIED HEREIN AS THE DAVEL LENDERS
and
THE PERSONS IDENTIFIED HEREIN AS THE PHONETEL LENDERS
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TABLE OF CONTENTS
RECITALS:.................................................................. 1
ARTICLE I DEFINITIONS...................................................... 3
Section 1.1 Defined Terms............................................ 3
Section 1.2 Interpretation........................................... 7
ARTICLE II DEBT FOR EQUITY EXCHANGES....................................... 7
Section 2.1 Davel Debt for Equity Exchange........................... 7
Section 2.2 PhoneTel Debt for Equity Exchange........................ 8
Section 2.3 Closing of Debt for Equity Exchanges..................... 8
Section 2.4 Further Assurances....................................... 9
ARTICLE III REPRESENTATIONS AND WARRANTIES................................. 9
Section 3.1 Representations and Warranties of the Davel Parties...... 9
Section 3.2 Representations and Warranties of the PhoneTel Parties... 13
Section 3.3 Representations and Warranties of the Davel Lenders...... 16
Section 3.4 Representations and Warranties of the PhoneTel Lenders... 17
ARTICLE IV COVENANTS....................................................... 18
Section 4.1 Davel Covenants.......................................... 18
Section 4.2 PhoneTel Covenants....................................... 20
ARTICLE V CONDITIONS TO CLOSING............................................ 21
Section 5.1 Conditions to the Obligations of the Lenders............. 21
Section 5.2 Conditions to the Obligations of Davel and PhoneTel...... 22
ARTICLE VI MISCELLANEOUS................................................... 23
Section 6.1 Notices.................................................. 23
Section 6.2 Entire Agreement; Amendments; Waiver..................... 24
i
Section 6.3 No Relationship.......................................... 25
Section 6.4 Successors and Assigns; Survival......................... 25
Section 6.5 Termination.............................................. 25
Section 6.6 Expenses................................................. 25
Section 6.7 Counterpart and Telecopier Execution..................... 25
Section 6.8 Governing Law; Submission to Jurisdiction................ 26
Section 6.9 TRIAL BY JURY............................................ 26
Section 6.10 Severability............................................ 26
Section 6.11 Captions................................................ 26
List of Schedules, Exhibits and Annexes to Exchange Agreement
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Schedules
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Schedule 2.1 - List of Exchanged Davel Loans and Davel Debt Exchange
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Shares
Schedule 2.2 - List of Exchanged PhoneTel Loans and PhoneTel Debt
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Exchange Shares
Schedule 2.3(A) - List of promissory notes, instruments of assignment
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and other closing documents to be delivered by Davel Lenders to Davel
Financing
Schedule 2.3(B) - List of stock certificates, officers' certificates,
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promissory notes and other closing documents to be delivered by Davel
Financing to the Davel Lenders
Schedule 2.3(C) - List of promissory notes, instruments of assignment
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and other closing documents to be delivered by PhoneTel Lenders to
PhoneTel
Schedule 2.3(D) - List of stock certificates, officers' certificates,
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promissory notes and other closing document to be delivered by PhoneTel
to the PhoneTel Lenders
Schedule 3.1(E) - Davel Governmental Approvals
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Schedule 3.1(F)(1) - Authorized and Issued Capital Stock of Davel as of
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Date of Execution
Schedule 3.1(F)(2) - Authorized and Issued Capital Stock of Davel after
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the Davel Effective Time; Schedule of Rights to Purchase Capital Stock
of Davel after the Davel Effective Time
Schedule 3.1(F)(3) - Authorized and Issued Capital Stock of Davel after
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the PhoneTel Effective Time; Schedule of Rights to Purchase Capital
Stock of Davel after the PhoneTel Effective Time
ii
Schedule 3.1(F)(5) - Pre-emptive Rights
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Schedule 3.1(F)(6) - Authorized and Issued Capital Stock of D Sub
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Schedule 3.1(K) - Certain Fees
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Schedule 3.2(E) - PhoneTel Governmental Approvals
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Schedule 3.2(F)(1) - Authorized and Issued Capital Stock of PhoneTel
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as of Date of Execution
Schedule 3.2(F)(2) - Authorized and Issued Capital Stock of PhoneTel
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after PhoneTel Debt for Equity Exchange but before Davel Effective
Time and the PhoneTel Effective Time
Schedule 3.2(F)(4) - Pre-emptive Rights
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Schedule 3.2(K) - Certain Fees
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Schedule 3.3(E) - Disclosure relating to Government Approvals
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Schedule 3.3(F) - Disclosure relating to ownership of the Davel Loans
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Schedule 3.4(E) - Disclosure relating to Government Approvals
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Schedule 3.4(F) - Disclosure relating to ownership of the PhoneTel
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Loans
Exhibits
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Exhibit A - Commitment Letter
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Exhibit B - Registration Rights Agreement
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iii
THIS EXCHANGE AGREEMENT (this "Agreement"), dated as of the 19th day
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of February, 2002, is being entered into by and among DAVEL COMMUNICATIONS,
INC., a Delaware corporation ("Davel"), DAVEL FINANCING COMPANY, L.L.C., a
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Delaware limited liability company wholly owned by Davel ("Davel Financing"), DF
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MERGER CORP., a Delaware corporation and a wholly-owned subsidiary of Davel
Financing ("D Sub"), PHONETEL TECHNOLOGIES, INC., an Ohio corporation
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("PhoneTel" and, together with Davel, the "Companies"), CHEROKEE COMMUNICATIONS,
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INC., a Texas corporation and a wholly owned subsidiary of PhoneTel
("Cherokee"), the persons identified on the signature pages to this Agreement as
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the "Davel Lenders" (the "Davel Lenders"), and the persons identified on the
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signature pages to this Agreement as the "PhoneTel Lenders" (the "PhoneTel
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Lenders" and, together with the Davel Lenders, the "Lenders").
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RECITALS:
A. Davel Financing (as the borrower), Davel and certain subsidiaries
of Davel (as guarantors) and the Davel Lenders are parties to a Credit Agreement
dated as of December 23, 1998 (as amended and modified by the First Amendment to
Credit Agreement and Consent and Waiver dated as of April 8, 1999, the Second
Amendment to Credit Agreement dated as of March 9, 2000, the Third Amendment to
Credit Agreement dated as of June 22, 2000, the Fourth Amendment to Credit
Agreement dated as of September 28, 2000, the Fifth Amendment to Credit
Agreement and Waiver dated as of November 29, 2000, the Sixth Amendment to
Credit Agreement and Waiver dated as of March 23, 2001 and the Seventh Amendment
to Credit Agreement and Consent and Waiver dated as of February 19, 2002 and as
may be further amended or modified from time to time, the "Davel Credit
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Agreement") providing for a senior secured credit facility (the "Davel Credit
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Facility") in a maximum aggregate amount of $280,000,000 consisting of "Term A
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Loans", "Term B Loans" and "Revolving Loans" (each as defined in the Davel
Credit Agreement and, collectively, the "Davel Loans"). As of the date hereof,
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the following Davel Loans are outstanding: $109,492,354 in principal amount of
Term A Loans, $93,379,558 in principal amount of Term B Loans and $34,383,088 in
principal amount of Revolving Loans, in each case excluding any outstanding
fees, interest and expenses.
B. PhoneTel and Cherokee (as the borrowers) are parties to a Loan
and Security Agreement dated as of November 17, 1999 (as amended by Amendments
Numbers One through Eight, most recently dated February 19, 2002 and as may be
further amended or modified from time to time, the "PhoneTel Credit Agreement")
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providing for a senior secured credit facility (the "PhoneTel Credit Facility")
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in a maximum aggregate amount of $46,000,000 consisting of revolving credit
loans (the "PhoneTel Loans"). As of December 31, 2001, $62,634,745 in principal
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amount (including capitalized fees, interest and expenses) of PhoneTel Loans
were outstanding.
C. In connection with the formation of D Sub, Davel Financing
contributed to D Sub a promissory note dated February 19, 2002 in the principal
amount of $342,551.46 (the "D Sub Note") in exchange for 1,000 shares of common
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stock of D Sub, having no par value ("D Sub Common Stock"), constituting all the
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issued and outstanding capital stock of D Sub.
D. PhoneTel, Davel, Davel Financing, D Sub and PT Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Davel Financing ("P Sub"),
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are parties to an Agreement and Plan of Reorganization and Merger dated as of
February 19, 2002 (the "Merger Agreement") providing for (i) the merger of P Sub
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with and into PhoneTel (the "PhoneTel Merger"), with PhoneTel surviving as a
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wholly owned subsidiary of Davel Financing, and (ii) the merger of D Sub with
and into Davel Financing, with Davel Financing as the surviving entity (the
"Davel Merger" and, together with the PhoneTel Merger, the "Mergers"). The
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Merger Agreement provides that, in connection with the PhoneTel Merger: (i) the
shares of common stock of PhoneTel common stock, par value $.01 per share
("PhoneTel Common Stock"), outstanding after giving effect to the transactions
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contemplated by Paragraph F below, will be converted into a number of fully paid
and nonassessable shares of common stock of Davel, par value $.01 per share
("Davel Common Stock"), as more fully set forth in the Merger Agreement (with
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the number of shares of Davel Common Stock into which each share of PhoneTel
Common Stock is so converted being sometimes referred to herein as the "PhoneTel
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Merger Exchange Ratio"), (ii) each outstanding option to purchase PhoneTel
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Common Stock (a "PhoneTel Option") will be converted into an option (an
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"Adjusted PhoneTel Option") to purchase a corresponding number of shares of
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Davel Common Stock, with Davel assuming the obligations under such Adjusted
PhoneTel Options, and (iii) each outstanding warrant to purchase PhoneTel Common
Stock (a "PhoneTel Warrant") will be converted into a warrant (an "Adjusted
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PhoneTel Warrant") to purchase a corresponding number of shares of Davel Common
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Stock, with Davel assuming the obligations under such Adjusted PhoneTel
Warrants, with the aggregate of (i), (ii) and (iii) representing 36.5% of the
number of shares of Davel Common Stock that will be outstanding on a fully-
diluted basis (without giving effect to the intended reservation of Davel Common
Stock for issuance in respect of stock options and warrants of Davel that is
referred to in Section 3.1(f)(ii)) immediately after the Mergers. The Merger
Agreement further provides that, in connection with the Davel Merger, the
outstanding shares of D Sub Common Stock will be converted into a number of
fully paid and nonassessable shares of common stock of Davel Common Stock
representing 59.06% of the number of shares of Davel Common Stock that will be
outstanding on a fully-diluted basis (after giving effect to the intended
reservation of Davel Common Stock for issuance in respect of stock options and
warrants of Davel that is referred to in Section 3.1(f)(ii)) immediately after
the Mergers (with the number of shares of Davel Common Stock into which each
share of D Sub Common Stock is so converted being sometimes referred to herein
as the "Davel Merger Exchange Ratio").
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E. It is contemplated that, prior to the Mergers, the Certificate of
Incorporation of Davel will be amended to increase the authorized number of
shares of common stock of Davel to 1,000,000,000 (one billion) shares.
F. In contemplation of the Mergers, PhoneTel and Davel, on the one
hand, and the Davel Lenders and the PhoneTel Lenders, on the other hand, are,
simultaneously with the execution of this Agreement, executing a commitment
letter in the form attached hereto as Exhibit A (the "Commitment Letter"), which
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Commitment Letter contemplates that, in connection with and contingent upon the
consummation of the Mergers: (i) the Davel Lenders will assign to Davel
Financing a portion of the Davel Loans in exchange for the transfer by Davel
Financing to the Davel Lenders of all the issued and outstanding shares of D Sub
Common Stock (such exchange being referred to herein as the "Davel Debt for
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Equity Exchange"), which shares are to be converted pursuant to the Davel Merger
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into shares of Davel Common Stock, (ii)
2
the PhoneTel Lenders will assign to PhoneTel a portion of the PhoneTel Loans in
exchange for the issuance by PhoneTel to the PhoneTel Lenders of shares of
PhoneTel Common Stock (such exchange being referred to herein as the "PhoneTel
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Debt for Equity Exchange"), which shares are to be converted into shares of
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Davel Common Stock upon consummation of the Merger and (iii) the Davel Loans not
so exchanged for D Sub Common Stock (the "Retained Davel Loans") and the
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PhoneTel Loans not so converted into PhoneTel Common Stock (the "Retained
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PhoneTel Loans") will be consolidated into a single restructured credit facility
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(the "New Credit Facility"), to be governed by a credit agreement to be executed
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on or before the Effective Time of the Mergers.
G. This Agreement is being entered into pursuant to the Commitment
Letter in order to set forth the terms and conditions on which the Davel Debt
for Equity Exchange and the PhoneTel Debt for Equity Exchange are to be effected
and the respective obligations of the parties with regard thereto.
NOW, THEREFORE, in consideration of these premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.1 Defined Terms. Except as otherwise specified herein or as the
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context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Agreement. Except as otherwise
specified herein, the terms set out in the preamble and Recitals hereto shall
have the respective meanings set forth therein for all purposes of this
Agreement.
"Adjusted PhoneTel Option" has the meaning set forth in Recital D
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hereto.
"Adjusted PhoneTel Warrant" has the meaning set forth in Recital D
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hereto.
"Agreement" has the meaning set forth in the preamble hereto.
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"Board of Directors" means, as applicable, the board of directors of
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Davel from time to time, or the board of directors of PhoneTel from time to
time.
"Cherokee" has the meaning set forth in the preamble hereto.
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"Combined Proxy Statement" means the joint proxy statement,
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contemplated by the Merger Agreement, to be prepared jointly by PhoneTel and
Davel and sent to their respective stockholders relating to the meetings of such
stockholders to be held in connection with the Merger Agreement.
"Commitment Letter" has the meaning set forth in Recital F hereto.
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"Companies" has the meaning set forth in the preamble hereto.
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3
"Consent" in relation to the Davel Lenders means the consent of Davel
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Lenders holding not less than 75% in aggregate principal amount of the Davel
Loans and in relation to the PhoneTel Lenders means the consent of PhoneTel
Lenders holding not less than 75% in aggregate principal amount of the PhoneTel
Loans.
"Converted Davel Debt Exchange Shares" means the shares of Davel
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Common Stock to be issued to the Davel Lenders pursuant to the Davel Merger in
respect of the Davel Debt Exchange Shares, as described in Section 2.1 hereof.
"Converted PhoneTel Debt Exchange Shares" means the shares of Davel
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Common Stock to be issued to the PhoneTel Lenders pursuant to the PhoneTel
Merger in respect of the PhoneTel Debt Exchange Shares, as described in Section
2.2 hereof.
"Davel" has the meaning set forth in the preamble hereto.
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"Davel Common Stock" has the meaning set forth in Recital D hereto.
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"Davel Credit Agreement" has the meaning set forth in Recital A
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hereto.
"Davel Credit Facility" has the meaning set forth in Recital A hereto.
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"Davel Debt Exchange Shares" means the shares of D Sub Common Stock to
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be received by the Davel Lenders pursuant to the Davel Debt for Equity Exchange,
as described in Section 2.1 hereof.
"Davel Debt for Equity Exchange" has the meaning set forth in Recital
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F hereto.
"Davel Effective Time" means the Davel Effective Time as determined
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pursuant to the Merger Agreement.
"Davel Financing" has the meaning set forth in the preamble hereto.
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"Davel Lenders" has the meaning set forth in the preamble hereto.
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"Davel Loans" has the meaning set forth in Recital A hereto.
