EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED
FEBRUARY 19, 2002
BY AND AMONG
DAVEL COMMUNICATIONS, INC.,
DAVEL FINANCING COMPANY, L.L.C.,
DF MERGER CORP.,
PT MERGER CORP.
AND
PHONETEL TECHNOLOGIES, INC.
TABLE OF CONTENTS
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ARTICLE I
THE RESTRUCTURING.....................................................................................................2
Section 1.01 Changes to PhoneTel Indebtedness..................................................2
Section 1.02 Changes to PhoneTel Equity Capitalization.........................................2
Section 1.03 Changes to Davel Indebtedness.....................................................2
Section 1.04 Changes to Davel Equity Capitalization............................................3
ARTICLE II
THE PHONETEL MERGER...................................................................................................3
Section 2.01 Effectuation of the PhoneTel Merger...............................................3
Section 2.02 Conversion of PhoneTel Shares.....................................................3
Section 2.03 Exchange of PhoneTel Shares.......................................................4
Section 2.04 Certain PhoneTel Adjustments......................................................7
Section 2.05 Stock Options and Warrants........................................................7
Section 2.06 Dissenter's Rights................................................................9
Section 2.07 PhoneTel Articles of Incorporation...............................................10
Section 2.08 PhoneTel Code of Regulations.....................................................10
Section 2.09 Directors and Officers...........................................................10
ARTICLE III
THE DAVEL MERGER.....................................................................................................10
Section 3.01 Effectuation of Davel Merger.....................................................11
Section 3.02 Conversion of D Sub Shares.......................................................11
Section 3.03 Exchange of Davel Shares.........................................................11
Section 3.04 Davel Financing Surviving Company
Certificate of Formation.........................................................13
Section 3.05 Davel Financing Surviving Company
Limited Liability Company Agreement..............................................13
Section 3.06 Davel Financing Surviving Company Sole Managing Member...........................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PHONETEL...........................................................................14
Section 4.01 Corporate Organization...........................................................14
Section 4.02 Authorization....................................................................14
Section 4.03 Capital Stock....................................................................15
Section 4.04 Subsidiaries.....................................................................15
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Section 4.05 Consents and Approvals; No Violation.............................................15
Section 4.06 SEC Reports and Financial Statements.............................................16
Section 4.07 Absence of Undisclosed Liabilities...............................................17
Section 4.08 Changes..........................................................................17
Section 4.09 Investigations; Litigation.......................................................17
Section 4.10 Contracts and Commitments........................................................18
Section 4.11 Environmental Matters............................................................19
Section 4.12 Taxes............................................................................19
Section 4.13 Employment Agreements............................................................20
Section 4.14 Change of Control Provisions.....................................................20
Section 4.15 Employee Benefit Plans...........................................................20
Section 4.16 Licenses.........................................................................21
Section 4.17 Real Estate Leases...............................................................21
Section 4.18 Intellectual Property............................................................22
Section 4.19 Compliance with Other Instruments and Laws.......................................22
Section 4.20 Employees........................................................................22
Section 4.21 Information Supplied.............................................................22
Section 4.22 Certain Fees.....................................................................23
Section 4.23 Opinion of Financial Advisor.....................................................23
Section 4.24 Voting Requirements..............................................................23
Section 4.25 State Takeover Statutes..........................................................23
Section 4.26 Payphones........................................................................23
Section 4.27 Average Net Revenue..............................................................23
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF DAVEL.............................................................................................................24
Section 5.01 Corporate Organization...........................................................24
Section 5.02 Authorization....................................................................24
Section 5.03 Capital Stock....................................................................24
Section 5.04 Subsidiaries.....................................................................25
Section 5.05 Consents and Approvals; No Violations............................................25
Section 5.06 SEC Reports and Financial Statements.............................................26
Section 5.07 Absence of Undisclosed Liabilities...............................................26
Section 5.08 Changes..........................................................................27
Section 5.09 Investigations; Litigation.......................................................27
Section 5.10 Contracts and Commitments........................................................28
Section 5.11 Environmental Matters............................................................28
Section 5.12 Taxes............................................................................29
Section 5.13 Employment Agreements............................................................29
Section 5.14 Change of Control Provisions.....................................................29
Section 5.15 Employee Benefit Plans...........................................................30
Section 5.16 Licenses.........................................................................31
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Section 5.17 Compliance with Other Instruments and Laws.......................................31
Section 5.18 Employees........................................................................31
Section 5.19 Information Supplied.............................................................31
Section 5.20 State Takeover Statutes..........................................................32
Section 5.21 Certain Fees.....................................................................32
Section 5.22 Opinion of Financial Advisor.....................................................32
Section 5.23 Voting Requirements..............................................................32
Section 5.24 Payphones........................................................................32
Section 5.25 Average Net Revenue..............................................................32
ARTICLE VI
COVENANTS OF PHONETEL................................................................................................33
Section 6.01 Conduct of Business by PhoneTel Pending
the PhoneTel Merger..............................................................33
Section 6.02 Stockholders' Meeting............................................................34
Section 6.03 Access to Information............................................................34
Section 6.04 No Solicitation..................................................................35
Section 6.05 Corporate Organization...........................................................35
Section 6.06 Warrants.........................................................................35
Section 6.07 Confidentiality..................................................................35
ARTICLE VII
COVENANTS OF DAVEL...................................................................................................36
Section 7.01 Conduct of Business by Davel Pending the Davel Merger............................36
Section 7.02 Confidentiality..................................................................37
Section 7.03 Obligations of D Sub and P Sub...................................................37
Section 7.04 Indemnification..................................................................37
Section 7.05 Davel Stockholders' Meeting......................................................38
Section 7.06 Amendment of Certificate of Incorporation........................................38
Section 7.07 Employee Matters.................................................................38
Section 7.08 Access to Information............................................................39
Section 7.09 No Solicitation..................................................................39
ARTICLE VIII
COVENANTS OF THE PARTIES.............................................................................................40
Section 8.01 Reasonable Best Efforts..........................................................40
Section 8.02 Certain Filings..................................................................40
Section 8.03 Public Announcements.............................................................40
Section 8.04 Further Assurances...............................................................40
Section 8.05 Notices of Certain Events........................................................41
Section 8.06 Preparation of the Form S-4 and the Proxy Statement..............................41
Section 8.07 Letters of Accountants...........................................................41
Section 8.08 Affiliates.......................................................................42
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Section 8.09 Representations..................................................................42
Section 8.10 Davel Board of Directors.........................................................42
ARTICLE IX
CONDITIONS TO THE MERGERS............................................................................................42
Section 9.01 Conditions to the Obligations of Each Party......................................42
Section 9.02 Conditions to the Obligations of Davel,
Davel Financing, D Sub and P Sub.................................................43
Section 9.03 Conditions to the Obligations of PhoneTel........................................43
ARTICLE X
TERMINATION AND WAIVER...............................................................................................44
Section 10.01 Termination......................................................................44
Section 10.02 Waiver...........................................................................45
Section 10.03 Effect of Termination............................................................45
ARTICLE XI
MISCELLANEOUS........................................................................................................45
Section 11.01 Closing..........................................................................45
Section 11.02 Notices..........................................................................45
Section 11.03 Survival of Representations and Warranties.......................................46
Section 11.04 Amendments; No Waivers...........................................................46
Section 11.05 Expenses.........................................................................47
Section 11.06 Successors and Assigns...........................................................47
Section 11.07 Governing Law; Jurisdiction......................................................47
Section 11.08 Counterparts; Effectiveness......................................................47
Section 11.09 Headings; Interpretation.........................................................47
Section 11.10 No Third Party Beneficiaries.....................................................47
Section 11.11 Entire Agreement.................................................................47
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DEFINED TERMS
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2002 Credit Facility..................................................................................................2
Acquisition Proposal.................................................................................................34
Adjusted PhoneTel Option..............................................................................................7
Adjusted PhoneTel Warrant.............................................................................................8
Affected Employee ...................................................................................................38
Affiliate List.......................................................................................................41
Agreement.............................................................................................................1
Amended Plan..........................................................................................................8
Average Net Revenue..................................................................................................23
Closing..............................................................................................................45
Closing Date.........................................................................................................45
Code..................................................................................................................2
Confidentiality Agreement............................................................................................35
D Sub.................................................................................................................1
D Sub Certificates...................................................................................................11
D Sub Stock...........................................................................................................3
Davel.................................................................................................................1
Davel 10-K...........................................................................................................26
Davel Benefit Plans..................................................................................................30
Davel Common Stock....................................................................................................4
Davel Contracts......................................................................................................28
Davel Disclosure Letter..............................................................................................23
Davel Effective Time.................................................................................................10
Davel Exchange Fund..................................................................................................11
Davel Financing.......................................................................................................1
Davel Financing Certificate of Merger................................................................................10
Davel Financing Surviving Company....................................................................................10
Davel Investigation..................................................................................................27
Davel Lenders.........................................................................................................1
Davel Material Adverse Effect........................................................................................24
Davel Merger..........................................................................................................1
Davel Merger Consideration...........................................................................................10
Davel Options........................................................................................................24
Davel Reports........................................................................................................26
Davel Restructuring...................................................................................................1
Davel Site Location Agreements.......................................................................................28
Davel Stock Option Plans..............................................................................................8
Davel Stockholder Approval...........................................................................................24
Davel Stockholders Meeting...........................................................................................38
Davel Subsidiaries...................................................................................................25
Davel Subsidiary.....................................................................................................25
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Davel Voting Agreements...............................................................................................2
Davel Warrants.......................................................................................................24
Delaware Law.........................................................................................................10
Delaware LLC Act.....................................................................................................10
Disclosure Document..................................................................................................40
Dissenting Shares ....................................................................................................9
Environmental and Safety Laws........................................................................................28
Environmental Laws...................................................................................................18
ERISA................................................................................................................20
Exchange Act.........................................................................................................15
Exchange Agent Agreement..............................................................................................4
Exchange Agreement....................................................................................................2
Exchange Ratio........................................................................................................4
Filed Davel Reports..................................................................................................26
Filed PhoneTel Reports...............................................................................................17
Form S-4.............................................................................................................22
GAAP.................................................................................................................16
Governmental Entity..................................................................................................15
Indemnified Parties..................................................................................................37
Indemnifying Parties.................................................................................................37
Intellectual Property................................................................................................21
Investigation........................................................................................................17
Licenses.............................................................................................................21
Location Owners......................................................................................................18
Mergers...............................................................................................................1
New Plan..............................................................................................................8
Ohio Law..............................................................................................................3
P Sub.................................................................................................................1
PhoneTel..............................................................................................................1
PhoneTel 10-K........................................................................................................16
PhoneTel Certificate of Merger........................................................................................3
PhoneTel Certificates.................................................................................................4
PhoneTel Common Stock.................................................................................................3
PhoneTel Contracts...................................................................................................18
PhoneTel Disclosure Letter...........................................................................................14
PhoneTel Effective Time...............................................................................................3
PhoneTel Exchange Fund................................................................................................4
PhoneTel Lenders......................................................................................................1
PhoneTel Material Adverse Effect.....................................................................................14
PhoneTel Merger.......................................................................................................1
PhoneTel Merger Consideration.........................................................................................4
PhoneTel Options......................................................................................................7
PhoneTel Reports.....................................................................................................16
PhoneTel Restructuring................................................................................................1
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PhoneTel Site Location Agreements....................................................................................18
PhoneTel Stock Option Plans...........................................................................................8
PhoneTel Stockholder Approval........................................................................................14
PhoneTel Stockholders Meeting........................................................................................34
PhoneTel Subsidiaries................................................................................................15
PhoneTel Subsidiary..................................................................................................15
PhoneTel Voting Agreements............................................................................................2
PhoneTel Warrants.....................................................................................................8
Plans................................................................................................................20
Proxy Statement......................................................................................................15
SEC...................................................................................................................8
Securities Act.......................................................................................................16
Servicing Agreement...................................................................................................1
Surviving Corporation.................................................................................................3
Trading Day...........................................................................................................6
Transactions..........................................................................................................1
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (this
"Agreement") is made and entered into as of February 19, 2002, by and among
Davel Communications, Inc., a Delaware corporation ("Davel"), Davel Financing
Company, L.L.C., a Delaware limited liability company ("Davel Financing"), DF
Merger Corp., a Delaware corporation and a wholly owned subsidiary of Davel
Financing ("D Sub"), PT Merger Corp., an Ohio corporation and a wholly owned
subsidiary of Davel Financing ("P Sub"), and PhoneTel Technologies, Inc., an
Ohio corporation ("PhoneTel").
RECITALS
WHEREAS, the Boards of Directors of Davel and PhoneTel deem it
advisable and in the best interests of the stockholders of such corporations to
effect (i) a restructuring of Davel's and PhoneTel's senior secured indebtedness
and (ii) a business combination of Davel and PhoneTel through the transactions
provided for herein (collectively, the "Transactions"), as a result of which
PhoneTel shall become a wholly owned subsidiary of Davel Financing;
WHEREAS, Davel and PhoneTel have executed a letter of intent,
dated June 12, 2001, as amended from time to time, pursuant to which Davel and
PhoneTel have expressed their mutual intent to enter into this Agreement and to
consummate the Transactions;
WHEREAS, Davel and PhoneTel have executed a Servicing
Agreement, dated as of June 12, 2001, as amended from time to time, designed to
commence cost savings initiatives in advance of the closing of the Transactions
(the "Servicing Agreement");
WHEREAS, the senior secured lenders of Davel listed in Section
1.03 of the Davel Disclosure Letter (the "Davel Lenders") have agreed with
Davel, and the senior secured lenders of PhoneTel listed in Section 1.01 of the
PhoneTel Disclosure Letter (the "PhoneTel Lenders") have agreed with PhoneTel,
to the respective debt restructurings referenced in Article I hereof (the "Davel
Restructuring" and "PhoneTel Restructuring," as applicable);
WHEREAS, in order to effect the Transactions, P Sub shall be
merged with and into PhoneTel with PhoneTel surviving as a wholly owned
subsidiary of Davel Financing (the "PhoneTel Merger") and D Sub shall be merged
with and into Davel Financing with Davel Financing surviving as a wholly owned
subsidiary of Davel (the "Davel Merger" and collectively with the PhoneTel
Merger, the "Mergers"), in each case pursuant to this Agreement;
WHEREAS, the respective Boards of Directors of Davel,
PhoneTel, D Sub and P Sub, and the sole managing member of Davel Financing, have
approved the Transactions and unanimously resolved to recommend that the
Transactions be approved by their respective stockholders;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Davel to enter
into this Agreement, each person set forth on Exhibit A, attached hereto, has
entered into Voting Agreements with Davel dated the date of this Agreement
(collectively, the "PhoneTel Voting Agreements");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to PhoneTel's willingness to enter
into this Agreement, each person set forth on Exhibit B, attached hereto, has
entered into Voting Agreements with PhoneTel, dated the date of this Agreement
(collectively, the "Davel Voting Agreements"); and
WHEREAS, Davel, PhoneTel, Davel Financing, D Sub and P Sub
desire, for Federal income tax purposes, that the Mergers qualify as tax-free
reorganizations under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code") and that this Agreement be adopted as a
plan of reorganization under the provisions of Section 368(a) of the Code;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual representations, warranties, covenants and agreements set forth herein,
the parties agree as follows:
ARTICLE I
THE RESTRUCTURING
Section 1.01 Changes to PhoneTel Indebtedness. As more fully
set forth in Section 2.2 of the Exchange Agreement (the "Exchange Agreement"),
dated as of the date hereof, by and among PhoneTel, Cherokee Communications,
Inc., a Texas corporation and a wholly owned subsidiary of PhoneTel, Davel,
Davel Financing, D Sub, the PhoneTel Lenders and the Davel Lenders, the PhoneTel
Lenders have agreed to exchange for shares of PhoneTel Common Stock a sufficient
amount of PhoneTel's consolidated senior indebtedness outstanding so that
PhoneTel will, as of immediately prior to the PhoneTel Effective Time, have
outstanding senior secured indebtedness (other than any secured indebtedness
outstanding under that certain Credit Agreement, dated February 19, 2002 (the
"2002 Credit Facility")) not exceeding $36.5 million in the aggregate, all of
which will constitute principal and not accrued interest, consisting of two
tranches of $18.25 million each bearing such terms and conditions as are set
forth in the Commitment Letter.
Section 1.02 Changes to PhoneTel Equity Capitalization. As
more fully set forth in Section 2.2 of the Exchange Agreement, PhoneTel shall
issue to the PhoneTel Lenders 112,246,511 shares of PhoneTel Common Stock. Such
shares of PhoneTel Common Stock shall be converted in the PhoneTel Merger for
shares of Davel Common Stock in accordance with the provisions of Article II
hereof.
