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WARRANT PURCHASE AGREEMENT
BETWEEN
PHONETEL TECHNOLOGIES, INC.
AND
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
AND
CERBERUS PARTNERS, L.P.
Dated as of March 15, 1996
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TABLE OF CONTENTS
Page
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Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Purchase and Sale of Warrants; Closing . . . . . . . . . . . . . . . 12
Section 3. Investment Representations . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5. Warranties, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7. Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8. Execution of Warrant Certificates . . . . . . . . . . . . . . . . . . 23
Section 9. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 10. Registration of Transfers and Exchanges . . . . . . . . . . . . . . . 23
Section 11. Warrants; Exercise of Warrants . . . . . . . . . . . . . . . . . . . 25
Section 12. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 13. Mutilated or Missing Warrant
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 14. Reservation of Warrant Shares . . . . . . . . . . . . . . . . . . . . 27
Section 15. Adjustment of Exercise Price and Number
of Warrant Shares Issuable . . . . . . . . . . . . . . . . . . . . . 28
(a) Reorganization of the Company . . . . . . . . . . . . . . . . . . 28
(b) When Issuance or Payment May be
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 16. Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 17. Notice to Warrant Holders . . . . . . . . . . . . . . . . . . . . . . 30
Section 18. Cash Distributions and Dividends . . . . . . . . . . . . . . . . . . 31
Section 19. Put Rights; Tag-Along Rights and
Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Put by Holders . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Restrictions on Purchase . . . . . . . . . . . . . . . . . . . . 34
(d) Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . . . . 35
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(e) Limitation on Put Rights of Others . . . . . . . . . . . . . . . 36
(f) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(g) Registration Rights . . . . . . . . . . . . . . . . . . . . . . . 37
Section 20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 21. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 22. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 23. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 24. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 25. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 26. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . 40
Section 27. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 28. Amendments; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 29. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 30. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 31. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 32. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 33. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Exhibit A Form of Warrant Certificate
Exhibit B Preemptive Rights, Options, Warrants, Rights of
Conversion and Purchase, etc.
Exhibit C Agreements Regarding Voting, Sale or Transfer
Exhibit D Registration Rights
Exhibit E Transactions with Affiliates
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WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of March 15, 1996 by and between PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation (the "Company"), INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION, a Delaware corporation ("ING") and CERBERUS PARTNERS, L.P., a
Delaware limited partnership ("Cerberus") (ING and Cerberus, each the
"Purchaser", and collectively, the "Purchasers").
W I T N E S S E T H:
RECITALS:
A. Simultaneously herewith, the Purchasers are entering
into a Credit Agreement, dated of even date herewith, among the Company, the
Purchasers and various other lenders that may become parties thereto (the
"Lenders") and ING in its capacity as Agent for the Lenders;
B. It is a condition precedent to the initial extensions
of credit by the Purchasers to the Company contemplated by the Credit Agreement
that the Company agree to issue to the Purchasers Warrants initially
exercisable for 204,824 shares of Series A Special Convertible Preferred Stock,
par value $.20 per share, of the Company; and
C. The Purchasers and the Company desire to set forth in
this Agreement the terms and provisions of the Warrants and the conditions to
the issuance and sale thereof to the Purchasers;
NOW, THEREFORE, in consideration of the premises and the
agreements herein set forth and to induce the Purchasers to proceed with the
transactions contemplated by the Credit Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. Definitions.
(a) Defined Terms. Capitalized terms appearing herein
and not otherwise defined herein shall have the meanings ascribed thereto in
the Credit Agreement (irrespective of whether the Credit Agreement is in effect
or has been terminated). The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings:
"Acquisition" means the acquisition by the Company or any of
its Subsidiaries of Telephones or rights to manage or service Telephones,
whether by acquisition of an operating
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division or business unit or assets of another Person, by acquisition of shares
in another Person, by merger or consolidation with another Person, by
acquisition from a vendor or otherwise.
"Additional Put Event" means any of the following: (a) any
representation or warranty of the Company under this Agreement or any other
Warrant Document or under the Credit Document or any other Loan Document is or
shall be incorrect when made in any material respect; (b) the Company shall
default in the due performance and observance of any of its obligations under
any Warrant Document; (c) an Event of Default shall have occurred due to a
default by the Company in the payment of any amount or other obligation due
under the Loan Documents or any other material Event of Default shall have
occurred under the Loan Documents; (d) a merger or consolidation of the Company
with or into any other Person (other than (i) a Permitted Merger, and (ii) a
merger with or into a corporation unaffiliated with the Company if 80% of the
assets of such corporation are directly related to the operation of Telephones
and 80% of the revenues of such corporation are derived directly from the
operation of Telephones) or any acquisition of the Company by means of a share
exchange; and (e) a Change of Control.
"Affiliate" of any Person means any other Person which,
directly or indirectly, controls or is controlled by or under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power
(a) to vote 5% or more of the securities having ordinary
voting power for the election of directors of such Person; or
(b) to direct or cause the direction of the management or
policies of such Person whether by contract or otherwise;
provided that ING and Cerberus shall not be deemed to be an Affiliate of the
Company hereunder.
"Agent" is defined in Recital A.
"Agreement" means this Warrant Purchase Agreement as in effect
on the date hereof and as hereafter amended, supplemented, restated or
otherwise modified.
"Approval" means each and every approval, consent, filing and
registration by or with any federal, state or other regulatory authority
(domestic or foreign) necessary to authorize or permit the execution, delivery
or performance of this Agreement or any other Warrant Document, or for the
validity or enforceability thereof.
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"Authorized Officer" means, relative to the Company, those of
the Company's officers whose signatures and incumbency shall have been
certified to the Agent and the Lenders pursuant to Section 4.1.(a)(ii) of the
Credit Agreement.
"Below Market Dilution Shares" shall mean, in connection with
the issuance of any shares of Common Stock pursuant to an acquisition at a
price below the Fair Market Value per Share, the product of (i) the quotient of
(A) the Fair Market Value per Share on the date of issuance minus the price per
share of Common Stock issued in connection with such acquisition, divided by
(B) such Fair Market Value per Share, times (ii) the number of shares of Common
Stock so issued.
"Business Day" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required to be
closed in New York, New York.
"Cash Equivalent Investment" means, at any time:
(a) any direct obligation issued or guaranteed by the
United States of America or any agency or instrumentality thereof and backed by
the full faith and credit of the United States of America, or issued by any
state or political subdivision or public instrumentality thereof, (i) which
has a remaining maturity at the time of purchase of not more than six months or
(ii) which is subject to a repurchase agreement with any Lender or any Eligible
Lending Institution exercisable within six months from the time of purchase so
long as such direct obligation remains in the possession of the Company or in
the possession of any Lender and (iii) which, in the case of obligations of any
state or political subdivision or public instrumentality thereof, is rated A or
better by Xxxxx'x Investors Service, Inc.;
(b) certificates of deposit, time deposits, demand
deposits and bankers' acceptances, having a remaining maturity at the time of
purchase of not more than six months, issued by any Lender or by any Eligible
Lending Institution;
(c) corporate obligations rated Prime-1 by Xxxxx'x
Investors Service, Inc. or A-1 by Standard & Poor's Corporation, having a
remaining maturity at the time of purchase of not more than one (1) year; and
(d) shares of funds registered under the Investment
Company Act of 1940, as amended, having assets of at least $100,000,000 which
invest only in obligations described above and which shares are rated by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation in one of the
two highest rating categories assigned by such agencies for obligations of such
nature.
"Certificate of Amendment" means the Certificate of Amendment
to the Articles of Incorporation of the Company filed
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with the Secretary of State of Ohio on March 13, 1996 relating to the Series A
Special Preferred Stock.
"Change of Control" means the occurrence of any of the
foregoing: (a) any Person or group of Persons shall have acquired beneficial
ownership of more than 25% of the outstanding Stock of the Company (within the
meaning of Section 13(d) or 14(d) of the Securities and Exchange Act of 1934,
as amended, and the applicable rules and regulations thereunder) other than as
a result of the issuance by the Company of Notes pursuant to the Credit
Agreement or the conversion thereof or of the exercise of the Warrants; (b)
during any period of 12 consecutive months (whether commencing before or after
the Closing Date), individuals who on the first day of such period were
directors of the Company (together with any replacement or additional directors
who are nominated or elected by a majority of directors then in office) cease
to constitute a majority of the Board of Directors of the Company; (c) the
failure of Xxxx to be the Chairman of the Board of Directors of the Company and
to be actively involved in the management of the Company; or (d) the failure of
Xxxx to own, beneficially and of record, 70% of the shares of Stock owned by
Xxxx on the Closing Date.
"Closing" means the closing of the sale and purchase of the
Warrants as contemplated hereby.
"Closing Date" means the date of the Closing.
"Common Stock" means shares now or hereafter authorized of any
class of common stock of the Company and any other capital stock of the
Company, however designated, that has the right (subject to any prior rights of
any other class or series of Stock) to participate in any distribution of the
assets upon voluntary or involuntary liquidation, dissolution or winding up of
the Company and in the earnings of the Company without limit as to per share
amount, and shall include, without limitation, the presently authorized
22,250,000 shares of Common Stock, $0.01 par value per share of the Company.
"Common Stock" shall not include preferred or special stock.
"Company" is defined in the preamble to this Agreement.
"Confidential Information" is defined in Section 32.
"Contract Value per Share" means the value determined in
accordance with paragraphs (i), (ii) and (iii) below and shall equal the
highest number yielded by such determination:
(i) The Contract Value per Share determined pursuant to
this paragraph (i) shall be an amount equal to the average of the Quoted Prices
for Common Stock for the thirty (30) consecutive trading days commencing
forty-five (45) trading days before the date of determination.
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(ii) The Contract Value per Share determined pursuant to
this paragraph (ii) shall equal the quotient of (A) five (5.0) times EBITDA,
minus (1) the outstanding principal amount of Funded Indebtedness as of the
last day of the fiscal month ending immediately prior to the date of
determination, plus (2) cash and Cash Equivalent Investments on the balance
sheet of the Company and its Subsidiaries as of the last day of the fiscal
month ending immediately prior to the date of determination, all determined in
accordance with GAAP, divided by (B) the sum of (1) the number of shares of
Common Stock outstanding on the date of determination, plus (2) the number of
Warrant Shares purchasable and receivable upon exercise of the rights
represented by the Warrant Certificates as of the date of determination.
(iii) If (but only if) the Company is not a Public Company,
the Contract Value per Share determined pursuant to this paragraph (iii) shall
be the quotient of (A) the fair market value of the Company and its
Subsidiaries taken as a whole on the date of determination, taking into account
all the factors relevant thereto, including, without limitation, the price that
could be obtained from an arms'-length sale without time constraints of (1) all
or substantially all of the assets of the Company and the Subsidiaries subject
to or after satisfaction of all liabilities of the Company and the
Subsidiaries, excluding any tax or other liabilities incurred in connection
with such sale or (2) all of the Stock of the Company, whether by stock sale,
merger, consolidation or otherwise, divided by (B) the sum (1) the number of
fully vested shares of Stock on the date of determination, plus (2) the number
of Warrant Shares purchasable and receivable upon exercise of the rights
represented by the Warrant Certificates as of the date of determination. In no
event shall the Contract Value per Share determined pursuant to this paragraph
(iii) be reduced or discounted on the basis that any securities to be valued on
the basis of such Contract Value per Share may represent the right to acquire a
minority interest in the Company or may not be freely transferable under
federal or state securities laws, or for any other reason. In any
circumstances in which the Contract Value per Share is to be determined
pursuant to this paragraph (iii), the Company shall give to the Holder (or, if
such determination affects less than all of the Holders, to the Holders so
affected) written notice of the proposed Contract Value per Share, as
determined in good faith by the Board of Directors of the Company. If, within
thirty (30) days after the date such notice is given, the Company and the
Required Holders agree upon the Contract Value per Share then the Contract
Value per Share for purposes of this paragraph (iii) shall be as so agreed. If
the Required Holders and the Company do not agree upon such Contract Value per
Share within such 30-day period, then the Required Holders and the Company
shall appoint a recognized investment banking firm of national reputation,
reasonably acceptable to the Required Holders and the Company. If the Company
and the Required Holders cannot agree on the appointment of a mutually
acceptable investment banking firm, or if the firm so appointed declines or
fails to serve, then the Required Holders and the Company shall
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each choose one such investment banking firm and the respective firms so chosen
shall appoint another recognized investment banking firm of national
reputation. The investment banking firm so selected shall appraise the value
of the Company for the purposes of this paragraph (iii), and such investment
banking firm shall make such appraisal (which shall be in the form of a written
report signed by such investment banking firm), and, for the purposes of
determining the Contract Value per Share pursuant to this paragraph (iii), such
appraised value of the Company determined as herein provided shall be final and
conclusive and binding on the Company and the Holders. All costs of appraisals
shall be borne by the Company.