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"Davel Material Adverse Effect" means a material adverse effect on the
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ability of Davel to consummate the Transactions or, as a result of any event,
change, circumstance or effect arising from or having an impact on Davel's
business, assets, financial condition or results of operations, a material
adverse effect on the ability of PhoneTel and its stockholders or the Lenders to
realize substantially all of the benefits of the Transactions.
"Davel Merger" has the meaning set forth in Recital D hereto.
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"Davel Merger Exchange Ratio" has the meaning set forth in Recital D
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hereto.
"Davel Parties" means Davel, Davel Financing and D Sub.
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4
"Davel Subsidiary" means a Davel Subsidiary as defined in the Merger
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Agreement.
"Davel Syndicate Agent" means PNC Bank N.A., as agent to the Davel
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Lenders under the Davel Credit Facility.
"Debt for Equity Exchanges" means, collectively, the Davel Debt for
-------------------------
Equity Exchange and the PhoneTel Debt for Equity Exchange.
"D Sub" has the meaning set forth in the preamble.
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"D Sub Common Stock" has the meaning set forth in Recital C hereto.
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"D Sub Note" has the meaning set forth in Recital C hereto.
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"Effective Time of the Exchanges" has the meaning set forth in Section
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2.3 hereof.
"Effective Time of the Mergers" means the earlier of the Davel
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Effective Time and the PhoneTel Effective Time, it being understood that,
pursuant to Section 11.01 of the Merger Agreement, it is contemplated that the
Davel Effective Time and the PhoneTel Effective Time will take place
substantially contemporaneously, with the Davel Effective Time immediately
preceding the PhoneTel Effective Time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchange Closing" means the closing of the Davel Debt for Equity
----------------
Exchange and the PhoneTel Debt for Equity Exchange, as described in Section 2.3
hereof.
"Exchanged Davel Loans" means the Davel Loans assigned by each Davel
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Lender to Davel Financing in exchange for the D Sub Common Stock, as described
in Section 2.1 hereof.
"Exchanged PhoneTel Loans" means the PhoneTel Loans assigned by each
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PhoneTel Lender to PhoneTel in exchange for the PhoneTel Debt Exchange Shares,
as described in Section 2.2 hereof.
"Governmental Entity" means any federal, state, local, foreign or
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other governmental department, commission, board, bureau, agency or
instrumentality.
"Lenders" has the meaning set forth in the preamble hereto.
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"Letter of Intent" means the Letter of Intent dated as of June 12,
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2001 between Davel and PhoneTel, as amended from time to time through January
31, 2002.
"Merger Agreement" has the meaning set forth in Recital D hereto.
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"Mergers" has the meaning set forth in Recital D hereto.
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5
"New Credit Facility" has the meaning set forth in Recital F hereto.
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"PhoneTel" has the meaning set forth in the preamble hereto.
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"PhoneTel Common Stock" has the meaning set forth in Recital D hereto.
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"PhoneTel Credit Agreement" has the meaning set forth in Recital B
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hereto.
"PhoneTel Credit Facility" has the meaning set forth in Recital B
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hereto.
"PhoneTel Debt Exchange Shares" means the shares of PhoneTel Common
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Stock to be received by the PhoneTel Lenders pursuant to the PhoneTel Debt for
Equity Exchange, as described in Section 2.2 hereof.
"PhoneTel Debt for Equity Exchange" has the meaning set forth in
---------------------------------
Recital F hereto.
"PhoneTel Effective Time" means the PhoneTel Effective Time as
-----------------------
determined pursuant to the Merger Agreement.
"PhoneTel Lenders" has the meaning set forth in the preamble hereto.
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"PhoneTel Loans" has the meaning set forth in Recital B hereto.
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"PhoneTel Material Adverse Effect" means a material adverse effect on
--------------------------------
the ability of PhoneTel to consummate the Transactions or, as a result of any
event, change, circumstance, or effect arising from or having an impact on
PhoneTel's business, financial condition or results of operations, a material
adverse effect on the ability of Davel and its stockholders or the Lenders to
realize substantially all of the benefits of the Transactions.
"PhoneTel Merger" has the meaning set forth in Recital D hereto.
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"PhoneTel Merger Exchange Ratio" has the meaning set forth in Recital
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D hereto.
"PhoneTel Option" has the meaning set forth in Recital D hereto.
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"PhoneTel Parties" means PhoneTel and Cherokee.
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"PhoneTel Subsidiary" means a PhoneTel Subsidiary as defined in the
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Merger Agreement.
"PhoneTel Syndicate Agent" means Foothill Capital Corporation, as
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agent to the PhoneTel Lenders under the PhoneTel Credit Facility.
"PhoneTel Warrant" has the meaning set forth in Recital D hereto.
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"P Sub" has the meaning set forth in Recital D hereto.
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6
"Registration Rights Agreement" means the Registration Rights
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Agreement described in Section 5.1(j) hereof.
"Registration Statement" means the Registration Statement to be filed
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on Securities Act Form S-4 pursuant to Section 8.06 of the Merger Agreement in
respect of the shares of Davel Common Stock to be issued in the Mergers,
including, without limitation, the Converted Davel Debt Exchange Shares and the
Converted PhoneTel Debt Exchange Shares.
"Retained Davel Loans" has the meaning set forth in Recital F hereto.
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"Retained PhoneTel Loans" has the meaning set forth in Recital F
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hereto.
"Securities Act" means the Securities Act of 1933, as amended.
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"Servicing Agreement" means the Servicing Agreement dated as of June
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12, 2001 between Davel and PhoneTel as amended from time to time through
December 31, 2001.
"Transaction Agreements" means, collectively, this Agreement, the
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Merger Agreement, the Commitment Letter, the Registration Rights Agreement and
any other agreement or instrument executed and delivered pursuant to any of the
foregoing (including, without limitation, any documentation relating to the New
Credit Facility).
"Transactions" means all the transactions contemplated by the
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Transaction Agreements.
Section 1.2 Interpretation. Whenever used in this Agreement, except as
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otherwise expressly provided or unless the context otherwise requires, any noun
or pronoun shall be deemed to include the plural as well as the singular and to
cover all genders. Unless otherwise specified, the terms "hereof" and "herein"
and similar terms refer to this Agreement as a whole (including the exhibits and
schedules hereto), and references herein to Articles, Sections and subsections
are to Articles, Sections and subsections of this Agreement unless otherwise
specified. All terms defined in this Agreement shall have the defined meanings
when used in any notice or other document made or delivered pursuant hereto,
unless otherwise defined therein.
ARTICLE II
DEBT FOR EQUITY EXCHANGES
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Section 2.1 Davel Debt for Equity Exchange. Immediately prior to the
------------------------------
Effective Time of the Mergers, subject to the fulfillment of the applicable
conditions set forth in Article V below, each Davel Lender shall assign to Davel
Financing the Davel Loans listed in Column A of Schedule 2.1 hereto opposite the
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name of such Davel Lender (collectively, the "Exchanged Davel Loans") in
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exchange for the transfer by Davel Financing to such Davel Lender (or its
designated affiliate) of the number of fully paid and nonassessable shares of D
Sub Common Stock set forth opposite such Davel Lender's name in Column B of
Schedule 2.1 (collectively, the "Davel Debt Exchange Shares"). Immediately
- ------------ --------------------------
following the assignment of the Exchanged Davel Loans to Davel Financing, such
loans shall be cancelled by Davel Financing. At the
7
Davel Effective Time, the Davel Debt Exchange Shares will be converted pursuant
to the Davel Merger into such number of shares of Davel Common Stock (the
"Converted Davel Debt Exchange Shares") as is equal to the number of such Davel
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Debt Exchange Shares multiplied by the Davel Merger Exchange Ratio, subject to
the provisions of the Merger Agreement regarding fractional shares.
Section 2.2 PhoneTel Debt for Equity Exchange. Immediately prior to the
---------------------------------
Effective Time of the Mergers, subject to the fulfillment of the applicable
conditions set forth in Article V below, each PhoneTel Lender shall assign to
PhoneTel the PhoneTel Loans listed in Column A of Schedule 2.2 hereto opposite
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the name of such PhoneTel Lender (collectively, the "Exchanged PhoneTel Loans")
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in exchange for the issuance by PhoneTel to such PhoneTel Lender (or its
designated affiliate) of the number of fully paid and nonassessable shares of
PhoneTel Common Stock (which may include fractional shares) set forth opposite
such PhoneTel Lender's name in Column B of Schedule 2.2 (collectively, the
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"PhoneTel Debt Exchange Shares"). Upon the assignment of such Exchanged PhoneTel
-----------------------------
Loans to PhoneTel, such loans shall be cancelled. At the PhoneTel Effective
Time, the PhoneTel Debt Exchange Shares issued to each PhoneTel Lender shall be
converted pursuant to the PhoneTel Merger into such number of shares of Davel
Common Stock (the "Converted PhoneTel Debt Exchange Shares") as is equal to the
---------------------------------------
number of such PhoneTel Debt Exchange Shares multiplied by the PhoneTel Merger
Exchange Ratio, subject to the provisions of the Merger Agreement regarding
fractional shares.
Section 2.3 Closing of Debt for Equity Exchanges. (a) Subject to the
------------------------------------
fulfillment of the applicable conditions precedent set forth in Article V below,
the consummation of the Davel Debt for Equity Exchange and the PhoneTel Debt for
Equity Exchange and the related actions provided for herein (the "Exchange
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Closing") shall take place immediately prior to the Effective Time of the
- -------
Mergers at the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago,
Illinois 60601 (with the date and time of such transactions being sometimes
referred to herein as the "Effective Time of the Exchanges").
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At the Exchange Closing: (i) the Davel Lenders shall deliver to Davel Financing
the promissory notes, instruments of assignment and other closing documents
listed on Schedule 2.3(A) hereto, (ii) Davel Financing shall deliver to the
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Davel Lenders the stock certificates, officers' certificates, promissory notes
and other closing documents listed on Schedule 2.3(B) hereto, and to the Davel
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Lenders and the PhoneTel Lenders, the legal opinions, addressed to the Lenders,
referred to in the Commitment Letter, (iii) the PhoneTel Lenders shall deliver
to PhoneTel the promissory notes, instruments of assignment and other closing
documents listed on Schedule 2.3(C) hereto and (iv) PhoneTel shall deliver to
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the PhoneTel Lenders the stock certificates, officers' certificates, promissory
notes and other closing documents listed on Schedule 2.3(D) hereto, and to the
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PhoneTel Lenders and the Davel Lenders, the legal opinions, addressed to the
Lenders, referred to in the Commitment Letter.
(b) In the event that either Merger has not become effective by 12:00
midnight (Eastern time) on the day of the Effective Time of the Exchanges, the
Davel Debt for Equity Exchange and the PhoneTel Debt for Equity Exchange may, by
notice given to Davel and PhoneTel by the Davel Syndicate Agent and/or the
PhoneTel Syndicate Agent, be rescinded and, in such case, such Debt For Equity
Exchanges shall be without any force or effect and the Exchanged Davel Loans and
the Exchanged PhoneTel Loans shall be reinstated. In the event of
8
any such rescission: (i) Davel Financing shall promptly redeliver to the Davel
Lenders the promissory notes and instruments of assignment relating to the
Exchanged Davel Loans, (ii) the Davel Lenders shall promptly surrender to Davel
Financing the stock certificates representing the Davel Debt Exchange Shares,
(iii) PhoneTel shall promptly redeliver to the PhoneTel Lenders the promissory
notes and instruments of assignment relating to the Exchanged PhoneTel Loans and
(iv) the PhoneTel Lenders shall promptly surrender to PhoneTel the stock
certificates representing the PhoneTel Debt Exchange Shares.
Section 2.4 Further Assurances. From time to time following the Davel
------------------
Effective Time and the PhoneTel Effective Time, upon the reasonable request of
the Lenders, each of Davel, Davel Financing and/or PhoneTel, as applicable,
shall execute and deliver, or cause to be executed and delivered, to the Lenders
such other instruments and take such other action as may be reasonably necessary
to more effectively vest in the Lenders and the Lenders put in possession of the
shares of Davel Common Stock which the Lenders are entitled to receive pursuant
to the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES.
Section 3.1 Representations and Warranties of the Davel Parties.
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The Davel Parties, jointly and severally, represent and warrant to the
other parties hereto, and acknowledge that the other parties hereto are relying
on such representations and warranties in entering into this Agreement and
completing the transactions contemplated herein notwithstanding any
investigation made by or on behalf of any of such other parties, that:
(a) Organization and Standing. Davel and D Sub is each duly
-------------------------
incorporated, validly existing and in good standing as a domestic corporation
under the laws of the State of Delaware, and has all requisite corporate power
and authority to own its properties and assets and to carry on its business as
it is at such time being conducted. Davel Financing is duly formed, validly
existing and in good standing as a domestic limited liability company under the
laws of the State of Delaware and has all requisite limited liability company
power and authority to own its properties and assets and to carry on its
business as it is being conducted on the date of this Agreement.
(b) Authorization. Davel and D Sub each has full corporate power and
-------------
authority, and has taken all corporate action necessary, to execute and deliver
this Agreement and to fulfill its obligations hereunder and to consummate the
transactions contemplated hereby. Davel Financing has full limited liability
company power and authority, and has taken all action necessary, to execute and
deliver this Agreement and to fulfill its obligations hereunder and to
consummate the transactions contemplated hereby.
(c) No Violation. Neither the execution and delivery of this Agreement
------------
nor the consummation by the parties of the transactions contemplated hereby will
(i) violate any provision of the organizational documents of any Davel Party,
(ii) violate, conflict with or result in a default (or any event that, with
notice or lapse of time or both, would constitute a default)
9
under, or give rise to any right of termination, cancellation or acceleration
under, any of the terms, conditions or provisions of or result in the creation
of any encumbrance upon the capital stock or the assets of Davel or any of its
subsidiaries (including, without limitation, Davel Financing) under any
indenture, note, mortgage, other evidence of indebtedness, guarantee, license,
agreement, lease or other contract or instrument or obligation to which Davel or
any subsidiary thereof (including, without limitation, Davel Financing) is a
party or by which Davel or any subsidiary thereof (including, without
limitation, Davel Financing) or any of its assets may be bound, or (iii) violate
any order, injunction, decree, statute, rule or regulation applicable to Davel
or any subsidiary thereof (including, without limitation, Davel Financing) and
in the case of clauses (ii) and (iii), which would have a Davel Material Adverse
Effect).
(d) Enforceability. This Agreement has been duly executed and delivered
--------------
by each of Davel, Davel Financing and D Sub and constitutes such party's legal,
valid and binding obligation, enforceable against such party in accordance with
its terms (except to the extent that the enforceability hereof may be limited by
bankruptcy, insolvency or other similar laws of general applicability affecting
the enforcement of creditor's rights generally and by a court's discretion in
relation to equitable remedies).
(e) Governmental Approvals. Except as set forth in Schedule 3.1(E)
---------------------- ---------------
hereto, all approvals, authorizations or other actions by, or filings with, any
governmental authority necessary for the validity or enforceability of the
obligations of the Davel Parties and P Sub under the Transaction Agreements have
been obtained, and neither the execution and delivery of this Agreement nor the
consummation by the parties of the transactions contemplated hereby will require
any filing with, or the obtaining of any permit, authorization, consent or
approval of, any governmental or regulatory authority whether within or outside
the United States.
(f) Capitalization.
--------------
(i) The (A) authorized and (B) issued fully diluted capital
stock of Davel as of the date of execution hereof is as
set forth in Schedule 3.1(F)(1) hereto.
------------------
(ii) The (A) authorized and (B) issued fully diluted capital
stock of Davel immediately after the Davel Effective
Time will be as set forth in Schedule 3.1(F)(2) hereto.