Section 1.03 Changes to Davel Indebtedness. As more fully set
forth in Section 2.1 of the Exchange Agreement, dated as of the date hereof, by
and among Davel, PhoneTel, Davel Financing, the other Subsidiaries of Davel
named therein, the Davel Lenders and the PhoneTel Lenders, the Davel Lenders
have agreed to exchange that portion of Davel's outstanding
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consolidated senior indebtedness (other than any secured indebtedness
outstanding under the 2002 Credit Facility) in excess of $63.5 million in the
aggregate (all of which $63.5 million will constitute principal and not accrued
interest and thereafter consist of two tranches of $31.75 million each bearing
such terms and conditions as are set forth in the Exchange Agreement) in return
for all of the outstanding shares of D Sub's Common Stock, no par value per
share (the "D Sub Stock").
Section 1.04 Changes to Davel Equity Capitalization. As
contemplated in Section 2.1 of the Exchange Agreement, Davel shall, in
accordance with Article III below, issue to the Davel Lenders in the Davel
Merger 380,612,730 shares of Davel Common Stock.
ARTICLE II
THE PHONETEL MERGER
Section 2.01 Effectuation of the PhoneTel Merger.
(a) On the terms and subject to the conditions
hereof, on the Closing Date, the parties shall effect the PhoneTel Merger,
pursuant to which P Sub shall be merged with and into PhoneTel in accordance
with the provisions of Section 1701.78 of the Ohio General Corporation Law
("Ohio Law"), whereupon the separate corporate existence of P Sub shall cease,
and PhoneTel shall be the surviving corporation (the "Surviving Corporation"),
with all of its outstanding capital stock then being held by Davel Financing.
(b) On the Closing Date, in order to effectuate the
PhoneTel Merger, PhoneTel and P Sub shall file a certificate of merger with the
Secretary of State of the State of Ohio (the "PhoneTel Certificate of Merger")
and make all other filings or recordings required by Ohio Law in connection with
the PhoneTel Merger. The PhoneTel Merger shall become effective at 5:00 p.m.,
E.S.T., on the Closing Date, which time shall be specified as the effective time
on the PhoneTel Certificate of Merger (the "PhoneTel Effective Time").
(c) From and after the PhoneTel Effective Time, the
Surviving Corporation shall possess all of the assets, rights, privileges,
powers and franchises and be subject to all of the liabilities, restrictions,
disabilities and duties of PhoneTel and P Sub, all as provided under Ohio Law.
Section 2.02 Conversion of PhoneTel Shares.
(a) At the PhoneTel Effective Time and by virtue of
the PhoneTel Merger and without any action on the part of the holders thereof:
(i) each share of common stock, par value
$0.01 per share, of PhoneTel ("PhoneTel Common Stock") held by PhoneTel
as treasury stock, or owned by Davel or any Davel Subsidiary, if any,
immediately prior to the PhoneTel Effective Time shall be canceled, and
no payment shall be made with respect thereto; provided, however, that
any shares of PhoneTel Common Stock as to which PhoneTel or any
PhoneTel
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Subsidiary is or may be required to act as a fiduciary or in a similar
capacity shall not be canceled but, instead, shall be treated as set
forth in Section 2.02(a)(iii) below;
(ii) each share of capital stock of P Sub
outstanding immediately prior to the PhoneTel Effective Time shall be
converted into and become one share of capital stock of the Surviving
Corporation with the same rights and privileges as the shares so
converted and shall constitute the only outstanding shares of capital
stock of the Surviving Corporation; and
(iii) subject to Sections 2.03(e) and 2.06
hereof, each share of PhoneTel Common Stock outstanding immediately
prior to the PhoneTel Effective Time shall, except as otherwise
provided in clause (i) of this subsection, be converted into the right
to receive 1.8233 (the "Exchange Ratio") fully paid and nonassessable
shares of common stock, par value $.01 per share (the "Davel Common
Stock"), of Davel (the "PhoneTel Merger Consideration"). As of the
PhoneTel Effective Time, all such shares of PhoneTel Common Stock shall
no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such PhoneTel Common Stock shall cease to have any
rights with respect thereto, except the right to receive the PhoneTel
Merger Consideration and any cash in lieu of fractional shares of Davel
Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.03(e)
hereof, without interest.
Section 2.03 Exchange of PhoneTel Shares.
(a) Prior to the PhoneTel Effective Time, Davel shall
enter into an agreement (the "Exchange Agent Agreement") with ChaseMellon
Shareholder Services, L.L.C., as exchange agent for the PhoneTel Merger, which
shall provide that, in addition to the matters described in Section 3.03 below,
Davel shall deposit with the Exchange Agent prior to the PhoneTel Effective
Time, for the benefit of the holders of shares of PhoneTel Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent,
certificates representing the shares of Davel Common Stock issuable pursuant to
Section 2.02 hereof in exchange for outstanding shares of PhoneTel Common Stock
(such shares of Davel Common Stock, together with any dividends or distributions
with respect thereto payable to such holder in accordance with Section 2.03(c)
hereof, and any cash payable in lieu of any fractional shares of Davel Common
Stock in accordance with Section 2.03(e) hereof, being herein referred to as the
"PhoneTel Exchange Fund").
(b) As soon as reasonably practicable after the
PhoneTel Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the PhoneTel
Effective Time represented outstanding shares of PhoneTel Common Stock (the
"PhoneTel Certificates") whose shares of PhoneTel Common Stock were converted
into the right to receive the PhoneTel Merger Consideration pursuant to Section
2.02 hereof (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the PhoneTel Certificates shall pass,
only upon delivery of the PhoneTel Certificates to the Exchange Agent and shall
be in such form and have such other provisions typical in transactions of this
type as Davel may reasonably specify) and (ii) instructions for use in
surrendering the PhoneTel
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Certificates, if in physical form, in exchange for the PhoneTel Merger
Consideration, as applicable. Upon surrender of a PhoneTel Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such PhoneTel Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Davel Common Stock which such holder has the right to receive pursuant
to the provisions of this Article II, any dividends or other distributions with
respect thereto payable to such holder in accordance with Section 2.03(c) hereof
and any cash payable in lieu of any fractional share of Davel Common Stock in
accordance with Section 2.03(e) hereof, and the PhoneTel Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of PhoneTel Common Stock which is not registered in the transfer
records of PhoneTel, a certificate representing the proper number of shares of
Davel Common Stock may be issued to a person other than the person in whose name
the PhoneTel Certificate so surrendered is registered if such PhoneTel
Certificate, if in physical form, is properly endorsed or otherwise in proper
form for transfer and the person requesting such issuance pays any transfer or
other taxes required by reason of the issuance of shares of Davel Common Stock
to a person other than the registered holder of such PhoneTel Certificate or
establishes to the satisfaction of Davel that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.03, each
PhoneTel Certificate shall be deemed at any time after the PhoneTel Effective
Time to represent only the right to receive upon such surrender that number of
whole shares of Davel Common Stock which the holder thereof has the right to
receive pursuant to the provisions of this Article II, any dividends or other
distributions payable to the holder thereof in accordance with Section 2.03(c)
hereof and cash in lieu of any fractional share of Davel Common Stock in
accordance with Section 2.03(e) hereof. No interest shall be paid or shall
accrue on any cash payable to holders of PhoneTel Certificates pursuant to the
provisions of this Article II.
(c) No dividends or other distributions with respect
to Davel Common Stock with a record date after the PhoneTel Effective Time shall
be paid to the holder of any unsurrendered PhoneTel Certificate, if in physical
form, with respect to the shares of Davel Common Stock obtainable upon surrender
thereof, and no cash payment in lieu of a fractional share of Davel Common Stock
shall be paid to any such holder pursuant to Section 2.03(e) hereof, in each
case until the surrender of such PhoneTel Certificate in accordance with this
Article II, and all such dividends, other distributions and cash in lieu of
fractional shares of Davel Common Stock shall be paid by Davel to the Exchange
Agent and shall be included in the PhoneTel Exchange Fund only after a proper
surrender of the PhoneTel Certificate has been made. Subject to the effect of
applicable escheat or similar laws, following surrender of any such PhoneTel
Certificate, there shall be paid to the holder of the certificate representing
whole shares of Davel Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the PhoneTel Effective Time theretofore
paid with respect to such whole shares of Davel Common Stock, and the amount of
any cash payable in lieu of a fractional share of Davel Common Stock to which
such holder is entitled pursuant to Section 2.03(e) hereof, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the PhoneTel Effective Time but prior to such surrender and
with a payment date subsequent to such surrender payable with respect to such
whole shares of Davel Common Stock.
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(d) All shares of Davel Common Stock issued upon the
surrender for exchange of PhoneTel Certificates in accordance with the terms of
this Article II (including any cash paid in lieu of fractional shares of Davel
Common Stock pursuant to this Article II) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to PhoneTel Common
Stock theretofore represented by such PhoneTel Certificates, subject, however,
to the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the PhoneTel Effective Time which may
have been declared or made by PhoneTel on such shares of PhoneTel Common Stock
which remain unpaid at the PhoneTel Effective Time, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of PhoneTel Common Stock which were outstanding
immediately prior to the PhoneTel Effective Time. If, after the PhoneTel
Effective Time, PhoneTel Certificates are presented to the Surviving Corporation
or the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article II, except as otherwise provided by law.
(e) No certificates or scrip representing fractional
shares of Davel Common Stock shall be issued upon the surrender for exchange of
PhoneTel Certificates, no dividend or distribution of Davel shall relate to such
fractional share interests and such fractional share interests shall not entitle
the owner thereof to vote or to any rights of a stockholder of Davel.
(i) Davel shall pay or cause to be paid to
each former holder of PhoneTel Common Stock an amount in cash equal to
the product obtained by multiplying (A) the fractional share interest
to which such former holder (after taking into account all shares of
PhoneTel Common Stock held at the PhoneTel Effective Time by such
holder) would otherwise be entitled by (B) the average of the closing
bid prices on the Nasdaq OTC market during the ten consecutive Trading
Days ending on the second Trading Day prior to the date of the PhoneTel
Stockholders Meeting. For purposes of this Agreement, "Trading Day"
shall mean any day on which the Nasdaq OTC market is open for trading.
(ii) As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
PhoneTel Certificates formerly representing PhoneTel Common Stock with
respect to any fractional share interests, the Exchange Agent shall
make available such amounts to such holders of PhoneTel Certificates
formerly representing shares of PhoneTel Common Stock subject to and in
accordance with the terms of Section 2.03(c) hereof.
(f) Any portion of the PhoneTel Exchange Fund which
remains undistributed to the holders of PhoneTel Certificates six months after
the Closing Date shall be delivered to Davel, upon demand, and any holders of
the PhoneTel Certificates who have not theretofore surrendered their PhoneTel
Certificates in accordance with this Article II shall thereafter look only to
Davel for payment of their claims for PhoneTel Merger Consideration, any
dividends or distributions with respect to Davel Common Stock, as applicable,
and any cash in lieu of fractional shares of Davel Common Stock.
(g) None of Davel, PhoneTel or the Exchange Agent
shall be liable to any person in respect of any shares of Davel Common Stock,
any dividends or distributions with respect
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thereto, or any cash in lieu of fractional shares of Davel Common Stock, in each
case, delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any PhoneTel Certificate in physical form
shall not have been surrendered prior to the date on which any PhoneTel Merger
Consideration, any dividends or distributions payable to the holder of such
PhoneTel Certificate or any cash payable to the holder of such PhoneTel
Certificate formerly representing PhoneTel Common Stock pursuant to this Article
II would otherwise escheat to or become the property of any Governmental Entity,
any such PhoneTel Merger Consideration, dividends or distributions in respect of
such PhoneTel Certificate or any such cash shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(h) The Exchange Agent shall invest any cash included
in the PhoneTel Exchange Fund in investment grade securities or U.S. government
obligations, as directed by Davel, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Davel.
(i) If any PhoneTel Certificate in physical form
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such PhoneTel Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by such
person of a bond in such reasonable amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against it with respect
to such PhoneTel Certificate, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed PhoneTel Certificate the PhoneTel Merger
Consideration and, if applicable, any unpaid dividends and distributions on
shares of Davel Common Stock deliverable in respect thereof and any cash in lieu
of any fractional share, in each case, due to such person pursuant to this
Agreement.
Section 2.04 Certain PhoneTel Adjustments. If, after the date
hereof and on or prior to the PhoneTel Effective Time, the outstanding shares of
Davel Common Stock or PhoneTel Common Stock shall (other than as contemplated by
Article I hereof) be changed into a different number, class or series of shares
or any other security by reason of any reclassification, recapitalization,
reorganization, merger, business combination, split-up, stock split, combination
or exchange of shares, or any dividend payable in stock or other securities
shall be declared thereon with a record date within such period, or any similar
event shall occur, the Exchange Ratio (and/or the security or securities to be
issued to the holders of PhoneTel Common Stock) shall be appropriately adjusted
to provide the effects contemplated by this Agreement prior to such
reclassification, recapitalization, reorganization, merger, business
combination, split-up, stock split, combination, exchange or dividend or similar
event.
Section 2.05 Stock Options and Warrants.
(a) As of the PhoneTel Effective Time, (i) each
outstanding option to purchase PhoneTel Common Stock (collectively, the
"PhoneTel Options") shall be converted into an option (an "Adjusted PhoneTel
Option") to purchase the number of shares of Davel Common Stock equal to the
number of shares of PhoneTel Common Stock subject to such options immediately
prior to the PhoneTel Effective Time multiplied by the Exchange Ratio (rounded
to the nearest whole
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number of shares of Davel Common Stock), at an exercise price per share equal to
the exercise price for each such share of PhoneTel Common Stock subject to such
option divided by the Exchange Ratio (rounded down to the nearest whole cent),
and all references in each such option to PhoneTel shall be deemed to refer to
Davel, where appropriate; provided, however, that the adjustments provided in
this clause (i) with respect to any options which are "incentive stock options"
(as defined in Section 422 of the Code) or which are described in Section 423 of
the Code shall be effected so as not to constitute a modification, extension or
renewal of such option under Section 424(a) of the Code, (ii) Davel shall assume
the obligations of PhoneTel under the PhoneTel Options, (iii) each outstanding
warrant to purchase PhoneTel Common Stock (the "PhoneTel Warrants") shall be
converted into a warrant (an "Adjusted PhoneTel Warrant") to purchase the number
of shares of Davel Common Stock equal to the number of shares of PhoneTel Common
Stock subject to such PhoneTel Warrants immediately prior to the PhoneTel
Effective Time multiplied by the Exchange Ratio (rounded to the nearest whole
number of shares of Davel Common Stock), at an exercise price per share equal to
the exercise price for each such share of PhoneTel Common Stock subject to such
PhoneTel Warrant divided by the Exchange Ratio (rounded to the nearest whole
cent), and all references in each such PhoneTel Warrant to PhoneTel shall be
deemed to refer to Davel, where appropriate and (iv) Davel shall assume the
obligations of PhoneTel under the PhoneTel Warrants. The other terms of each
Adjusted PhoneTel Option and Adjusted PhoneTel Warrant, and the plans or
agreements under which they were issued, if any, shall continue to apply in
accordance with their terms. The date of grant of each Adjusted PhoneTel Option
and Adjusted PhoneTel Warrant shall be the date on which the corresponding
PhoneTel Option or PhoneTel Warrant was granted.
(b) PhoneTel and Davel agree that each of the
applicable PhoneTel equity-based compensation plans (the "PhoneTel Stock Option
Plans"), programs or agreements and each of the applicable Davel equity-based
compensation plans (the "Davel Stock Option Plans") shall be amended, to the
extent necessary, to reflect the transactions contemplated by this Agreement,
including, without limitation, the conversion of each share of PhoneTel Common
Stock held or to be awarded or paid pursuant to such plans, programs or
agreements into shares of Davel Common Stock on a basis consistent with the
transactions contemplated by this Agreement. PhoneTel and Davel shall submit
such amendments to the Davel Stock Option Plans or such PhoneTel Stock Option
Plans, programs or agreements to their respective stockholders, if such
submission is determined to be necessary by counsel to PhoneTel or Davel after
consultation with one another to preserve the benefits of the PhoneTel Options;
provided, however, that such approval shall not be a condition to the
consummation of the Transactions. No options or other awards shall have been
made under any Davel Stock Option Plan, including the Davel Communications, Inc.
2000 Long-Term Equity Incentive Plan (in accordance with the following sentence,
the "New Plan"), or any PhoneTel Stock Option Plan at or prior to the PhoneTel
Effective Time. Pursuant to Section 7.05 below, the New Plan shall be amended,
as of the PhoneTel Effective Time, in substantially the form attached hereto as
Exhibit C (the "Amended Plan") to increase the number of options reserved and
available for grant under such plan, as necessary to permit four percent (4%) of
the shares of Davel Common Stock outstanding immediately after the PhoneTel
Effective Time, on a fully-diluted basis, and including all shares reserved for
grant under the Amended Plan.