"Conversion Rate" is defined in subparagraph (1)(iv) of the
Certificate of Amendment.
"Convertible Securities" is defined in subparagraph
(l)(vii)(C) of the Certificate of Amendment.
"Credit Agreement" means the Credit Agreement, dated of even
date herewith, among the Company, the Purchasers and various other Lenders that
may become parties thereto and ING as Agent for the Lenders, as in effect on
the date hereof and as hereafter amended, supplemented, restated or otherwise
modified.
"EBITDA" means the net income of the Company and its
Subsidiaries, reported on a consolidated basis for the twelve-month period
immediately preceding the month of the date of determination, adjusted by
adding thereto the amount of all interest expense, depreciation, amortization
of intangible assets and other non-cash charges (to the extent deducted in
computing net income for such period) and taxes incurred, if any, that were
deducted in computing net income for such period, all determined in accordance
with GAAP as in effect on the Closing Date, but excluding the effect of the
accretion of the right to put Warrant Securities pursuant to this Agreement and
any original issue discount on the issuance of the Warrants; provided, however
that if the Company or any of its Subsidiaries has effected an Acquisition
during such twelve-month period, EBITDA shall be calculated giving pro forma
effect to such Acquisition as if such Acquisition was consummated (and any
Funded Indebtedness incurred in connection therewith was incurred) on the first
day of such period. In giving pro forma effect to any Acquisition, EBITDA with
respect to Telephones acquired pursuant to such Acquisition shall be based upon
the Company's projected EBITDA with respect to such Telephones for the 12-month
period commencing with the month immediately following such Acquisition as
determined in good faith by the Board of Directors of the Company, but in any
event EBITDA shall be deemed to be not less than $600 per Telephone acquired
pursuant to such Acquisition. In giving pro forma effect to any Funded
Indebtedness incurred in connection with an Acquisition, interest attributable
to Funded Indebtedness bearing a floating rate of interest shall be computed as
if the rate in effect on the
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date of determination had been the applicable rate for the entire period.
"Eligible Lending Institution" means a financial institution
having a branch or office in the United States and having capital and surplus
and undivided profits aggregating at least $100,000,000 and whose long-term
debt securities are rated Prime-1 or better by Xxxxx'x Investor Service, Inc.
or A-1 or better by Standard & Poor's Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended or otherwise modified from time to time.
"Exercise Price" means $0.20 per Warrant Share, as adjusted as
herein provided.
"Fair Market Value per Share" means the fair market value of
a share of Common Stock as determined in accordance with subparagraph
(l)(vii)(H) of the Certificate of Amendment.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means each twelve month accounting period of the
Company which ends on December 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1996 Fiscal Year") refer to the
Fiscal Year in which the majority of days in such Fiscal Year occur.
"Funded Indebtedness" means (i) the indebtedness under the
Credit Agreement, and (ii) all other indebtedness of the Company and its
Subsidiaries which matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendable, at the
option of the Company or any of its Subsidiaries, to a date more than one year
from such date or arises under an agreement which obligates the lender or
lenders to extend credit during a period of more than one year from such date.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Xxxx" means Xxxxx X. Xxxx.
"Holders" means, collectively, the Purchasers and any
subsequent registered holders, from time to time, of Warrant Securities.
"Indemnified Liabilities" is defined in Section 22.
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"Indemnified Parties" is defined in Section 22.
"Legally Available Funds" means, with respect to any purchase
of Warrant Securities pursuant to Section 19(a), the amount of funds of the
Company legally available therefor under the corporate laws under which the
Company is organized and existing.
"Lender" is defined in Recital A.
"Lien" means any mortgage, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other), adverse
claim (i.e., a claim that a transfer was or would be wrongful or that a
particular adverse person is the owner or has an interest in property),
security agreement or other arrangement of any kind or nature whatsoever that
entitles any creditor or obligee to be satisfied from any or all of the assets
of a debtor or obligor prior to the satisfaction of any claims of any other
creditor or obligee (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Loan" means, collectively, the Revolving Loans and the Term
Loan made by the Lenders to the Company pursuant to Section 2.1 of the Credit
Agreement.
"Obligations" means all obligations of the Company with
respect to the repayment or performance of any obligations (monetary or
otherwise) of the Company arising under or in connection with the Credit
Agreement, the "Notes" or the other "Loan Documents" (as such terms are defined
in the Credit Agreement) and the Warrant Documents.
"Organic Document" means, relative to any Person, its articles
or certificate of incorporation or certificate of limited partnership, its
by-laws, partnership agreement or other organizational documents, and all
stockholders agreements, voting trusts and similar arrangements applicable to
any of its stock or partnership interests, in each case, as amended.
"Permitted Merger" means the merger of the Company with and
into a Delaware corporation for the sole purpose of changing the Company's
state of incorporation to the State of Delaware, provided that (i) the
shareholders of the surviving corporation immediately after such merger are the
shareholders of the Company immediately prior to such merger, (ii) the number
of authorized and issued and authorized and unissued shares, and the respective
classes and series, of capital stock of the surviving corporation shall be the
same as the number of authorized and issued and authorized and unissued shares,
and the respective classes and series, of capital stock of the Company
immediately prior to such merger, (iii) the voting powers, designations,
preferences and
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relative, participating, optional or other special rights, and qualifications,
limitations and restrictions of all classes and series of capital stock of the
surviving corporation shall be identical to the voting powers, designations,
preferences (including, without limitation, stated values and liquidation
preferences) and relative, participating, optional or other special rights, and
qualifications, limitations and restrictions of the respective classes and
series of the capital stock of the Company as in effect immediately prior to
such merger, (iv) the Holders shall have received (A) an assumption agreement
in form and substance satisfactory to the Required Holders, duly executed by
the surviving corporation and pursuant to which the surviving corporation shall
expressly assume all of the obligations of the Company under this Agreement and
the other Warrant Documents, and (B) such acknowledgments, certificates,
instruments and legal opinions relating to such merger and assumption agreement
as the Required Holders shall reasonably request, and (v) the provisions of
Section 203 of the Delaware General Corporation Law would not apply to the
Company or any Holder, this Agreement, any of the other Warrant Documents or
any of the Loan Documents or the authorization or the issuance of the Warrant
Securities or any shares of capital stock to be issued pursuant to the Loan
Documents.
"Person" means any natural person, corporation, partnership,
limited liability company, firm, association, government, governmental agency
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Preferred Stock" means shares now or hereafter authorized of
any class of capital stock of the Company other than Common Stock, and shall
include, without limitation, the presently authorized 2,500,000 shares of
Preferred Stock, $.01 par value, of which (i) 2,125 shares have been designated
Preferred Stock, $100 par value, of which no shares are outstanding, (ii) 6,500
shares have been designated Convertible Preferred Stock, without par value,
$100 stated value, cumulative and redeemable, of which no shares are
outstanding, (iii) 3,880 shares have been designated Preferred Stock, without
par value, $1,000 stated value, cumulative and redeemable, of which no shares
are outstanding, (iv) 16,000 shares have been designated 8% Preferred Stock,
without par value, $100 stated value, cumulative and redeemable, of which no
shares are outstanding, (v) 2,500 shares have been designated 7% Convertible
Preferred Stock, without par value, $100 stated value, cumulative and
redeemable, of which no shares are outstanding, (vi) 550,000 shares have been
designated 10% Preferred Stock, without par value, $10 stated value,
cumulative, of which 530,534 shares are outstanding, (vii) 250,000 shares have
been designated Series A Special Convertible Preferred Stock, $.20 par value,
of which no shares are outstanding, (viii) 250,000 shares have been designated
Series B Special Convertible Preferred Stock, $.20 par value, of which no
shares are outstanding, (ix) 200,000 shares have been designated 14%
Convertible Preferred Stock, without par value, $60 stated value, of which
107,918
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shares are outstanding and (x) 1,218,995 shares are undesignated and unissued.
"Prospective Purchaser" shall have the meaning set forth in
Section 19(d).
"Public Company" means a company (i) which is subject to the
reporting requirements of Section 15(d) of the Exchange Act, or (ii) any of
whose securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act.
"Purchase Price" is the amount payable to each Holder for such
Holder's Warrant Securities, as calculated in accordance with Section 19(a).
"Put Closing Date" is defined in Section 19(b).
"Put Notice" is the written notice to the Company specifying
the number and type of Warrant Securities with respect to which the Put Right
is being exercised.
"Put Right" is the right of each Holder to require that the
Company purchase all or any portion of the Warrant Securities then owned by
such Holder.
"Quoted Price" of Common Stock for each day means the last
reported sales price of Common Stock on such day as reported by NASDAQ or, if
Common Stock is listed on a national securities exchange, the last reported
sales price of Common Stock on such exchange (which shall be for consolidated
trading if applicable to such exchange) on such day, or if not so reported or
listed, the average of the last reported bid and asked prices of Common Stock
on such day, in each case as appropriately adjusted for any stock splits or
reverse stock splits occurring after the Closing Date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated of even date herewith, between the Company and the Purchasers,
as in effect on the date hereof and as hereafter amended, supplemented,
restated or otherwise modified.
"Required Holders" means Holders holding at least 66-2/3% of
the Warrant Securities outstanding (treating all Warrants as fully exercised
for the Warrant Shares to which Holders would be entitled upon exercise of such
Warrants) or, if any matter affects the interest of less than all of the
Holders, then Holders holding at least 66-2/3% of the Warrant Securities so
affected, as the context may require.
"Required Lenders" is defined in the Credit Agreement.
"Restriction on Purchase" exists if, at the time of a Closing,
(i) the purchase of such Warrant Securities would result in a default under or
a breach of any Restrictive Provision (assuming that the covenants applicable
to the Company at the end
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of the Fiscal Quarter in which such purchase is to occur were applicable on the
date of such purchase), or (ii) the Company would not have sufficient Legally
Available Funds to pay the Purchase Price for the Warrant Securities.
"Restrictive Provision" means any of the financial covenants
contained in Section 6.2.4 or the negative covenants contained in Section 6.2.8
of the Credit Agreement, in each case as the same may be amended from time to
time; provided, however, that to the extent noncompliance with any such
covenant as a result of the purchase by the Company of Warrant Securities is
waived in accordance with Section 9.1 of the Credit Agreement such covenant
shall not constitute a Restrictive Provision.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Legend" is defined in Section 10.
"Selling Holder" is defined in Section 19(c).
"Selling Holder Notice" is defined in Section 19(d).
"Selling Holder Offer" is defined in Section 19(d).
"Series A Special Preferred Stock" means the 250,000 shares of
Series A Special Convertible Preferred Stock of the Company, $.20 par value per
share, authorized pursuant to the Certificate of Amendment, of which no shares
are outstanding as of the Closing Date.
"Series B Special Preferred Stock" means the 250,000 shares of
Series B Special Convertible Preferred Stock of the Company, $.20 par value per
share, authorized pursuant to the Certificate of Amendment, of which no shares
are outstanding as of the Closing Date.
"Stock" means any capital stock of the Company.
"Subsidiary" of any corporation means any other corporation
greater than 50% of the outstanding shares of capital stock of which having
ordinary voting power for the election of directors is owned directly or
indirectly by such corporation, and, except as otherwise indicated herein,
references to Subsidiaries shall refer to Subsidiaries of the Company.
"Substitute Securities" is defined in Section 15(a).
"Telephone" is defined in the Credit Agreement.
"Transfer Agent" is defined in Section 14.
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"Warrant Certificates" means the certificates evidencing the
Warrants in the form of Exhibit A.
"Warrant Documents" means, collectively, this Agreement, the
Warrants, the Registration Rights Agreement and any other document, instrument
or agreement executed or delivered in connection with any of the foregoing to
which the Company is a party, but excluding the Credit Agreement and the other
Loan Documents (as defined in the Credit Agreement).