------------------
Immediately after the Davel Effective Time, the
Converted Davel Debt Exchange Shares will represent 93%
of the outstanding Davel Common Stock calculated on a
fully diluted basis (taking into account the intended
reservation of Davel Common Stock for issuance in
respect of stock options and warrants of Davel from and
after the Effective Time of the Exchanges). Schedule
--------
3.1(F)(2) also sets forth a schedule of any stock
---------
options, warrants or other rights exercisable for the
purchase of shares of capital stock of Davel that will
be outstanding immediately following the Davel
Effective Time.
10
(iii) The (A) authorized and (B) issued fully diluted capital
stock of Davel immediately after the PhoneTel Effective
Time will be as set forth in Schedule 3.1(F)(3) hereto.
------------------
Immediately after the PhoneTel Effective Time, the
Converted Davel Debt Exchange Shares will represent
59.06% of the outstanding Davel Common Stock calculated
on a fully diluted basis (taking into account the
intended reservation of Davel Common Stock for issuance
in respect of stock options and warrants of Davel from
and after the Effective Time of the Exchanges) and the
Converted PhoneTel Debt Exchange Shares will represent
31.76% of the outstanding Davel Common Stock calculated
on a fully diluted basis (taking into account the
intended reservation of Davel Common Stock for issuance
in respect of stock options and warrants of Davel from
and after the Effective Time of the Exchanges).
Schedule 3.1(F)(3) also sets forth a schedule of any
------------------
stock options, warrants or other rights exercisable for
the purchase of shares of capital stock of Davel that
will be outstanding immediately following the PhoneTel
Effective Time (including the exercise price thereof).
(iv) As of (A) the date of this Agreement and (B)
immediately following each of (1) the Davel Effective
Time and (2) the PhoneTel Effective Time, all of the
outstanding shares of Davel's capital stock are (or
will be) duly and validly authorized and issued, fully
paid and nonassessable, have been (or will have been)
issued in compliance with all federal and state
securities laws, and were not issued (and will not have
been issued) in violation of or subject to any
preemptive rights.
(v) Except as otherwise disclosed or contemplated in any of
the Transaction Agreements or as disclosed in Schedule
--------
3.1(F)(5) hereto, as of (A) the date of this Agreement
---------
and (B) immediately following each of (1) the Debt For
Equity Exchanges and (2) the Mergers, neither Davel nor
any Davel Subsidiary, and, to the best knowledge of
Davel (without investigation other than a review of
publicly available information), no other person
holding more than 5% of the Davel Common Stock
(determined without giving effect to the Transactions),
is or will be a party to any put option, call option,
voting trust, voting agreement, irrevocable proxy or
agreement providing for tag-along rights, drag-along
rights, rights of first offer or refusal, registration
rights or any other rights relating to the sale,
purchase, transfer or other acquisition or disposition
or voting of shares of Davel Common Stock.
11
(vi) The authorized and issued fully diluted D Sub Common
Stock immediately prior to the Davel Debt for Equity
Exchange will be as set forth in Schedule 3.1(F)(6)
------------------
hereto, all of which will be held by Davel Financing. All
of such D Sub Common Stock will be duly and validly
authorized and issued, fully paid and nonassessable, will
have been issued in compliance with all federal and state
securities laws, and will not have been issued in
violation of or subject to any preemptive rights.
(g) Litigation. There is no action, suit, arbitration, inquiry,
----------
proceedings or investigation by or before any authority of any nature, civil,
criminal, regulatory or otherwise, pending or to the knowledge of the Davel
Parties, threatened against or involving any Davel Party, P Sub or any Davel
Subsidiary in connection with the Debt for Equity Exchanges or the Mergers or
the execution or performance of any of the Transaction Agreements.
(h) Accuracy of Representations and Warranties. All representations and
------------------------------------------
warranties of any Davel Party set forth in the Merger Agreement are accurate,
true and correct in all material respects as of the date hereof (unless another
date is specified in the Merger Agreement, in which case the applicable
representations and warranties were true and correct as of such other date).
(i) Disclosure Documents.
--------------------
(A) The portions of the Registration Statement based on information
provided by Davel and, to the best knowledge of Davel, all other
portions of the Registration Statement, will not, at the time such
Registration Statement is filed with the Securities and Exchange
Commission and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, and it will comply as to form in all
material respects with the requirements of the Securities Act.
(B) The portions of the Combined Proxy Statement based on information
provided by Davel and, to the best knowledge of Davel, all other
portions of the Combined Proxy Statement, will not, at the date it is
first mailed to the stockholders of PhoneTel and Davel, respectively,
and at the time of each meeting of such stockholders relating to the
Mergers, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, and it will comply as to form
in all material respects with the requirements of the Exchange Act.
12
(j) Anti-Takeover Provisions. No takeover statute or applicable anti-
------------------------
takeover provision in Davel's Certificate of Incorporation or By Laws is, or at
the Davel Effective Time and the PhoneTel Effective Time will be, applicable to
the Debt for Equity Exchanges, the Mergers or any of the other transactions
contemplated by the Transaction Agreements. Davel does not have and at the
Davel Effective Time and the PhoneTel Effective Time will not have, in effect
any "poison pill" or "shareholders rights plan".
(k) Certain Fees. Except as contemplated by the Commitment Letter or as
------------
set forth in Schedule 3.1(K), no Davel Party nor P Sub nor any of their
---------------
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees or commissions or finders' fees in
connection with the Debt for Equity Exchanges, the Mergers or any of the other
transactions contemplated by the Transaction Agreements.
Section 3.2 Representations and Warranties of the PhoneTel Parties.
------------------------------------------------------
The PhoneTel Parties, jointly and severally, represent and warrant to
the other parties hereto, and acknowledge that the other parties hereto are
relying on such representations and warranties in entering into this Agreement
and completing the transactions contemplated herein notwithstanding any
investigation made by or on behalf of any of such other parties, that:
(a) Organization and Standing. PhoneTel is duly incorporated, validly
-------------------------
existing and in good standing as a domestic corporation under the laws of the
State of Ohio, and has all requisite corporate power and authority to own its
properties and assets and to carry on its business as it is being conducted on
the date of this Agreement. Cherokee is duly incorporated, validly existing and
in good standing as a domestic corporation under the laws of the State of Texas,
and has all requisite corporate power and authority to own its properties and
assets and to carry on its business as it is being conducted on the date of this
Agreement.
(b) Authorization. PhoneTel and Cherokee each has full corporate power
-------------
and authority, and has taken all corporate action necessary, to execute and
deliver this Agreement and to fulfill its obligations hereunder and to
consummate the transactions contemplated hereby.
(c) No Violation. Neither the execution and delivery of this Agreement
------------
nor the consummation by the parties of the transactions contemplated hereby will
(i) violate any provision of any PhoneTel Party's organizational documents, (ii)
violate, conflict with or result in a default (or any event that, with notice or
lapse of time or both, would constitute a default) under, or give rise to any
right of termination, cancellation or acceleration under, any of the terms,
conditions or provisions of or result in the creation of any encumbrance upon
the capital stock or the assets of PhoneTel or any of its subsidiaries under any
indenture, note, mortgage, other evidence of indebtedness, guarantee, license,
agreement, lease or other contract or instrument or obligation to which PhoneTel
or any subsidiary thereof is a party or by which PhoneTel or any subsidiary
thereof or any of its assets may be bound, or (iii) violate any order,
injunction, decree, statute, rule or regulation applicable to PhoneTel or any
subsidiary thereof, and in the case of clauses (ii) and (iii), which would have
a PhoneTel Material Adverse Effect.
13
(d) Enforceability. This Agreement has been duly executed and delivered
--------------
by each of PhoneTel and Cherokee and constitutes such party's legal, valid and
binding obligation, enforceable against such party in accordance with its terms
(except to the extent that the enforceability hereof may be limited by
bankruptcy, insolvency or other similar laws of general applicability affecting
the enforcement of creditor's rights generally and by a court's discretion in
relation to equitable remedies).
(e) Governmental Approvals. Except as set forth in Schedule 3.2(E)
---------------------- ---------------
hereto, all approvals, authorizations or other actions by, or filings with, any
governmental authority necessary for the validity or enforceability of the
obligations of the PhoneTel Parties under the Transaction Agreements have been
obtained, and neither the execution and delivery of this Agreement nor the
consummation by the parties of the transactions contemplated hereby will require
any filing with, or the obtaining of any permit, authorization, consent or
approval of, any governmental or regulatory authority whether within or outside
the United States.
(f) Capitalization.
--------------
(i) The authorized and issued fully diluted capital stock of
PhoneTel as of the date of execution hereof is as set forth in
Schedule 3.2(F)(1) hereto.
------------------
(ii) The authorized and issued fully diluted capital stock of
PhoneTel immediately after giving effect to the PhoneTel Debt
for Equity Exchange but immediately prior to the PhoneTel
Effective Time will be as set forth in Schedule 3.2(F)(2)
------------------
hereto.
(iii) As of (A) the date of this Agreement and (B) immediately after
the PhoneTel Debt for Equity Exchange (but before the PhoneTel
Effective Time), all of the outstanding shares of PhoneTel's
capital stock are (or will be) duly and validly authorized and
issued, fully paid and nonassessable, have been (or will have
been) issued in compliance with all federal and state
securities laws, and were not issued (and will not have been
issued) in violation of or subject to any preemptive rights.
(iv) Except as otherwise disclosed or contemplated in any of the
Transaction Agreements or as disclosed in Schedule 3.2(F)(4)
------------------
hereto, as of (A) the date of this Agreement and (B)
immediately after the PhoneTel Debt For Equity Exchange neither
PhoneTel nor any PhoneTel subsidiary, and, to the best
knowledge of PhoneTel (without investigation other than a
review of publicly available information), no other person
holding more than 5% of the PhoneTel Common Stock (determined
without giving effect to the Transactions), is or will be a
party to any put option, call option, voting trust, voting
agreement, irrevocable proxy or agreement providing for tag-
along rights, drag-along rights, rights of first offer or
14
refusal, registration rights or any other rights relating to
the sale, purchase, transfer or other acquisition or
disposition or voting of shares of PhoneTel Common Stock.
(g) Litigation. There is no action, suit, arbitration, inquiry,
----------
proceedings or investigation by or before any authority of any nature, civil,
criminal, regulatory or otherwise, pending or to the knowledge of the PhoneTel
Parties, threatened against or involving any PhoneTel Party or any PhoneTel
Subsidiary in connection with any of the Transactions or the execution or
performance of any of the Transaction Agreements.
(h) Accuracy of Representations and Warranties. All representations and
------------------------------------------
warranties of any PhoneTel Party set forth in the Merger Agreement are accurate,
true and correct in all material respects as of the date hereof (unless another
date is specified in the Merger Agreement, in which case the applicable
representations and warranties were true and correct as of such other date).
(i) Disclosure Documents.
--------------------
(A) The portions of the Registration Statement based on information
provided by PhoneTel and, to the best knowledge of PhoneTel, all
other portions of the Registration Statement, will not, at the time
such Registration Statement is filed with the Securities and Exchange
Commission and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, and it will comply as to form in all
material respects with the requirements of the Securities Act.
(B) The portions of the Combined Proxy Statement based on information
provided by PhoneTel and, to the best knowledge of PhoneTel, all
other portions of the Combined Proxy Statement, will not, at the date
it is first mailed to the stockholders of PhoneTel and Davel,
respectively, and at the time of each meeting of such stockholders
relating to the Mergers, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and it will
comply as to form in all material respects with the requirements of
the Exchange Act.
(j) Anti-Takeover Provisions. No takeover statute or applicable anti-
------------------------
takeover provision in PhoneTel's Certificate of Incorporation or By Laws is, or
at the Effective Time of the Exchanges will be, applicable to the PhoneTel Debt
for Equity Exchange or the other transactions contemplated by this Agreement.
As of the date hereof, PhoneTel has not, and at the Effective Time of the
Exchanges will not have, adopted any "poison pill" or "shareholders rights
plan".
15
(k) Certain Fees. Except as contemplated by the Commitment Letter or as
------------
set forth in Schedule 3.2(K), no PhoneTel Party nor any of their respective
---------------
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees or commissions or finders' fees in
connection with Debt for Equity Exchanges, the Mergers or any of the other
transactions contemplated by the Transaction Agreements.
Section 3.3 Representations and Warranties of the Davel Lenders.
---------------------------------------------------
Each of the Davel Lenders, by its signature hereto, severally but not
jointly and each as to itself, represents and warrants to the other parties
hereto that:
(a) Organization. Such Davel Lender is duly organized, validly existing,
------------
and in good standing under the laws of the jurisdiction in which it is
organized.
(b) Authorization. Such Davel Lender has full corporate or limited
-------------
liability company or limited partnership power and authority, as the case may
be, and has taken all action necessary, to execute and deliver this Agreement
and to fulfill its obligations hereunder and to consummate the transactions
contemplated hereby.
(c) No Violation. The making and performance of this Agreement by such
------------
Davel Lender does not and will not violate any law or regulation of the
jurisdiction under which it exists, any other law or regulation applicable to
it, any other agreement to which it is a party or by which it is bound or to
which any of its assets are subject, or any provision of its organizational
documents.
(d) Enforceability. This Agreement has been duly executed and delivered
--------------
by such Davel Lender and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms (except to the extent that
the enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws of general applicability affecting the enforcement of creditor's
rights generally and by a court's discretion in relation to equitable remedies).
(e) Governmental Approvals. Except as set forth in Schedule 3.3(E)
---------------------- ---------------
hereto, all approvals, authorizations or other actions by, or filings with, any
governmental authority necessary for the validity or enforceability of the
obligations of such Davel Lender under this Agreement have been obtained.
(f) Ownership of the Davel Loans. Except as disclosed in Schedule 3.3(F)
---------------------------- ---------------
hereto, as of the date of this Agreement such Davel Lender is the sole legal
owner of the Davel Loans to be exchanged by it in the Davel Debt for Equity
Exchange. Between the date hereof and the Effective Time of the Exchanges, such
Davel Lender will not transfer any such Davel Loan to any other person unless
the transferee has first agreed in a form reasonably satisfactory to Davel to be
bound by the obligations of such Davel Lender under this Agreement with respect
to such transferred loans.
(g) Certain Fees. Neither such Davel Lender nor any of its officers,
------------
directors or employees has employed any broker or finder or incurred any
liability for any
16
brokerage fees or commissions or finders' fees in connection with the Davel Debt
for Equity Exchange or any of the other transactions contemplated by this
Agreement.
(h) Investment Intent. Subject to the contemplated conversion of the
-----------------
Davel Debt Exchange Shares into shares of Davel Common Stock pursuant to the
Davel Merger, such Davel Lender will be acquiring such Davel Debt Exchange
Shares for investment only (whether for its own account or for one or more
separate accounts maintained by it for the account of one or more pension or
trust funds) and not with a view to the distribution thereof.
(i) Accredited Investor. Each Davel Lender is an accredited investor
-------------------
within the meaning of Rule 501 of the Securities Act.
Section 3.4 Representations and Warranties of the PhoneTel Lenders.
------------------------------------------------------
Each of the PhoneTel Lenders, by its signature hereto, severally but
not jointly and each as to itself, represents and warrants to the other parties
hereto that:
(a) Organization. Such PhoneTel Lender is duly organized, validly
------------
existing, and in good standing under the laws of the jurisdiction in which it is
organized.
(b) Authorization. Such PhoneTel Lender has full corporate or limited
-------------
liability company or limited partnership power and authority, as the case may
be, and has taken all action necessary, to execute and deliver this Agreement
and to fulfill its obligations hereunder and to consummate the transactions
contemplated hereby.