(c) As of the PhoneTel Effective Time, Davel shall
(i) reserve for issuance the number of shares of Davel Common Stock that shall
become subject to the Adjusted PhoneTel
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Warrants and Adjusted PhoneTel Options and (ii) issue or cause to be issued the
appropriate number of shares of Davel Common Stock pursuant to the Adjusted
PhoneTel Warrants and Adjusted PhoneTel Options, upon the exercise or maturation
of rights existing thereunder on the PhoneTel Effective Time or as thereafter
granted or awarded. No later than the PhoneTel Effective Time, Davel shall
prepare and file with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-8 (or other appropriate form) registering a
number of shares of Davel Common Stock necessary to fulfill Davel's obligations
under this Section 2.05. Such registration statement shall be kept effective
(and the current status of the prospectus required thereby shall be maintained),
if then required by the SEC, for at least as long as any Adjusted PhoneTel
Options remain outstanding.
(d) As soon as practicable after the PhoneTel
Effective Time, Davel shall deliver to the holders of PhoneTel Options and
PhoneTel Warrants appropriate notices setting forth (i) such holders' rights
pursuant to the respective plans and agreements evidencing the grants of the
related PhoneTel Options and PhoneTel Warrants, (ii) the number of Shares of
Davel Common Stock for which such holder's Adjusted PhoneTel Options or Adjusted
PhoneTel Warrants are then exercisable and the exercise price therefor, and
(iii) that such PhoneTel Options and PhoneTel Warrants and the related plans,
programs and agreements shall be assumed by Davel and shall continue in effect
on the same terms and conditions (subject to the adjustments required by this
Section 2.05 after giving effect to the PhoneTel Merger).
Section 2.06 Dissenter's Rights.
(a) Any PhoneTel Common Stock as to which dissenting
shareholders' rights are perfected under Sections 1701.84 and 1701.85 of the
Ohio Law ("Dissenting Shares") shall not be converted into or represent a right
to receive the PhoneTel Merger Consideration. Holders of Dissenting Shares shall
be entitled only to the rights of a dissenting shareholder under Section 1701.85
of the Ohio Law, and such PhoneTel Common Stock shall be canceled and retired
and shall cease to exist.
(b) If the rights of any holder who has made a demand
for dissenting shareholders' rights under Section 1701.85 of the Ohio Law are
terminated for any reason other than the purchase by the Surviving Corporation
or Davel of the PhoneTel Common Stock subject to the demand, the shares subject
to the demand shall be converted into and represent only the right to receive
the PhoneTel Merger Consideration, without interest thereon, upon surrender of
the certificates representing the shares, and such shares shall be canceled and
retired and shall cease to exist.
(c) PhoneTel shall give Davel (i) prompt notice and
copies of any demands for dissenting shareholders' rights under Sections 1701.84
and 1701.85 of the Ohio Law and of any withdrawals of any such demands and (ii)
the right to direct all negotiations and proceedings with respect to any such
demands. PhoneTel shall not, except with the prior written consent of Davel,
voluntarily make any payment with respect to any such demands or any offer to
settle any such demands and PhoneTel's board of directors shall not waive any
failure by any dissenting shareholder to comply with Section 1701.85 of the Ohio
Law.
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Section 2.07 PhoneTel Articles of Incorporation. The articles
of incorporation of P Sub in effect at the PhoneTel Effective Time shall,
without further action, become (and shall be specified by the PhoneTel
Certificate of Merger to be) the articles of incorporation of the Surviving
Corporation until amended in accordance with applicable law, except that the
name of the Surviving Corporation shall be "PhoneTel Technologies, Inc."
Section 2.08 PhoneTel Code of Regulations. The code of
regulations of P Sub in effect at the PhoneTel Effective Time shall, without
further action, become (and shall be specified by the PhoneTel Certificate of
Merger to be) the code of regulations of the Surviving Corporation until amended
in accordance with applicable law.
Section 2.09 Directors and Officers. From and after the
PhoneTel Effective Time, until successors are duly elected or appointed in
accordance with applicable law, (a) the directors of P Sub at the PhoneTel
Effective Time shall constitute all of the directors of the Surviving
Corporation, and (b) the officers of PhoneTel at the PhoneTel Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE III
THE DAVEL MERGER
Section 3.01 Effectuation of Davel Merger.
(a) On the terms and subject to the conditions
hereof, on the Closing Date, the parties shall effect the Davel Merger, pursuant
to which D Sub shall be merged with and into Davel Financing in accordance with
the Delaware General Corporation Law ("Delaware Law") and with the Delaware
Limited Liability Company Act ("Delaware LLC Act"), whereupon the separate
corporate existence of D Sub shall cease, and Davel Financing shall be the
surviving company (the "Davel Financing Surviving Company"), with all of its
outstanding membership interests then being held by Davel.
(b) On the Closing Date, in order to effectuate the
Davel Merger, Davel Financing and D Sub shall file a certificate of merger with
the Secretary of State of the State of Delaware (the "Davel Financing
Certificate of Merger") and make all other filings or recordings required by the
Delaware Law and Delaware LLC Act in connection with the Davel Merger. The Davel
Merger shall become effective at 4:59 p.m., E.S.T., on the Closing Date, which
time shall be specified as the effective time on the Davel Financing Certificate
of Merger (the "Davel Effective Time").
(c) From and after the Davel Effective Time, the
Davel Financing Surviving Company shall possess all of the assets, rights,
privileges, powers and franchises and be subject to all of the liabilities,
restrictions, disabilities and duties of Davel Financing, all as provided by the
Delaware Law and Delaware LLC Act.
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Section 3.02 Conversion of D Sub Shares. At the Davel
Effective Time, by virtue of the Davel Merger and without any action on the part
of the holders thereof, each share (and each fractional share) of D Sub Stock
outstanding immediately prior to the Davel Effective Time shall be converted
into the right to receive fully paid and nonassessable shares of Davel Common
Stock (the "Davel Merger Consideration") in the ratio of 380,612.73 shares of
Davel Common Stock to each share of D Sub Stock (provided that, notwithstanding
the foregoing conversion ratio, to the extent that the application of such
conversion ratio to any holder of D Sub Stock would (after aggregating all such
shares, and fractions thereof, then held by such holder and being so converted)
result in such holder being entitled to receive a fractional share of Davel
Common Stock, then such holder shall be entitled (a) to receive only the highest
whole number of shares to which such holder would be entitled (and such
fractional share shall not be issued or paid to such holder in any other form)
in the case in which such fractional share constitutes less than one-half (1/2)
of a share) or (b) to receive the sum of the highest whole number of shares to
which such holder would be entitled plus one additional share (and such
fractional share shall not be issued or paid to such holder in any other form)
in the case in which such fractional share constitutes one-half (1/2) or more of
a share). Each such share (and fractional share) of D Sub Stock so converted
shall cease to be outstanding (and shall automatically be canceled and retired
and shall cease to exist), and each holder of a certificate representing any
such shares, or fractions thereof, of D Sub Stock shall cease to have any rights
with respect thereto, except the right to receive the Davel Merger Consideration
to be issued in consideration therefor upon surrender of such certificate in
accordance with Section 3.03 hereof, without interest.
Section 3.03 Exchange of Davel Shares.
(a) Pursuant to the Exchange Agent Agreement, Davel
shall deposit with the Exchange Agent prior to the Davel Effective Time, for the
benefit of the holders of shares of D Sub Stock, for exchange in accordance with
this Article III, through the Exchange Agent, certificates representing the
shares of Davel Common Stock issuable pursuant to Section 3.02 hereof in
exchange for outstanding shares, or fractions thereof, of D Sub Stock (such
shares of Davel Common Stock, together with any dividends or distributions with
respect thereto payable to such holder in accordance with Section 3.03(c) hereof
being herein referred to as the "Davel Exchange Fund").
(b) As soon as reasonably practicable after the Davel
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Davel Effective Time
represented outstanding shares of D Sub Stock (including any book entry in lieu
thereof, the "D Sub Certificates") whose shares of D Sub Stock, or fractions
thereof, were converted into the right to receive the Davel Merger Consideration
pursuant to Section 3.02 hereof, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the D Sub
Certificates shall pass, only upon, if applicable, delivery of the D Sub
Certificates to the Exchange Agent and shall be in such form and have such other
provisions typical in transactions of this type as Davel may reasonably specify)
and (ii) instructions for use in surrendering the D Sub Certificates, if in
physical form, in exchange for the Davel Merger Consideration, as applicable.
Upon surrender of a D Sub Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such D Sub Certificate shall be entitled
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to receive in exchange therefor a certificate representing that number of shares
of Davel Common Stock which such holder has the right to receive pursuant to the
provisions of this Section 3.02 hereof, together with any dividends or other
distributions with respect thereto payable to such holder in accordance with
Section 3.03(c) hereof, and each D Sub Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares of D
Sub Stock, or fractions thereof, which is not registered in the transfer records
of D Sub, a certificate representing the proper number of shares of Davel Common
Stock may be issued to a person other than the person in whose name the D Sub
Certificate so surrendered is registered if such D Sub Certificate, if in
physical form, is properly endorsed or otherwise in proper form for transfer and
the person requesting such issuance pays any transfer or other taxes required by
reason of the issuance of shares of Davel Common Stock to a person other than
the registered holder of such D Sub Certificate or establishes to the
satisfaction of Davel that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 3.03, each D Sub Certificate shall
be deemed at any time after the Davel Effective Time to represent only the right
to receive upon such surrender that number of shares of Davel Common Stock which
the holder thereof has the right to receive pursuant to the provisions of this
Article III and any dividends or other distributions payable to the holder
thereof in accordance with Section 3.03(c) hereof. No interest shall be paid or
shall accrue on any cash payable to holders of D Sub Certificates pursuant to
the provisions of this Article III.
(c) No dividends or other distributions with respect
to D Sub Stock with a record date after the Davel Effective Time shall be paid
to the holder of any unsurrendered D Sub Certificate, if in physical form, with
respect to the shares of D Sub Stock represented thereby, and all such dividends
and other distributions shall be paid by Davel to the Exchange Agent and shall
be included in the Davel Exchange Fund, in each case, until the surrender of
such D Sub Certificate in accordance with this Article III. Subject to the
effect of applicable escheat or similar laws, following surrender of any such D
Sub Certificate, there shall be paid to the holder of the certificate
representing shares of Davel Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Davel Effective Time theretofore paid
with respect to such whole shares of Davel Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Davel Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such whole
shares of Davel Common Stock.
(d) All shares of Davel Common Stock issued upon the
surrender for exchange of D Sub Certificates in accordance with the terms of
this Article III shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to shares (or fractional shares) of D Sub
Stock theretofore represented by such D Sub Certificates, subject, however, to
the Davel Financing Surviving Company's obligation to pay any dividends or make
any other distributions with a record date prior to the Davel Effective Time
which may have been declared or made by Davel Financing on such shares, or
fractional shares, of D Sub Stock which remain unpaid at the Davel Effective
Time, and there shall be no further registration of transfers on the stock
transfer books of the Davel Financing Surviving Company of D Sub Stock which
were outstanding immediately prior to the Davel Effective Time. If, after the
Davel Effective Time, D Sub Certificates are presented to the Davel Financing
Surviving Company or the Exchange Agent for any reason, they shall be canceled
and exchanged as provided in this Article III, except as otherwise provided by
law.
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(e) Any portion of the Davel Exchange Fund which
remains undistributed to the holders of the D Sub Certificates six months after
the Closing Date shall be delivered to Davel, upon demand, and any holders of
the D Sub Certificates who have not theretofore surrendered their D Sub
Certificates in accordance with this Article III shall thereafter look only to
Davel for payment of their claims for Davel Merger Consideration and any
dividends or distributions with respect to Davel Common Stock.
(f) None of Davel, D Sub or the Exchange Agent shall
be liable to any person in respect of any shares of Davel Common Stock, any
dividends or distributions with respect thereto, in each case, delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any D Sub Certificate in physical form shall not have been
surrendered prior to the date on which any Davel Merger Consideration, any
dividends or distributions payable to the holder of such D Sub Certificate or
any cash payable to the holder of such D Sub Certificate formerly representing D
Sub Stock pursuant to this Article III would otherwise escheat to or become the
property of any Governmental Entity, any such Davel Merger Consideration,
dividends or distributions in respect of such D Sub Certificate or such cash
shall, to the extent permitted by applicable law, become the property of the
Davel Financing Surviving Company, free and clear of all claims or interest of
any person previously entitled thereto.
(g) The Exchange Agent shall invest any cash included
in the Davel Exchange Fund, as directed by Davel, on a daily basis. Any interest
and other income resulting from such investments shall be paid to Davel.
(h) If any D Sub Certificate in physical form shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such D Sub Certificate to be lost, stolen or
destroyed and, if required by Davel, the posting by such person of a bond in
such reasonable amount as Davel may direct as indemnity against any claim that
may be made against it with respect to such D Sub Certificate, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed D Sub
Certificate the Davel Merger Consideration and, if applicable, any unpaid
dividends and distributions on shares of Davel Common Stock deliverable in
respect thereof, in each case, due to such person pursuant to this Agreement.
Section 3.04 Davel Financing Surviving Company Certificate of
Formation. The certificate of formation of Davel Financing in effect at the
Davel Effective Time shall continue to be the certificate of formation of the
Davel Financing Surviving Company until amended in accordance with applicable
law.
Section 3.05 Davel Financing Surviving Company Limited
Liability Company Agreement. The limited liability company agreement of Davel
Financing in effect at the Davel Effective Time shall continue to be the limited
liability company agreement of the Davel Financing Surviving Company until
amended in accordance with applicable law.
Section 3.06 Davel Financing Surviving Company Sole Managing
Member. From and after the Davel Effective Time, until successors are duly
elected or appointed in accordance with
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applicable law, the sole managing member of Davel Financing at the Davel
Effective Time shall continue to be the sole managing member of the Davel
Financing Surviving Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PHONETEL
PhoneTel represents and warrants to Davel that:
Section 4.01 Corporate Organization. PhoneTel is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio, and has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as it
is now being conducted. Except as set forth in Section 4.01 of the disclosure
letter delivered by PhoneTel to Davel with the execution of this Agreement (the
"PhoneTel Disclosure Letter"), PhoneTel is duly qualified to do business and is
in good standing in each jurisdiction in which the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not, individually or in the aggregate, have a PhoneTel
Material Adverse Effect. As used herein, "PhoneTel Material Adverse Effect"
shall mean 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, assets, financial
condition or results of operations, a material adverse effect on the ability of
Davel and its stockholders to realize substantially all of the benefits of the
Transactions.
Section 4.02 Authorization. PhoneTel has the necessary
corporate power and authority to enter into this Agreement and, subject to the
approval of the Transactions, including, but not limited to, the PhoneTel
Restructuring, the PhoneTel Merger and this Agreement (and the transactions and
amendments, if any, to its charter documents contemplated hereby) by the
affirmative vote of the holders of a majority of the outstanding shares of
PhoneTel Common Stock on the applicable record date at the PhoneTel Stockholders
Meeting ("PhoneTel Stockholder Approval"), to carry out its obligations
hereunder. The execution and delivery of this Agreement by PhoneTel, the
performance by PhoneTel of its obligations hereunder and the consummation by
PhoneTel of the Transactions have been duly and validly authorized by PhoneTel's
Board of Directors, have been unanimously approved by the PhoneTel Board of
Directors prior to Davel becoming an "interested shareholder" (as defined in
Section 1704.01(C)(8) of Ohio Law) and have been approved by PhoneTel's Board of
Directors as otherwise required by PhoneTel's articles of incorporation. Except
for PhoneTel Stockholder Approval, no other corporate proceeding on the part of
PhoneTel is necessary for the execution and delivery of this Agreement by
PhoneTel, the performance by PhoneTel of its obligations hereunder or the
consummation by PhoneTel of the Transactions. This Agreement has been duly and
validly executed and delivered by PhoneTel and is a legal, valid and binding
obligation of PhoneTel, enforceable against PhoneTel in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other laws affecting creditors' rights
generally or by the availability of equitable remedies generally.
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Section 4.03 Capital Stock. The authorized capital stock of
PhoneTel consists of 45,000,000 shares of PhoneTel Common Stock, of which
10,189,684 shares were issued and outstanding and no shares are held in
PhoneTel's treasury. All of the outstanding shares of capital stock of PhoneTel
have been validly issued and are fully paid, nonassessable and free of
preemptive rights with no personal liability attaching to the ownership thereof.
Except for (i) options to acquire up to 345,000 shares of PhoneTel Common Stock
and (ii) warrants to acquire up to 1,077,024 shares of PhoneTel Common Stock,
there are no outstanding subscriptions, options, warrants, rights, contracts or
other arrangements or commitments obligating PhoneTel to issue any shares of its
capital stock or any securities convertible into or exchangeable for shares of
its capital stock. Section 4.03 of PhoneTel's Disclosure Letter sets forth a
list of each PhoneTel Option and PhoneTel Warrant to issue shares of PhoneTel
Common Stock outstanding on the date hereof, together with each such option or
warrant's term, exercise price, the number of shares subject thereto and, as
applicable, the name of the PhoneTel Stock Option Plan under which such PhoneTel
Option or PhoneTel Warrant was granted.