"Warrant Securities" means, collectively, the Warrants and
Warrant Shares.
"Warrant Shares" means the securities which a Holder may
acquire upon exercise of a Warrant, together with any other securities which
such Holder may acquire on account of any such securities, including, without
limitation, as the result of the Series A Special Preferred Stock being
converted into shares of Common Stock and/or any dividend or other distribution
on Common Stock, any split-up of such Common Stock, or in accordance with a
recapitalization, merger, consolidation, share exchange, reorganization or
other transaction or series of related transactions in which shares of Common
Stock are changed into or exchanged for securities of another corporation, or
the exercise of any preemptive right (or the exercise or conversion of any
security which such Holder may acquire in connection with the exercise of any
preemptive right) with respect to any such Common Stock.
"Warrants" means the warrants referred to in Recital B
evidenced by the Warrant Certificates, together with any warrants issued in
substitution or replacement therefor.
(b) Cross-References. Unless otherwise specified,
references in this Agreement to any Article or Section are references to such
Article or Section of this Agreement, and unless otherwise specified,
references in any Article, Section, or definition to any clause are references
to such clause of such Section, Article or definition.
(c) Gender; Usage. Whenever used herein the singular
number shall include the plural, the plural shall include the singular, and the
use of any gender shall include all genders. The words "hereof," "herein" and
"hereunder," and words of similar import, when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
SECTION 2. Purchase and Sale of Warrants; Closing.
(a) Subject to the initial funding of the Loan, the Company
hereby agrees to sell to each Purchaser and, subject to the provisions of
Section 4, each Purchaser hereby agrees to purchase from the Company, Warrants
to purchase 102,412 shares of Series A Special Preferred Stock, for an
aggregate purchase
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price of $1.00 and other good and valuable consideration, all of which shall be
deemed to have been received by the Company upon the initial funding of the
Loan under the Credit Agreement.
(b) The sale and purchase of the Warrants shall take
place at the Closing at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. on March 15, 1996 or
such other place and time as may be agreed upon by the Purchasers and the
Company. At the Closing, the Company will deliver to each Purchaser Warrant
Certificates in the form of Exhibit A attached hereto evidencing the Warrants
to be purchased by such Purchaser (in such denomination or denominations as
such Purchaser may request and registered in its name or the name of its
nominee), dated the Closing Date.
SECTION 3. Investment Representations. Each Purchaser
represents and warrants that it is purchasing the Warrants for its own account,
for investment purposes and not with a view to the distribution thereof;
provided, however, that the foregoing representation shall not be construed as
imposing any limitation on such Purchaser's right to transfer any of the
Warrants that is not otherwise expressly set forth in the Warrant Documents or
required under applicable law. Each Holder agrees that it will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any of the Warrant Securities (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of the Warrant Securities),
except in compliance with the Securities Act. Each Holder agrees that it will
not transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of
the Warrant Securities if any such disposition would cause the Company to be
required to register any Warrant Securities pursuant to Section 12(g) of the
Exchange Act.
SECTION 4. Conditions Precedent. The obligation of
Purchasers to purchase the Warrants on the Closing Date pursuant to Section 2
hereof shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 4, except as the Purchasers
shall otherwise consent:
(a) the accuracy of the representations set forth in this
Agreement and in the other Warrant Documents in all material respects;
(b) the compliance by the Company in all material
respects with all covenants and agreements required to be performed by it on or
prior to the Closing;
(c) the satisfaction of all of the conditions precedent
set forth in Article 4 of the Credit Agreement;
(d) the initial funding of the Loan under the Credit
Agreement;
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(e) each Purchaser's receipt of Warrant Certificates
registered in such Purchaser's name (or in the name of a nominee of such
Purchaser) evidencing the Warrants;
(f) the Purchasers' receipt of the Registration Rights
Agreement with respect to the Warrants, in form and substance satisfactory to
Purchasers, duly executed and delivered by the Company and dated the Closing
Date;
(g) the Purchasers' receipt of a copy of the Company's
certificate of incorporation, certified by the Secretary of State of Ohio as of
a recent date;
(h) the Purchasers' receipt of a certificate of the
secretary or an assistant secretary of the Company, together with true and
correct copies of the resolutions of the Board of Directors authorizing or
ratifying the execution, delivery and performance of this Agreement and the
other Warrant Documents, and authorizing the creation and issuance of the
Warrants and the Warrant Shares; and setting forth the names of the Authorized
Officers of the Company executing this Agreement and the other Warrant
Documents, together with a sample of the true signature of each such Authorized
Officer;
(i) the Purchasers' receipt of certified copies of all
documents evidencing any other necessary corporate action, consents and
governmental approvals or filings (if any) with respect to this Agreement and
the other Warrant Documents;
(j) the Purchasers' receipt of an opinion, dated the
Closing Date, from Messrs. Skadden, Arps, Slate, Xxxxxxx & Xxxx, counsel to the
Company, in form and substance satisfactory to each Purchaser and its counsel,
and covering such matters as each Purchaser may reasonably request; and
(k) all proceedings taken in connection with the
transactions contemplated by this Agreement and the other Warrant Documents
shall be satisfactory in form and substance to each Purchaser and its counsel,
and each Purchaser and its counsel shall have received copies (executed or
certified as may be appropriate) of all documents, instruments and agreements
which such Purchaser or its counsel may request in connection with the
consummation of such transactions.
SECTION 5. Warranties, etc. In order to induce the
Purchasers to enter into this Agreement, to engage in the transactions
contemplated herein and in the other Warrant Documents and to purchase the
Warrants hereunder, the Company represents and warrants unto each Purchaser as
set forth in this Section 5, each and all of which representations and
warranties shall survive the execution and delivery of this Agreement and the
Closing hereunder:
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(a) Credit Agreement Warranties. Each of the
representations and warranties of the Company set forth in the Credit Agreement
is true and correct as of the date of this Agreement and will be true and
correct as of the Closing Date.
(b) Power, Authority, etc. The Company has full power
and authority to enter into and perform its obligations under this Agreement
and each of the other Warrant Documents.
(c) Due Authorization. The Certificate of Amendment has
been duly adopted pursuant to applicable law, has been duly filed with the Ohio
Secretary of State and is in full force and effect. The execution and delivery
by the Company of this Agreement and each of the other Warrant Documents, the
performance by the Company of its obligations hereunder and thereunder and the
issuance of the Warrant Securities by the Company have been duly authorized by
all necessary corporate action, do not require any Approval (except those
Approvals already obtained), do not and will not conflict with, result in any
violation of, or constitute any default under, any provision of any Organic
Document of the Company or any Subsidiary, any agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which it or any of its
property is bound, or any law or governmental regulation or court decree or
order and will not result in or require the creation or imposition of any Lien
on any of the Company's or any Subsidiary's properties pursuant to the
provisions of any such agreement or instrument. No vote (including any vote
under the rules of any securities exchange or trading system or market on which
any of the Company's securities are listed or traded) on the part of the
stockholders of the Company is required to approve or authorize the Certificate
of Amendment, any of the transactions contemplated by this Agreement, any of
the other Warrant Documents or any of the Loan Documents or the authorization
or the issuance of the Warrant Securities or any shares of capital stock to be
issued pursuant to the Loan Documents. None of the transactions contemplated
by this Agreement, any of the other Warrant Documents or any of the Loan
Documents (including the issuance of the Warrant Securities or any shares of
capital stock to be issued pursuant to the Loan Documents) will give rise to
any payment or the acceleration of any obligation (whether with or without the
passage of time or upon the occurrence of any event) to any director, officer
or employee of the Company or any Subsidiary.
(d) Absence of Takeover Statutes. The Board of Directors
of the Company has approved for purposes of Chapter 1704 of the Ohio Revised
Code (Transactions Involving Interested Shareholders) the transactions
contemplated by this Agreement, the other Warrant Documents and the Loan
Documents and the issuance of the Warrant Securities and any shares of capital
stock to be issued pursuant to the Loan Documents and upon conversion of any
such shares. The provisions of Ohio Revised Code Section 1707.041 with respect
to "control bids" as defined in Ohio Revised Code Section 1707.01(V)(1) do not
apply to the transactions
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contemplated by the Warrant Agreement, the other Warrant Documents and the Loan
Documents or the issuance of the Warrant Securities and any shares of Stock to
be issued pursuant to the Loan Documents or upon conversion of such shares. No
other "fair price," "moratorium," "control share acquisition," "business
combination," "shareholder protection," or similar antitakeover statute will
apply to any Holder as a result of this Agreement, any of the other Warrant
Documents or any of the Loan Documents or the authorization or issuance of the
Warrant Securities or any shares of capital stock to be issued pursuant to the
Loan Documents. The Company is not a party to, and is not subject to, any
rights plan, rights agreement or similar agreement, arrangement or
understanding.
(e) Communications Act. None of the Company and its
Subsidiaries holds any licenses or conducts any business which would result in
the application of Section 310 of the Communications Act of 1934 as a result of
this Agreement, any of the other Warrant Documents, or any of the Loan
Documents or the authorization or issuance of the Warrant Securities or any
shares of capital stock to be issued pursuant to the Loan Documents.
(f) Validity, etc. This Agreement constitutes, and each
of the other Warrant Documents will upon the execution and delivery thereof
constitute, the legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms, in each case subject to (i) the
effect of any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally, and (ii) the effect of general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
(g) Capitalization and Ownership of the Company. The
authorized capital stock of the Company consist of 22,500,000 shares of Common
Stock, par value $0.01 per share, 3,410,939 of which will be outstanding on the
Closing Date; 2,500,000 shares of Preferred Stock, $.01 par value, of which (i)
2,125 shares have been designated Preferred Stock, $100 par value, of which no
shares will be outstanding on the Closing Date, (ii) 6,500 shares have been
designated Convertible Preferred Stock, without par value, $100 stated value,
cumulative and redeemable, of which no shares will be outstanding on the
Closing Date, (iii) 3,880 shares have been designated Preferred Stock, without
par value, $1,000 stated value, cumulative and redeemable, of which no shares
will be outstanding on the Closing Date, (iv) 16,000 shares have been
designated 8% Preferred Stock, without par value, $100 stated value, cumulative
and redeemable, of which no shares will be outstanding on the Closing Date, (v)
2,500 shares have been designated 7% Convertible Preferred Stock, without par
value, $100 stated value, cumulative and redeemable, of which no shares will
be outstanding on the Closing Date, (vi) 550,000 shares have been designated
10% Preferred Stock, without par value, $10 stated value, cumulative, of which
530,534 shares will be outstanding on the Closing Date, (vii) 250,000 shares
have been designated Series
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A Special Convertible Preferred Stock, $.20 par value, no shares of which will
be outstanding on the Closing Date, (viii) 250,000 shares have been designated
Series B Special Convertible Preferred Stock, $.20 par value, no shares of
which will be outstanding on the Closing Date, (ix) 200,000 shares have been
designated 14% Convertible Preferred Stock, without par value, $60 stated
value, of which 107,918 shares will be outstanding on the Closing Date and (x)
1,218,995 shares are undesignated and unissued on the Closing Date. All
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, and are not, and will not have been,
issued in violation of any preemptive rights. Except as set forth in Exhibit B
attached hereto, no issued, no authorized but unissued and no treasury shares
of capital stock of the Company are subject to any preemptive right, option,
warrant, right of conversion or purchase or any similar right issued or granted
by the Company or, to the knowledge of the Company, by any of its shareholders.
Except as set forth in the Organic Documents of the Company, in Section 19 of
this Agreement, or on Exhibit C attached hereto, there are no agreements or
understandings with respect to the voting, sale or transfer of any shares of
stock of the Company to which the Company or any of its Subsidiaries is a
party.