(c) No Violation. The making and performance of this Agreement by such
------------
PhoneTel Lender does not and will not violate any law or regulation of the
jurisdiction under which it exists, any other law or regulation applicable to
it, any other agreement to which it is a party or by which it is bound or to
which any of its assets are subject, or any provision of its organizational
documents.
(d) Enforceability. This Agreement has been duly executed and delivered
--------------
by such PhoneTel Lender and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms (except to the extent that
the enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws of general applicability affecting the enforcement of creditor's
rights generally and by a court's discretion in relation to equitable remedies).
(e) Governmental Approvals. Except as set forth in Schedule 3.4(E)
---------------------- ---------------
hereto, all approvals, authorizations or other actions by, or filings with, any
governmental authority necessary for the validity or enforceability of the
obligations of such PhoneTel Lender under this Agreement have been obtained.
(f) Ownership of the PhoneTel Loans. Except as disclosed in Schedule
------------------------------- --------
3.4(F) hereto, as of the date of this Agreement, such PhoneTel Lender is the
- ------
sole legal owner of the PhoneTel Loans to be exchanged by it in the PhoneTel
Debt for Equity Exchange. Between the date hereof and the Effective Time of the
Exchanges, such PhoneTel Lender shall not transfer any such PhoneTel Loan to any
other person unless the transferee has first agreed in a form
17
reasonably satisfactory to PhoneTel to be bound by the obligations of such
PhoneTel Lender under this Agreement with respect to such transferred loans.
(g) Certain Fees. Neither such PhoneTel Lender nor any of its
------------
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees or commissions or finders' fees in
connection with the PhoneTel Debt for Equity Exchange or any of the other
transactions contemplated by this Agreement.
(h) Investment Intent. Subject to the contemplated conversion of
-----------------
the PhoneTel Debt Exchange Shares into shares of Davel Common Stock pursuant to
the Davel Merger, such PhoneTel Lender will be acquiring such PhoneTel Debt
Exchange Shares for investment only (whether for its own account or for one or
more separate accounts maintained by it for the account of one or more pension
or trust funds) and not with a view to the distribution thereof.
(i) Accredited Investor. Each PhoneTel Lender is an accredited
-------------------
investor within the meaning of Rule 501 of the Securities Act.
ARTICLE IV
COVENANTS
---------
Section 4.1 Davel Covenants. Unless otherwise authorized in writing by the
---------------
Davel Syndicate Agent with the Consent of the Davel Lenders and by the PhoneTel
Syndicate Agent with the Consent of the PhoneTel Lenders, and except as
otherwise expressly contemplated in this Agreement:
(a) Each Davel Party shall use its best efforts to consummate
the Mergers and to cause each of the conditions precedent to the obligations of
the Lenders to effect the Debt for Equity Exchanges to be met, and shall keep
the Lenders fully informed of all matters relating to the Mergers.
(b) Davel shall, pursuant to the provisions of the Securities
Act, use its reasonable best efforts to cause the Registration Statement to
become effective prior to the closing of the Debt for Equity Exchanges.
(c) In the event that any shares of Davel Common Stock are or
become listed on any securities exchange or automated quotation system, Davel
shall promptly cause the Converted PhoneTel Debt Exchange Shares and the
Converted Davel Debt Exchange Shares to be so listed.
(d) Each Davel Party shall use its reasonable best efforts to
obtain any other governmental approvals and contractual consents necessary or
required in order to complete the Davel Debt for Equity Exchange, the Mergers
and the other transactions contemplated by the Transaction Agreements.
(e) Davel shall promptly notify the Davel Syndicate Agent and
the PhoneTel Syndicate Agent of:
18
(i) any notice or other communication received by any
Davel Party or P Sub (other than a communication
relating to a consent identified in the Davel
Disclosure Letter (as defined in the Merger
Agreement)) from any person alleging that the
consent of such person is or may be required in
connection with the Debt for Equity Exchanges, the
Mergers or any of the other transactions
contemplated by the Transaction Agreements;
(ii) any notice or other communication received by any
Davel Party or P Sub (other than a communication
relating to a consent identified in the Davel
Disclosure Letter (as defined in the Merger
Agreement)) from any Governmental Entity in
connection with the Debt for Equity Exchanges, the
Mergers or any of the other transactions
contemplated by the Transaction Agreements;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of any
Davel Party, threatened against, relating to or
involving or otherwise affecting any Davel Party
or any subsidiary thereof that relates to the
consummation of the Debt for Equity Exchanges, the
Mergers or any of the other transactions
contemplated by the Transaction Agreements; and
(iv) any action, event or occurrence that would
constitute a breach of any representation,
warranty, covenant or agreement of any Davel Party
set forth in this Agreement, the Commitment
Letter, the Merger Agreement or any other
Transaction Agreement.
(f) No Davel Party shall agree to any material amendment of the
Merger Agreement without the prior written authorization of the Davel Syndicate
Agent with the Consent of the Davel Lenders and the PhoneTel Syndicate Agent
with the Consent of the PhoneTel Lenders.
(g) The Davel Parties shall consult with the Davel Syndicate
Agent and the PhoneTel Syndicate Agent before issuing any press release or
making any public statement with respect to this Agreement (or any other
transaction contemplated hereby, including, without limitation, the Mergers)
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, shall not issue any such press release or make
any such public statement prior to such consultation.
(h) Each Davel Party shall use its reasonable best efforts to
obtain all approvals, authorizations or other actions by any governmental
authority, and shall make all filings, necessary for the validity or
enforceability of its obligations under this Agreement.
19
(i) Each Davel Party shall use its best efforts to obtain all
contractual approvals necessary to enable it to comply with its obligations
under this Agreement, the Merger Agreement and the other Transaction Agreements.
Section 4.2 PhoneTel Covenants. Unless otherwise authorized in writing by
------------------
the Davel Syndicate Agent with the Consent of the Davel Lenders and by the
PhoneTel Syndicate Agent with the Consent of the PhoneTel Lenders, and except as
otherwise expressly contemplated in this Agreement:
(a) Each PhoneTel Party shall use its best efforts to consummate
the PhoneTel Merger and to cause each of the conditions precedent to the
obligations of the PhoneTel Lenders to effect the PhoneTel Debt for Equity
Exchanges to be met, and shall keep the Lenders fully informed of all matters
relating to the PhoneTel Merger.
(b) Each PhoneTel Party shall use its reasonable best efforts to
obtain any other governmental approvals and contractual consents necessary or
required in order to complete the PhoneTel Debt for Equity Exchange, the
PhoneTel Merger and the other transactions contemplated by the Transaction
Agreements.
(c) PhoneTel shall promptly notify the Davel Syndicate Agent and
the PhoneTel Syndicate Agent of:
(i) any notice or other communication received by any
PhoneTel Party (other than a communication
relating to a consent identified in the PhoneTel
Disclosure Letter (as defined in the Merger
Agreement)) from any person alleging that the
consent of such person is or may be required in
connection with the Debt for Equity Exchanges, the
Mergers or any of the other transactions
contemplated by the Transaction Agreements;
(ii) any notice or other communication received by any
PhoneTel Party (other than a communication
relating to a consent identified in the PhoneTel
Disclosure Letter (as defined in the Merger
Agreement)) from any Governmental Entity in
connection with the Debt for Equity Exchanges, the
Mergers or any of the other transactions
contemplated by the Transaction Agreements;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of any
PhoneTel Party, threatened against, relating to or
involving or otherwise affecting any PhoneTel
Party or any subsidiary thereof that relates to
the consummation of the Debt for Equity Exchanges,
the Mergers or any of the other transactions
contemplated by the Transaction Agreements; and
(iv) any action, event or occurrence that would
constitute a breach of any representation,
warranty, covenant or agreement of any
20
PhoneTel Party set forth in this Agreement, the
Commitment Letter, the Merger Agreement or any
other Transaction Agreement.
(d) No PhoneTel Party shall agree to any material amendment
of the Merger Agreement without the prior written authorization of the Davel
Syndicate Agent with the Consent of the Davel Lenders and the PhoneTel Syndicate
Agent with the Consent of the PhoneTel Lenders.
(e) The PhoneTel Parties shall consult with the Davel
Syndicate Agent and the PhoneTel Syndicate Agent before issuing any press
release or making any public statement with respect to this Agreement (or any
other transaction contemplated hereby, including, without limitation, the
Mergers) and, except as may be required by applicable law or any listing
agreement with any national securities exchange, shall not issue any such press
release or make any such public statement prior to such consultation.
(f) Each PhoneTel Party shall use its reasonable best
efforts to obtain all approvals, authorizations or other actions by any
governmental authority, and shall make all filings, necessary for the validity
or enforceability of its obligations under this Agreement.
(g) Each PhoneTel Party shall use its best efforts to
obtain all contractual approvals necessary to enable it to comply with its
obligations under this Agreement, the Merger Agreement and the other Transaction
Agreements.
ARTICLE V
CONDITIONS TO CLOSING
---------------------
Section 5.1 Conditions to the Obligations of the Lenders. The
--------------------------------------------
obligations of each of the Lenders to consummate the Debt for Equity Exchanges
are subject to the satisfaction or waiver of the following conditions:
(a) The representations and warranties of each Davel Party
and PhoneTel Party contained in this Agreement, the Commitment Letter, the
Merger Agreement and each other Transaction Agreement shall be true and correct
in all material respects as of the Effective Time of the Exchanges as if made on
and as of such date (unless another date is specified in the applicable
agreement, in which case the applicable representations and warranties shall
have been true and correct as of such other date).
(b) Each Davel Party and PhoneTel Party shall have complied
with or performed in all material respects all agreements and covenants required
to be complied with or performed by it under this Agreement at or prior to the
Davel Effective Time, and the Certificate of Incorporation of PhoneTel will have
been amended to increase the authorized capital stock of PhoneTel as set forth
in Schedule 3.2(F)(2).
(c) No fact, circumstance or event shall have occurred
between January 1, 2002 and the Effective Time of the Exchanges that has had or
would reasonably be expected to have either a Davel Material Adverse Effect or a
PhoneTel Material Adverse Effect.
21
(d) A certificate of an authorized officer of each of Davel
and PhoneTel shall have been delivered to both the Davel Syndicate Agent and the
PhoneTel Syndicate Agent stating that the conditions set forth in Section
5.1(a), (b) and (c) above have been met.
(e) All material applicable governmental approvals and
contractual consents shall have been obtained.
(f) Except for the consummation of the Debt for Equity
Exchanges, each of the conditions to the closing of the Mergers set forth in the
Merger Agreement shall have been met, provided that any waiver of any condition
to closing of the Mergers by one or more of the parties to the Merger Agreement
shall not be deemed to constitute the meeting of such condition for the purposes
of this Agreement unless such waiver has been authorized in writing by each of
(a) the Davel Syndicate Agent with the Consent of the Davel Lenders and (b) the
PhoneTel Syndicate Agent with the Consent of the PhoneTel Lenders.
(g) No litigation, arbitration, or adversarial proceeding
shall be pending or threatened against any party to this Agreement or any other
Transaction Agreement seeking to enjoin or challenge either of the Mergers,
either of the Debt for Equity Exchanges or any other transaction contemplated
hereby or thereby.
(h) The Registration Statement shall have become effective
and shall not be subject to any stop order, and any state securities laws
filings or authorizations required in connection with the issuance of the
Converted Davel Debt Exchange Shares or the Converted PhoneTel Debt Exchange
Shares shall have been made or obtained.
(i) No appraisal rights shall have been asserted by any
stockholder of Davel or PhoneTel in connection with the Mergers, the Debt for
Equity Exchanges or any of the other transactions contemplated by the
Transaction Agreements.
(j) Davel shall have entered into a Registration Rights
Agreement with the Lenders in the form attached hereto as Exhibit B (the
---------
"Registration Rights Agreement").
-----------------------------
(k) The Lenders shall have received the legal opinions
referred to in Section 2.3 hereof.
-----------
(l) Definitive Agreements effecting the financial
restructuring shall have been executed between the Lenders and Davel, as more
fully contemplated in the Commitment Letter.
Each of the conditions to the obligations of the Lenders to consummate
the Debt for Equity Exchanges may be waived by each of (a) the Davel Syndicate
Agent with the Consent of the Davel Lenders and (b) the PhoneTel Syndicate Agent
with the Consent of the PhoneTel Lenders.
Section 5.2 Conditions to the Obligations of Davel and PhoneTel.
---------------------------------------------------
The obligations of the Davel Parties and the PhoneTel Parties to
consummate the Debt for Equity Exchanges are subject to the satisfaction or
waiver of the following conditions:
22
(a) The representations and warranties of the Davel Lenders and
of the PhoneTel Lenders set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date.
(b) No litigation, arbitration, or adversarial proceeding is
pending against it or, to its knowledge, threatened against it, seeking to
enjoin or challenge the Mergers, the Davel Debt for Equity Exchange, the
PhoneTel Debt for Equity Exchange or any other transaction contemplated hereby,
and no court or governmental entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any law, statute, ordinance,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Mergers, the Davel Debt for Equity
Exchange, the PhoneTel Debt for Equity Exchange or the other transactions
contemplated hereby, and no proceeding shall have been commenced therefor.
(c) Except for the consummation of the Debt for Equity
Exchanges, each of the conditions to the closing of the Mergers set forth in the
Merger Agreement shall have been met or waived.
(d) The Registration Statement shall have become effective and
shall not be subject to any stop order and any state securities laws filings or
authorizations required in connection with the issuance of the Converted
PhoneTel Debt Exchange Shares and the Converted Davel Debt Exchange Shares shall
be effective.
ARTICLE VI
MISCELLANEOUS.
-------------
Section 6.1 Notices.
-------
All notices and communications between the parties hereto shall be
given or confirmed in writing, delivered to the address indicated below (or such
replacement address given by like notice or communication by the applicable
party), and shall be effective when received.
If to Davel, Davel Financing or Davel Communications, Inc.
D Sub: 10120 Windhorst Road
Tampa, Florida 33619
Facsimile: (813) 740-9406
Attention: Bruce W. Renard
with a copy to: Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: R. Scott Falk, Esq.
Facsimile: (312) 861-2200
23
If to PhoneTel or Cherokee: PhoneTel Technologies, Inc.
1001 Lakeside Avenue, 7/th/ Floor
Cleveland, Ohio 44114
Facsimile: (216) 875-4337
Attention: John Chichester
with a copy to: Hahn, Loeser & Parks LLP
3300 BP Tower
200 Public Square
Cleveland, Ohio
Attention: F. Ronald O'Keefe, Esq.
Facsimile: (216) 241-2824
If to the Davel Lenders: c/o PNC Bank N.A.
Davel Syndicate Agent
1600 Market Street, 11/th/ Floor
F2-F070-11-4
Philadelphia, PA 19103
Attention: Michael Valerio
Facsimile: (215) 585-6690
Confirmation: (215) 585-4499
If to the PhoneTel Lenders: c/o Foothill Capital Corporation
PhoneTel Syndicate Agent
2450 Colorado Avenue
Suite 3000W
Santa Monica, CA 90404
Attention: Amy Lam
Facsimile: (310) 453-7412
Confirmation: (310) 453-7365
Section 6.2 Entire Agreement; Amendments; Waiver.
------------------------------------
This Agreement, together with the other Transaction Agreements
constitute the entire agreement of the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior or
contemporaneous negotiations, promises, covenants, agreements, or
representations (including, without limitation, the Letter of Intent). This
Agreement may not be amended, modified or supplemented, except by an instrument
in writing executed by each of the parties hereto. Any provision of this
Agreement may be waived (either generally or in a particular instance and either
retrospectively or prospectively) if, and only if, such waiver is in writing and
signed by each party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege under this
Agreement shall operate as a waiver of such right, power or privilege nor shall
any single or partial exercise of any such right, power or privilege preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege.