Section 4.04 Subsidiaries. Section 4.04 of the PhoneTel
Disclosure Letter lists all direct and indirect subsidiaries of PhoneTel (each,
a "PhoneTel Subsidiary" and, collectively, the "PhoneTel Subsidiaries"). Except
for the PhoneTel Subsidiaries and as listed in Section 4.04 of the PhoneTel
Disclosure Letter, PhoneTel does not directly or indirectly own any interest in
any other corporation, partnership, joint venture or other business association
or entity. Each PhoneTel Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as it
is now being conducted. Except as set forth in Section 4.04 of the PhoneTel
Disclosure Letter, each PhoneTel Subsidiary is duly qualified to do business and
is in good standing in each jurisdiction in which the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not, individually or in the aggregate, be reasonably
expected to have a PhoneTel Material Adverse Effect. Except as set forth in
Section 4.04 of the PhoneTel Disclosure Letter, all outstanding shares of
capital stock of each PhoneTel Subsidiary are validly issued, fully paid and
nonassessable and are owned by PhoneTel or another PhoneTel Subsidiary free and
clear of any liens, claims or encumbrances.
Section 4.05 Consents and Approvals; No Violation. Except as
set forth in Section 4.05 of the PhoneTel Disclosure Letter and except for (a)
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "Exchange Act"), 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 (the "Proxy Statement"), (b) the filing of the
PhoneTel 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 Transactions, (d)
filings with the SEC with respect to the deregistration of the shares of
PhoneTel Common Stock 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
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governmental department, commission, board, bureau, agency or instrumentality
(each, a "Governmental Entity") is necessary for the consummation by PhoneTel of
the Transactions. Neither the execution and delivery of this Agreement by
PhoneTel nor the consummation by PhoneTel of the Transactions, nor compliance by
PhoneTel with any of the provisions hereof, will (i) conflict with or result in
any violation of any provision of the articles of incorporation or bylaws, or
comparable organizational documents, of PhoneTel or any PhoneTel Subsidiary,
(ii) except as set forth in Section 4.05 of the PhoneTel Disclosure Letter,
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which PhoneTel or any
PhoneTel Subsidiary is a party or by which any of them or any of their
properties or assets may be bound, or, (iii) subject to the governmental filings
and other matters referred to above in this Section 4.05, violate any Federal,
state, local or foreign order, writ, injunction, decree, statute, rule or
regulation applicable to PhoneTel, any PhoneTel Subsidiary or any of their
properties or assets, excluding from the foregoing clauses (ii) and (iii)
violations, breaches or defaults which, either individually or in the aggregate,
would not reasonably be expected to have a PhoneTel Material Adverse Effect or
impair materially PhoneTel's ability to perform its obligations hereunder or
prevent or materially delay the consummation of the Transactions. The Ohio
Control Share Acquisition Act (Section 1701.831 et seq. of the Ohio Law) does
not apply to the execution and delivery of this Agreement or the consummation of
the Transactions.
Section 4.06 SEC Reports and Financial Statements.
(a) Since November 17, 1999, PhoneTel has filed all
required forms, reports and documents with the SEC required to be filed by it
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and the Exchange Act
(hereinafter collectively referred to as the "PhoneTel Reports"), all of which
have complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act.
(b) None of the PhoneTel Reports, including, without
limitation, any financial statements or schedules included therein, at the time
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) The consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity and changes in
financial position (including, without limitation, the related notes thereto) of
PhoneTel and the PhoneTel Subsidiaries included in the financial statements
contained in PhoneTel's Annual Report on Form 10-K for the year ended December
31, 2000 (the "PhoneTel 10-K") and in PhoneTel's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001 present fairly the consolidated
financial position of PhoneTel and the PhoneTel Subsidiaries as of their
respective dates, and the results of consolidated operations and changes in
consolidated financial position for the periods then ended, all in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis, except as otherwise noted therein, and
-16-
subject in the case of unaudited interim financial statements to normal year-end
audit adjustments and the absence of footnotes.
Section 4.07 Absence of Undisclosed Liabilities. Neither
PhoneTel nor any PhoneTel Subsidiary has any liabilities (whether absolute,
accrued or contingent), except: (a) liabilities, obligations or contingencies
that are accrued and reserved against in the consolidated balance sheet of
PhoneTel and the PhoneTel Subsidiaries as of December 31, 2000 or reflected in
the notes thereto, (b) liabilities incurred since December 31, 2000 in the
ordinary course of business, (c) liabilities disclosed in Section 4.07 of the
PhoneTel Disclosure Letter, (d) any liabilities which, individually or in the
aggregate, have not had, and would not reasonably be expected to have, a
PhoneTel Material Adverse Effect or (e) liabilities relating to or arising from
the Servicing Agreement or PhoneTel's performance thereof.
Section 4.08 Changes. Since the date of the PhoneTel 10-K, and
except as set forth in the PhoneTel Reports filed prior to the date of this
Agreement (as amended to the date hereof, the "Filed PhoneTel Reports"), and
except as otherwise disclosed in Section 4.08 of the PhoneTel Disclosure Letter
or as otherwise provided by this Agreement:
(a) there has been no PhoneTel Material Adverse
Effect;
(b) except as expressly permitted or otherwise
contemplated by this Agreement, there has been no direct or indirect redemption,
purchase or other acquisition of any shares of PhoneTel's capital stock, or any
declaration, setting aside or payment of any dividend or other distribution by
PhoneTel in respect of PhoneTel's capital stock, or any issuance of any shares
of capital stock of PhoneTel (other than pursuant to the exercise of options and
warrants pursuant to their terms), or any granting to any person of any option
to purchase or other right to acquire shares of capital stock of PhoneTel or any
stock split or other change in PhoneTel's capitalization, or any repricing or
other modification to the terms of any such option or right to acquire;
(c) neither PhoneTel nor any PhoneTel Subsidiary has
entered into or agreed to enter into any new or amended contract with any labor
unions representing employees of PhoneTel or any PhoneTel Subsidiary;
(d) neither PhoneTel nor any PhoneTel Subsidiary has
entered into or agreed to enter into any new or amended contract with any of the
officers thereof or otherwise increased the compensation payable to the officers
or directors of any such entity;
(e) neither PhoneTel nor any PhoneTel Subsidiary has
(i) entered into or amended any bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance or other
benefit plan except as required by law or regulation or (ii) made any
contribution to any such plan except for contributions specifically required by
law or pursuant to the terms of such plans; and
(f) neither PhoneTel nor any PhoneTel Subsidiary has
made any change in accounting methods, principles or practices materially and
adversely affecting its assets, liabilities or business.
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Section 4.09 Investigations; Litigation.
(a) Except as described in Section 4.09(a) of the
PhoneTel Disclosure Letter, there are no pending or, to the knowledge of
PhoneTel, threatened investigations, reviews or inquiries by any Governmental
Entity with respect to PhoneTel or any PhoneTel Subsidiary or with respect to
the activities of any officer, director or, to the knowledge of PhoneTel,
employee of PhoneTel (an "Investigation"), other than Investigations which, if
the resolution thereof were adverse, would not, individually or in the
aggregate, reasonably be expected to have a PhoneTel Material Adverse Effect.
For the purpose of this Agreement, "knowledge of PhoneTel" shall be deemed to
mean the actual knowledge, after reasonable inquiry, of John D. Chichester or
Richard P. Kebert.
(b) Except as described in Section 4.09(b) of the
PhoneTel Disclosure Letter, (i) there are no actions or proceedings pending or,
to the knowledge of PhoneTel, threatened against PhoneTel or any PhoneTel
Subsidiary before any court or before any administrative agency or
administrative officer or executive, whether Federal, state, local or foreign,
which seek to enjoin the PhoneTel Merger or which, if adversely determined,
would, individually or in the aggregate, reasonably be expected to have a
PhoneTel Material Adverse Effect, (ii) there are no outstanding domestic or
foreign judgments, decrees or orders against PhoneTel or any PhoneTel Subsidiary
that, individually or in the aggregate, would reasonably be expected to have a
PhoneTel Material Adverse Effect, (iii) neither PhoneTel nor any PhoneTel
Subsidiary is in violation of, and none of them has received any claim or notice
that it is in violation of, any Federal, state, local or foreign laws, statutes,
rules, regulations or orders promulgated or judgments entered by any
Governmental Entity, which violations, individually or in the aggregate, would
reasonably be expected to have a PhoneTel Material Adverse Effect; and (iv)
there are no actions pending or, to the knowledge of PhoneTel, threatened
against the directors or any director of PhoneTel alleging a breach of such
directors' or director's fiduciary duties (except such actions which may arise
as a result of the Transactions).
Section 4.10 Contracts and Commitments.
(a) Except as are attached as exhibits to any Filed
PhoneTel Report or as set forth in Section 4.10 of the PhoneTel Disclosure
Letter, PhoneTel is not, nor is any PhoneTel Subsidiary, with respect to its
business, a party to any contracts or agreements (other than site location
agreements between PhoneTel or a PhoneTel Subsidiary (the "PhoneTel Site
Location Agreements") and location providers (the "Location Owners")) that are
material to the business, properties, assets or financial condition of PhoneTel
and the PhoneTel Subsidiaries, either individually or taken as a whole (together
with all amendments, exhibits, attachments, waivers or other changes thereto,
the "PhoneTel Contracts").
(b) PhoneTel has supplied or made available to Davel
valid copies of all PhoneTel Contracts and PhoneTel Site Location Agreements.
(c) Since January 1, 2001, except as set forth in
Section 4.10 of the PhoneTel Disclosure Letter, PhoneTel has not altered its
payment practices with regard to amounts payable to local exchange carriers in
respect of payphone services or with regard to amounts payable to Location
Owners in respect of commissions, which alteration would result in a material
breach of
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the contractual duties of PhoneTel to such local exchange carriers in the
aggregate or to such Location Owners in the aggregate.
Section 4.11 Environmental Matters. Except as described in the
Filed PhoneTel Reports, (a) PhoneTel and each of the PhoneTel Subsidiaries are
in compliance with all applicable Federal, state, local and foreign laws and
regulations and all judicial and administrative orders and determinations
relating to pollution or protection of the environment or of human health
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) (collectively, "Environmental Laws"), except for
non-compliance that would not, individually or in the aggregate, reasonably be
expected to have a PhoneTel Material Adverse Effect, which compliance includes,
but is not limited to, the possession by PhoneTel and each of the PhoneTel
Subsidiaries of permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; (b) neither PhoneTel nor any of the PhoneTel Subsidiaries has received
written notice of, or, to the knowledge of PhoneTel, is the subject of, any
actions, causes of action, claims, investigations, demands or notices by any
person alleging liability under or non-compliance with any Environmental Law
that would, individually or in the aggregate, reasonably be expected to have a
PhoneTel Material Adverse Effect; and (c) there has not been by PhoneTel or any
of the PhoneTel Subsidiaries any treatment, storage, disposal or release of any
hazardous or toxic material, substance or waste or of petroleum, or any
fractions or by-products thereof, at any of their current or, to the knowledge
of PhoneTel, former properties or facilities or any current or, to the knowledge
of PhoneTel, former offsite properties and facilities used in the business of
PhoneTel or the PhoneTel Subsidiaries (in each case, other than properties or
facilities where payphones are located pursuant to PhoneTel Site Location
Agreements) in a manner or at levels that require or is reasonably likely to
require investigation, removal or remediation under Environmental Laws that
would, either individually or in the aggregate, reasonably be expected to have a
PhoneTel Material Adverse Effect.
Section 4.12 Taxes. Each of PhoneTel and the PhoneTel
Subsidiaries has filed all tax returns and reports required to be filed by it
and all such returns and reports are complete and correct in all materials
respects, or requests for extensions to file such returns or reports have been
timely filed, granted and have not expired, except to the extent that such
failures to file, to be complete or correct or to have extensions granted that
remain in effect individually or in the aggregate would not reasonably be
expected to have a PhoneTel Material Adverse Effect. Each of PhoneTel and the
PhoneTel Subsidiaries has timely paid (or PhoneTel has paid on its behalf) all
taxes that have become due and payable, except to the extent the failure to pay
such taxes individually or in the aggregate would not reasonably be expected to
have a PhoneTel Material Adverse Effect, and the most recent financial
statements contained in the PhoneTel Reports reflect an adequate provision in
accordance with GAAP for all taxes payable by PhoneTel and the PhoneTel
Subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements. No taxing authority has given written notice
of any proposal, assertion or assessment of any tax deficiencies against
PhoneTel or any of the PhoneTel Subsidiaries that are not adequately reserved
for, except for deficiencies that individually or in the aggregate would not
reasonably be expected to have a PhoneTel Material Adverse Effect. There is no
action, suit, taxing authority proceeding or audit now in progress, pending, or,
to the knowledge of PhoneTel, threatened against or with respect to PhoneTel or
any of the PhoneTel Subsidiaries.
-19-
Section 4.13 Employment Agreements. Except as disclosed in
Section 4.13 of the PhoneTel Disclosure Letter, there are no employment,
consulting, severance or indemnification contracts or agreements between
PhoneTel or any PhoneTel Subsidiary, on the one hand, and any directors,
officers or other employees of PhoneTel or any PhoneTel Subsidiary, on the other
hand. PhoneTel is not a party to any collective bargaining agreement.
Section 4.14 Change of Control Provisions. Except as disclosed
in Section 4.14 of the PhoneTel Disclosure Letter, none of the contracts or
agreements set forth in Section 4.13 of the PhoneTel Disclosure Letter and none
of PhoneTel's or any PhoneTel Subsidiary's employee benefit plans, programs or
arrangements contains any provision that would become operative as the result of
a change of control of PhoneTel or that would become operative as a result of
the PhoneTel Merger or the Transactions.
Section 4.15 Employee Benefit Plans.
(a) Except as set forth in Section 4.15(a) of the
PhoneTel Disclosure Letter, all of the (i) Plans and (ii) other bonus,
insurance, pension, profit sharing, retirement, health, and other benefit plans,
stock option plans and stock purchase or ownership plans currently maintained by
PhoneTel or any of the PhoneTel Subsidiaries or to which PhoneTel or any of the
PhoneTel Subsidiaries is a party may be terminated by the Surviving Corporation
following the PhoneTel Effective Time without financial penalty or premium and
there shall be no obligation of the Surviving Corporation or Davel following the
PhoneTel Effective Time to issue any shares of their respective capital stock
pursuant to any of the foregoing or otherwise following the PhoneTel Effective
Time. Except as set forth in Section 4.15(a) of the PhoneTel Disclosure Letter,
no payment by PhoneTel or any of the PhoneTel Subsidiaries to any person
(payable or distributable pursuant to the foregoing agreements and plans or this
Agreement) shall be nondeductible by PhoneTel or any of the PhoneTel
Subsidiaries for Federal income tax purposes because of Section 280G of the
Code.
(b) Since December 31, 2000, all employee benefit
plans within the meaning of Section 3(3) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained by PhoneTel or any of the
PhoneTel Subsidiaries (collectively, the "Plans") are in material compliance
with, and have been administered and operated in accordance with, the terms of
such Plans and applicable law, and the Internal Revenue Service has determined
that each such Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and that each related trust is exempt
from tax under Section 501(a) of the Code. No event which constitutes a
"reportable event" as defined in Section 4043 of ERISA has occurred and is
continuing with respect to any Plan subject to Title IV of ERISA. No material
liability under any statutes, orders, governmental rules or regulations
applicable to any Plan, including, without limitation, ERISA and the Code, has
been or may reasonably be expected to be incurred with respect to any Plan
(other than liabilities for the payment of contributions and benefits in the
ordinary course). No Plan has been terminated pursuant to Title IV of ERISA. No
event has occurred and no condition exists with respect to any Plan which
presents a risk of termination or partial termination of any Plan which could
reasonably be anticipated to result in liability on the part of PhoneTel or any
of the PhoneTel Subsidiaries. Full payment has been made, or provision has been
made therefor, of all amounts which PhoneTel or any of the PhoneTel Subsidiaries
were required under the terms of the Plans to have paid as contributions to such
Plans on or prior to the date hereof and no Plan which is
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subject to Part 3 of Subtitle B of Title I of ERISA has incurred any
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived. Neither PhoneTel nor any of the
PhoneTel Subsidiaries nor, to the knowledge of PhoneTel, any other "disqualified
person" or "party in interest" (as defined in Section 4975 of the Code and
Section 3(14) of ERISA, respectively) has engaged in any nonexempt prohibited
transactions in connection with any Plan (or its related trust) with respect to
which PhoneTel, any of the PhoneTel Subsidiaries, or any officer, director,
employee of PhoneTel or any of the PhoneTel Subsidiaries or, to the knowledge of
PhoneTel, any trustee, administrator or other fiduciary of any Plan, would be
subject to either a penalty pursuant to Section 502(i) of ERISA or a material
tax imposed by Section 4975 of the Code nor, to the knowledge of PhoneTel, shall
the consummation of the Transactions constitute such a transaction. Except as
disclosed in Section 4.15(b) of the PhoneTel Disclosure Letter, no claim, action
or litigation, has been made, commenced or, to the knowledge of PhoneTel,
threatened with respect to any Plan (other than claims for benefits made in the
ordinary course). No Plan or related trust owns any securities in violation of
Section 407 of ERISA. No withdrawal by PhoneTel or any of the PhoneTel
Subsidiaries, partial or complete, within the meaning of Title IV of ERISA, has
occurred or may be reasonably expected to occur with respect to any Plan which
is a multiemployer plan which would create a material liability not adequately
reserved against by PhoneTel. With respect to each employee pension benefit plan
(as defined in Section 3(2) of ERISA) which is a defined benefit plan and is not
a multiemployer plan, the assets of such Plan available to meet the accrued
liabilities of such Plan would exceed such liabilities, based on the actuarial
assumptions used for plan termination. PhoneTel has paid, or has set up an
adequate reserve for, all liabilities under each Plan.