(h) Authorization and Issuance of Warrants. The issuance
of the Warrants has been duly authorized and, upon delivery to the Purchasers
of the Warrant Certificates therefor in accordance with the terms hereof, the
Warrants will have been validly issued and fully paid and nonassessable, free
and clear of all Liens and the issuance thereof will not give rise to any
preemptive rights. The issuance of the shares of Series A Special Preferred
Stock subject to the Warrants has been duly authorized and, when issued upon
exercise of the Warrants, such shares will have been validly issued and will be
fully paid and nonassessable and the issuance thereof will not give rise to any
preemptive rights. The issuance of the shares of Common Stock issuable upon
conversion of the Series A Special Preferred Stock has been duly authorized
and, when issued upon conversion of the Series A Special Preferred Stock, such
shares will have been validly issued and will be fully paid and nonassessable
and the issuance thereof will not give rise to any preemptive rights. 250,000
shares of Series A Special Preferred Stock have been duly reserved for issuance
upon the exercise of the Warrants and 5,000,000 shares of Common Stock have
been duly reserved for issuance upon the conversion of the Series A Special
Preferred Stock. Except as set forth in the Registration Rights Agreement and
as set forth on Exhibit D attached hereto, no Person has the right to demand or
any other right to cause the Company to file any registration statement under
the Securities Act relating to any securities of the Company or any right to
participate in the any such registration.
(i) Securities Laws. In reliance on the investment
representations contained in Section 3, the offer, issuance, sale and delivery
of the Warrants to the Purchasers, as provided in
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this Agreement, and the issuance and delivery of Series A Special Preferred
Stock upon the exercise of the Warrants by the Purchasers and the issuance and
delivery of Common Stock to the Purchasers upon the conversion of the Series A
Special Preferred Stock, are and will be exempt from the registration
requirements of the Securities Act and all applicable state securities laws, as
such laws are currently in effect.
(j) No Integration of Issue. Neither the Company nor any
Person authorized or employed by the Company as agent, broker or otherwise in
connection with the offering of the Warrants has offered the Warrants for sale
to, or solicited any offers to buy the Warrants from, or otherwise approached
or negotiated or communicated in respect thereof with, anyone other than
Purchasers. Neither the Company nor any Person acting on behalf of the Company
will sell or offer any class of securities to, or solicit any offers to buy any
class of securities from, or otherwise approach, negotiate or communicate in
respect thereof with, any Person so as to require the registration of the
Warrants under the Securities Act or any applicable state securities laws.
SECTION 6. Covenants. The Company agrees with each Holder
that, until the termination of this Agreement pursuant to Section 24 hereof,
the Company will perform the obligations set forth in this Section 6:
(a) Financial and Business Information. At any time
during which the Company is not a Public Company, the Company will furnish, or
will cause to be furnished, to each Holder copies of the following financial
statements, reports and information:
(i) promptly when available and in any event
within ninety (90) days after the close of each Fiscal Year, a
consolidated and consolidating balance sheet at the close of
such Fiscal Year, and related consolidated and consolidating
statements of operations, retained earnings, and cash flows
for such Fiscal Year, of the Company and its Subsidiaries
(with comparable information at the close of and for the prior
Fiscal Year), certified (in the case of consolidated
statements) without qualification by Price Waterhouse LLP or
other independent public accountants reasonably satisfactory
to the Required Holders, together with a report containing a
description of projected business prospects (including capital
expenditures) and management's discussion and analysis of
financial condition and results of operation of the Company
and its Subsidiaries;
(ii) at any time during which any indebtedness
shall be outstanding under the Credit Agreement, promptly when
available but in any event within thirty (30) days after the
close of each calendar month of each Fiscal Year, consolidated
and consolidating balance
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sheets at the close of such month, and consolidated and
consolidating statements of operations, retained earnings, and
cash flows for such month and for the period commencing at the
close of the previous Fiscal Year and ending with the close of
such month, of the Company and its Subsidiaries (with
comparable information at the close of and for the
corresponding month of the prior Fiscal Year and for the
corresponding portion of such prior Fiscal Year), certified by
the Chief Financial Officer of the Company, together with a
description of projected business prospects (including capital
expenditures) and a brief report containing management's
discussion and analysis of the financial condition and results
of operations of the Company and its Subsidiaries (including a
discussion and analysis of any changes compared to prior
results);
(iii) at any time during which all outstanding
indebtedness under the Credit Agreement shall have been
repaid in full, promptly when available and in any event
within forty-five (45) days after the close of each Fiscal
Quarter of each Fiscal Year, consolidated and consolidating
balance sheets at the close of such quarter, and consolidated
and consolidating statements of operations, retained
earnings, and cash flows for such quarter and for the period
commencing at the close of the previous Fiscal Year and
ending with the close of such Fiscal Quarter, of the Company
and its Subsidiaries (with comparable information at the
close of and for the corresponding Fiscal Quarter of the
prior Fiscal Year and for the corresponding portion of such
prior Fiscal Year), certified by the Chief Financial Officer
of the Company, together with a description of projected
business prospects (including capital expenditures) and a
report containing management's discussion and analysis of the
financial condition and results of operations of the Company
and its Subsidiaries (including a discussion and analysis of
any changes compared to prior results); and
(iv) promptly upon the sending or filing thereof,
copies of all reports that the Company sends to its security
holders generally.
(b) Issuance of Additional Warrants. Within 10 days
following the first date on which the aggregate principal amount of the
Revolving B Loans exceeds $1,500,000, the Company shall issue to the Lenders,
ratably in accordance with such Lenders' Revolving Percentages on such date,
additional Warrants to purchase shares of Series A Special Preferred Stock
which are convertible into 0.31% of the outstanding common stock of the Company
on a fully-diluted basis as of the Closing Date (but without taking into
account the Term Notes or other the Series B Special Preferred Stock), for an
aggregate purchase price of $1.00
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and other good and valuable consideration, and the Company shall deliver to
each Lender Warrant Certificates in the form of Exhibit A attached hereto
evidencing the Warrants to be issued to such Lenders (in such denomination or
denominations as such Lenders may request and registered in its name or the
name of its nominee), dated the date of such issuance.
(c) Maintenance of Corporate Existences, etc. The
Company will cause to be done at all times all things necessary to maintain and
preserve the corporate existences of the Company and its Subsidiaries.
(d) Maintenance of Books and Records. The Company will,
and will cause each Subsidiary to, keep books and records reflecting all of its
business affairs and transactions in accordance with GAAP.
(e) Inconsistent Agreements. The Company will not, and
will not permit any Subsidiary to, enter into any agreement containing any
provision which would be violated or breached by the issuance of the Warrants
or the Warrant Shares or by the performance by the Company or any Subsidiary of
its obligations under this Agreement or under any other Warrant Documents.
(f) Organic Documents. So long as any Warrant Securities
are outstanding, the Company's certificate of incorporation shall contain the
provisions regarding the Series A Special Preferred Stock set forth in its
Organic Documents as constituted on the date hereof. The Company shall not
permit to occur any amendment, alteration or modification to its Organic
Documents, as constituted on the date hereof, the effect of which, in the
Purchasers' or the Required Holders' reasonable judgment, would be to impair or
adversely affect either the rights and benefits of Purchasers or the Holders or
the duties and obligations of the Company under this Agreement and the other
Warrant Documents. The Company shall not adopt or enter into any rights plan,
rights agreement, or similar arrangement or understanding.
(g) Transactions with Affiliates. Except as set forth on
Exhibit E, the Company will not, and will not permit any Subsidiary to, enter
into, or cause, suffer or permit to exist:
(i) any management contract or agreement, consulting
agreement or arrangement, contract or arrangement relating to the
allocation of revenues or expenses or similar contract or arrangement
requiring any payments to be made by the Company or any of its
Subsidiaries to any Affiliate, other than any arrangement solely among
the Company and its wholly-owned Subsidiaries; and
(ii) any other transaction, arrangement or contract with
any of its Affiliates which is on terms which are less
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favorable than are obtainable in a transaction from any Person which is
not one of its Affiliates.
(h) Issuance of Additional Rights, Options and Warrants.
The Company will not issue any rights, options or warrants to subscribe for or
purchase or otherwise acquire Common Stock or Convertible Securities, whether or
not the right to exercise such rights, options or warrants or to convert or
exchange such Convertible Securities is immediately exercisable or is
conditioned upon the passage of time, an occurrence or non-occurrence of some
other event, or both; provided, however, that:
(i) the Company may issue any such rights, options or
warrants to members of management of the Company (other than Xxxx)
pursuant to a management incentive plan approved by the Company's
Board of Directors provided (x) any such rights, options or warrants
granted pursuant to any such plan are granted in respect of any fiscal
year only upon meeting the Projections (as defined in the Loan
Documents) for such fiscal year and (y) the aggregate amount of Common
Stock for which any such rights, options or warrants may be exercised,
when taken together with the aggregate amount of any Below Market
Dilution Shares, shall not exceed 10% of the outstanding Common Stock
of the Company as of the Closing Date, and (z) such rights, options or
warrants granted in respect of any single fiscal year shall not
represent more than 50% of the maximum number of rights, options or
warrants that may be granted pursuant to such plan; and
(ii) subject to the Company's obligations under subparagraph
(l)(vii) of the Certificate of Amendment, the Company may issue
rights, options or warrants to purchase Common Stock to Xxxx.
(i) Preferred Stock. The Company will not declare, pay
or make any dividend or distribution, in cash, property or obligations, on any
shares of Preferred Stock issued and outstanding as of the Closing Date
(including, without limitation, dividends or distributions by issuance of
shares of Stock or by accretion to the liquidation preference or stated value
of such Preferred Stock), except such dividends and distributions as accrue and
cumulate in accordance with the terms of such Preferred Stock as in effect on
the Closing Date. The Company will not apply, or permit any Subsidiary to
apply, any of its funds, properties or assets to the purchase, redemption,
sinking fund or other retirement of any shares of Preferred Stock issued and
outstanding as of the Closing Date, or make any deposit for any of the
foregoing, except that the Company may purchase or redeem such Preferred Stock
at such times as are required in accordance with the terms of such Preferred
Stock as in effect on the Closing Date and at a purchase or redemption price
not to exceed the stated value of such Preferred Stock plus accrued and unpaid
dividends (to the extent not added to the stated value thereof). The Company
will not issue any Preferred Stock having a stated value
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or liquidation preference in excess of the issue price therefor. The Company
will not effect a conversion or exchange of any shares of Preferred Stock
issued and outstanding as of the Closing Date for other securities of the
Company except that the Company may convert such Preferred Stock into Common
Stock in accordance with the terms of such Preferred Stock as in effect on the
Closing Date.
(j) Antitakeover Statutes. The Company shall take all
action necessary to avoid the application of any "fair price," "moratorium,"
"control share acquisition," "business combination," "shareholder protection"
or similar antitakeover statute to the transactions contemplated by this
Agreement, any of the other Warrant Documents or any of the Loan Documents
(including the issuance of the Warrant Securities or any shares of capital
stock to be issued pursuant to the Loan Documents).
(k) Redemptions; Extraordinary Dividends. The Company (i)
shall not redeem, purchase or otherwise retire any Stock or any rights, options
or warrants to subscribe for or purchase any Stock, and (ii) shall not declare
or pay any extraordinary dividend or distribution on any shares of Stock.
(l) FCC Licenses. Neither the Company nor any of its
Subsidiaries will acquire any licenses or conduct any business which would
result in the application of Section 310 of the Communications Act of 1934 (or
any similar provision) as a result of this Agreement, any of the other Warrant
Documents, or any of the Loan Documents or the authorization or issuance of the
Warrant Securities or any shares of capital stock to be issued pursuant to the
Loan Documents.
(m) Governmental Approvals. The Company will, and will
cooperate with the Holders to, secure all necessary consents, approvals,
authorizations and exemptions from all governmental authorities (including the
making of all filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act")) in connection with the exercise of the
Warrants, the issuance of shares of Series A Special Preferred Stock upon
exercise of the Warrants and the issuance of shares of Common Stock upon the
conversion of such shares of Series A Special Preferred Stock. The Company
shall be responsible for all filing fees and other expenses with respect to all
filings under the HSR Act in connection with the foregoing.
(n) Issuances of Shares. The Company will not issue any
shares of Series A Special Preferred Stock other than pursuant to the exercise
of the Warrants or Series B Special Preferred Stock other than pursuant to the
conversion of the Term Notes.
SECTION 7. Warrant Certificates. The Warrant Certificates to
be delivered pursuant to this Agreement shall be in registered form only and
shall be in the form set forth as Exhibit A attached hereto.
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SECTION 8. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President or a Vice President and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the Chairman of the
Board, President, Vice President, Secretary or Assistant Secretary and may be
printed or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be delivered or disposed of such person shall have ceased to
hold such office. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates.
In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate although at the date of the execution
of this Agreement such person was not such an officer.