24
Section 6.3 No Relationship.
---------------
Nothing contained in this Agreement shall establish any fiduciary,
partnership, joint venture, or similar relationship between or among the parties
hereto.
Section 6.4 Successors and Assigns; Survival.
--------------------------------
The representations and warranties contained herein shall survive the
execution of this Agreement and the transactions contemplated hereby. The terms
of this Agreement shall be binding upon, and shall inure to the benefit of each
of the parties hereto and their respective successors and permitted assigns.
Section 6.5 Termination.
-----------
The rights and obligations of the parties hereunder shall terminate
upon any termination of the Merger Agreement. Notwithstanding the foregoing, no
such termination of this Agreement shall affect any party's rights in respect of
any breach by any other party of any provision hereof occurring prior to such
termination.
Section 6.6 Expenses.
--------
(a) Davel and PhoneTel, jointly and severally, shall pay all
of the reasonable expenses, including, without limitation, reasonable attorneys
fees and expenses, incurred by the Davel Syndicate Agent in connection with the
preparation, review, negotiation, execution and delivery of this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated herein and therein, whether or not any of such transactions fail to
be consummated or are rescinded. Similarly, Davel and PhoneTel, jointly and
severally, shall pay all of the reasonable expenses, including, without
limitation, reasonable attorneys fees and expenses, incurred by the PhoneTel
Syndicate Agent in connection with the preparation, review, negotiation,
execution and delivery of this Agreement and the other Transaction Agreements
and the consummation of the transactions contemplated herein and therein,
whether or not any of such transactions fail to be consummated or are rescinded.
(b) Except as provided in Subsection (a) above or elsewhere in
any of the Transaction Agreements, each party to this Agreement shall bear its
own expenses incurred in connection with the preparation, review, negotiation,
execution and delivery of this Agreement and the other Transaction Agreements
and the consummation of the transactions contemplated herein and therein.
Section 6.7 Counterpart and Telecopier Execution.
------------------------------------
This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall be an original, but all of which
together shall constitute one agreement binding on the parties hereto.
Transmission by telecopier of an executed counterpart of this Agreement shall be
deemed to constitute due and sufficient delivery of such counterpart, provided
that the party so delivering such counterpart shall, promptly after such
delivery, deliver the original of such counterpart to the other parties hereto.
25
Section 6.8 Governing Law; Submission to Jurisdiction.
-----------------------------------------
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York including, without limitation, Title 14,
Section 5-1401 of the New York General Obligations Law, without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State
of New York or of any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York. Each party
hereto irrevocably submits to the non-exclusive jurisdiction of any state or
federal court located in the Borough of Manhattan, New York City, New York for
the purposes of any suit, action or other proceeding arising out of or to
enforce, interpret, or construe any provision of this Agreement.
Section 6.9 TRIAL BY JURY.
-------------
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY TRANSACTION AND ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO EACH OTHER PARTY ENTERING INTO THIS AGREEMENT.
Section 6.10 Severability.
------------
If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any jurisdiction, that provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions of this Agreement; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
Section 6.11 Captions.
--------
The captions and headings hereunder are for convenience only and shall
not affect the interpretations or construction of this Agreement.
26
IN WITNESS WHEREOF, this Exchange Agreement has been duly
executed as of the date first above written.
DAVEL COMMUNICATIONS, INC.
By: /s/ Bruce W. Renard
---------------------------------------
Authorized Signatory
Name: Bruce W. Renard
Title: President
DAVEL FINANCING COMPANY, L.L.C.
By: DAVEL COMMUNICATIONS, INC., its sole
managing member
By: /s/ Bruce W. Renard
---------------------------------
Authorized Signatory
Name: Bruce W. Renard
Title: President
DF MERGER CORP.
By: /s/ Bruce W. Renard
---------------------------------------
Authorized Signatory
Name: Bruce W. Renard
Title: President
PHONETEL TECHNOLOGIES, INC.
By: /s/ John D. Chichester
---------------------------------------
Authorized Signatory
Name: John D. Chichester
Title: President and Chief Executive
Officer
CHEROKEE COMMUNICATIONS, INC.
By: /s/ John D. Chichester
---------------------------------------
Authorized Signatory
Name: John D. Chichester
Title: President and Chief Executive
Officer
DAVEL SYNDICATE AGENT: PNC BANK, N.A.
in its capacities as the Davel Syndicate Agent and
as a Davel Lender
By: /s/ Michael A. Valerio, Jr. VP
--------------------------------------
Name: Michael A. Valerio, Jr.
Title: Vice President
DAVEL LENDERS:
ARK CLO 2000-1, Limited
By: Patriarch Partners, LLC
Its Collateral Manager
By: /s/ Lynn Tilton
-------------------------------
Name: Lynn Tilton
Title: Authorized Signatory
U.S. BANK, NATIONAL ASSOCIATION
By: /s/ David C. Larsen
------------------------------
Name: David C. Larsen
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/ Craig Thistlethwaite
--------------------------------------
Name: Craig Thistlethwaite
Title: Assistant Vice President
BNP PARIBAS
By: /s/ Edward V. Canale
----------------------------------
Name: Edward V. Canale
Title: Managing Director
By: /s/ Kathryn B. Quinn
----------------------------------
Name: Kathryn Quinn
Title: Vice President
MORGAN STANLEY PRIME INCOME TRUST
By: /s/ Sheila Finnerty
---------------------------------
Name: Sheila Finnerty
Title: Executive Director
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C., as General
Partner
By: /s/ Stephen Feinberg
----------------------------------
Name: Stephen Feinberg
Title: Managing Member
AMROC INVESTMENTS, LLC
By: /s/ Marc Lasry
----------------------------------
Name: Marc Lasry
Title: Senior Managing Director
PHONETEL SYNDICATE AGENT: FOOTHILL CAPITAL CORPORATION
in its capacities as the PhoneTel Syndicate Agent
and as a PhoneTel Lender
By: /s/ Amy Lam
-------------------------------------
Name: Amy Lam
Title: Vice President
PHONETEL LENDERS: FOOTHILL PARTNERS III, L.P.
By: /s/ Dennis R. Ascher
--------------------------------
Name: Dennis R. Ascher
Title: Managing Member
ABLECO FINANCE LLC, as a PhoneTel Lender
and as agent for its affiliate assigns
By: /s/ Kevin Genda
-------------------------------------
Name: Kevin Genda
Title: SVP & Chief Credit Officer
Schedule 2.1
------------
List of Exchanged Davel Loans and Davel Debt Exchange Shares/1/
---------------------------------------------------------------
Davel Lender % COLUMN A - Exchanged COLUMN B - Davel Debt
Davel Loans Exchange Shares
PNC BANK, N.A. 6.57% 11,422,803 65.7408574905
ARK CLO 2000-I, LIMITED 14.09% 24,479,122 140.8829771154
U.S. BANK, NATIONAL 6.57% 11,422,803 65.7408574905
ASSOCIATION
HELLER FINANCIAL, INC. 3.73% 6,478,771 37.2868200484
BNP PARIBAS 6.57% 11,422,803 65.7408574905
MORGAN STANLEY DEAN 3.11% 5,398,976 31.0723498577
WITTER PRIME INCOME
TRUST
CERBERUS PARTNERS, L.P. 46.24% 80,339,185 462.3704949491
AMROC INVESTMENTS, LLC 13.12% 22,790,537 131.1647854315
------------------------------------
173,754,999 1,000
------------------------------------
________________
/1/ Amounts in Column A represent the total principal amount of the Davel Loans
(excluding any accrued interest and fees, and all accrued interest and fees as
of the date hereof will be added to Column A as of immediately prior to the
Effective Time of the Exchanges) of $237,254,999 as of February 19, 2002 less
$63,500,000.00. The actual amounts to be assigned to Davel Financing at the
Effective Time of the Exchanges will include any additional capitalized and any
additional accrued interest and fees on all the Davel Loans through the
Effective Time of the Exchanges.
Schedule 2.2
------------
List of Exchanged PhoneTel Loans and PhoneTel Debt Exchange Shares/2/
---------------------------------------------------------------------
PhoneTel Lender % COLUMN A - Exchanged COLUMN B - PhoneTel Debt
PhoneTel Loans Exchange Shares
Foothill Capital 37.5% $10,563,422.66 42,092,442
Corporation
Foothill Partners 37.5% $10,563,422.66 42,092,442
III, L.P.
Ableco Finance, LLC 25% $ 7,042,281.78 28,061,627
------------------------------------------
$28,169,127.10 112,246,511
------------------------------------------
_______________________
/2/ Amounts in Column A represent the total PhoneTel Loans (including accrued
interest and fees) of $64,669,127.10 as of February 14, 2002 less
$36,500,000.00. The actual amounts to be assigned to PhoneTel at the Effective
Time of the Exchanges will include any additional capitalized and any additional
accrued interest and fees on all the PhoneTel Loans through the Effective Time
of the Exchanges.
Schedule 2.3(A)
---------------
List of promissory notes, instruments of assignment and other closing documents
- -------------------------------------------------------------------------------
to be delivered by Davel Lenders to Davel Financing
---------------------------------------------------
1. Promissory Notes in respect of the Exchanged Davel Loans described in
Column A of Schedule 2.1 hereto.
2. Assignment Agreement in mutually agreeable form, which shall provide for an
assignment of all the capitalized and all the accrued interest, fees and
expenses required to be assigned together with principal amount of the Exchanged
Davel Loans.
Schedule 2.3(B)
---------------
List of stock certificates, officers' certificates, promissory notes and other
- ------------------------------------------------------------------------------
closing documents to be delivered by Davel Financing to the Davel Lenders
-------------------------------------------------------------------------
1. The stock certificates with respect to D Sub described in Column B of
Schedule 2.1 hereto and representing the Davel Debt Exchange Shares.
Schedule 2.3(C)
---------------
List of promissory notes, instruments of assignment and other closing documents
- -------------------------------------------------------------------------------
to be delivered by PhoneTel Lenders to PhoneTel
-----------------------------------------------
1. Promissory Notes in respect of the Exchanged PhoneTel Loans described in
Column A of Schedule 2.2 hereto.
2. Assignment Agreement in mutually agreeable form, which shall provide for an
assignment of all the capitalized and all the accrued interest, fees and
expenses required to be assigned together with principal amount of the Exchanged
PhoneTel Loans.
Schedule 2.3(D)
---------------
List of stock certificates, officers' certificates, promissory notes and other
- ------------------------------------------------------------------------------
closing document to be delivered by PhoneTel to the PhoneTel Lenders
--------------------------------------------------------------------
1. The stock certificates with respect to PhoneTel described in Column B of
Schedule 2.2 hereto and representing the PhoneTel Debt Exchange Shares.
Schedule 3.1(E) - Disclosure relating to Davel Governmental Approvals
---------------------------------------------------------------------
(a) applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder and the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, including the
filing with and clearing by the SEC of a joint proxy statement relating to the
PhoneTel Stockholders Meeting and the Davel Stockholders Meeting, as amended or
supplemented from time to time;
(b) the filing of the Certificate of Merger as required by Delaware Law;
(c) such filings and consents as may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered by the
Transaction;
(d) filings with the SEC with respect to the deregistration of the shares of
PhoneTel Common Stock or the registration of Davel Common Stock in connection
with the Amended Plan (as such term is defined in the Merger Agreement); and
(e) such consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings as may be required by state public
utility or public service commissions or under the corporation, takeover or blue
sky laws of various states, no filing with or prior notice to, and no permit,
authorization, consent or approval of, any Federal, state, local, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality is necessary for the consummation by Davel of the Transaction.
Schedule 3.1(F)(1) - Authorized and Issued Capital Stock of Davel as of Date of
- -------------------------------------------------------------------------------
Execution/3/
------------
Authorized Number of Davel Common Stock Issued Number of Davel Common Stock
- --------------------------------------- -----------------------------------
50,000,000 12,277,830
Authorized Number of Davel Preferred Stock Issued Number of Davel Preferred Stock
- ------------------------------------------ --------------------------------------
1,000,000 0
____________________
/3/ The issued number of Davel Common Stock is given on a fully diluted basis
with respect to existing options and warrants but without giving effect to the
intended reservation of Davel Common Stock for issuance in respect of stock
options and warrants of Davel referred to in Section 3.1(f)(ii) of the Exchange
Agreement.
Schedule 3.1(F)(2) - Authorized and Issued Capital Stock of Davel after the
---------------------------------------------------------------------------
Davel Effective Time; Schedule of Rights to Purchase Capital Stock of Davel
---------------------------------------------------------------------------
after the Davel Effective Time/4/
---------------------------------
Authorized Number of Davel Common Stock Issued Number of Davel Common Stock
- --------------------------------------- -----------------------------------
1,000,000,000 392,890,560
Authorized Number of Davel Preferred Stock Issued Number of Davel Preferred Stock
- ------------------------------------------ --------------------------------------
1,000,000 0
Schedule of current options and warrants for Davel Capital Stock attached
hereto.
_______________________
/4/ The issued number of Davel Common Stock is given on a fully diluted basis
with respect to existing options and warrants but without giving effect to the
intended reservation of Davel Common Stock for issuance in respect of stock
options and warrants of Davel referred to in Section 3.1(f)(ii) of the Exchange
Agreement. The Schedule of Rights to Purchase Capital Stock of Davel after the
Davel Effective Time reflects the position without giving effect to the intended
reservation of Davel Common Stock for issuance in respect of stock options and
warrants of Davel referred to in Section 3.1(f)(ii) of the Exchange Agreement.
Schedule 3.1(F)(3) - Authorized and Issued Capital Stock of Davel after the
---------------------------------------------------------------------------
PhoneTel Effective Time; Schedule of Rights to Purchase Capital Stock of Davel
------------------------------------------------------------------------------
after the PhoneTel Effective Time/5/
------------------------------------
Authorized Number of Davel Common Stock Issued Number of Davel Common Stock
- --------------------------------------- -----------------------------------
1,000,000,000 618,721,250
Authorized Number of Davel Preferred Stock Issued Number of Davel Preferred Stock
- ------------------------------------------ --------------------------------------
1,000,000 0
Schedule of Adjusted PhoneTel Options and Adjusted PhoneTel Warrants (both as
defined in the Merger Agreement) attached hereto. In addition see Schedule
3.1(F)(2).
__________________________
/5/ The issued number of Davel Common Stock is given on a fully diluted basis
with respect to existing options and warrants but without giving effect to the
intended reservation of Davel Common Stock for issuance in respect of stock
options and warrants of Davel referred to in Section 3.1(f)(ii) of the Exchange
Agreement. The Schedule of Rights to Purchase Capital Stock of Davel after the
PhoneTel Effective Time reflects the position without giving effect to the
intended reservation of Davel Common Stock for issuance in respect of stock
options and warrants of Davel referred to in Section 3.1(f)(ii) of the Exchange
Agreement.
Schedule 3.1(F)(5) - Disclosure relating to Pre-emptive Rights
--------------------------------------------------------------
Investment Agreement, dated April 19, 1999, as amended to date, by and among
Davel, Samstock, L.L.C., a Delaware limited liability company, EGI-Davel
Investors n/k/a EGI-DM Investors, L.L.C., David R. Hill and Davel Communications
Group., an Illinois corporation.