Section 4.16 Licenses. PhoneTel and the PhoneTel Subsidiaries
have obtained all permits, concessions, grants, franchises, licenses and other
federal, state, local or foreign governmental authorizations and approvals
(collectively, "Licenses") material, individually or in the aggregate, to the
conduct of the business of PhoneTel and the PhoneTel Subsidiaries taken as a
whole. All such Licenses are in full force and effect and, to the knowledge of
PhoneTel, will not be impaired or adversely affected by the Transactions in a
manner or to a degree that would reasonably be expected to have a PhoneTel
Material Adverse Effect. There is not pending or, to the knowledge of PhoneTel,
threatened any domestic or foreign suit or proceeding with respect to the
suspension, revocation, cancellation, modification or non-renewal of any of such
Licenses, and, except as set forth in Section 4.16 of the PhoneTel Disclosure
Letter, no event under the control of PhoneTel has occurred that (whether with
notice or lapse of time, or both) would reasonably be expected to result in a
suspension or revocation of or failure to renew any of such Licenses, the loss
of which would reasonably be expected to have a PhoneTel Material Adverse
Effect.
Section 4.17 Real Estate Leases. Section 4.17 of the PhoneTel
Disclosure Letter sets forth a list of (a) all leases and subleases under which
PhoneTel and the PhoneTel Subsidiaries is lessor or lessee of any real property,
together with all amendments, supplements, nondisturbance agreements and other
agreements pertaining thereto, (b) all options held by PhoneTel and the PhoneTel
Subsidiaries or contractual obligations on the part of PhoneTel and the PhoneTel
Subsidiaries to purchase or acquire any interest in real property and (c) all
options granted by PhoneTel and the PhoneTel Subsidiaries or contractual
obligations on the part of PhoneTel and the PhoneTel Subsidiaries to sell or
dispose of any interest in real property, in each case, other than
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PhoneTel Site Location Agreements between PhoneTel or any of the PhoneTel
Subsidiaries and Location Owners.
Section 4.18 Intellectual Property. All of the patents,
registered trademarks, registered service marks, registered copyrights,
applications for any of the foregoing and unregistered trademarks, service
marks, copyrights, trade names and corporate names material to the conduct of
the business of PhoneTel and the PhoneTel Subsidiaries (collectively,
"Intellectual Property") are set forth in Section 4.18 of the PhoneTel
Disclosure Letter. To the knowledge of PhoneTel and except as set forth in
Section 4.18 of the PhoneTel Disclosure Letter, (i) PhoneTel or one of the
PhoneTel Subsidiaries owns and possesses all right, title and interest in and
to, or possesses the valid right to use, the Intellectual Property; (ii) neither
PhoneTel nor any PhoneTel Subsidiary has received any notice of any potential
claim of any, infringement of or misappropriation from any third party with
respect to any material item of Intellectual Property; (iii) each item of
Intellectual Property is valid and enforceable; and (iv) neither PhoneTel nor
any of the PhoneTel Subsidiaries is currently infringing and, except as set
forth in Section 4.18 of the PhoneTel Disclosure Letter, has not infringed any
intellectual property of any other person. To the knowledge of PhoneTel, the
PhoneTel Merger and the Transactions will not impair any item of Intellectual
Property.
Section 4.19 Compliance with Other Instruments and Laws.
Except as set forth in Section 4.19 of the PhoneTel Disclosure Letter, neither
PhoneTel nor any PhoneTel Subsidiary is in violation of any term of its articles
of incorporation or code of regulations or comparable organizational documents,
or in violation of any PhoneTel Contract or of any judgment, decree or order
which names PhoneTel or any PhoneTel Subsidiary or in violation of any term of
any other material instrument, contract or agreement (other than any PhoneTel
Site Location Agreement) to which it is a party or by which it or any of its
properties or assets is bound, except to the extent that any such violation
would not reasonably be expected to have a PhoneTel Material Adverse Effect.
Except as set forth in Section 4.19 of the PhoneTel Disclosure Letter,
PhoneTel's and each PhoneTel Subsidiary's businesses are in compliance with all
Federal, state, local and foreign statutes, laws, ordinances, rules,
governmental regulations, permits, concessions, grants, franchises, licenses or
other governmental authorizations or approvals applicable to the operation of
such business, except to the extent that the failure to be in compliance would
not reasonably be expected to have a PhoneTel Material Adverse Effect.
Section 4.20 Employees. Without limiting the generality of
Section 4.19 hereof, PhoneTel has complied in all material respects with all
laws relating to the employment of labor, including provisions thereof relating
to wages, hours, equal opportunity, collective bargaining, civil rights, workers
compensation, WARN statutes, severance, termination, record keeping, labor
relations and family and/or medical leave and, to the knowledge of PhoneTel, it
does not have any material labor relations problems (including, without
limitation, actual or threatened strikes or work stoppages or material
grievances).
Section 4.21 Information Supplied. None of the information
supplied or to be supplied by PhoneTel for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Davel in connection with the issuance of Davel Common Stock in the
Transactions (the "Form S-4") shall, at the time the Form S-4 is filed with the
SEC or at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or
-22-
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 or (ii) the Proxy Statement shall, at the date it is first
mailed to PhoneTel's stockholders or at the time of the PhoneTel Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Proxy Statement shall comply as to form in all material
respects with the requirements of the Exchange Act, except that no
representation or warranty is made by PhoneTel with respect to statements made
or incorporated by reference therein based on information supplied by Davel for
inclusion or incorporation by reference in the Proxy Statement.
Section 4.22 Certain Fees. Except in connection with the
engagement of Ladenburg Thalmann & Co. Inc. and as otherwise set forth in
Section 4.22 of the PhoneTel Disclosure Letter, neither PhoneTel nor any
PhoneTel Subsidiary has employed any broker or finder or incurred any liability
for any financial advisory, brokerage or finders' fees or commissions in
connection with the Transactions. The fees payable by PhoneTel to Ladenburg
Thalmann & Co. Inc. in connection with the Transactions are set forth in Section
4.22 of the PhoneTel Disclosure Letter.
Section 4.23 Opinion of Financial Advisor. PhoneTel has
received the opinion of Ladenburg Thalmann & Co. Inc., dated the date hereof,
attached hereto as Exhibit E.
Section 4.24 Voting Requirements. Except as contemplated by
Article I hereof, PhoneTel Stockholder Approval is the only vote of the holders
of any class or series of PhoneTel's capital stock necessary to adopt this
Agreement and the PhoneTel Merger.
Section 4.25 State Takeover Statutes. The Board of Directors
of PhoneTel has approved this Agreement and the consummation of the PhoneTel
Merger and the Transactions, and such approval constitutes approval of the
PhoneTel Merger by the Board of Directors of PhoneTel under the provisions of
Section 1704 of Ohio Law such that Section 1704 of Ohio Law does not apply to
the Transactions. To the knowledge of PhoneTel, no "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under state or Federal law applicable to PhoneTel is applicable to the
Transactions.
Section 4.26 Payphones. As of January 18, 2002, PhoneTel has
good and marketable title to at least 29,987 installed payphones, all of which,
except for those specifically described in Section 4.26 of the PhoneTel
Disclosure Letter, are operational and which, except for those payphones further
specifically described in Section 4.26 of the PhoneTel Disclosure Letter, are
subject to enforceable PhoneTel Site Location Agreements. PhoneTel's good faith
estimate of the average remaining term of the PhoneTel Site Location Agreements
is 46 months.
Section 4.27 Average Net Revenue. The Average Net Revenue is
at least $23.77 per payphone in operation by PhoneTel and the PhoneTel
Subsidiaries as of the date hereof. For purposes of this Agreement, "Average Net
Revenue" for such payphones shall mean the average of the monthly gross revenues
(excluding dial-around compensation) minus telephone bills (including accrued
sales tax but excluding operator service provider fees) and commissions for the
3 months prior to November 30, 2001.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF DAVEL
Davel represents and warrants to PhoneTel that:
Section 5.01 Corporate Organization. Each of Davel and P Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation, with all requisite corporate power and
authority to own, operate and lease its properties and assets and to carry on
its businesses as now being conducted. Except as set forth in Section 5.01 of
the disclosure letter delivered by Davel to PhoneTel concurrently with the
execution of this Agreement (the "Davel Disclosure Letter"), Davel and P Sub are
duly qualified to do business and are in good standing in each jurisdiction in
which the character of their properties owned or held under lease or the nature
of their activities makes such qualification necessary except where the failure
to be so qualified or to be in good standing would not, individually or in the
aggregate, have a Davel Material Adverse Effect. As used herein, "Davel Material
Adverse Effect" shall mean a material adverse effect on the 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 to realize substantially all of the
benefits of the Transactions.
Section 5.02 Authorization. Each of Davel and P Sub has the
necessary corporate power and authority to enter into this Agreement and,
subject to approval of the Transactions, including, but not limited to, the
Davel Restructuring, the Mergers and this Agreement (and the transactions and
amendments, if any, to its charter documents contemplated hereby) by the
affirmative vote of the holders of a majority of the outstanding shares of Davel
Common Stock on the applicable record date at the Davel Stockholders Meeting
("Davel Stockholder Approval"), to carry out its obligations hereunder. The
execution and delivery of this Agreement by Davel and P Sub, the performance by
Davel and P Sub of their respective obligations hereunder and the consummation
by Davel and P Sub of the Transactions have been duly and validly authorized by
the respective Boards of Directors of Davel and P Sub, have been approved by the
Boards of Directors of Davel and P Sub as otherwise required by their respective
articles of incorporation or comparable organizational documents, and have been
approved by Davel as the sole stockholder of P Sub. Except for Davel Stockholder
Approval, no other corporate proceeding on the part of Davel or P Sub is
necessary for the execution and delivery of this Agreement by Davel and P Sub,
the performance of their obligations hereunder and the consummation by Davel and
P Sub of the Transactions. This Agreement has been duly and validly executed and
delivered by Davel and P Sub and is a legal, valid and binding obligation of
Davel and P Sub, enforceable against each of them in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other laws affecting creditors' rights
generally or by the availability of equitable remedies generally.
Section 5.03 Capital Stock. The authorized capital stock of
Davel consists of: (a) 50,000,000 shares of Davel Common Stock, of which
11,169,440 shares were issued and
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outstanding and no shares were held in Davel's treasury and (b) 1,000,000 shares
of preferred stock, par value $.01 per share, of which no shares are issued and
outstanding. All of the outstanding shares of capital stock of Davel have been
validly issued and are fully paid, nonassessable and free of preemptive rights
with no personal liability attaching to the ownership thereof. Except for
options to acquire not more than 681,067 shares of Davel Common Stock (the
"Davel Options") and warrants to acquire not more than 427,323 shares of Davel
Common Stock (the "Davel Warrants"), there are no outstanding subscriptions,
options, warrants, rights, contracts or other arrangements or commitments
obligating Davel to issue any shares of its capital stock or any securities
convertible into or exchangeable for shares of its capital stock. Section 5.03
of Davel's Disclosure Letter sets forth a list of each Davel Option and Davel
Warrant to issue shares of Davel Common Stock outstanding on the date hereof,
together with each such Davel Option or Davel Warrant's term, exercise price,
and the number of shares subject thereto, and as applicable, the name of the
Davel Stock Option Plan under which such Davel Option or Davel Warrant was
granted.
Section 5.04 Subsidiaries. Section 5.04 of the Davel
Disclosure Letter lists all direct and indirect subsidiaries of Davel (each, a
"Davel Subsidiary" and, collectively, the "Davel Subsidiaries"). Except for the
Davel Subsidiaries and as listed in Section 5.04 of the Davel Disclosure Letter,
Davel does not directly or indirectly own any interest in any other corporation,
partnership, joint venture or other business association or entity. Each Davel
Subsidiary is a corporation (or, in the case of Davel Financing, a limited
liability company) duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate or company power and authority to own, operate and lease its
properties and assets and to carry on its business as it is now being conducted.
Except as set forth in Section 5.04 of the Davel Disclosure Letter, each Davel
Subsidiary is duly qualified to do business and is in good standing in each
jurisdiction in which the character of its properties owned or held under lease
or the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or to be in good standing would not, individually
or in the aggregate, be reasonably expected to have a Davel Material Adverse
Effect. Except as set forth in Section 5.04 of the Davel Disclosure Letter, all
outstanding shares of capital stock of each Davel Subsidiary are validly issued,
fully paid and nonassessable and are owned by Davel or another Davel Subsidiary
free and clear of any liens, claims or encumbrances.
Section 5.05 Consents and Approvals; No Violations. Except for
(a) applicable requirements of the Securities Act and the Exchange Act,
including the filing with and clearing by the SEC of the Form S-4, (b) the
filing of the Davel Financing Certificate of Merger as required by the Delaware
Law and Delaware LLC Act, (c) the filing of the PhoneTel Certificate of Merger
as required by Ohio Law, (d) such filings and consents as may be required under
any environmental law pertaining to any notification, disclosure or required
approval triggered by the Transactions, 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 Governmental Entity is necessary for the consummation by Davel or P Sub of
the Transactions. Except as set forth in Section 5.05 of the Davel Disclosure
Letter, neither the execution and delivery of this Agreement by Davel or P Sub,
nor the consummation by Davel or P Sub of the Transactions nor compliance by
Davel or P Sub with any of the provisions hereof, will (i) conflict with or
result in any violation of any provision of the articles of incorporation
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or bylaws, or comparable organizational documents, of Davel or any Davel
Subsidiary, (ii) at the Davel Effective Time, result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any note, bond, mortgage indenture, license, agreement or other
instrument or obligation to which Davel or any Davel Subsidiary is a party or by
which any of them or any of their respective properties or assets may be bound,
or (iii) subject to the governmental filings and other matters referred to above
in this Section 5.05, violate any Federal, state, local or foreign order, writ,
injunction, decree, statute, rule or regulation applicable to Davel or any Davel
Subsidiary or any of their properties or assets, excluding from the foregoing
clauses (ii) and (iii) violations, breaches or defaults which would not,
individually or in the aggregate, be reasonably expected to have a Davel
Material Adverse Effect.
Section 5.06 SEC Reports and Financial Statements.
(a) Since December 31, 1999, Davel has filed all
required forms, reports and documents with the SEC required to be filed by it
pursuant to the Securities Act and the Exchange Act (hereinafter collectively
referred to as the "Davel Reports"), all of which have complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act.
(b) None of the Davel Reports, including, without
limitation, any financial statements or schedules included therein, at the time
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) The consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity and changes in
financial position (including, without limitation, the related notes thereto) of
Davel and the Davel Subsidiaries included in the financial statements contained
in Davel's Annual Report on Form 10-K for the year ended December 31, 2000 (the
"Davel 10-K") and in Davel's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001 present fairly the consolidated financial position of Davel
and the Davel Subsidiaries as of their respective dates, and the results of
consolidated operations and changes in consolidated financial position for the
periods then ended, all in conformity with GAAP applied on a consistent basis,
except as otherwise noted therein, and subject in the case of unaudited interim
financial statements to normal year-end audit adjustments and the absence of
footnotes.
Section 5.07 Absence of Undisclosed Liabilities. Neither Davel
nor any Davel Subsidiary has any liabilities (whether absolute, accrued or
contingent), except: (a) liabilities, obligations or contingencies that are
accrued and reserved against in the consolidated balance sheet of Davel and the
Davel Subsidiaries as of December 31, 2000 or reflected in the notes thereto,
(b) liabilities incurred since December 31, 2000 in the ordinary course of
business, (c) liabilities disclosed in Section 5.07 of the Davel Disclosure
Letter, (d) any liabilities which, individually or in the aggregate, have not
had, and would not reasonably be expected to have, a Davel Material Adverse
Effect or (e) liabilities relating to or arising from the Servicing Agreement or
Davel's performance thereof.