SECTION 9. Registration. The Company shall number and
register the Warrant Certificates in a register as they are issued. The
Company may deem and treat the registered holder(s) of the Warrant Certificates
as the absolute owner(s) thereof (notwithstanding any notation of ownership or
other writing thereon made by anyone) for all purposes and shall not be
affected by any notice to the contrary.
SECTION 10. Registration of Transfers and Exchanges. The
Company shall from time to time register the transfer of any outstanding
Warrant Certificates in a Warrant register to be maintained by the Company upon
surrender of such Warrant Certificates accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company, duly
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Company. The Company agrees that it will make the Warrant
register available for inspection by the Holders during normal business hours
at its office and that the Holders may rely on the Warrant register for
purposes of complying with the preceding sentence.
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The Warrants shall be transferable in whole or in part and, in
the event that a Warrant Certificate is transferred in respect of fewer than
all the Warrants evidenced by the Warrant Certificate, a new Warrant
Certificate evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section 10 and of Section 8.
If such transfer of Warrants is not made pursuant to an
effective registration statement under the Securities Act, the Holder will, if
reasonably requested by the Company, deliver to the Company an opinion of
counsel, which may be counsel to the Holder but which counsel must be
reasonably satisfactory to the Company (provided that King & Spalding and
Xxxxxxxxxx, Sandler, Kohl, Xxxxxx & Xxxxxx shall be deemed reasonably
satisfactory), reasonably satisfactory in form, scope and substance to the
Company, that the Warrants may be sold without registration under the
Securities Act, as well as:
(1) an investment covenant reasonably
satisfactory to the Company signed by the proposed transferee (except that no
such covenant will be required in connection with a transfer effected in
accordance with Rule 144A under the Securities Act); and
(2) an agreement by such transferee to the
impression of the restrictive legends set forth below on the Warrant
Certificate.
The Holders agree that each Warrant Certificate and each
certificate representing Warrant Shares will bear the following legend (the
"Securities Legend"):
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS.
SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION, OR AN
OPINION OF COUNSEL (WHICH MAY BE COUNSEL
TO THE HOLDER) AS TO AN EXEMPTION, FROM
THE REGISTRATION PROVISIONS OF SAID ACT
OR LAWS."
Notwithstanding the foregoing provisions of this Section 10, the restrictions
upon the transferability of the Warrant Certificates and the Securities Legend
requirement set forth above in this Section 10 shall terminate as to any of the
Warrant Securities (i) when and so long as such Warrant Security shall have
been effectively registered under the Securities Act and disposed of pursuant
thereto or (ii) when the Company shall have received an opinion of counsel
reasonably satisfactory to it that such Securities Legend is not required in
order to ensure compliance with the Securities Act. Whenever the restrictions
imposed by
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this Section 10 shall terminate as to any Warrant Security, as hereinabove
provided, the Holder thereof shall be entitled to receive from the Company, at
the expense of the Company, a new Warrant Certificate or certificate for
Warrant Shares bearing the following legend in place of the Securities Legend
set forth above:
"THE RESTRICTIONS ON TRANSFERABILITY OF
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE TERMINATED ON ______________,
19__, AND ARE OF NO FURTHER FORCE AND
EFFECT."
The Holders further agree that each Warrant Certificate and
each certificate representing Warrant Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF
MARCH 15, 1996, BETWEEN PHONETEL
TECHNOLOGIES, INC. (THE "COMPANY") AND
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION ("ING") AND CERBERUS
PARTNERS, L.P. ("CERBERUS"), AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS
OF MARCH 15, 1996, AMONG THE COMPANY, ING
AND CERBERUS, COPIES OF EACH OF WHICH ARE
ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE
SECURITIES EVIDENCED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS OF THOSE
AGREEMENTS AND ANY SALE OR TRANSFER OF
SUCH SECURITIES IN VIOLATION OF SAID
AGREEMENTS SHALL BE INVALID."
Warrant Certificates may be exchanged at the option of the
Holder(s) thereof when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrants, including, without
limitation, upon an adjustment in the Exercise Price or in the number of
Warrant Shares purchasable upon exercise of the Warrants. Warrant Certificates
surrendered for exchange shall be cancelled and disposed of by the Company.
SECTION 11. Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Holder shall have the right, which may be
exercised at any time or from time to time prior to April 1, 2006, to receive
from the Company the number of fully paid and nonassessable Warrant Shares
which such Holder may at the time be entitled to receive on exercise of all or
any part of the Warrants and payment of the Exercise Price then in effect for
such Warrant Shares.
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A Warrant may be exercised upon surrender to the Company at
its office designated for such purpose (the address of which is set forth in
Section 20) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase attached thereto properly
completed and signed, upon payment to the Company of the Exercise Price for the
number of Warrant Shares in respect of which such Warrants are then exercised.
Payment of the aggregate Exercise Price shall be made in cash or by check
payable to the order of the Company.
Upon such surrender of Warrant Certificates and payment of the
Exercise Price, the Company shall issue and cause to be delivered with all
reasonable dispatch (and in any event within five (5) Business Days of such
surrender and payment) to or, subject to the provisions of Section 10, upon the
written order of the Holder, and in the name of the Holder or the Holder's
nominee, a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants together with such other property
(including cash) and securities as may then be deliverable upon such exercise,
including cash for fractional Warrant Shares as provided in Section 16. Such
certificate or certificates shall be deemed to have been issued and the Person
so named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrant Certificates and
payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the
Holders thereof, either in full or from time to time in part, and, in the event
that a Warrant Certificate is exercised in respect of fewer than all of the
Warrant Shares issuable pursuant to such Warrant Certificate at any time prior
to the date of expiration of the Warrants, a new Warrant Certificate evidencing
the remaining Warrant or Warrants will be issued and delivered pursuant to the
provisions of this Section 11 and of Section 8.
All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled and disposed of by the Company. The Company shall keep
copies of this Agreement and any notices received hereunder available for
inspection during normal business hours at its office. The Company will
furnish, at its expense, copies of this Agreement and all such notices, upon
request, to any Holder of any Warrant Certificates.
SECTION 12. Payment of Taxes. The Company will pay all stamp
and transfer taxes in connection with the issuance, sale and delivery of the
Warrants hereunder, as well as all such taxes attributable to the initial
issuance of Warrant Shares upon the exercise of Warrants and payment of the
Exercise Price and upon the issuance of shares of Common Stock upon the
conversion of shares of Series A Special Preferred Stock. The Company will
not, however, be required to pay any tax or other similar charges imposed in
connection with any transfer of any Warrant Securities. Nothing herein shall
be construed as requiring the Company to pay any taxes imposed in respect of
income realized by any Holder upon
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the purchase, transfer or exercise of Warrants or upon conversion of shares of
Series A Special Preferred Stock.
SECTION 13. Mutilated or Missing Warrant Certificates. In
case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, upon receipt of an affidavit and reasonable indemnity from the
holder thereof stating that such Warrant Certificate has been mutilated, lost,
stolen or destroyed the Company shall issue, in exchange and substitution for
and upon cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants.
SECTION 14. Reservation of Warrant Shares. The Company will
at all times reserve and keep available, free from preemptive or similar
rights, out of the aggregate of its authorized but unissued capital stock or
its authorized and issued capital stock held in its treasury, for the purpose
of enabling it to satisfy any obligation to issue Warrant Shares upon exercise
of Warrants, (i) the maximum number of shares of each class of capital stock
constituting a part of the Warrant Shares which may then be deliverable upon
the exercise of all outstanding Warrants and (ii) the maximum number of shares
of each class of Stock of the Company which may then be delivered upon the
conversion into Common Stock of all issued Warrant Shares. The Company shall
cause all shares of Common Stock into which Warrant Shares are convertible to
be (x) listed (or to be listed subject to notice of issuance) on each
securities exchange on which shares of Common Stock are listed, or (y) admitted
for trading in any inter-dealer quotation system on which shares of Common
Stock are traded.
The Company or, if appointed, the transfer agent for shares of
each class of capital stock of the Company (the "Transfer Agent") and every
subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the Warrants will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall be
required for such purpose. The Company will keep a copy of this Agreement on
file with the Transfer Agent and with every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants or of the rights of conversion of the
Warrant Shares. The Company will furnish such Transfer Agent a copy of all
notices of adjustments, and certificates related thereto, transmitted to each
Holder pursuant to Section 17.
Before taking any action which would cause an adjustment
pursuant to Section 15 to reduce the Exercise Price below the then par value
(if any) of the Warrant Shares, the Company will take any corporate action
which may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid
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and nonassessable Warrant Shares at the Exercise Price as so adjusted.
SECTION 15. Adjustment of Exercise Price and Number of
Warrant Shares Issuable. The Exercise Price and the number of Warrant Shares
issuable upon the exercise of each Warrant are subject to adjustment from time
to time upon the occurrence of any of the events enumerated in this Section 15.
(a) Reorganization of the Company
In the event of any capital reorganization, recapitalization
or reclassification of the capital stock of the Company, or consolidation,
merger or amalgamation of the Company with another entity, any acquisition of
capital stock of the Company by means of a share exchange, or the sale, lease,
transfer, conveyance or other disposition of all or substantially all of its
assets to another entity, then, as a condition of such reorganization,
recapitalization, reclassification, consolidation, merger, amalgamation, share
exchange or sale, lease, transfer, conveyance or other disposition, lawful and
adequate provision shall be made whereby the Holders of the Warrant
Certificates shall thereafter have the right to purchase and receive, on the
basis and upon the terms and conditions specified in this Agreement and in lieu
of the Warrant Shares immediately theretofore purchasable and receivable upon
the exercise of the rights represented by the Warrants, (i) such shares of
stock, securities, cash or property as may be issued or payable with respect to
or in exchange for a number of outstanding Warrant Shares equal to the number
of Warrant Shares immediately theretofore purchasable and receivable upon the
exercise of the rights represented by the Warrant Certificates had such
reorganization, recapitalization, reclassification, consolidation, merger,
amalgamation, share exchange or sale, lease, transfer, conveyance or other
disposition not taken place, and (ii) if such consolidation, merger,
amalgamation, share exchange, sale, lease, transfer, conveyance or other
disposition is with any Person (or any Affiliate of such Person) who shall have
made a purchase, tender or exchange offer which was accepted by the holders of
not less than twenty percent (20%) of the outstanding shares of Common Stock,
the Holders of the Warrants shall have been given a reasonable opportunity
(and, in no event, less than 30 days) to elect to receive, either (x) the
stock, securities, cash or property it would have received pursuant to clause
(i) immediately preceding or (y) the stock, securities, cash or property issued
to previous holders of the Common Stock in accordance with such offer, or the
equivalent thereof. In any such case appropriate provision shall be made with
respect to the rights and interests of the Holders of the Warrants to the end
that the provisions hereof (including, without limitation, provisions for
adjustment of the Exercise Price and of the number and type of securities
purchasable upon the exercise of the Warrants) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities, cash or
property thereafter deliverable upon
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the exercise of the Warrants. The Company shall not effect any such
consolidation, merger, amalgamation, share exchange or sale, lease, transfer,
conveyance or other disposition unless prior to or simultaneously with the
consummation thereof the successor entity (if other than the Company) resulting
from such consolidation, merger or amalgamation, share exchange or the entity
purchasing or otherwise acquiring such assets or shares (i) shall assume by a
supplemental Warrant Agreement, satisfactory in form, scope and substance to
the Holders (which shall be mailed or delivered to the Holders of the Warrants
at the last address of such Holders appearing on the books of the Company) the
obligation to deliver to such Holders such shares of stock, securities, cash or
property as, in accordance with the foregoing provisions, such Holders may be
entitled to purchase (the "Substitute Securities") and (ii) shall assume all of
the other obligations of the Company set forth in this Agreement and the
Registration Rights Agreement. Following such assumption such obligations
shall apply to the Substitute Securities rather than to the Warrants and the
Warrant Shares. The foregoing provisions of this paragraph shall similarly
apply to successive reorganizations, recapitalizations, reclassifications,
consolidations, mergers, amalgamations, share exchanges, sales, leases,
transfers, conveyances or other dispositions.
If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an Affiliate of the
formed, surviving, transferee or lessee entity, such issuer shall join the
supplemental Warrant Agreement.