Shareholders Agreement, dated as of December 22, 1998, as amended to date, by
and among Davel, Samstock, L.L.C., a Delaware limited liability company, EGI-
Davel Investors n/k/a EGI-DM Investments, L.L.C., David R. Hill and Davel
Communications Group, Inc., an Illinois corporation.
Amended and Restated Corporate Governance, Liquidity and Voting Agreement, dated
as of December 22, 1998, by and among UBS Capital II LLC, Davel Communications
Group, Inc., an Illinois corporation, Davel Holdings, Inc., a Delaware
corporation, and Peoples Telephone, Inc., a New York corporation.
Schedule 3.1(F)(6) - Authorized and Issued Capital Stock of D Sub
-----------------------------------------------------------------
Authorized Number of D Sub Stock Issued Number of D Sub Stock
- -------------------------------- ----------------------------
1,000 1,000
Schedule 3.1(K) - Disclosure of Certain Fees
--------------------------------------------
1. By letter agreement dated November 12, 2001, Davel paid to PhoneTel
$17,500, representing one-half of the $35,000 engagement fee paid by PhoneTel to
Ladenburg Thalmann & Co Inc. ("Ladenburg"). Davel is also obligated to pay 50%
of Ladenburg's fees and expenses, if any, incurred in connection with such
agreement.
2. Davel has paid Marshall & Stevens $72,000 for certain financial
services in connection with the Merger.
Schedule 3.2(E) - PhoneTel Governmental Approvals
-------------------------------------------------
(a) applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder and the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, including the
filing with and clearing by the SEC of a joint proxy statement relating to the
PhoneTel Stockholders Meeting and the Davel Stockholders Meeting, as amended or
supplemented from time to time;
(b) the filing of the Certificate of Merger as required by Ohio Law;
(c) such filings and consents as may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered by the
Transaction;
(d) filings with the SEC with respect to the deregistration of the shares of
PhoneTel Common Stock or the registration of Davel Common Stock in connection
with the Amended Plan (as such term is defined in the Merger Agreement); and
(e) such consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings as may be required by state public
utility or public service commissions or under the corporation, takeover or blue
sky laws of various states, no filing with or prior notice to, and no permit,
authorization, consent or approval of, any Federal, state, local, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality is necessary for the consummation by PhoneTel of the
Transaction.
Schedule 3.2(F)(1) - Authorized and Issued Capital Stock of PhoneTel as of Date
- -------------------------------------------------------------------------------
of Execution/6/
---------------
45,000,000 shares of PhoneTel Common Stock are authorized and 11,611,708 shares
of PhoneTel common stock are currently outstanding, on a fully diluted basis.
________________
/6/ The issued number of PhoneTel Capital Stock is given on a fully diluted
basis with respect to existing options and warrants but without giving effect to
the deemed reservation of 4% of PhoneTel Common Stock for issuance in respect of
stock options and warrants of PhoneTel (which deemed reservation is referred to
in Section I of the Commitment Letter in the form of Exhibit A attached to the
Exchange Agreement).
Schedule 3.2(F)(2) - Authorized and Issued Capital Stock of PhoneTel after
- --------------------------------------------------------------------------
PhoneTel Debt for Equity Exchange but before Davel Effective Time and the
-------------------------------------------------------------------------
PhoneTel Effective Time/7/
--------------------------
123,858,219 shares of PhoneTel common stock will be outstanding after the Equity
Exchange but prior to the Effective Time of the PhoneTel Merger, on a fully
diluted basis. PhoneTel will seek approval of its stockholders to increase its
authorized capital stock to an amount in excess of 123,858,219 shares in advance
of the such Effective Time.
______________________
/7/ The issued number of PhoneTel Capital Stock is given on a fully diluted
basis with respect to existing options and warrants but without giving effect to
the deemed reservation of 4% of PhoneTel Common Stock for issuance in respect of
stock options and warrants of PhoneTel (which deemed reservation is referred to
in Section I of the Commitment Letter in the form of Exhibit A attached to the
Exchange Agreement).
Schedule 3.2(F)(4) - Disclosure relating to Pre-emptive Rights
--------------------------------------------------------------
None.
Schedule 3.2(K) - Disclosure of Certain Fees
--------------------------------------------
The fees owed pursuant to an the agreement dated January 8, 2001 with Ladenburg
Thalmann & Co., Inc. in connection with the Transaction will equal 1-1/4% of the
Aggregate Consideration paid by Davel including retainer amounts and amounts
paid pursuant to the issuance of a fairness opinion by Ladenburg Thalmann & Co.,
Inc. For purposes of the Transaction, Aggregate Consideration is defined as the
total sale proceeds and all other consideration received by PhoneTel and/or
holders of PhoneTel's stock, options and warrants upon the consummation of the
Transaction, inclusive of cash, debt and equity securities, notes, property,
shareholder payables and indebtedness assumed, plus the total value of any
interest-bearing and long-term liabilities assumed or retired and the aggregate
amount of any dividends or other distributions paid by the Company to its
stockholders after the date of the engagement letter.
As discussed above, Ladenburg Thalmann & Co., Inc. is entitled to receive
$175,000 for the issuance of a fairness opinion to the Board of Directors in
connection with the Transaction.
By letter agreement dated November 12, 2001, PhoneTel engaged Ladenburg,
Thalmann & Co. to assist in obtaining receivables-backed debt financing for
PhoneTel and Davel for a fixed fee of $35,000. In a separate letter agreement
dated November 12, 2001, Davel has agreed to pay one half of the fixed fee and
out-of-pocket expenses. The $35,000 fee has been paid, and Davel has reimbursed
the Company for half of such fee.
Schedule 3.3(E) - Disclosure relating to Government Approvals
-------------------------------------------------------------
Schedule 3.3(F) - Disclosure relating to ownership of the Davel Loans
---------------------------------------------------------------------
Schedule 3.4(E) - Disclosure relating to Government Approvals
-------------------------------------------------------------
Schedule 3.4(F) - Disclosure relating to ownership of the PhoneTel Loans
------------------------------------------------------------------------
Exhibit A
---------
Commitment Letter
-----------------
Exhibit B
---------
Registration Rights Agreement
-----------------------------
Exhibit B.doc EXHIBIT B
================================================================================
REGISTRATION RIGHTS AGREEMENT
dated as of February 19, 2002
among
DAVEL COMMUNICATIONS, INC.
and
THE HOLDERS OF REGISTRABLE SECURITIES REFERRED TO HEREIN
================================================================================
TABLE OF CONTENTS
Page
----
Section 1. Definitions and Usage...................................... 1
Section 2. Demand Registration........................................ 5
Section 3. Piggyback Registration..................................... 7
Section 4. Registration Procedures.................................... 8
Section 5. Holders' Obligations....................................... 11
Section 6. Expenses of Registration................................... 11
Section 7. Indemnification; Contribution.............................. 12
Section 8. Transfer of Registration Rights............................ 15
Section 9. Holdback................................................... 15
Section 10. Covenants of the Company................................... 15
Section 11. Amendment, Modification and Waivers; Further Assurances.... 17
Section 12. Assignment; Benefit........................................ 17
Section 13. Miscellaneous.............................................. 17
i
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
---------
[INSERT EXECUTION DATE], 2002 among Davel Communications, Inc., a Delaware
corporation (the "Company"), and the Persons named on Schedule 1 as Holders
------- ----------
(each a "Holder" and collectively, the "Holders").
------ -------
RECITALS
--------
A. WHEREAS, pursuant to that certain merger agreement (the "Merger
------
Agreement") dated as of February 19, 2002 by and among the Company, Davel
- ---------
Financing Company, L.L.C. ("Davel Financing"), DF Merger Corp. ("D Sub"), PT
--------------- -----
Merger Corp. ("P Sub") and PhoneTel Technologies, Inc. ("PhoneTel"), providing
----- --------
for the merger of P Sub with and into PhoneTel (the "PhoneTel Merger"), with
---------------
PhoneTel surviving as a wholly owned subsidiary of the Company, and the Merger
of D Sub with and into Davel Financing, with Davel Financing surviving as a
wholly owned subsidiary of the Company (the "Davel Merger", and together with
------------
the PhoneTel Merger, the "Mergers"), the Holders received shares of common stock
-------
of the Company in consideration for shares of common stock previously held by
them in PhoneTel (in the case of the PhoneTel Merger) or in D Sub (in the case
of the Davel Merger).
B. WHEREAS, pursuant to that certain Exchange Agreement (the
"Exchange Agreement") dated as of February 19, 2002, by and among the Company,
- -------------------
Davel Financing, D Sub, PhoneTel, Cherokee Communications, Inc. and the Holders,
the Holders received shares of stock in D Sub and in PhoneTel which stock was,
pursuant to the Merger Agreement and as contemplated in the Exchange Agreement,
to be converted into shares of common stock in the Company.
C. WHEREAS, as a condition to the consummation of the transactions
contemplated in the Exchange Agreement, the Company is required to enter into
this Agreement to provide certain rights to the Holders to cause the shares so
received pursuant to the Mergers to be registered pursuant to the Securities
Act.
D. WHEREAS, the parties hereto hereby desire to set forth the
Holders' rights and the Company's obligations to cause the registration of the
Registrable Securities pursuant to the Securities Act.
NOW, THEREFORE, in consideration of the agreement by the Holders to
enter into the Exchange Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions and Usage.
---------------------
As used in this Agreement:
1.1. Definitions.
-----------
"Agent" means the principal placement agent on an agented
-----
placement of Registrable Securities.
"Agreement" means this Registration Rights Agreement.
---------
"Board" means the board of directors of the Company.
-----
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" means (i) the common stock, par value $.01 per
------------
share, of the Company, and (ii) shares of capital stock of the Company issued by
the Company in respect of or in exchange for shares of such common stock in
connection with any stock dividend or distribution, stock split-up,
recapitalization, recombination or exchange by the Company generally of shares
of such common stock.
"Company" means Davel Communications, Inc., a Delaware
-------
corporation.
"Continuously Effective", with respect to a specified
----------------------
registration statement, means that it shall not cease to be effective and
available for Transfers of Registrable Securities thereunder for longer than
either (i) any ten (10) consecutive business days, or (ii) an aggregate of
fifteen (15) business days during the period specified in the relevant provision
of this Agreement.
"Davel Effective Time" has the meaning set forth in Section
--------------------
3.01(b) of the Merger Agreement.
"Davel Financing" has the meaning set forth in Recital A hereto.
---------------
"Davel Merger" has the meaning set forth in Recital A hereto.
------------
"Demand Registration" has the meaning set forth in Section
------------------- -------
2.1(i).
- ------
"Demanding Holders" has the meaning set forth in Section 2.1(i).
----------------- --------------
"D Sub" has the meaning set forth in Recital A hereto.
-----
"Effective Date" means date of filing by the Company of its
--------------
annual report on Form 10-K for its fiscal year ending December 31, 2002.
"Exchange Act" means the Securities Exchange Act of 1934.
------------
"Exchange Agreement" has the meaning set forth in Recital B
------------------
hereto.
"Holders" means the Persons named on Schedule 1 as Holders of
------- ----------
Registrable Securities and Transferees of such Persons' Registrable Securities
with respect to the rights that such Transferees shall have acquired in
accordance with Section 8, at such times as such Persons shall own Registrable
---------
Securities, and a reference to the Holders shall include a reference to any of
them.
"Majority Selling Holders" means those Selling Holders whose
------------------------
Registrable Securities included in such registration represent a majority of the
Registrable Securities of all Selling Holders included therein.
2
"Merger Agreement" has the meaning set forth in Recital A hereto.
----------------
"Mergers" has the meaning set forth in Recital A hereto.
-------
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"P Sub" has the meaning set forth in Recital A hereto.
-----
"PhoneTel" has the meaning set forth in Recital A hereto.
--------
"PhoneTel Effective Time" has the meaning set forth in Section
-----------------------
2.01(b) of the Merger Agreement.
"PhoneTel Merger" has the meaning set forth in Recital A hereto.
---------------
"Piggyback Registration" has the meaning set forth in Section 3.
---------------------- ---------
"Register", "registered", and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering by the Commission of effectiveness of such registration statement or
document.
"Registrable Securities" means, subject to Section 8 and Section
---------------------- --------- -------
10.4: (i) the Shares owned by the Holders immediately after the Davel Effective
- ----
Time and the PhoneTel Effective Time, and owned by a Holder on the date of
determination, together with any shares of Common Stock acquired by such Holder
after the Davel Effective Time and the PhoneTel Effective Time but prior to such
date of determination, (ii) any shares of Common Stock or other securities
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange by the Company generally for, or in replacement by the
Company generally of, such Shares; and (iii) any securities issued in exchange
for Shares in any merger or reorganization of the Company; provided, however,
-------- -------
that Registrable Securities shall not include any Securities which have
theretofore been registered and sold pursuant to the Securities Act or which
have been sold to the public pursuant to Rule 144 or any similar rule
promulgated by the Commission pursuant to the Securities Act, and, provided
--------
further, the Company shall have no obligation under Sections 2 and 3 to register
- ------- ----------------
any Registrable Securities of a Holder if the Company shall deliver to the
Holders requesting such registration an opinion of counsel reasonably
satisfactory to such Holders and its counsel to the effect that the proposed
sale or disposition of all of the Registrable Securities for which registration
was requested does not require registration under the Securities Act for a sale
or disposition in a single public sale, and offers to remove any and all legends
restricting transfer from the certificates evidencing such Registrable
Securities. For purposes of this Agreement, a Person will be deemed to be a
holder of Registrable Securities whenever such Person has the then-existing
right to acquire such Registrable Securities (by conversion, purchase or
otherwise), whether or not such acquisition has actually been effected.
3
"Registrable Securities then outstanding" means, with respect to
---------------------------------------
a specified determination date, the Registrable Securities owned by all Holders
on such date.
"Registration Expenses" has the meaning set forth in Section 6.1.
--------------------- -----------
"Securities Act" means the Securities Act of 1933.
--------------
"Selling Holders" means, with respect to a specified registration
---------------
pursuant to this Agreement, Holders whose Registrable Securities are included in
such registration.
"Shares" means the shares of Common Stock received by the Holders
------
pursuant to the Merger Agreement.
"Shelf Registration" means a registration with the Commission in
------------------
accordance with the Securities Act for an offering on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act.
"Transfer" means and includes the act of selling, giving,
--------
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging, hypothecating or otherwise transferring as
security) (and correlative words shall have correlative meanings); provided
--------
however, that any transfer or other disposition upon foreclosure or other
- -------
exercise of remedies of a secured creditor after an event of default under or
with respect to a pledge, hypothecation or other transfer as security shall
constitute a "Transfer".
"Underwriters' Representative" means the managing underwriter,
----------------------------
or, in the case of a co-managed underwriting, the managing underwriter
designated as the Underwriters' Representative by the co-managers, and if there
is only one underwriter, such underwriter.
"Violation" has the meaning set forth in Section 7.1.
--------- -----------
1.2. Usage.
-----
(i) References to a Person are also references to its assigns
and successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder
shall include Registrable Securities beneficially owned by such Person but which
are held of record in the name of a nominee, trustee, custodian, or other agent,
but shall exclude shares of Common Stock held by a Holder in a fiduciary
capacity for customers of such Person.
(iii) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
4
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
(v) The definitions set forth herein are equally applicable
both to the singular and plural forms and the feminine, masculine and neuter
forms of the terms defined.
(vi) The term "including" and correlative terms shall be
deemed to be followed by "without limitation" whether or not followed by such
words or words of like import.
(vii) The term "hereof" and similar terms refer to this
Agreement as a whole.
(viii) The "date of" any notice or request given pursuant to
this Agreement shall be determined in accordance with Section 13.