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Section 5.08 Changes. Since the date of the Davel 10-K, and
except as set forth in the Davel Reports filed prior to the date of this
Agreement (as amended to the date hereof, the "Filed Davel Reports"), and except
as otherwise disclosed in Section 5.08 of the Davel Disclosure Letter or as
otherwise provided by this Agreement:
(a) there has been no Davel Material Adverse Effect;
(b) except as expressly permitted or otherwise
contemplated by this Agreement, there has been no direct or indirect redemption,
purchase or other acquisition of any shares of Davel's capital stock, or any
declaration, setting aside or payment of any dividend or other distribution by
Davel in respect of Davel's capital stock, or any issuance of any shares of
capital stock of Davel, or any granting to any person of any option to purchase
or other right to acquire shares of capital stock of Davel or any stock split or
other change in Davel's capitalization, or any repricing or other modification
to the terms of any such option or right to acquire;
(c) neither Davel nor any Davel Subsidiary has
entered into or agreed to enter into any new or amended contract with any labor
unions representing employees of Davel or any Davel Subsidiary;
(d) neither Davel nor any Davel Subsidiary has
entered into or agreed to enter into any new or amended contract with any of the
officers thereof or otherwise increased the compensation payable to the officers
or directors of any such entity;
(e) neither Davel nor any Davel Subsidiary has (i)
entered into or amended any bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance or other
benefit plan except as required by law or regulation or (ii) made any
contribution to any such plan except for contributions specifically required by
law or pursuant to the terms of such plans; and
(f) neither Davel nor any Davel Subsidiary has made
any change in accounting methods, principles or practices materially and
adversely affecting its assets, liabilities or business.
Section 5.09 Investigations; Litigation.
(a) Except as described in Section 5.09(a) of the
Davel Disclosure Letter, there are no pending or, to the knowledge of Davel,
threatened investigations, reviews or inquiries by any Governmental Entity with
respect to Davel or any Davel Subsidiary or with respect to the activities of
any officer, director or, to the knowledge of Davel, employee of Davel (a "Davel
Investigation"), other than Davel Investigations which, if the resolution
thereof were adverse, would not, individually or in the aggregate, reasonably be
expected to have a Davel Material Adverse Effect. For the purpose of this
Agreement, "knowledge of Davel" shall be deemed to mean the actual knowledge,
after reasonable inquiry, of Bruce W. Renard or Marc S. Bendesky.
(b) Except as described in Section 5.09(b) of the
Davel Disclosure Letter, (i) there are no actions or proceedings pending or, to
the knowledge of Davel, threatened against
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Davel or any Davel Subsidiary before any court or before any administrative
agency or administrative officer or executive, whether Federal, state, local or
foreign, which seek to enjoin the Mergers or which, if adversely determined,
would, individually or in the aggregate, reasonably be expected to have a Davel
Material Adverse Effect, (ii) there are no outstanding domestic or foreign
judgments, decrees or orders against Davel or any Davel Subsidiary that,
individually or in the aggregate, would reasonably be expected to have a Davel
Material Adverse Effect, (iii) neither Davel nor any Davel Subsidiary is in
violation of, and none of them has received any claim or notice that it is in
violation of, any federal, state, local or foreign laws, statutes, rules,
regulations or orders promulgated or judgments entered by any Governmental
Entity, which violations, individually or in the aggregate, would reasonably be
expected to have a Davel Material Adverse Effect; and (iv) there are no actions
pending or, to the knowledge of Davel, threatened against the directors or any
director of Davel alleging a breach of such directors' or director's fiduciary
duties (except such actions which may arise as a result of the Transactions).
Section 5.10 Contracts and Commitments.
(a) Except as are attached as exhibits to any Filed
Davel Report or as set forth in Section 5.10 of the Davel Disclosure Letter,
Davel is not, nor is any Davel Subsidiary, with respect to its business, a party
to any contracts or agreements (other than site location agreements between
Davel or a Davel Subsidiary (the "Davel Site Location Agreements") and Location
Owners) that are individually material to the business, properties, assets or
financial condition of Davel and the Davel Subsidiaries, taken as a whole
(together with all amendments, exhibits, attachments, waivers or other changes
thereto, the "Davel Contracts").
(b) Davel has supplied or made available to PhoneTel
valid copies of all Davel Contracts and Davel Site Location Agreements.
(c) Since January 1, 2001, except as set forth in
Section 5.10 of the Davel Disclosure Letter, Davel has not altered its payment
practices with regard to amounts payable to local exchange carriers in respect
of payphone services or with regard to amounts payable to Location Owners in
respect of commissions, which alteration would result in a material breach of
the contractual duties of Davel to such local exchange carriers in the aggregate
or to such Location Owners in the aggregate.
Section 5.11 Environmental Matters. Except as described in the
Filed Davel Reports, (a) Davel and each of the Davel Subsidiaries are in
compliance with all applicable Environmental Laws, except for non-compliance
that would not, individually or in the aggregate, reasonably be expected to have
a Davel Material Adverse Effect, which compliance includes, but is not limited
to, the possession by Davel and each of the Davel Subsidiaries of permits and
other governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof; (b) neither Davel nor any
of the Davel Subsidiaries has received written notice of, or, to the knowledge
of Davel, is the subject of, any actions, causes of action, claims,
investigations, demands or notices by any person alleging liability under or
non-compliance with any Environmental Law that would, individually or in the
aggregate, reasonably be expected to have a Davel Material Adverse Effect; and
(c) there has not been by Davel or any of the Davel Subsidiaries any treatment,
storage, disposal or release of any hazardous or toxic material, substance
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or waste or of petroleum, or any fractions or by-products thereof, at any of
their current or, to the knowledge of Davel, former properties or facilities or
any current or, to the knowledge of Davel, former offsite properties and
facilities used in the business of Davel or the Davel Subsidiaries (in each
case, other than properties or facilities where payphones are located pursuant
to agreements with Location Owners) in a manner or at levels that require or is
reasonably likely to require investigation, removal or remediation under
Environmental Laws that would, either individually or in the aggregate,
reasonably be expected to have a Davel Material Adverse Effect.
Section 5.12 Taxes.
(a) Each of Davel and the Davel Subsidiaries has
filed all tax returns and reports required to be filed by it and all such
returns and reports are complete and correct in all materials respects, or
requests for extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to file,
to be complete or correct or to have extensions granted that remain in effect
individually or in the aggregate would not reasonably be expected to have a
Davel Material Adverse Effect. Each of Davel and the Davel Subsidiaries has
timely paid (or Davel has paid on its behalf) all taxes that have become due and
payable, except to the extent the failure to pay such taxes individually or in
the aggregate would not reasonably be expected to have a Davel Material Adverse
Effect, and the most recent financial statements contained in the Davel Reports
reflect an adequate provision in accordance with GAAP for all taxes payable by
Davel and the Davel Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements.
(b) No taxing authority has given written notice of
any proposal, assertion, or assessment of any tax deficiencies against Davel or
any of the Davel Subsidiaries that are not adequately reserved for, except for
deficiencies that individually or in the aggregate would not reasonably be
expected to have a Davel Material Adverse Effect. Except as set forth in Section
5.12 of the Davel Disclosure Letter, there is no action, suit, taxing authority
proceeding or audit now in progress, pending, or, to the knowledge of Davel,
threatened against or with respect to Davel or any of the Davel Subsidiaries.
Section 5.13 Employment Agreements. Except as disclosed in
Section 5.13 of the Davel Disclosure Letter, there are no employment,
consulting, severance or indemnification contracts or agreements between Davel
or any Davel Subsidiary, on the one hand, and any directors, officers or other
employees of Davel or any Davel Subsidiary, on the other hand. Davel is not a
party to any collective bargaining agreement.
Section 5.14 Change of Control Provisions. Except as disclosed
in Section 5.14 of the Davel Disclosure Letter, none of the contracts or
agreements set forth in Section 5.13 of the Davel Disclosure Letter and none of
Davel's or any Davel Subsidiary's employee benefit plans, programs or
arrangements contains any provision that would become operative as the result of
the Mergers or the Transactions.
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Section 5.15 Employee Benefit Plans.
(a) Except as set forth in Section 2.05 hereof or
Section 5.15(a) of the Davel Disclosure Letter, all of the (i) Davel Benefit
Plans and (ii) other bonus, insurance, pension, profit sharing, retirement,
health, and other benefit plans, stock option plans and stock purchase or
ownership plans currently maintained by Davel or any of the Davel Subsidiaries
or to which Davel or any of the Davel Subsidiaries is a party may be terminated
at Davel's election, without financial penalty or premium and there shall be no
obligation of Davel following the Davel Effective Time, to issue any shares of
its capital stock pursuant to any of the foregoing or otherwise following the
Davel Effective Time. Except as set forth in Section 5.15(a) of the Davel
Disclosure Letter, no payment by Davel or any of the Davel Subsidiaries to any
person (payable or distributable pursuant to the foregoing agreements and plans
or this Agreement) shall be nondeductible by Davel or any of the Davel
Subsidiaries for Federal income tax purposes because of Section 280G of the
Code.
(b) Since December 31, 2000, all employee benefit
plans within the meaning of Section 3(3) of ERISA maintained by Davel or any of
the Davel Subsidiaries (collectively, the "Davel Benefit Plans") are in material
compliance with, and have been administered and operated in accordance with, the
terms of such Davel Benefit Plans and applicable law, and the Internal Revenue
Service has determined that each such Davel Benefit Plan which is intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified and
that each related trust is exempt from tax under Section 501(a) of the Code. No
event which constitutes a "reportable event" as defined in Section 4043 of ERISA
has occurred and is continuing with respect to any Davel Benefit Plan subject to
Title IV of ERISA. No material liability under any statutes, orders,
governmental rules or regulations applicable to any Davel Benefit Plan,
including, without limitation, ERISA and the Code, has been or may reasonably be
expected to be incurred with respect to any Davel Benefit Plan (other than
liabilities for the payment of contributions and benefits in the ordinary
course). No Davel Benefit Plan has been terminated pursuant to Title IV of
ERISA. No event has occurred and no condition exists with respect to any Davel
Benefit Plan which presents a risk of termination or partial termination of any
Davel Benefit Plan which could reasonably be anticipated to result in liability
on the part of Davel or any of the Davel Subsidiaries. Full payment has been
made, or provision has been made therefor, of all amounts which Davel or any of
the Davel Subsidiaries were required under the terms of the Davel Benefit Plans
to have paid as contributions to such Davel Benefit Plans on or prior to the
date hereof and no Davel Benefit Plan which is subject to Part 3 of Subtitle B
of Title I of ERISA has incurred any "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived. Neither Davel nor any of the Davel Subsidiaries nor, to the knowledge of
Davel, any other "disqualified person" or "party in interest" (as defined in
Section 4975 of the Code and Section 3(14) of ERISA, respectively) has engaged
in any nonexempt prohibited transactions in connection with any Davel Benefit
Plan (or its related trust) with respect to which Davel, any of the Davel
Subsidiaries, or any officer, director, employee of Davel or any of the Davel
Subsidiaries or, to the knowledge of Davel, any trustee, administrator or other
fiduciary of any Davel Benefit Plan, would be subject to either a penalty
pursuant to Section 502(i) of ERISA or a material tax imposed by Section 4975 of
the Code nor, to the knowledge of Davel, shall the consummation of the
Transactions constitute such a transaction. Except as disclosed in Section
5.15(b) of the Davel Disclosure Letter, no claim, action or litigation, has been
made, commenced or, to the knowledge of Davel, threatened with respect to any
Davel Benefit Plan (other than claims for benefits made in the ordinary course).
No Davel Benefit Plan or
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related trust owns any securities in violation of Section 407 of ERISA. No
withdrawal by Davel or any of the Davel Subsidiaries, partial or complete,
within the meaning of Title IV of ERISA, has occurred or may be reasonably
expected to occur with respect to any Davel Benefit Plan which is a
multiemployer plan which would create a material liability not adequately
reserved against by Davel. With respect to each employee pension benefit plan
(as defined in Section 3(2) of ERISA) which is a defined benefit plan and is not
a multiemployer plan, the assets of such Plan available to meet the accrued
liabilities of such Plan would exceed such liabilities, based on the actuarial
assumptions used for plan termination. Davel has paid, or has set up an adequate
reserve for, all liabilities under each Davel Benefit Plan.
Section 5.16 Licenses. Davel and the Davel Subsidiaries have
obtained all Licenses material, individually or in the aggregate, to the conduct
of the business of Davel and the Davel Subsidiaries taken as a whole. All of
such Licenses are in full force and effect and, to the best of Davel's
knowledge, will not be impaired or adversely affected by the Transactions in a
manner or to a degree that would reasonably be expected to have a Davel Material
Adverse Effect. There is not pending or, to the knowledge of Davel, threatened
any domestic or foreign suit or proceeding with respect to the suspension,
revocation, cancellation, modification or non-renewal of any of such Licenses,
and, except as set forth in Section 5.16 of the Davel Disclosure Letter, no
event under the control of Davel has occurred that (whether with notice or lapse
of time, or both) would reasonably be expected to result in a suspension or
revocation of or failure to renew any of such Licenses, the loss of which would
reasonably be expected to have a Davel Material Adverse Effect.
Section 5.17 Compliance with Other Instruments and Laws.
Except as set forth in Section 5.17 of the Davel Disclosure Letter, neither
Davel nor any Davel Subsidiary is in violation of any term of its articles of
incorporation or bylaws or comparable organizational documents, or in violation
of any Davel Contract or of any judgment, decree or order which names Davel or
any Davel Subsidiary or in violation of any term of any other material
instrument, contract or agreement (other than any Davel Site Location Agreement)
to which it is a party or by which it or any of its properties or assets is
bound, except to the extent that any such violation would not reasonably be
expected to have a Davel Material Adverse Effect. Except as set forth in Section
5.17 of the Davel Disclosure Letter, Davel's and each Davel Subsidiary's
businesses are in compliance with all Federal, state, local and foreign
statutes, laws, ordinances, rules, governmental regulations, permits,
concessions, grants, franchises, licenses or other governmental authorizations
or approvals applicable to the operation of such business, except to the extent
that the failure to be in compliance would not reasonably be expected to have a
Davel Material Adverse Effect.
Section 5.18 Employees. Without limiting the generality of
Section 5.17 hereof, Davel has complied in all material respects with all laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining, civil rights, workers
compensation, WARN statutes, severance, termination, record keeping, labor
relations and family and/or medical leave and, to the knowledge of Davel, it
does not have any material labor relations problems (including, without
limitation, actual or threatened strikes or work stoppages or material
grievances).
Section 5.19 Information Supplied. None of the information
supplied or to be supplied by Davel for inclusion or incorporation by reference
in (i) the Form S-4 shall, at the time the
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Form S-4 is filed with the SEC or 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 or (ii) the Proxy Statement shall, at the date it is first mailed
to Davel's stockholders or at the time of the Davel Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Form S-4 shall comply as to form in all material respects with
the requirements of the Securities Act, except that no representation or
warranty is made by Davel with respect to statements made or incorporated by
reference in either the Form S-4 or the Proxy Statement based on information
supplied by PhoneTel for inclusion or incorporation by reference therein.
Section 5.20 State Takeover Statutes. To the knowledge of
Davel, no "fair price," "moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation enacted under state or Federal law
applicable to Davel is applicable to the Transactions.
Section 5.21 Certain Fees. Except in connection with the
engagement of Marshall & Stevens and as otherwise set forth in Section 5.21 of
the Davel Disclosure Letter, neither Davel nor any Davel Subsidiary has employed
any broker or finder or incurred any liability for any financial advisory,
brokerage or finders' fees or commissions in connection with the Transactions.
The fees payable by Davel to Marshall & Stevens in connection with the
Transactions are set forth in Section 5.21 of the Davel Disclosure Letter.
Section 5.22 Opinion of Financial Advisor. Davel has received
the opinion of Marshall & Stevens, dated the date hereof, attached hereto as
Exhibit F.
Section 5.23 Voting Requirements. Except as contemplated by
Article I hereof, Davel Stockholder Approval is the only vote of the holders of
any class or series of Davel's capital stock necessary to adopt this Agreement
and approve the Transactions.
Section 5.24 Payphones. As of January 10, 2002, Davel has good
and marketable title to at least 54,000 installed payphones, all of which,
except for those specifically described in Section 5.24 of the Davel Disclosure
Letter, are operational and which, except for those payphones further
specifically described in Section 5.24 of the Davel Disclosure Letter, are
subject to enforceable Davel Site Location Agreements with Location Owners.
Davel's good faith estimate of the average remaining term of the Davel Site
Location Agreements is 24 months.
Section 5.25 Average Net Revenue. The Average Net Revenue is
at least $29.38 per payphone in operation by Davel and the Davel Subsidiaries as
of the date hereof.