(b) When Issuance or Payment May Be Deferred
In any case in which this Section 15 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the Holder of any Warrant exercised after such record date
the Warrant Shares issuable upon such exercise over and above the Warrant
Shares issuable upon such exercise on the basis of the Exercise Price prior to
such adjustment and (ii) paying to such Holder any amount in cash in lieu of a
fractional share pursuant to Section 16; provided, however, that the Company
shall deliver to such Holder a xxxx or other appropriate instrument evidencing
such Holder's right to receive such additional Warrant Shares and cash upon the
occurrence of the event requiring such adjustment.
SECTION 16. Fractional Interests. The Company shall not
be required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the same Holder, the number of full Warrant Shares which shall be issuable
upon exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of the Warrant Shares would, except for the provisions of this Section
16, be issuable on the exercise of
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any Warrants (or specified portion thereof), the Company shall pay an amount in
cash equal to the product of (x) the Fair Market Value per Share on the day
immediately preceding the date the Warrant is presented for exercise,
multiplied by (y) the Conversion Rate, multiplied by (z) such fraction.
SECTION 17. Notice to Warrant Holders. Upon any
adjustment of the Exercise Price or number of Warrant Shares purchasable upon
exercise of the Warrants pursuant to Section 15 or subparagraph (l)(vii) of the
Certificate of Amendment and as otherwise required by Section 15 or
subparagraph (l)(vii) of the Certificate of Amendment, the Company shall
promptly thereafter (i) upon the reasonable request of the Required Holders,
cause to be filed with the Company a certificate of the independent certified
public accountants for the Company setting forth the Exercise Price and the
number and type of securities or other property constituting Warrant Shares
after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and, in the
case of an adjustment pursuant to Section 15(a) or subparagraph (l)(vii) of the
Certificate of Amendment, setting forth the number and type of securities or
other property constituting Warrant Shares (or portion thereof) issuable, after
such adjustment in the Exercise Price and number of Warrant Shares purchasable
upon exercise of the Warrants, upon exercise of a Warrant and payment of the
adjusted Exercise Price, and (ii) cause to be given to each of the Holders of
the Warrant Certificates written notice of such adjustments, together with a
copy of such certificate. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be given under the
other provisions of this Section 17.
In the event:
(a) the Company shall authorize the issuance to holders
(although not necessarily to all such holders) of shares of Common Stock or
rights, options or warrants to subscribe for or purchase or otherwise acquire
shares of Common Stock or of any other securities or property (including
securities of any other issuer) or of any other subscription rights, options or
warrants; or
(b) the Company shall authorize the payment of any
dividend or distribution to holders of shares of Common Stock of cash, capital
stock or other securities or property (including securities of any other
issuer) of the Company; or
(c) of any capital reorganization, reclassification or
recapitalization of the capital stock of the Company, or any amalgamation,
consolidation or merger to which the Company is a party, or any acquisition of
capital stock of the Company through a share exchange, or of the sale, lease,
conveyance, transfer or other disposition of the properties and assets of the
Company substantially as an entirety, or a purchase, tender or exchange offer
for shares of Common Stock or other securities constituting
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part of the Warrant Shares (whether by the Company or some other party); or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any action which would
require an adjustment of the Exercise Price or number of Warrant Shares
purchasable upon exercise of the Warrants pursuant to Section 15 or
subparagraph (l)(vii) of the Certificate of Amendment;
then the Company shall cause to be given to each of the Holders, at least 20
days prior to the applicable record date hereinafter specified (or promptly in
the case of events for which there is no record date), a written notice stating
(as applicable) (i) the date as of which the holders of record of shares of
Common Stock entitled to receive any such rights, options, warrants or
dividends or distribution are to be determined, (ii) the date on which any such
reclassification, recapitalization or reorganization, consolidation, merger,
amalgamation, share exchange, sale, lease, conveyance, transfer, disposition,
dissolution, liquidation or winding up is expected to become effective or be
consummated, or (iii) the initial expiration date set forth in any purchase,
tender or exchange offer for shares of Common Stock, and the date as of which
it is expected that holders of record of shares of Common Stock or other
securities constituting a part of the Warrant Shares (or securities into which
the Warrant Shares may be converted) shall be entitled to exchange such shares
or securities for securities or other property, if any, deliverable upon such
reclassification, recapitalization, reorganization, consolidation, merger,
amalgamation, share exchange, sale, lease, conveyance, transfer, disposition,
dissolution, liquidation or winding up.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the Holders thereof the
right to vote or to consent as stockholders in respect of the meetings of
stockholders or the election of members of the Board of Directors of the
Company or any other matter, or any rights whatsoever as stockholders of the
Company.
SECTION 18. Cash Distributions and Dividends. If the
Company pays a dividend or makes a distribution to the holders of its Common
Stock of any securities (other than capital stock for which an adjustment in
the Conversion Rate is made pursuant to subparagraph (l)(vii) of the
Certificate of Amendment) or property (including cash and securities of other
companies) of the Company, or any rights, options or warrants to subscribe for
or purchase securities (other than Common Stock) or property (including
securities of other companies) of the Company, then, simultaneously with the
payment of such dividend or the making of such distribution, and as a condition
precedent to its right to do so, it will pay or distribute to the Holders of
Warrant
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Certificates an amount of property (including, without limitation, cash) and/or
securities (including, without limitation, securities of other companies) of
the Company as would have been received by such Holders had they exercised all
of the Warrants represented by the Warrant Certificates and the Warrant Shares
issued upon such exercise had been converted into Common Stock, in each case
immediately prior to the record date (or other applicable date) used for
determining stockholders of the Company entitled to receive such dividend or
distribution. No adjustment to the Exercise Price shall be made for the
distribution of Convertible Securities or rights, options or warrants to
purchase Convertible Securities of the Company to the Holders pursuant to the
provisions of this Section 18.
SECTION 19. Put Rights; Tag-Along Rights and Registration
Rights.
(a) Put by Holders.
Unless the Required Holders have otherwise agreed in writing,
at any time and from time to time on or after (i) the repayment in full or in
part of the Loan in each case utilizing the proceeds of borrowed funds or the
issuance of debt securities or (ii) the occurrence of an Additional Put Event,
the Put Right shall be exercisable by each of the Holders, provided, however,
that ING agrees not to exercise its Put Right upon the occurrence of an event
specified in clause (i) until an event in clause (ii) occurs if the event in
clause (i) involves the use of proceeds of borrowed funds provided through a
credit facility for which ING serves as the administrative agent or the
issuance of debt securities pursuant to a private placement or public offering
for which ING or one of its Affiliates serves as a co-placement agent or
co-lead underwriter, and provided, further, with respect to each event
specified in clauses (i) and (ii) (other than an Additional Put Event within
the meaning of clause (c) of such definition in which case the put may be
exercised with respect to all Warrant Securities), the total number of Warrant
Securities that the Holders shall be entitled to put pursuant to this Section
19 shall not represent more than the greater of (x) 6% of the shares of Common
Stock outstanding on a fully diluted basis on the date hereof, and (y) 20% of
the Warrant Securities held by such Holders (it being understood that each
Holder shall be entitled to put such Warrant Securities pro rata based upon the
number of Warrant Securities held by it). The Put Right shall be exercised by
the delivery of a Put Notice
After receipt of a Put Notice from any Holder, the Company
will promptly (and in any event within ten (10) days) give written notice (the
"Exercise Notice") to each of the other Holders of Warrant Securities that a
Put Right has been exercised. Each Holder will have the right to participate
in the Put Right and require the Company to repurchase all or any portion of
such Holder's Warrant Securities by delivering written notice to the Company
within ten (10) days following receipt of the Exercise
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Notice. All such notices delivered by such other Holders will be deemed to
have been delivered as of the date of the initial Put Notice and taken together
will be deemed to be one exercise of the Put Right.
Upon the exercise by a Holder of the Put Right, the Purchase
Price payable to such Holder by the Company for such Holder's Warrant
Securities shall be as follows:
(i) in the case of Warrants, an amount determined by
subtracting (A) the aggregate Exercise Price for such Warrants then in effect
under the Warrant Agreement from (B) the product of (1) the Contract Value per
Share, multiplied by (2) the number of shares of Common Stock that may be
acquired upon the conversion by such Holder of the shares of Series A Special
Preferred Stock that would be received upon exercise of such Holder's Warrants
with respect to which the Put Right is being exercised;
(ii) in the case of Series A Special Preferred Stock, an
amount equal to the product of (A) the Contract Value per Share, multiplied by
(B) the number of shares of Common Stock that may be acquired upon the
conversion by such Holder of the shares of Series A Special Preferred Stock
with respect to which the Put Right is being exercised; and
(iii) in the case of Common Stock, an amount equal to the
product of (A) the Contract Value per Share, multiplied by (B) the number of
shares of Common Stock with respect to which the Put Right is being exercised.
Promptly upon the receipt of a Put Notice pursuant to Section
19(a) the Company shall cause the Contract Value per Share to be determined,
and shall give written notice of the determination thereof to each Holder,
promptly upon the determination thereof and in any event within thirty (30)
days following the Company's receipt of the Put Notice.
The provisions of this Section 19(a) shall apply until the
termination of this Agreement pursuant to Section 24 to any Person who acquires
in any manner any Warrant Securities from any Holder.
(b) Closing.
Each closing of the purchase and sale of any Warrant
Securities pursuant to Section 19(a) shall take place on a date (a "Put Closing
Date") which is thirty (30) days after the giving of the Put Notice, provided
that if such day is not a Business Day such closing shall be on the next
succeeding Business Day. Payment of the Purchase Price shall be due and
payable in full on the Put Closing Date. The closing of such purchase and sale
of Warrant Securities shall take place at 10:00 a.m. on the Put Closing Date at
such location in Atlanta, Georgia, or New York, New York, as the Required
Holders may reasonably determine and
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notify the Company or at such other location as may be agreed to by the Company
and the Required Holders.
The Purchase Price shall be paid in full at each such closing,
by wire transfer of immediately available federal funds, and the Warrant
Securities to be repurchased at such closing shall be duly endorsed for
transfer. Such Warrant Securities shall be free and clear of all liens and
encumbrances of any kind, nature and description, other than applicable
restrictions under federal and state securities laws, and each Holder shall
represent and warrant to the Company to such effect with respect to such
Holder's Warrant Securities. The Company will pay all stamp and transfer taxes
in connection with the repurchase of the Warrant Securities hereunder.
(c) Restrictions on Purchase.
The Company covenants and agrees that, other than the
Restrictive Provisions, it shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Required Holders,
enter into or agree to become subject to any term, condition, provision or
agreement that would conflict with or restrict in any way the performance of
the Company's obligations under this Agreement or that would by its terms
restrict the availability of Legally Available Funds with which to perform such
obligations.
Anything in this Agreement to the contrary notwithstanding,
the Company shall not be required to purchase Warrant Securities under Section
19(a) if at the time of closing of the purchase and sale of any Warrant
Securities pursuant to Section 19(a) there exists any Restrictions on Purchase.
Upon receipt of a Put Notice, if the Company's obligations
under Section 19(a) at the time of performance would be subject to Restrictions
on Purchase, then the Company (i) shall promptly use all reasonable efforts
(excluding the payment of waiver, consent or similar transactional fees, but
including reasonable documentation costs and other similar expenses) to cause
the Required Lenders to waive compliance with any such Restrictive Provisions
and/or to amend the Restrictive Provisions so as to permit the purchase of the
Warrant Securities pursuant to this Agreement, (ii) shall not repay, redeem,
purchase or otherwise retire any indebtedness for borrowed money of, or any
debt securities issued by, the Company in an amount or for a price or other
consideration in excess of the principal amount thereof, and (iii) shall not
declare or pay any dividend or distribution on any shares of Stock (other than
dividends that accrue and cumulate on Preferred Stock in accordance with the
terms of such Preferred Stock as is in effect on the date such Put Notice is
received by the Company).
If, notwithstanding the Company's reasonable efforts required
under this Section 19(c), the Company is unable to
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fulfill its obligations under Section 19(a) because of the existence of one or
more Restrictions on Purchase, the Company shall give prompt written notice
thereof to each Holder exercising Put Rights, specifying in reasonable detail
the nature thereof and the extent, if any, to which the Company would be able
to fulfill its obligation to pay the Purchase Price within the Restrictions on
Purchase.