----------
Section 2. Demand Registration.
-------------------
2.1. (i) At any time on or after the Effective Date, if one or
more Holders that own an aggregate of 25% or more of the Registrable Securities
then outstanding shall make a written request to the Company (the "Demanding
---------
Holders"), the Company shall cause there to be filed with the Commission a
- -------
registration statement meeting the requirements of the Securities Act (a "Demand
------
Registration"), and each Demanding Holder shall be entitled to have included
- ------------
therein (subject to Section 2.6) all or such number of such Demanding Holder's
-----------
Registered Shares, as the Demanding Holder shall report in writing; provided,
--------
however, that no request may be made pursuant to this Section 2.1 if within 12
- ------- -----------
months prior to the date of such request a Demand Registration Statement
pursuant to this Section 2.1 shall have been declared effective by the
-----------
Commission. Any request made pursuant to this Section 2.1 shall be addressed to
-----------
the attention of the Secretary of the Company, and shall specify the number of
Registrable Securities to be registered, the intended methods of disposition
thereof (including, without limiting the foregoing, an underwritten public
offering) and that the request is for a Demand Registration pursuant to this
Section 2.1(i).
- --------------
(ii) The Company shall be entitled to postpone for up to 90
days the filing of any Demand Registration statement otherwise required to be
prepared and filed pursuant to this Section 2.1, if the Board determines, in its
-----------
good faith reasonable judgment (with the concurrence of the Underwriters'
Representative, if any), that such registration and the Transfer or Registrable
Securities contemplated thereby would materially interfere with, or require
premature disclosure of, any financing, acquisition or reorganization involving
the Company or any of its wholly owned subsidiaries and the Company promptly
gives the Demanding Holders notice of such determination; provided, however,
-------- -------
that the Company shall not have postponed pursuant to this Section 2.1(ii) the
---------------
filing of any other Demand Registration statement otherwise required to be
prepared and filed pursuant to this Section 2.1 during the 12 month period ended
-----------
on the date of the relevant request pursuant to Section 2.1(i).
--------------
(iii) Whenever the Company shall have received a demand
pursuant to Section 2.1(i) to effect the registration of any Registrable Shares,
--------------
the Company shall promptly give written notice of such proposed registration to
all Holders. Any such Holder may, within twenty (20) days after receipt of such
notice, request in writing that all of such Holder's
5
Registrable Shares, or any portion thereof designated by such Holder, be
included in the registration.
2.2. Following receipt of a request for a Demand Registration,
the Company shall:
(i) File the registration statement with the Commission as
promptly as practicable, and shall use the Company's best efforts to have the
registration declared effective under the Securities Act as soon as reasonably
practicable, in each instance giving due regard to the need to prepare current
financial statements, conduct due diligence and complete other actions that are
reasonably necessary to effect a registered public offering.
(ii) Use the Company's best efforts to keep the relevant
registration statement Continuously Effective for up to 270 days or until such
earlier date as of which all the Registrable Securities under the Demand
Registration statement shall have been disposed of in the manner described in
the Registration Statement. Notwithstanding the foregoing, if for any reason the
effectiveness of a registration pursuant to this Section 2 is suspended or
---------
postponed as permitted by Section 2.1(ii), the foregoing period shall be
---------------
extended by the aggregate number of days of such suspension or postponement.
2.3. The Company shall be obligated to effect no more than two
Demand Registrations. For purposes of the preceding sentence, registration
shall not be deemed to have been effected:
(i) unless a registration statement with respect thereto has
become effective;
(ii) if after such registration statement has become
effective, such registration or the related offer, sale or distribution of
Registrable Securities thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to the Selling Holders and such
interference is not thereafter eliminated; or
(iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Selling Holders.
If the Company shall have complied with its obligations under this Agreement, a
right to demand a registration pursuant to this Section 2 shall be deemed to
---------
have been satisfied upon the earlier of (x) the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Registration Statement, and (y) the date as of which such Demand
Registration shall have been Continuously Effective for a period of 270 days.
2.4. A registration pursuant to this Section 2 shall be on
---------
such appropriate registration form of the Commission as shall:
(i) be selected by the Company and be reasonably acceptable
to the Majority Selling Holders; and
6
(ii) permit the disposition of the Registrable Securities in
accordance with the intended method or methods of disposition specified in the
request pursuant to Section 2.1(i); provided, however, that the Company shall
-------------- -------- -------
not be required to incur any additional unreasonable costs or expenses in
connection with the requested method of distribution and such costs and
expenses, if incurred, shall be paid by the Selling Holders.
2.5. If any registration pursuant to Section 2 involves an
---------
underwritten offering (whether on a "firm", "best efforts" or "all reasonable
efforts" basis or otherwise), or an agented offering, the Majority Selling
Holders shall have the right to select the underwriter or underwriters and
manager or managers to administer such underwritten offering or the placement
agent or agents for such agented offering; provided, however, that each Person
-------- -------
so selected shall be reasonably acceptable to the Company, which approval shall
not be unreasonably withheld, delayed or denied.
2.6. Whenever the Company shall effect a registration pursuant
to this Section 2 in connection with an underwritten offering by one or more
---------
Selling Holders of Registrable Securities, if the Underwriters' Representative
or the Agent advises each such Selling Holder in writing that, in its opinion,
the amount of securities requested to be included in such offering (whether by
Selling Holders or others) exceeds the amount which can be sold in such offering
within a price range acceptable to the Majority Selling Holders, securities
shall be included in such offering and the related registration, to the extent
of the amount which can be sold within such price range, and on a pro rata basis
among all Selling Holders, subject to the cut back priorities set forth in
Section 3.2.
2.7. Any request pursuant to Sections 2.1 or 3.1 for
------------ ---
registration of Registrable Securities must be made within 8 years from the date
of this Agreement.
Section 3. Piggyback Registration.
----------------------
3.1. If at any time the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders of the Company other than the Holders) securities under the
Securities Act in connection with the public offering solely for cash on Form S-
1, S-2 or S-3 (or any replacement or successor forms), the Company shall
promptly give each Holder of Registrable Securities written notice of such
registration. Upon the written request of each Holder given within 20 days
following the date of such notice, the Company shall cause to be included in
such registration statement and use its best efforts to be registered under the
Securities Act all the Registrable Securities that each such Holder shall have
requested to be registered (a "Piggyback Registration"). The Company shall have
----------------------
the absolute right to withdraw or cease to prepare or file any registration
statement for any offering referred to in this Section 3 without any obligation
---------
or liability to any Holder.
3.2. If the Underwriters' Representative or the Agent shall
advise the Company in writing (with a copy to each Selling Holder) that, in its
opinion, the amount of Registrable Securities requested to be included in such
registration would materially adversely affect such offering, or the timing
thereof, then the Company will include in such registration, to the extent of
the amount and class which the Company is so advised can be sold without such
material adverse effect in such offering:
7
(i) first, all securities proposed to be sold by the Company
for its own account;
(ii) second, the Registrable Securities requested to be
included in such registration by Holders pursuant to this Section 3, and all
---------
other securities being registered pursuant to the exercise of contractual rights
comparable to the rights granted in this Section 3, pro rata based on the
---------
estimated gross proceeds from the sale thereof; and
(iii) third, all other securities requested to be included in
such registration.
3.3. Each Holder shall be entitled to have its Registrable
Securities included in an unlimited number of Piggyback Registrations pursuant
to this Section 3.
---------
3.4. If the Company has previously filed a registration
statement with respect to Registrable Securities pursuant to Section 2 or
---------
pursuant to this Section 3, and if such previous registration has not been
---------
withdrawn or abandoned, the Company will not file or cause to be effected any
other registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-8 or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of 180
days has elapsed from the effective date of such a previous registration.
3.5. If the Company has a current Shelf Registration which is
effective and which includes Registrable Securities, and a request for
registration is made pursuant to Sections 2.1 or 3.1 for other Registrable
------------ ---
Securities, the Company shall not be required to effect another Demand
Registration; provided, however, that such other Registrable Securities included
-------- -------
in such request can be and are included in such currently effective Shelf
Registration through an amendment thereto and the Company promptly prepares and
files with the Commission such amendment and such amendment becomes effective.
Section 4. Registration Procedures. Whenever required under Section
----------------------- -------
2 or Section 3 to effect the registration of any Registrable Securities, the
- - ---------
Company shall, as expeditiously as practicable:
4.1. Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use the Company's best
efforts to cause such registration statement to become effective; provided,
--------
however, that before filing a registration statement or prospectus or any
- -------
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the registration statement and prior to
effectiveness thereof, the Company shall furnish to one firm of counsel for the
Selling Holders (selected by Majority Selling Holders) copies of all such
documents in the form substantially as proposed to be filed with the Commission
at least four (4) business days prior to filing for review and comment by such
counsel, which opportunity to comment shall include an absolute right to control
or contest disclosure if the applicable Selling Holder reasonably believes that
it may be subject to controlling person liability under applicable securities
laws with respect thereto.
8
4.2. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act and rules thereunder with respect to the
disposition of all securities covered by such registration statement. If the
registration is for an underwritten offering, the Company shall amend the
registration statement or supplement the prospectus whenever required by the
terms of the underwriting agreement entered into pursuant to Section 5.2. In
-----------
the event that any Registrable Securities included in a registration statement
subject to, or required by, this Agreement remain unsold at the end of the
period during which the Company is obligated to use its best efforts to maintain
the effectiveness of such registration statement, the Company may file a post-
effective amendment to the registration statement for the purpose of removing
such Securities from registered status.
4.3. Furnish to each Selling Holder of Registrable Securities,
without charge, such numbers of copies of the registration statement, any pre-
effective or post-effective amendment thereto, the prospectus, including each
preliminary prospectus and any amendments or supplements thereto, in each case
in conformity with the requirements of the Securities Act and the rules
thereunder, and such other related documents as any such Selling Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by such Selling Holder.
4.4. Use the Company's best efforts:
(i) to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
states or jurisdictions as shall be reasonably requested by the Underwriters'
Representative or the Agent (as applicable, or if inapplicable, the Majority
Selling Holders); and
(ii) to obtain the withdrawal of any order suspending the
effectiveness of a registration statement, or the lifting of any suspension of
the qualification (or exemption from qualification) of the offer and transfer of
any of the Registrable Securities in any jurisdiction, at the earliest possible
moment;
provided, however, that the Company shall not be required in connection
- -------- -------
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
4.5. In the event of any underwritten or agented offering,
enter into and perform the Company's obligations under an underwriting or agency
agreement (including indemnification and contribution obligations of
underwriters or agents), in usual and customary form, with the managing
underwriter or underwriters of or agents for such offering. The Company shall
also cooperate with the Majority Selling Holders and the Underwriters'
Representative or the Agent for such offering in the marketing of the
Registrable Shares, including making available the Company's officers,
accountants, counsel, premises, books and records for such purpose, but the
Company shall not be required to incur any material out-of-pocket expense
pursuant to this sentence.
9
4.6. Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission in connection therewith (and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered).
4.7. Make generally available to the Company's security holders
copies of all periodic reports, proxy statements, and other information referred
to in Section 10.1 and an earnings statement satisfying the provisions of
------------
Section 11(a) of the Securities Act no later than 90 days following the end of
the 12-month period beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of each registration statement filed
pursuant to this Agreement.
4.8. Make available for inspection by any Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter (but not more than one firm of counsel to such
Selling Holders), all financial and other information as shall be reasonably
requested by them, and provide the Selling Holder, any underwriter participating
in such offering and the representatives of such Selling Holder and Underwriter
the opportunity to discuss the business affairs of the Company with its
principal executives and independent public accountants who have certified the
audited financial statements included in such registration statement, in each
case all as necessary to enable them to exercise their due diligence
responsibility under the Securities Act; provided, however, that information
-------- -------
that the Company determines, in good faith, to be confidential and which the
Company advises such Person in writing, is confidential shall not be disclosed
unless such Person signs a confidentiality agreement reasonably satisfactory to
the Company or the related Selling Holder of Registrable Securities agrees to be
responsible for such Person's breach of confidentiality on terms reasonably
satisfactory to the Company.
4.9. Use the Company's best efforts to obtain a so-called "comfort
letter" from its independent public accountants, and legal opinions of counsel
to the Company addressed to the Selling Holders, in customary form and covering
such matters of the type customarily covered by such letters, and in a form that
shall be reasonably satisfactory to the Majority Selling Holders and the
Underwriter's Representative, if any. The Company shall furnish to each Selling
Holder, and the Underwriter's Representative, if any, a signed counterpart of
any such comfort letter or legal opinion. Delivery of any such opinion or
comfort letter shall be subject to the recipient furnishing such written
representations or acknowledgements as are customarily provided by selling
shareholders who receive such comfort letters or opinions.
4.10. Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement.
4.11. Use all reasonable efforts to cause the Registrable
Securities covered by such registration statement:
(i) if the Common Stock is then listed on a securities exchange or
included for quotation in a recognized trading market, to continue to be so
listed or included for a reasonable period of time after the offering; and
10
(ii) to be registered with or approved by such other United
States or state governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Company to enable the Selling
Holders of Registrable Securities to consummate the disposition of such
Registrable Securities.
4.12. Use the Company's reasonable efforts to provide a CUSIP
number for the Registrable Securities prior to the effective date of the first
registration statement including Registrable Securities.
4.13. Take such other actions as are reasonably required in
order to expedite or facilitate the disposition of Registrable Securities
included in each such registration.
Section 5. Holders' Obligations. It shall be a condition precedent
--------------------
to the obligations of the Company to take any action pursuant to this Agreement
with respect to the Registrable Securities of any Selling Holder of Registrable
Securities that such Selling Holder shall:
5.1. Furnish to the Company such information regarding such
Selling Holder, the number of the Registrable Securities owned by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of such Selling Holder's Registrable Securities, and to
cooperate with the Company in preparing such registration;
5.2. Agree to sell their Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as the Company or the other Persons on whose behalf the registration
statement was being filed have agreed to sell their securities, and to execute
the underwriting agreement agreed to by the Majority Selling Holders (in the
case of a registration under Section 2) or the Company and the Majority Selling
---------
Holders (in the case of a registration under Section 3).
---------
Section 6. Expenses of Registration. Expenses in connection with
------------------------
registrations pursuant to this Agreement shall be allocated and paid as follows:
6.1. With respect to each Demand Registration, the Company
shall bear and pay all expenses incurred in connection with any registration,
filing, or qualification of Registrable Securities with respect to such Demand
Registrations for each Selling Holder (which right may be assigned to any Person
to whom Registrable Securities are Transferred as permitted by Section 8),
---------
including all registration, filing and National Association of Securities
Dealers, Inc. fees, all fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the reasonable fees and disbursements of counsel for the
Company, and of the Company's independent public accountants, including the
expenses of "cold comfort" letters required by or incident to such performance
and compliance, and the reasonable fees and disbursements of one firm of counsel
for the Selling Holders of Registrable Securities (selected by Demanding Holders
owning a majority of the Registrable Securities owned by Demanding Holders to be
included in a Demand Registration) (the "Registration Expenses"), but excluding
---------------------
underwriting discounts and commissions relating to Registrable Securities (which
shall be paid on a pro rata basis by the
11
Selling Holders) provided, however, that the Company shall not be required to
-------- -------
pay for any expenses of any registration proceeding begun pursuant to Section 2
---------
if the registration is subsequently withdrawn at the request of the Majority
Selling Holders (in which case all Selling Holders shall bear such expense),
unless Holders whose Registrable Securities constitute a majority of the
Registrable Securities then outstanding agree that such withdrawn registration
shall constitute one of the demand registrations under Section 2 hereof.