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ARTICLE VI
COVENANTS OF PHONETEL
Section 6.01 Conduct of Business by PhoneTel Pending the
PhoneTel Merger. PhoneTel covenants and agrees that, prior to the PhoneTel
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 10.01 hereof, unless Davel shall otherwise
consent in writing or except as otherwise contemplated by this Agreement or the
Servicing Agreement:
(a) the businesses of PhoneTel and the PhoneTel
Subsidiaries shall be conducted only in the ordinary and usual course; to the
extent consistent therewith, PhoneTel shall use its best efforts to, and shall
cause each PhoneTel Subsidiary to, preserve intact their respective business
organizations and goodwill, keep available the services of their respective
officers and employees and maintain satisfactory relationships with their
respective suppliers, distributors, customers and others having business
relationships with them; and PhoneTel shall notify Davel as promptly as
practicable of any event or occurrence or emergency not in the ordinary and
usual course of the business of PhoneTel or any PhoneTel Subsidiary and material
to the business of PhoneTel and the PhoneTel Subsidiaries, taken as a whole;
(b) neither PhoneTel nor any PhoneTel Subsidiary
shall (i) amend its articles of incorporation or code of regulations or
comparable organizational documents or (ii) split, combine or reclassify the
outstanding PhoneTel Common Stock or declare, set aside or pay any dividend
payable in cash, stock or property with respect to the PhoneTel Common Stock;
(c) neither PhoneTel nor any PhoneTel Subsidiary
shall (i) issue or agree to issue any additional shares of, or rights of any
kind to acquire shares of, its capital stock of any class other than the
issuance of shares of capital stock of a PhoneTel Subsidiary to PhoneTel or,
with respect to PhoneTel, PhoneTel Common Stock issuable upon exercise of
PhoneTel Options or PhoneTel Warrants, or (ii) modify or agree to modify any
term of any option, warrant or other right to acquire shares of its capital
stock;
(d) neither PhoneTel nor any PhoneTel Subsidiary
shall enter into or agree to enter into, or amend, any contract or agreement
with any labor unions representing employees of PhoneTel or any PhoneTel
Subsidiary;
(e) PhoneTel shall not authorize, recommend, propose
or announce an intention to authorize, recommend or propose, or enter into an
agreement in principle or an agreement with respect to any merger, consolidation
or business combination (other than the Transactions), any acquisition or
disposition of a material amount of assets or securities (including, without
limitation, the assets or securities of any PhoneTel Subsidiary) or any change
in its capitalization, or enter into, other than in the ordinary course of
business, a material contract or any release or relinquishment of any material
contract rights;
(f) PhoneTel shall not, and shall not permit any
PhoneTel Subsidiary to, (i) enter into or amend any employment, severance or
change-in-control agreement, or any bonus,
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incentive compensation, deferred compensation, profit sharing, retirement,
pension, group insurance or other benefit plan except as required by law or
regulation or as expressly provided by this Agreement or (ii) make any
contribution to any such plan except for contributions specifically required by
law or pursuant to the terms of such plans;
(g) PhoneTel shall not (i) create, incur or assume
any long-term debt (including, without limitation, obligations in respect of
capital leases) or, except in the ordinary course of business under existing
lines of credit or except to fund out-of-pocket costs incurred in connection
with the Transactions, create, incur, assume, maintain or permit to exist any
short-term debt; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person except wholly owned PhoneTel Subsidiaries in the ordinary
course of business and consistent with past practices; or (iii) make any loans,
advances or capital contributions to, or investments in, any other person other
than a wholly owned PhoneTel Subsidiary (other than customary advances to
employees and short-term investments pursuant to customary cash management
systems of PhoneTel in the ordinary course and consistent with past practice);
(h) neither PhoneTel nor any PhoneTel Subsidiary
shall declare or make any dividend or distribution of cash, securities or other
property to their respective stockholders or existing senior secured lenders,
except as may be agreed to in writing by each party and their respective senior
secured lenders; and
(i) neither PhoneTel nor any PhoneTel Subsidiary
shall agree in writing or otherwise to take (i) any action that it is prohibited
from taking by this Section 6.01 or (ii) any action that would constitute or is
likely to cause or result in a breach of any representation or warranty set
forth herein or a breach in any material respect of any covenant or agreement
set forth herein.
Section 6.02 Stockholders' Meeting. PhoneTel shall cause a
meeting of its stockholders to be duly called and held as soon as reasonably
practicable for the purpose of obtaining PhoneTel Stockholder Approval (the
"PhoneTel Stockholders Meeting"). The Board of Directors of PhoneTel shall (i)
unanimously recommend the Transactions and adoption of this Agreement by
PhoneTel's stockholders and (ii) use reasonable best efforts to obtain PhoneTel
Stockholder Approval.
Section 6.03 Access to Information. Subject to the terms of
Section 7.02 hereof, PhoneTel shall give Davel and its directors, employees,
counsel, financial advisors, auditors, lenders and other authorized
representatives full access during normal business hours throughout the period
prior to the Closing Date to all of the offices, properties, business and
marketing plans, books, files and records of PhoneTel and the PhoneTel
Subsidiaries, shall furnish to Davel and its directors, employees, counsel,
financial advisors, auditors, lenders and other authorized representatives such
financial, tax, accounting and operating data and other information as such
persons may reasonably request and shall instruct PhoneTel's employees, counsel
and financial advisors to cooperate with Davel in its preparation for
integration into the business of Davel of the business of PhoneTel and the
PhoneTel Subsidiaries. Throughout the period prior to the Closing Date, PhoneTel
shall furnish promptly to Davel (i) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of Federal or
state securities laws, and (ii) all such other information concerning its
business, properties and personnel as Davel may reasonably request; provided
that no
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investigation pursuant to this Section 6.03 shall affect any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Transactions.
Section 6.04 No Solicitation.
(a) PhoneTel shall not, and shall use reasonable best
efforts to cause its officers, directors, employees, investment bankers,
attorneys, accountants and other agents retained by it not to, initiate, solicit
or encourage any inquiries relating to, or the making of any, Acquisition
Proposal or engage in negotiations or discussions with, or furnish any
information to, any third party relating to any Acquisition Proposal. As used
herein, "Acquisition Proposal" shall mean any proposal made by a third party,
other than by Davel or P Sub with respect to the PhoneTel Common Stock, to
acquire, directly or indirectly, (x) more than 25% of the shares and/or voting
power of the PhoneTel Common Stock or the Davel Common Stock, as the case may
be, then outstanding pursuant to a merger, consolidation or other business
combination, purchase of shares, tender offer or exchange offer or similar
transaction, including, without limitation, any single or multi-step transaction
or series of related transactions or (y) all or a substantial portion of the
business or assets of PhoneTel and the PhoneTel Subsidiaries or of Davel and the
Davel Subsidiaries, as the case may be.
(b) PhoneTel shall advise Davel in writing of its
receipt, directly or indirectly, of any inquiries relating to an Acquisition
Proposal promptly following such receipt. Following its receipt, directly or
indirectly, of any Acquisition Proposal (or any inquiry referred to above),
PhoneTel shall furnish to Davel either a copy of such Acquisition Proposal (or
such inquiry) or a written summary of such Acquisition Proposal (or such
inquiry).
Section 6.05 Corporate Organization. Notwithstanding anything
to the contrary contained in this Agreement or in the PhoneTel Disclosure
Letter, PhoneTel and each PhoneTel Subsidiary shall take all reasonable actions
necessary in order to remain duly qualified and in good standing until the
PhoneTel Effective Time in each jurisdiction in which the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary.
Section 6.06 Warrants. On or prior to the Closing Date,
PhoneTel shall take all actions necessary to allow the PhoneTel Warrants to be
exercised by the holders thereof.
Section 6.07 Confidentiality. PhoneTel shall hold, and shall
cause the PhoneTel Subsidiaries to hold, and shall use their respective,
reasonable best efforts to cause their officers, directors, employees,
consultants, advisors, lenders and agents to hold, in confidence, all trade
secrets and confidential information concerning Davel and the Davel Subsidiaries
furnished to PhoneTel in connection with the Transactions in accordance with the
Confidentiality Agreement, dated October 20, 2000, by and between Davel and
PhoneTel (the "Confidentiality Agreement"), which Confidentiality Agreement
shall survive any termination of this Agreement.
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ARTICLE VII
COVENANTS OF DAVEL
Section 7.01 Conduct of Business by Davel Pending the Davel
Merger. Davel covenants and agrees that, prior to the Davel Effective Time or
the date, if any, on which this Agreement is earlier terminated pursuant to
Section 10.01 hereof, unless PhoneTel shall otherwise consent in writing or
except as otherwise contemplated by this Agreement or the Servicing Agreement:
(a) the businesses of Davel and the Davel
Subsidiaries shall be conducted only in the ordinary and usual course; to the
extent consistent therewith, Davel shall use its best efforts to, and shall
cause each Davel Subsidiary to, preserve intact their respective business
organizations and goodwill, keep available the services of their respective
officers and employees and maintain satisfactory relationships with their
respective suppliers, distributors, customers and others having business
relationships with them; and Davel shall notify PhoneTel as promptly as
practicable of any event or occurrence or emergency not in the ordinary and
usual course of the business of Davel or any Davel Subsidiary and material to
the business of Davel and the Davel Subsidiaries, taken as a whole;
(b) neither Davel nor any Davel Subsidiary shall (i)
amend its certificate of incorporation or bylaws or comparable organizational
documents or (ii) split, combine or reclassify the outstanding Davel Common
Stock or declare, set aside or pay any dividend payable in cash, stock or
property with respect to the Davel Common Stock;
(c) neither Davel nor any Davel Subsidiary shall (i)
issue or agree to issue any additional shares of, or rights of any kind to
acquire shares of, its capital stock of any class other than the issuance of
shares of capital stock of a Davel Subsidiary to Davel or, with respect to
Davel, Davel Common Stock issuable upon exercise of Davel Options or Davel
Warrants, or (ii) modify or agree to modify any term of any option, warrant or
other right to acquire shares of its capital stock;
(d) neither Davel nor any Davel Subsidiary shall
enter into or agree to enter into, or amend, any contract or agreement with any
labor unions representing employees of Davel or any Davel Subsidiary;
(e) Davel shall not authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into an
agreement in principle or an agreement with respect to any merger, consolidation
or business combination (other than the Transactions), any acquisition or
disposition of a material amount of assets or securities (including, without
limitation, the assets or securities of any Davel Subsidiary) or any change in
its capitalization, or enter into, other than in the ordinary course of
business, a material contract or any release or relinquishment of any material
contract rights;
(f) Davel shall not, and shall not permit any Davel
Subsidiary to, (i) enter into or amend any employment, severance or
change-in-control agreement, or any bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance or other
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benefit plan except as required by law or regulation or as expressly provided by
this Agreement or (ii) make any contribution to any such plan except for
contributions specifically required by law or pursuant to the terms of such
plans;
(g) Davel shall not (i) create, incur or assume any
long-term debt (including, without limitation, obligations in respect of capital
leases) or, except in the ordinary course of business under existing lines of
credit or except to fund out-of-pocket costs incurred in connection with the
Transactions, create, incur, assume, maintain or permit to exist any short-term
debt; (ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except wholly owned Davel Subsidiaries in the ordinary course of business
and consistent with past practices; or (iii) make any loans, advances or capital
contributions to, or investments in, any other person other than a wholly owned
Davel Subsidiary (other than customary advances to employees and short-term
investments pursuant to customary cash management systems of Davel in the
ordinary course and consistent with past practice);
(h) neither Davel nor any Davel Subsidiary shall
declare or make any dividend, distribution or payment of cash, securities or
other property to their respective stockholders or existing senior secured
lenders, except as may be agreed to in writing by each party and their
respective senior secured lenders; and
(i) neither Davel nor any Davel Subsidiary shall
agree in writing or otherwise to take (i) any action that it is prohibited from
taking by this Section 7.01 or (ii) any action that would constitute or is
likely to cause or result in a breach of any representation or warranty set
forth herein or a breach in any material respect of any covenant or agreement
set forth herein.
Section 7.02 Confidentiality. Davel shall hold, and shall
cause the Davel Subsidiaries to hold, and shall use their respective reasonable
best efforts to cause their officers, directors, employees, consultants,
advisors, lenders and agents to hold, in confidence, all trade secrets and
confidential information concerning PhoneTel and the PhoneTel Subsidiaries
furnished to Davel in connection with the Transactions in accordance with the
Confidentiality Agreement.
Section 7.03 Obligations of D Sub and P Sub. Davel shall cause
both D Sub and P Sub to perform their obligations under this Agreement and to
consummate the Transactions on the terms and conditions set forth in this
Agreement.
Section 7.04 Indemnification.
(a) Davel shall and shall cause each of its direct or
indirect subsidiaries, including PhoneTel, successors or assigns (the
"Indemnifying Parties") to indemnify, to the fullest extent permitted under the
applicable law of the state of incorporation of each such Indemnifying Party,
each person who was or is or becomes prior to the PhoneTel Effective Time, a
director, officer or trustee of any such entity (the "Indemnified Parties") for
costs and expenses incurred in respect of actions taken prior to and including
the PhoneTel Effective Time in connection with their duties as directors,
officers or trustees of the Indemnifying Parties (including with respect to the
Transactions) for a period of not less than six years from the PhoneTel
Effective Time; provided that, in the event
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any claim or claims are asserted or made within such six-year period, all rights
to indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims. Without limitation of the
foregoing, in the event any Indemnified Party becomes involved in such capacity
in any pending or threatened action, proceeding or investigation in connection
with any matter or event, including with respect to the Transactions, occurring
prior to and including the PhoneTel Effective Time, the Surviving Corporation,
to the fullest extent permitted and on such conditions as may be required by
applicable law, shall make advances for or reimburse such Indemnified Party for
his or her legal and other out-of-pocket expenses (including the cost of any
investigation and preparation) as incurred in connection therewith. In addition,
during such six-year period the charter and by-laws of each of the Indemnifying
Parties and their successors or assigns shall continue to contain provisions no
less favorable to the present and former directors and officers of such
corporation's charter or bylaws as in effect as of immediately prior to the
PhoneTel Effective Time.
(b) For not less than six years after the PhoneTel
Effective Time, the Indemnifying Parties shall maintain in effect directors' and
officers' liability insurance covering the Indemnified Parties who are currently
covered by the Indemnifying Parties' existing directors' and officers' liability
insurance. The Indemnifying Parties will maintain such insurance with policy
limits at least equal to the greater of (i) those in effect with respect to
Davel and its subsidiaries and (ii) those in effect with respect to PhoneTel and
its subsidiaries, in each case as of the date of this Agreement, and with
deductible and retention amounts no greater than the lesser of (x) those in
effect with respect to Davel and its subsidiaries and (y) those in effect with
respect to PhoneTel and its subsidiaries, in each case as of the date of this
Agreement.
Section 7.05 Davel Stockholders' Meeting. Davel shall cause a
meeting of its stockholders to be duly called and held as soon as reasonably
practicable for the purpose of obtaining Davel Stockholder Approval for the
transactions contemplated hereby, as well as stockholder approval of the Amended
Plan (the "Davel Stockholders Meeting"). The Board of Directors of Davel shall
(a) unanimously approve the Transactions and the Amended Plan and recommend
approval of this Agreement and the Amended Plan and (b) use reasonable best
efforts to obtain Davel Stockholder Approval and stockholder approval of the
Amended Plan.
Section 7.06 Amendment of Certificate of Incorporation.
Subject to Davel Stockholder Approval, at the Closing, (a) the Certificate of
Incorporation of Davel shall be amended to increase the authorized number of
shares of Davel Common Stock to 1,000,000,000 and (b) Davel shall have reserved
for issuance upon exercise of Adjusted PhoneTel Options and Adjusted PhoneTel
Warrants an aggregate number of shares of Davel Common Stock sufficient to
comply fully with the terms thereof.
Section 7.07 Employee Matters.
(a) Davel agrees that individuals who are employed by
PhoneTel or any of the PhoneTel Subsidiaries immediately prior to the Closing
Date shall remain employees of the Surviving Corporation or its subsidiaries as
of the Closing Date (each such employee, an "Affected Employee"); provided,
however, that nothing contained herein shall confer upon any Affected
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Employee the right to continued employment by PhoneTel or any of the PhoneTel
Subsidiaries for any period of time after the Closing Date which is not
otherwise required by law.
(b) Davel shall, or shall cause the Surviving
Corporation or one of the Davel Subsidiaries to give Affected Employees full
credit for purposes of eligibility and vesting under any employee benefit plans
or arrangements maintained by Davel, PhoneTel or any of the Davel Subsidiaries
for such Affected Employees' service with Davel, PhoneTel or any affiliate
thereof to the same extent recognized immediately prior to the Closing Date.
(c) Davel shall, no later than the PhoneTel Effective
Time, enter into an employment agreement with Mr. John D. Chichester to serve as
chief executive officer of Davel and an employment agreement with Mr. Bruce W.
Renard to serve as president of Davel.
(d) Davel shall cause the Surviving Corporation to
continue to honor all employment, severance, separation and other compensation
agreements existing as of the Closing Date between PhoneTel or any of the
PhoneTel Subsidiaries with any officer or employee thereof, which are set forth
on Section 7.07(d) of the PhoneTel Disclosure Letter.
Section 7.08 Access to Information. Subject to the terms of
Section 6.07 hereof, Davel shall give PhoneTel, its directors, employees,
counsel, financial advisors, auditors, lenders and other authorized
representatives full access during normal business hours throughout the period
prior to the Closing Date to all of the offices, properties, business and
marketing plans, books, files and records of Davel and the Davel Subsidiaries,
shall furnish to PhoneTel and its directors, employees, counsel, financial
advisors, auditors, lenders and other authorized representatives such financial,
tax, accounting and operating data and other information as such persons may
reasonably request and shall instruct Davel's employees, counsel and financial
advisors to cooperate with PhoneTel in its preparation for integration into the
business of Davel and the Davel Subsidiaries of the business of PhoneTel.