If any Restrictions on Purchase exist on the proposed Put
Closing Date, then at the sole and independent election of each such Holder,
and pursuant to written notice given by any such Holder to the Company: (i)
such Holder's Put Right shall remain exercised and the closing of the purchase
and sale of Warrant Securities pursuant to such Holder's Put Right shall be
deferred until not more than five Business Days after all such Restrictions on
Purchase cease to exist; provided, however, that, as and to the extent that
such Restrictions on Purchase cease to exist, the Company shall promptly make
partial payments of the Purchase Price to such Holder, in which case there
shall be a series of such closings, each of which shall take place not more
than five Business Days after such Restrictions on Purchase have ceased to
exist to an extent that would permit such partial payments of the Purchase
Price in increments of not less than $100,000 ("Partially Available Funds"); or
(ii) the exercise of such Holder's Put Right shall be rescinded and such Holder
shall reserve its right to exercise the Put Right at any subsequent time. In
the event that any Holders make the election provided in clause (i) of the
immediately preceding sentence, the Company shall purchase from such selling
Holders that number of Warrant Securities as may be purchased at the Purchase
Price using that portion of Partially Available Funds for such purchase as
equals the product of (a) all Partially Available Funds, and (b) the ratio of
(i) the Warrant Securities originally proposed to be sold by such Holders
electing to sell and not electing to rescind pursuant to clause (ii) of the
immediately preceding sentence, to (ii) the Warrant Securities originally
proposed to be sold by all Holders (treating all Warrants as fully exercised
for the Warrant Shares to which the Holders would be entitled upon exercise of
such Warrants). Such purchase shall be made from each selling Holder pro rata
based on the ratio of (i) the number of Warrant Securities originally proposed
to be sold by such Holder to (ii) the Warrant Securities originally proposed to
be sold by all Holders.
None of the provisions of this Section 19(c) shall be
construed to limit any other right or remedy under applicable law which any
Holder may have as a result of the failure by the Company to purchase Warrant
Securities as herein provided.
(d) Tag-Along Rights.
Without limitation to the right of any Holder to exercise its
Put Right pursuant to Section 19(a), if at any time the Company or Xxxx shall
determine to enter into any transaction or series of transactions that would
result in a Change of Control
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(a "Change of Control Transaction") (any third party proposing to enter into
such transaction or transactions with the Company or Xxxx being hereinafter
referred to in this Section 19(d) as a "Prospective Purchaser"), either the
Company or Xxxx, as the case may be, and in either case any Prospective
Purchaser, shall first give written notice (the "Offer Notice") to all of the
Holders, specifying the name and address of the Prospective Purchaser and the
number of shares, if any, of Stock proposed to be issued, sold, transferred or
otherwise disposed of by the Company or Xxxx, as applicable, and setting forth
in reasonable detail the price, structure and other terms and conditions of the
Change of Control Transaction, as applicable. The Offer Notice shall represent
the offer (the "Offer") from the Prospective Purchaser to each of the Holders
of the right to sell to the Prospective Purchaser as a condition to the
consummation of the proposed transaction described in the Offer Notice, all the
Warrant Securities then owned by each Holder to the Prospective Purchaser and,
at the option of the Holders, on the same terms and conditions (including price
and form of consideration) as are being offered by the Prospective Purchaser to
the Company or Xxxx, as the case may be, or at the Fair Market Value per Share,
determined as of the date of the Offer Notice. Each Holder shall have thirty
(30) days from the date of receipt of the Offer Notice to give written notice
of its intention to accept or reject the Offer. Failure to respond within such
thirty-day period shall be deemed notice of rejection. In the event that any
Holder gives written notice to the Company or Xxxx, as the case may be, and the
Prospective Purchaser of its intention to accept such Offer, then such written
notice, taken in conjunction with the Offer Notice, shall constitute a valid
and legally binding agreement, and each of the Holders so giving such written
notice shall be entitled to sell to the Prospective Purchaser,
contemporaneously with the consummation of the Change of Control Transaction,
all of the Warrant Securities at the price specified therefor by such Holder in
accordance with this Section 19(d). In the event that all of the Holders
reject or are deemed to have rejected the offer represented by the Offer
Notice, the Company or Xxxx, as applicable, shall be free to proceed to
consummate such Change of Control Transaction on the terms and conditions set
forth in the Offer Notice, provided that such sale is not otherwise prohibited
by any agreement between the Company and the Purchaser. In the event the
Company or Xxxx, as applicable, fails to complete the proposed sale, transfer
or other disposition within ninety (90) days after the Holder or Holders
rejected or were deemed to have rejected the Offer, such shares of Stock shall
again be subject to the provisions of this Section 19(d).
The provisions of this Section 19(d) shall apply until the
termination of this Agreement pursuant to Section 24 to any Person who acquires
in any manner any Warrant Securities from any Holder.
(e) Limitation on Put Rights of Others. The Company
covenants and agrees that, neither the Company nor any of its
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Subsidiaries shall, directly or indirectly, grant to any Person or agree to or
otherwise become obligated in respect of any rights to require the Company or
any of its Subsidiaries to purchase securities of the Company upon the demand
of any Person. The Company represents and warrants that neither it nor any of
its Subsidiaries has previously entered into any agreement granting any such
rights to any Person.
(f) Severability. If any provision of this Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict
of any provision with any constitution, statute, rule or public policy, or for
any other reason, such circumstances shall not have the effect of rendering the
provision or provisions in question, invalid, inoperative or unenforceable in
any other jurisdiction or in any other case or circumstance or of rendering any
other provision or provisions herein contained invalid, inoperative or
unenforceable to the extent that such other provisions are not themselves
actually in conflict with such constitution, statute, rule or public policy,
but this Agreement shall be reformed and construed in any such jurisdiction or
case as if such invalid, inoperative or unenforceable provision had never been
contained herein and such provision reformed so that it would be valid,
operative and enforceable to the maximum extent permitted in such jurisdiction
or in such case.
(g) Registration Rights. The Warrant Securities are
subject to and entitled to the benefit of certain registration rights, as more
fully set forth in the Registration Rights Agreement, which is incorporated
herein by reference.
SECTION 20. Notices. All notices, consents, approvals,
agreements and other communications provided hereunder shall be in writing or
by telex or telecopy and shall be sufficiently given to the Purchasers, the
Holders and the Company if addressed or delivered to them at the following
addresses:
If to ING: Internationale Nederlanden
(U.S.) Capital Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Credit Officer
Telecopier No.: (000) 000-0000
with copies to: Internationale Nederlanden
(U.S.) Capital Corporation
Atlanta Xxxxxx
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
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41
and a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telecopier No.: (000) 000-0000
If to Cerberus: Cerberus Partners, L.P.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxxxxxx, Sandler, Kohl,
Xxxxxx & Xxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to any other Holder: At its last known address appearing on the
books of the Company maintained for such
purpose
If to the Company: PhoneTel Technologies, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
or at such other address as any party may designate to any other party by
written notice.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when
received if deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when transmission is verified, if telecopied; and on the next
Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.
SECTION 21. Costs and Expenses. The Company agrees to
pay all expenses of the Purchasers for the negotiation, preparation, execution,
and delivery of this Agreement and each other Warrant Document, and any
amendments, waivers, consents,
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supplements, or other modifications to this Agreement or any other Warrant
Document as may from time to time hereafter be required (including the
reasonable fees and expenses of counsel retained by the Purchasers from time to
time in connection therewith), whether or not the transactions contemplated
hereby are consummated, and to pay all reasonable expenses of the Purchasers
(including reasonable fees and expenses of counsel to the Purchasers) incurred
in connection with the consideration of legal questions relevant hereto and
thereto. Except as otherwise provided herein, the Company also agrees to
reimburse the Purchasers and each Holder upon demand for all reasonable
expenses (including attorneys' fees and expenses) incurred by the Purchasers or
such Holder in enforcing the obligations of the Company under this Agreement or
any other Warrant Document or in connection with any amendment, waiver,
consent, supplement or other modification to this Agreement or any Warrant
Document. Except in connection with the exercise by any Purchaser of any of
its rights under Section 19 or under the Registration Rights Agreement, and
except as otherwise expressly provided herein and in the other Warrant
Documents, the Company shall have no obligation to reimburse the Purchasers for
any expenses incurred by the Purchasers in connection with any subsequent
transfer of the Warrants.
SECTION 22. Indemnification. In consideration of the
transactions contemplated by this Agreement and the other Warrant Documents,
the Company hereby agrees to indemnify, exonerate and hold the Purchasers and
each Holder, each of their respective successors and assigns, each of the
respective officers, directors, employees, attorneys and agents of the
Purchasers and each Holder and each of their respective successors and assigns
(collectively, the "Indemnified Parties") free and harmless from and against
any and all actions, causes of action, suits, losses, costs, liabilities,
damages and expenses (irrespective of whether such Indemnified Party is a party
to the action for which indemnification hereunder is sought), including
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
the Indemnified Parties or any of them or asserted or awarded against the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(a) the making of any claim by any investment banking
firm, broker or third party, claiming through the Company or as a result of the
relationship of such investment banking firm, broker or third party with the
Company, that it is entitled to compensation from any Indemnified Party in
connection with this Agreement or the transactions contemplated hereby;
(b) any claim, investigation, litigation, or proceeding
made or commenced by a third party related to this Agreement or any other
Warrant Documents, whether or not the Indemnified Party or any other
Indemnified Party is party thereto;
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(c) the breach by the Company of any representation or
warranty set forth in this Agreement or in any other Warrant Document; or
(d) the failure of the Company to comply with all terms,
conditions, and covenants set forth in this Agreement or in any other Warrant
Document;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct as determined by a final and
nonappealable decision of a court of competent jurisdiction.
If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The foregoing indemnity
shall become effective immediately upon the execution and delivery hereof and
shall remain operative and in full force and effect notwithstanding the
consummation of the transactions contemplated hereunder, the issuance or
exercise of the Warrants hereunder, the termination of this Agreement pursuant
to Section 24, the invalidity or unenforceability of any term or provision of
this Agreement or any other Warrant Document, or any investigation made by or
on behalf of any Holder or any Purchaser.
SECTION 23. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Holders shall
bind and inure to the benefit of their respective successors and assigns,
including those by operation of law, merger, consolidation or as otherwise
provided in Section 15(a).
SECTION 24. Termination. Except as otherwise provided
herein, this Agreement shall terminate when all Warrants have expired
unexercised in accordance with their terms and no Warrant Securities are
outstanding.
SECTION 25. Governing Law. THIS AGREEMENT AND THE
WARRANTS SHALL BE GOVERNED BY THOSE PROVISIONS OF THE CORPORATE CODE OF THE
JURISDICTION IN WHICH THE COMPANY IS INCORPORATED AND ARTICLE 8 OF THE UNIFORM
COMMERCIAL CODE OF THE JURISDICTION IN WHICH THE COMPANY IS INCORPORATED WHICH
ARE NECESSARILY APPLICABLE TO SECURITIES ISSUED BY A CORPORATION INCORPORATED
IN SUCH JURISDICTION AND OTHERWISE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE.
SECTION 26. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company and
the Holders any legal or equitable right, remedy or
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claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company and the Holders.
SECTION 27. Counterparts. This Agreement may be executed
in any number of counterparts and each such counterpart shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute one and the same instrument.
SECTION 28. Amendments; Waiver. No provision of this
Agreement may be amended or waived except by an instrument in writing signed by
the party sought to be bound; provided, however, that any amendment requested
or waiver sought from the Holders of any provision of this Agreement which
affects Holders generally may be given by the Required Holders and any waiver
so given shall be binding on all Holders; provided further, that the provisions
of Section 11 with respect to the type of securities for which the Warrants are
exercisable may not be changed without the consent of each Holder affected
thereby. No failure or delay by any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall a waiver of a particular
right or remedy on one occasion be deemed a waiver of any other right or remedy
or a waiver of the same right or remedy on any subsequent occasion.
SECTION 29. Waiver of Jury Trial. EACH PURCHASER, EACH
HOLDER AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, ON THE WARRANTS OR ON ANY OF THE OTHER WARRANT DOCUMENTS, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE WARRANTS OR ANY OF THE
OTHER WARRANT DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PURCHASERS, ANY HOLDER
OR THE COMPANY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASERS'
ENTERING INTO THIS AGREEMENT.