---------
6.2. The Company shall bear and pay all Registration Expenses
incurred in connection with any Piggyback Registrations pursuant to Section 3
---------
for each Selling Holder (which right may be Transferred to any Person to whom
Registrable Securities are Transferred as permitted by Section 8), but excluding
---------
underwriting discounts and commissions relating to Registrable Securities (which
shall be paid on a pro rata basis by the Selling Holders of Registrable
Securities).
6.3. Any failure of the Company to pay any Registration
Expenses as required by this Section 6 shall not relieve the Company of its
---------
obligations under this Agreement.
Section 7. Indemnification; Contribution.
-----------------------------
7.1. If any Registrable Securities are included in a
registration statement under this Agreement, to the extent permitted by
applicable law, the Company shall indemnify and hold harmless each Selling
Holder, each Person, if any, who controls such Selling Holder within the meaning
of the Securities Act, and each officer, director, partner, and employee of such
Selling Holder and such controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint or several), including attorneys' fees
and disbursements and expenses of investigation, incurred by such party pursuant
to any actual or threatened action, suit, proceeding or investigation, or to
which any of the foregoing Persons may become subject under the Securities Act,
the Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses 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 or 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; or
(iii) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
applicable state securities law;
provided, however, that the indemnification required by this Section 7.1 shall
- -------- ------- -----------
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense 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 expense 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 to the
12
Company by the indemnified party expressly for use in connection with such
registration. The Company shall also indemnify underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, their officers, directors, agents and employees and each
person who controls such persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of the Selling Holders; provided,
--------
however, that the indemnity agreement contained in this Section 7 shall not
- ------- ---------
apply to any underwriter to the extent that any such loss is based on or arises
out of an untrue statement or alleged untrue statement of a material fact, or an
omission or alleged omission to state a material fact, contained in or omitted
from any preliminary prospectus if the final prospectus shall correct such
untrue statement or alleged untrue statement, or such omission or alleged
omission, and a copy of the final prospectus has not been sent or given to such
person at or prior to the confirmation of sale to such person if such
underwriter was under an obligation to deliver such final prospectus and failed
to do so.
7.2. If any Registrable Securities are included in a registration
statement under this Agreement, to the extent permitted by applicable law, each
Selling Holder shall indemnify and hold harmless the Company, each of its
directors, each of its officers who shall have signed the registration
statement, each Person, if any, who controls the Company within the meaning of
the Securities Act, any other Selling Holder, any controlling Person of any such
other Selling Holder and each officer, director, partner, and employee of such
other Selling Holder and such controlling Person, against any and all losses,
claims, damages, liabilities and expenses (joint and several), including
attorneys' fees and disbursements and expenses of investigation, incurred by
such party pursuant to any actual or threatened action, suit, proceeding or
investigation, or to which any of the foregoing Persons may otherwise become
subject under the Securities Act, the Exchange Act or other federal or state
laws, insofar as such losses, claims, damages, liabilities and expenses 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 Selling Holder expressly for use in
connection with such registration; provided, however, that (x) the
-------- -------
indemnification required by this Section 7.2 shall not apply to amounts paid in
-----------
settlement of any such loss, claim, damage, liability or expense if settlement
is effected without the consent of the relevant Selling Holder of Registrable
Securities, which consent shall not be unreasonably withheld, and (y) in no
event shall the amount of any indemnity under this Section 7.2 exceed the gross
-----------
proceeds from the applicable offering received by such Selling Holder.
7.3. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit, proceeding,
- ---------
investigation or threat thereof made in writing for which such indemnified party
may make a claim under this Section 7, such indemnified party shall 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; provided, however, that an indemnified party shall
-------- -------
have the right to retain its own counsel, with the fees and disbursements and
expenses to be paid by the indemnifying party (as more fully set forth in clause
(iii) below). The failure to deliver written notice to the indemnifying party
within a reasonable time following the commencement of any such action, if
prejudicial to its ability to
13
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 7 but shall not relieve the
---------
indemnifying party of any liability that it may have to any indemnified party
otherwise than pursuant to this Section 7. Any fees and expenses incurred by the
---------
indemnified party (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding) shall be paid to
the indemnified party, as incurred, within thirty (30) days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld.
7.4. If the indemnification required by this Section 7 from
---------
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to in
this Section 7:
---------
(i) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. The amount paid or payable by a party as a
result of the
14
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 7.1 and
-----------
Section 7.2, any legal or other fees or expenses reasonably incurred by such
- -----------
party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
-----------
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 7.4(i). No Person
--------------
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
7.5. If indemnification is available under this Section 7, the
---------
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 8 without regard to the relative fault of such
---------
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 7.4.
-----------
7.6. The obligations of the Company and the Selling Holders
under this Section 7 shall survive the completion of any offering of Registrable
---------
Securities pursuant to a registration statement under this Agreement, and
otherwise.
Section 8. Transfer of Registration Rights. All rights of a Holder
-------------------------------
with respect to Registrable Securities pursuant to this Agreement may be
Transferred by such Holder to any Person in connection with the Transfer of
Registrable Securities to such Person, in all cases, if (x) any such Transferee
that is not a party to this Agreement shall have executed and delivered to the
Secretary of the Company a properly completed agreement substantially in the
form of Exhibit A, and (y) the Transferor shall have delivered to the Secretary
---------
of the Company, no later than 15 days following the date of the Transfer,
written notification of such Transfer setting forth the name of the Transferor,
name and address of the Transferee, and the number of Registrable Securities
which shall have been so Transferred.
Section 9. Holdback. Each Holder entitled pursuant to this Agreement
--------
to have Registrable Securities included in a registration statement prepared
pursuant to this Agreement, if so requested by the Underwriters' Representative
or the Agent in connection with an offering of any Registrable Securities, shall
not effect any public sale or distribution of shares of Common Stock or any
securities convertible into or exchangeable or exercisable for shares of Common
Stock, including a sale pursuant to Rule 144 under the Securities Act (except as
part of such underwritten or agented registration), during the 5-day period
prior to, and during the [90]-day period beginning on, the date such
registration statement is declared effective under the Securities Act by the
Commission, provided that such Holder is timely notified of such effective date
--------
in writing by the Company or such Underwriters' Representative or the Agent. In
order to enforce the foregoing covenant, the Company shall be entitled to impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder until the end of such period.
Section 10. Covenants of the Company. The Company hereby agrees and
------------------------
covenants as follows:
15
10.1. The Company shall file as and when applicable, on a timely
basis, all reports required to be filed by it under the Exchange Act. If the
Company is not required to file reports pursuant to the Exchange Act, upon the
request of any Holder of Registrable Securities, the Company shall make publicly
available the information specified in subparagraph (c)(2) of Rule 144 of the
Securities Act, and take such further action as may be reasonably required from
time to time and as may be within the reasonable control of the Company, to
enable the Holders to Transfer Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act or any similar rule or regulation hereafter adopted by
the Commission.
10.2. The Company shall not, and shall permit its majority owned
subsidiaries to, effect any public sale or distribution of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
shares of Common Stock, during the five business days prior to, and during the
90-day period beginning on, the commencement of a public distribution of the
Registrable Securities pursuant to any registration statement prepared pursuant
to this Agreement (other than by the Company pursuant to such registration if
the registration is pursuant to Section 3). The Company shall not effect any
---------
registration of its securities (other than on Form S-4, Form S-8, or any
successor forms to such forms or pursuant to such other registration rights
agreements as may be approved in writing by the Majority Selling Holders), or
effect any public or private sale or distribution of any of its securities,
including a sale pursuant to Regulation D under the Securities Act, whether on
its own behalf or at the request of any holder or holders of such securities
from the date of a request for a Demand Registration pursuant to Section 2.1
-----------
until the earlier of (x) 90 days following the date as of which all securities
covered by such Demand Registration statement shall have been Transferred, and
(y) [180] days following the effective date of such Demand Registration
Statement, unless the Company shall have previously notified in writing all
Selling Holders of the Company's desire to do so, and Selling Holders owning a
majority of the Registrable Securities or the Underwriters' Representative, if
any, shall have consented thereto in writing.
10.3. The Company shall not, directly or indirectly, (x) enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation or (y) Transfer or agree to Transfer all or
substantially all the Company's assets, unless prior to such merger,
consolidation, reorganization or asset Transfer, the surviving corporation or
the Transferee, respectively, shall have agreed in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to include the securities
which the Holders of Registrable Securities would be entitled to receive in
exchange for Registrable Securities pursuant to any such merger, consolidation
or reorganization.
10.4. The Company shall not, without the consent of Holders owning
Registrable Securities possessing two-thirds in number of the Registrable
Securities then outstanding, grant to any Person (other than a Holder of
Registrable Securities) any registration rights with respect to securities of
the Company, or enter into any agreement, that would entitle the holder thereof
to have securities owned by it included in a Demand Registration.
16
Section 11. Amendment, Modification and Waivers; Further Assurances.
-------------------------------------------------------
(i) This Agreement may be amended with the consent of the
Company and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company shall
have obtained the written consent of Holders owning Registrable Securities
possessing two-thirds in number of the Registrable Securities then outstanding
to such amendment, action or omission to act.
(ii) No waiver of any terms or conditions of this Agreement
shall operate as a waiver of any other breach of such terms and conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
No written waiver hereunder, unless it by its own terms explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
Section 12. Assignment; Benefit. This Agreement and all of the
-------------------
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, assigns, executors, administrators or
successors; provided, however, that except as specifically provided herein with
-------- -------
respect to certain matters, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by the Company
without the prior written consent of Holders owning Registrable Securities
possessing a majority in number of the Registrable Securities then outstanding
on the date as of which such delegation or assignment is to become effective. A
Holder may Transfer its rights hereunder to a successor in interest to the
Registrable Securities owned by such assignor only as permitted by Section 8.
---------
Section 13. Miscellaneous.
-------------
13.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
13.2. Notices. All notices and requests given pursuant to this
-------
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day delivery to the relevant
address specified on Schedule 1 to this Agreement or in the relevant agreement
----------
in the form of Exhibit A whereby such party became bound by the provisions of
---------
this Agreement. Except as otherwise provided in this Agreement, the date of
each such notice and request shall be deemed to be, and the date on which each
such notice and request shall be deemed given shall be: at the time delivered,
if personally delivered or mailed; when receipt is
17
acknowledged, if sent by facsimile; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next
business day delivery.
13.3. Entire Agreement; Integration. This Agreement supersedes
-----------------------------
all prior agreements (other than the Merger Agreement, the Exchange Agreement
and the Commitment Letter) between or among any of the parties hereto with
respect to the subject matter contained herein and therein, and this Agreement
embodies the entire understanding among the parties relating to the subject
matter hereof.
13.4. Consent to Jurisdiction. Each party hereto irrevocably
-----------------------
submits to the jurisdiction of courts sitting in New York, New York, for the
purposes of any action, suit or other proceeding arising out of the Agreement or
any transaction contemplated hereby. Each Party hereto agrees to commence any
such action, suit or proceeding relating thereto either in the United States
District Court for the Southern District of New York or, if, for jurisdictional
reasons, such suit, action or other proceeding may not be brought in such court,
in the Supreme Court of the State of New York, New York County. Each party
hereto further agrees that service of any process, summons, notice or document
by U.S. registered mail to such Party's respective address set forth above shall
be effective service of process for any such action, suit or proceeding with
respect to any matters to which it has submitted to jurisdiction as set forth
above in this Section 13.4. Each party hereto irrevocably and unconditionally
------------
waives any objection to the laying of venue of any action, suit or proceeding
described above in (x) the Supreme Court of the State of New York, New York
County, or (y) the United States District Court for the Southern District of New
York, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
13.5. Injunctive Relief. Each of the parties hereto acknowledges
-----------------
that in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy at law. Each
of the parties therefore agrees that in the event of such a breach hereof the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance (without the requirement
of posting bond) or to enjoin the continuing breach hereof. By seeking or
obtaining any such relief, the aggrieved party shall not be precluded from
seeking or obtaining any other relief to which it may be entitled.
13.6. Section Headings. Section headings are for convenience of
----------------
reference only and shall not affect the meaning of any provision of this
Agreement.
13.7. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
13.8. Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
18
13.9. Filing. A copy of this Agreement and of all amendments
------
thereto shall be filed at the principal executive office of the Company with the
corporate recorder of the Company.
13.10. Termination. This Agreement may be terminated at any time
-----------
by a written instrument signed by the parties hereto. Unless sooner terminated
in accordance with the preceding sentence, this Agreement (other than Section 7
---------
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Securities outstanding, provided that any shares of Common Stock
--------
previously subject to this Agreement shall not be Registrable Securities
following the sale of any such shares in an offering registered pursuant to this
Agreement.
13.11. Attorneys' Fees. In any action or proceeding brought to
---------------
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
13.12. No Third Party Beneficiaries. Nothing herein expressed or
----------------------------
implied is intended to confer upon any person, other than the parties hereto or
their respective permitted assigns, successors, heirs and legal representatives,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
19
IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed as of the date first above written.
DAVEL COMMUNICATIONS, INC.
By:_______________________________
Authorized Signatory
Name:
Title:
Address for Notices:
PNC BANK, N.A.
By:_________________________________
Name: ___________________________
Title:___________________________
ARK CLO 2000-I, LIMITED
By:___________________________________
Name: _____________________________
Title: ____________________________
U.S. BANK, NATIONAL ASSOCIATION
By:___________________________________
Name: _____________________________
Title: ____________________________
HELLER FINANCIAL, INC.
By:___________________________________
Name: _____________________________
Title: ____________________________
BNP PARIBAS
By:___________________________________
Name: _____________________________
Title: ____________________________
By:___________________________________
Name: _____________________________
Title: ____________________________
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By:___________________________________
Name: _____________________________
Title: ____________________________
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C., as General
Partner
By:___________________________________
Name: _____________________________
Title: ____________________________
AMROC INVESTMENTS, LLC
By: _________________________________
Name: ___________________________
Title: __________________________
FOOTHILL CAPITAL CORPORATION
By: _________________________________
Name: ___________________________
Title: __________________________
FOOTHILL PARTNERS III, L.P.
By: ___________________________
Name: _____________________
Title: ____________________
ABLECO FINANCE LLC, as a Holder and as agent
for its affiliate assigns
By: ____________________________
Name: ______________________
Title: _____________________
SCHEDULE 1
List of Holders
---------------
PNC BANK, N.A.
ARK CLO 2000-I, LIMITED
U.S. BANK, NATIONAL ASSOCIATION
HELLER FINANCIAL, INC.
BNP PARIBAS
MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST
CERBERUS PARTNERS, L.P.
AMROC INVESTMENTS, LLC
FOOTHILL CAPITAL CORPORATION
FOOTHILL PARTNERS III, L.P.
ABLECO FINANCE LLC
or, in each case, its designated affiliate
E-1
EXHIBIT A
to Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee of _______ shares of the common
stock, $.01 par value per share [or describe other capital stock received in
exchange for such common stock] (the "Registrable Securities"), of Davel
----------------------
Communications, Inc., a Delaware corporation (the "Company"), as a condition to
-------
the receipt of such Registrable Securities, acknowledges that matters pertaining
to the registration of such Registrable Securities is governed by the
Registration Rights Agreement dated as of February 19, 2002 initially among the
Company and the Holders referred to therein (the "Agreement"), and the
---------
undersigned hereby (1) acknowledges receipt of a copy of the Agreement, and (2)
agrees to be bound as a Holder by the terms of the Agreement, as the same has
been or may be amended from time to time.
Agreed to this __ day of ______________, ______.
_________________________________
Address for Notices:
_________________________________
_________________________________
A-1