Throughout the period prior to the Closing Date, Davel shall furnish promptly to
PhoneTel (a) a copy of each report, schedule and other document filed or
received by it pursuant to the requirements of Federal or state securities laws
and (b) all such other information concerning its business, properties and
personnel as PhoneTel may reasonably request; provided that no investigation
pursuant to this Section 7.08 shall affect any representation or warranty
contained herein or the conditions to the obligations of the parties to
consummate the Transactions.
Section 7.09 No Solicitation.
(a) Davel shall not, and shall use reasonable best
efforts to cause its officers, directors, employees, investment bankers,
attorneys, accountants and other agents retained by it not to, initiate, solicit
or encourage any inquiries relating to, or the making of any, Acquisition
Proposal or engage in negotiations or discussions with, or furnish any
information to, any third party relating to any Acquisition Proposal.
(b) Davel shall advise PhoneTel in writing of its
receipt, directly or indirectly, of any inquiries relating to an Acquisition
Proposal promptly following such receipt. Following its receipt, directly or
indirectly, of any Acquisition Proposal (or any inquiry referred to
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above), Davel shall furnish to PhoneTel either a copy of such Acquisition
Proposal (or such inquiry) or a written summary of such Acquisition Proposal (or
such inquiry).
ARTICLE VIII
COVENANTS OF THE PARTIES
Section 8.01 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party shall use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the Transactions. PhoneTel and Davel shall each furnish to one
another and to one another's counsel all such information as may be required in
order to accomplish the foregoing actions, subject to the terms and conditions
of this Agreement. In connection with and without limiting the foregoing,
PhoneTel and Davel shall (a) take all reasonable action necessary to ensure that
no state takeover statute or similar statute or regulation is or becomes
applicable to the Transactions and (b) if any state takeover statute or similar
statute or regulation becomes applicable to the Transactions, take all
reasonable action necessary to ensure that the Transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Transactions.
Section 8.02 Certain Filings. PhoneTel and Davel shall
cooperate with one another (a) in connection with the preparation of the Form
S-4, the Proxy Statement and any other disclosure document filed after the date
hereof pursuant to the Securities Act, the Exchange Act or any state securities
law (each a "Disclosure Document"), (b) in determining whether any other action
by or in respect of, or filing with, any Governmental Entity or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts in connection with the consummation of the Transactions and
(c) in seeking any such actions, consents, approvals or waivers or making any
such filings, furnishing information required in connection therewith or with
the Form S-4, the Proxy Statement and the Disclosure Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
Section 8.03 Public Announcements. Davel and PhoneTel shall
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the Transactions 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.
Section 8.04 Further Assurances. Upon the terms and subject to
the satisfaction of the conditions contained in this Agreement, each of the
parties hereto shall use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Transactions.
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Section 8.05 Notices of Certain Events. PhoneTel and Davel
shall promptly notify the other of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the Transactions;
(b) any notice or other communication from any
Governmental Entity in connection with the Transactions;
(c) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened against,
relating to or involving or otherwise affecting PhoneTel or any PhoneTel
Subsidiary, on the one hand, or Davel or any Davel Subsidiary, on the other
hand, which relate to the consummation of the Transactions; and
(d) any action, event or occurrence that would
constitute a breach of any representation, warranty, covenant or agreement of it
set forth in this Agreement.
Section 8.06 Preparation of the Form S-4 and the Proxy
Statement. As soon as practicable following the date of this Agreement, PhoneTel
and Davel shall jointly prepare and file with the SEC the Proxy Statement and
PhoneTel and Davel shall prepare, and Davel shall file, with the SEC the Form
S-4, in which the Proxy Statement shall be included as a prospectus. Each of
PhoneTel and Davel shall use reasonable best efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. PhoneTel and Davel shall use their respective reasonable best
efforts to cause the Proxy Statement to be mailed to their respective
stockholders as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. No filing of, or amendment or supplement to, the Form
S-4 shall be made by Davel or to the Proxy Statement shall be made by PhoneTel
or Davel without providing the other party the opportunity to review and comment
thereon. Davel shall advise PhoneTel, promptly after it receives notice thereof,
of the time when the Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the Davel Common Stock issuable in connection with the
Transactions for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement or the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Closing Date any information relating to PhoneTel or Davel, or
any of its affiliates, officers or directors, should be discovered by PhoneTel
or Davel which should be set forth in an amendment or supplement to any of the
Form S-4 or the Proxy Statement, so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other party hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the stockholders of PhoneTel and
Davel.
Section 8.07 Letters of Accountants. Each of Davel and
PhoneTel shall use its reasonable best efforts to cause to be delivered to the
other party two letters from its respective independent accountants, one dated a
date within two business days before the date on which the Form S-4 shall become
effective and one dated a date within two business days before the Closing Date,
each addressed to the other party, in form and substance reasonably satisfactory
to Davel and PhoneTel and customary in scope and substance for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
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Section 8.08 Affiliates. As soon as reasonably practicable
after the date hereof (but in no event later than 45 days prior to the PhoneTel
Effective Time), PhoneTel shall deliver to Davel a list (the "Affiliate List")
identifying all persons who are, in the reasonable judgment of PhoneTel,
"affiliates" of PhoneTel for purposes of Rule 145 of the Securities Act.
PhoneTel shall use all commercially reasonable efforts to deliver or cause to be
delivered to Davel an agreement, substantially in the form attached hereto as
Exhibit D, (i) executed by each person listed on the Affiliate List no later
than 30 days prior to the PhoneTel Effective Time and (ii) executed by each
person who becomes an "affiliate" of PhoneTel for purposes of Rule 145 of the
Securities Act after delivery of the Affiliate List as soon as reasonably
practicable thereafter and prior to the PhoneTel Effective Time.
Section 8.09 Representations. Each of PhoneTel and Davel shall
(a) use its reasonable best efforts to take all action necessary to render true
and correct as of the Closing Date its representations and warranties contained
in this Agreement, (b) refrain from taking any action that would render any such
representation or warranty untrue or incorrect as of such time, and (c) perform
or cause to be satisfied each agreement, covenant or condition to be performed
or satisfied by it.
Section 8.10 Davel Board of Directors. Each of PhoneTel and
Davel, and their respective Lenders, will cooperate in good faith to determine
the nominees for the Board of Directors of Davel following the Mergers.
ARTICLE IX
CONDITIONS TO THE MERGERS
Section 9.01 Conditions to the Obligations of Each Party. The
obligations of PhoneTel, Davel, Davel Financing, D Sub and P Sub to consummate
the Transactions are subject to the satisfaction or waiver of the following
conditions:
(a) the Transactions, including, but not limited to,
the PhoneTel Restructuring, this Agreement and the PhoneTel Merger shall have
been approved and adopted by the stockholders of PhoneTel in accordance with
Ohio Law;
(b) the Transactions, including but not limited to,
the Davel Restructuring, this Agreement and the Mergers shall have been approved
by the stockholders of Davel in accordance with applicable law;
(c) no Governmental Entity shall have issued any
judgment, injunction, order or decree or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Transactions, which
judgment, injunction, order or decree or other action shall have become final
and nonappealable;
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(d) the Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order;
(e) the PhoneTel Restructuring and the Davel
Restructuring shall have been consummated; and
(f) the 2002 Credit Facility, in an amount of no less
that $10 million, shall continue to be available to Davel no later than the
PhoneTel Effective Time.
Section 9.02 Conditions to the Obligations of Davel, Davel
Financing, D Sub and P Sub. The obligations of Davel, Davel Financing, D Sub and
P Sub to consummate the Transactions are subject to the satisfaction of the
following additional conditions:
(i) that the representations and warranties
of PhoneTel as set forth in this Agreement shall be true and correct in
all material respects as if made on and as of the Closing Date (other
than those representations and warranties which address matters only as
of a certain date, which shall be true and correct in all material
respects as of such certain date) and PhoneTel 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 Closing Date; provided, that, for purposes of
determining whether the condition set forth in this Section 9.02(a) has
been satisfied, no representation or warranty of PhoneTel shall be
deemed untrue, incorrect, not complied with or not performed as a
consequence of the existence or absence of any fact, circumstance or
event unless such fact, circumstance or event, individually or when
taken together with all other facts, circumstances or events
inconsistent with the representations or warranties of PhoneTel, has
had or would reasonably be expected to have a PhoneTel Material Adverse
Effect (disregarding for this purpose any materiality qualification
contained in such representations or warranties); and
(ii) The PhoneTel Merger shall have been
contemporaneously consummated in the manner set forth in Section 2.01.
Section 9.03 Conditions to the Obligations of PhoneTel. The
obligations of PhoneTel to consummate the Transactions are subject to the
satisfaction of the following additional conditions:
(a) the representations and warranties of Davel as
set forth in this Agreement shall be true and correct in all material respects
as if made on and as of the Closing Date (other than those representations and
warranties which address matters only as of a certain date, which shall be true
and correct in all material respects as of such certain date) and Davel and P
Sub shall have complied with or performed in all material respects all
agreements and covenants required to be complied with or performed by them under
this Agreement at or prior to the Closing Date; provided, that, for purposes of
determining whether the condition set forth in this Section 9.03(a) has been
satisfied, no representation or warranty of Davel shall be deemed untrue,
incorrect, not complied with or not performed as a consequence of the existence
or absence of any fact, circumstance or event unless such fact, circumstance or
event, individually or when taken together with all other facts,
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circumstances or events inconsistent with the representations or warranties of
Davel, has had or would reasonably be expected to have a Davel Material Adverse
Effect (disregarding for this purpose any materiality qualification contained in
such representations or warranties); and
(b) The Davel Merger shall have been
contemporaneously consummated in the manner set forth in Section 3.01.
ARTICLE X
TERMINATION AND WAIVER
Section 10.01 Termination. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Closing Date
(notwithstanding any approval of this Agreement and the PhoneTel Merger by the
stockholders of PhoneTel or any approval of this Agreement by the stockholders
of Davel as provided herein):
(a) by mutual written consent of PhoneTel and Davel;
(b) by either PhoneTel or Davel, if the Transactions
have not been consummated by August 31, 2002; provided that no party may
terminate this Agreement pursuant to this subsection if such party's failure to
fulfill any of its obligations under this Agreement shall have been the reason
that the Closing shall not have occurred on or before such date;
(c) by either PhoneTel or Davel, if there shall be
adopted or enacted after the date hereof any law or regulation that makes
consummation of the Transactions illegal or otherwise prohibited or if any
judgment, injunction, order or decree enjoining Davel or PhoneTel from
consummating the Transactions is entered and such judgment, injunction, order or
decree shall have become final and nonappealable;
(d) by either PhoneTel or Davel, if (i) PhoneTel
Stockholder Approval shall not have been obtained at the PhoneTel Stockholders
Meeting or any adjournment or postponement thereof or (ii) if Davel Stockholder
Approval shall not have been obtained at the Davel Stockholders Meeting or any
adjournment or postponement thereof;
(e) by Davel (provided that Davel is not then in
breach of its obligations hereunder in any material respect), if PhoneTel shall
have breached in any material respect any of its representations, warranties,
covenants or agreements contained herein (determined in accordance with Section
9.02(a) hereof) and shall not have cured such breach within 30 days after
PhoneTel receives written notice of such breach from Davel; or
(f) by PhoneTel (provided that PhoneTel is not then
in breach of its obligations hereunder in any material respect), if Davel shall
have breached in any material respect any of its representations, warranties,
covenants or agreements contained herein (determined in accordance with Section
9.03(a) hereof) and shall not have cured such breach within 30 days after Davel
receives written notice of such breach from PhoneTel.
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Such right of termination shall be exercised by written notice of termination
given by the terminating party to the other parties hereto in the manner
hereinafter provided. Any such right of termination shall not be an exclusive
remedy hereunder but shall be in addition to any other legal or equitable
remedies that may be available to any non-defaulting party hereto arising out of
any default hereunder by any other party hereto.
Section 10.02 Waiver. At any time prior to the Closing Date,
the parties hereto, by action taken by or pursuant to resolutions of their
respective Boards of Directors, may (a) extend the time for the performance of
any of the obligations or other acts of the parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) except for obtaining PhoneTel
Stockholder Approval and Davel Stockholder Approval, waive compliance with any
of the agreements or conditions contained herein; provided, however, that no
waiver by PhoneTel shall be effective unless consented to in writing by the
PhoneTel Lenders. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
Section 10.03 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.01 hereof, this Agreement shall become void
and of no effect with no liability on the part of any party hereto, except that
the agreements contained in Sections 6.07, 7.02, 11.05 and 11.07 hereof shall
survive the termination hereof and except that no such termination shall relieve
any party from liability for breach of this Agreement or failure by it to
perform its obligations hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Closing. The closing of the Mergers (the
"Closing") shall occur at the Davel Effective Time and the PhoneTel Effective
Time, respectively. The date on which the PhoneTel Effective Time and the Davel
Effective Time occurs is referred to herein as the "Closing Date".
Section 11.02 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile,
telex or similar writing) and shall be given,
If to Davel, Davel Financing, D Sub or P Sub, to:
Davel Communications, Inc.
10120 Windhorst Road
Tampa, Florida 33619
Attention: Bruce W. Renard, Esq.
Facsimile: (813) 740-9406
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with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: R. Scott Falk, Esq.
Facsimile: (312) 861-2200
if to PhoneTel, to:
PhoneTel Technologies, Inc.
1001 Lakeside Avenue, 7th Floor
Cleveland, Ohio 44114
Attention: John D. Chichester
Facsimile: (216) 875-4337
with a copy to:
Hahn Loeser & Parks LLP
3300 BP Tower
200 Public Square
Cleveland, Ohio 44114-2301
Attn: F. Ronald O'Keefe, Esq.
Facsimile: (216) 241-2824
or such other address, telecopy or telex number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (a) if given by facsimile or
telex, upon confirmation of receipt, or (b) if given by any other means, when
delivered at the address specified in this Section 11.02.
Section 11.03 Survival of Representations and Warranties. The
representations and warranties contained herein shall not survive the Closing
Date.
Section 11.04 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived prior to the Closing (whether before or after approval of this Agreement
by the stockholders of Davel or PhoneTel, if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by all of the
parties hereto or in the case of a waiver, by the party against whom the waiver
is to be effective; provided, however, that no waiver by PhoneTel shall be
effective unless consented to in writing by the PhoneTel Lenders; provided,
further, that after any such approval by the stockholders of Davel or PhoneTel,
no such amendment or waiver shall, without the further approval of such
stockholders, alter or change (i) the amount or kind of consideration to be
received in exchange for any shares of capital stock of Davel or PhoneTel, (ii)
any term of the articles of incorporation of the Surviving Corporation (except
that alterations or changes may be made that could
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otherwise be adopted by the Board of Directors of the Surviving Corporation) or
(iii) any of the terms or conditions of this Agreement if such alteration or
change would adversely affect the holders of any class or series of shares of
capital stock of Davel or PhoneTel.
(b) No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 11.05 Expenses. Each party shall pay its own costs and
expenses relating to this Agreement and the Transactions, except that each of
Davel and PhoneTel shall bear and pay one- half of the costs and expenses
incurred in connection with the printing and mailing of the Proxy Statement.
Section 11.06 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
Section 11.07 Governing Law; Jurisdiction. All provisions of
this Agreement relating to the PhoneTel Merger shall be construed in accordance
with and governed by Ohio Law. In all other respects, this Agreement shall be
construed in accordance with and governed by the law of the State of Delaware,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Delaware. Each party hereto irrevocably submits to the nonexclusive
jurisdiction of (a) the state courts of Delaware and (b) the federal district
courts located in the State of Delaware for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby.
Section 11.08 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts (including by means of telecopied
signature pages), each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.
Section 11.09 Headings; Interpretation. Section headings used
in this Agreement are for convenience only and shall be ignored in the
construction and interpretation hereof. The use of the word "including" herein
shall mean "including without limitation."
Section 11.10 No Third Party Beneficiaries. Except for Section
7.04 hereof, no provision of this Agreement is intended to, or shall, confer any
third party beneficiary or other rights or remedies upon any person other than
the parties hereto.
Section 11.11 Entire Agreement. This Agreement and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein) constitute the entire
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agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
DAVEL COMMUNICATIONS, INC.
By: /s/ Bruce W. Renard
--------------------------------
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
-----------------------------
Name: Bruce W. Renard
Title: President
DF MERGER CORP.
By: /s/ Bruce W. Renard
--------------------------------
Name: Bruce W. Renard
Title: President
PT MERGER CORP.
By: /s/ Bruce W. Renard
--------------------------------
Name: Bruce W. Renard
Title: President
PHONETEL TECHNOLOGIES, INC.
By: /s/ John D. Chichester
--------------------------------
Name: John D. Chichester
Title: President & Chief Executive Officer