SECTION 30. Jurisdiction. The Company hereby agrees that
any legal action or proceeding against it with respect to this Agreement, the
Warrants or any of the other Warrant Documents may be brought in the courts of
the State of New York or of the United States of America sitting in New York as
any Holder may elect, and, by execution and delivery hereof, for itself and in
respect of its property it accepts and consents to, generally and
unconditionally, the jurisdiction of the aforesaid courts and agrees that such
jurisdiction shall be exclusive, unless waived by the Required Holders in
writing, with respect to any action or proceeding brought by it against such
Holders. The Company hereby irrevocably designates, appoints and empowers CT
Corporation System whose present address is 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, as its authorized agent to receive, for and on its behalf and its
property, service of process in the State of New York when and as legal actions
or proceedings may be brought in the courts of the State of New York or of the
United States of America sitting in New York, and such service of process shall
be deemed complete upon the date of delivery thereof to such agent, or upon
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45
the earliest of any other date permitted by applicable law. It is understood
that a copy of said process served on such agent will be forwarded to the
Company as soon as practicable, at its address set forth herein, but its
failure to receive such copy shall not affect in any way the service of said
process on said agent as the agent of the Company. The Company irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of the copies thereof by certified
mail, return receipt requested, postage prepaid, to it at its address set forth
herein, such service to become effective upon the earlier of (i) the date 10
calendar days after such mailing and (ii) any earlier date permitted by
applicable law. The Company agrees that it will at all times continuously
maintain an agent to receive service of process in the State of New York on
behalf of itself and its properties and in the event that, for any reason, the
agent named above or its successor shall no longer serve as its agent to
receive service of process in the State of New York on its behalf, it shall
promptly appoint a successor so to serve and shall advise the Holders thereof.
The Company agrees that Sections 5-1401 and 5-1402 of the General Obligations
Law of the State of New York shall apply to this Agreement and each of the
other Warrant Documents and waives any right to stay or to dismiss any action
or proceeding brought before said courts on the basis of forum non conveniens.
Nothing herein shall affect the right of any Holder to bring proceedings
against the Company in the courts of any other jurisdiction or to serve process
in any other manner permitted by applicable law.
SECTION 31. Specific Performance. The Company recognizes
that the rights of the Holders under this Agreement and the other Warrant
Documents are unique and, accordingly, the Holders shall, in addition to such
other remedies as may be available to any of them at law or in equity, have the
right to enforce their rights hereunder and thereunder by actions for
injunctive relief and specific performance to the extent permitted by law. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
or any of the other Warrant Documents and hereby agrees to waive in any action
for specific performance the defense that a remedy at law would be adequate.
This Agreement is not intended to limit or abridge any rights of the Holders
which may exist apart from this Agreement.
SECTION 32. Confidentiality.
(a) Each Holder shall treat any information concerning
the Company (whether prepared by the Company, its advisors or otherwise) which
has been or will be furnished by or on behalf of the Company or any Subsidiary
thereof (herein collectively referred to as the "Confidential Information") in
accordance with such Holder's customary procedures for handling confidential
information of this nature and will not wilfully disclose any Confidential
Information to any other party, except as otherwise provided herein. The
Confidential Information will be used solely
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46
in connection with the transactions contemplated by the Warrant Documents or as
otherwise authorized by the Company. The term "Confidential Information" shall
not include, with respect to any Holder, information which (i) is or becomes
generally available to the public other than as a result of a disclosure by
such Holder, or its affiliates, partners, directors, officers or employees, or
(ii) becomes available on a non-confidential basis from a source other than the
Company, any of its Subsidiaries, or their respective affiliates, partners,
directors, officers, employees or advisors, provided that such source is not
known by such Holder to be bound by a confidentiality agreement with or other
obligation of secrecy to the Company or any of its Subsidiaries.
(b) Notwithstanding the foregoing, (i) Confidential
Information may be disclosed to the Holders' affiliates, partners, directors,
officers, employees and advisors who are in a confidential relationship with
such Person or who are informed of the confidential nature of such information,
(ii) Confidential Information may be disclosed as reasonably required by any
proposed transferee of Warrant Securities, provided that such proposed
transferee shall have agreed in writing for the Company's benefit to be bound
by the terms of this Section 32 and shall agree to return any Confidential
Information, and will not retain any copies, extracts or other reproductions in
whole or in part of such Confidential Information, if it does not become a
transferee of Warrant Securities, (iii) Confidential Information may be
disclosed to the extent requested or required by bank regulators or auditors or
any administrative body or commission to whose jurisdiction a Holder may be
subject, (iv) Confidential Information may be disclosed to the extent required
by law, regulation, subpoena, judicial order or legal process, provided that
notice of such requirement or order shall be promptly furnished to the Company
unless such notice is legally prohibited, (v) Confidential Information may be
disclosed to the extent required by the rules of any securities exchange on
which securities of any Holder are listed and traded, (vi) Confidential
Information may be disclosed in connection with the enforcement by any Holder
of its rights under the Warrant Documents or in connection with any litigation
between the Company and any Holder with resect to such Holder's Warrant
Securities or any Warrant Document, and (vii) Confidential Information may be
disclosed to the extent the Company consents to such disclosure.
SECTION 33. Entire Agreement. The parties hereto agree
that this Agreement, the Registration Rights Agreement, and the Loan Documents
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings between
them as to such subject matter; and there are no restrictions, agreements,
arrangements, oral or written, between any or all of the parties relating to
the subject matter hereof which are not fully expressed or referred to herein
or therein.
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47
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
PHONETEL TECHNOLOGIES, INC.
By:/s/ Xxxxx X. Xxxx
-----------------------------
Xxxxx X. Xxxx
Chairman and
Chief Executive Officer
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx
Managing Director
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.P.,
its general partner
By:/s/ Xxxxxxx Xxxxxxxx
------------------------
Xxxxxxx Xxxxxxxx
General Partner
XXXXXXX XXXXXXXX
General Partner Cerberus Associates, L.P.
General Partner Cerberus Partners
Solely for purposes of
Section 19(d):
/s/ Xxxxx X. Xxxx
----------------------------
Xxxxx X. Xxxx
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48
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER)
AS TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF MARCH 15, 1996, BETWEEN PHONETEL
TECHNOLOGIES, INC. (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION ("ING") AND CERBERUS PARTNERS, L.P. ("CERBERUS") AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MARCH 15, 1996, AMONG THE COMPANY,
ING AND CERBERUS, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
No. 1 102,412 Warrants
Warrant Certificate
PHONETEL TECHNOLOGIES, INC.
This Warrant Certificate certifies that INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION, or registered assigns, is the registered holder of
the number of Warrants (the "Warrants") set forth above to purchase shares of
Series A Special Convertible Preferred Stock, par value $.20 per share (the
"Series A Special Preferred Stock"), of PHONETEL TECHNOLOGIES, INC., an Ohio
corporation (the "Company"). Each Warrant entitles the holder upon exercise to
receive from the Company one fully paid and nonassessable share of Series A
Special Preferred Stock (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $0.20, payable in lawful money of the United States of
America, upon surrender of this Warrant Certificate and payment of the Exercise
Price, if applicable, at the office of the Company designated for such purpose,
subject to the conditions set forth herein and in the Warrant Agreement
referenced below. The Exercise Price and number and type of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, as set forth in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to
a Warrant Purchase Agreement dated as of March 15, 1996 (the "Warrant
Agreement"), duly executed and delivered by the Company, ING and Cerberus,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
obligations and duties hereunder of the Company and the holders of the Warrants
(the words "holders" or "holder"
49
meaning the registered holders or registered holder). A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
The holder of Warrants evidenced by this Warrant Certificate may exercise such
Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election
to purchase attached hereto (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price in cash at
the office of the Company designated for such purpose. In the event that any
exercise of Warrants evidenced hereby shall be for less than the total number
of Warrants evidenced hereby, there shall be issued by the Company to the
holder hereof or his or its registered assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price set forth on the face hereof may, subject to certain conditions,
be adjusted. If the Exercise Price is adjusted, the Warrant Agreement
provides that the number of shares of Warrant Shares issuable upon the exercise
of each Warrant shall be adjusted. No fractional shares of Warrant Shares will
be issued upon the exercise of any Warrant, but the Company will pay the cash
value thereof determined as provided in the Warrant Agreement.
The holder hereof possesses certain rights to require the Company to purchase
the Warrants (the "Put Rights"), and the holder hereof has been granted
certain rights to participate in a sale of the Common Stock of the Company by
certain shareholders of the Company (and certain of their successors and
assigns) all at the times specified in, and pursuant to the terms and
conditions set forth in, the Warrant Agreement.
The Holders of the Warrants are entitled to certain registration rights as set
forth in a Registration Rights Agreement dated as of March 15, 1996, among
the Company, ING and Cerberus (the "Registration Rights Agreement"). By
acceptance of this Warrant Certificate, the Holder hereof agrees that upon
exercise of any or all of the Warrants evidenced hereby, such Holder will be
bound by the Registration Rights Agreement. A copy of the Registration Rights
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
2
50
The Company may deem and treat the registered holder(s) thereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing made hereon) for the purpose of any exercise hereof,
of any distribu tion to the holder(s) hereof and for all other purposes, and
the Company shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company (other than the right to receive dividends and
distributions as set forth in Section 18 of the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its duly authorized officer and has caused its corporate seal to
be affixed hereunto or imprinted hereon.
Dated: March 15, 1996
PHONETEL TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxx
----------------------------------
Name: Xxxxx Xxxx
Title: Chairman of the Board
[CORPORATE SEAL]
51
FORM OF ELECTION TO PURCHASE
[To Be Executed Upon Exercise of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ____________ shares
of Series A Special Convertible Preferred Stock, par value $.20 per share (the
"Series A Special Preferred Stock"), of PHONETEL TECHNOLOGIES, INC. (the
"Company") and herewith tenders payment for such shares to the order of the
Company in the amount of $___________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of the undersigned or his/its nominee hereinafter set forth, and further
that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth. If said number of shares is less than all of the shares of Series A
Special Preferred Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or his/its nominee hereinafter set
forth, and further that such Warrant Certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
Certificate to be registered as follows:
---------------------------------------
Name:
Address:
Certificate to be delivered as follows:
--------------------------------------
Name:
Address:
Date:
-------------------- -------------------------------
(Signature must conform in all
respects to the name of the
holder as specified on the fact
of the Warrant Certificate,
unless Form of Assignment has
been executed)
4
52
FORM OF ASSIGNMENT
[To be executed upon Transfer of Warrant]
FOR VALUE RECEIVED, the undersigned registered holder of the
enclosed Warrant Certificate hereby sells, assigns and transfers unto
________________________________________ the right represented by such Warrant
Certificate to purchase _____________ shares of Series A Special Convertible
Preferred Stock, par value $.20 per share, of PHONETEL TECHNOLOGIES, INC. to
which such Warrant Certificate relates, and appoints __________________
_______________________________ Attorney to make such transfer on the books of
PHONETEL TECHNOLOGIES, INC. maintained for such purpose, with full power of
substitution in the premises.
Date:
------------------- ---------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate)
---------------------------------
(Street Address)
---------------------------------
(City) (State) (Zip Code)
53
THIS TERM NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION, OR AN OPINION OF COUNSEL
(WHICH MAY BE COUNSEL TO THE HOLDER) AS TO AN EXEMPTION, FROM THE REGISTRATION
PROVISIONS OF SAID ACT OR LAWS.
THIS TERM NOTE IS SUBJECT TO THE TERMS OF A CREDIT AGREEMENT, DATED AS OF MARCH
15, 1996, BETWEEN PHONETEL TECHNOLOGIES, INC. (THE "BORROWER"), THE LENDERS
NAMED THEREIN, AND INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, AS
AGENT FOR THE LENDERS, A COPY OF WHICH IS ON FILE AT THE MAIN OFFICE OF THE
BORROWER. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS TERM NOTE
IS SUBJECT TO THE TERMS OF SAID CREDIT AGREEMENT AND ANY SALE OR TRANSFER OF
SUCH SECURITIES IN VIOLATION OF SAID CREDIT AGREEMENT SHALL BE INVALID.
TERM NOTE
$ 14,500,000 March 15, 1996
FOR VALUE RECEIVED, the undersigned, PHONETEL TECHNOLOGIES, INC., an Ohio
corporation (the "Borrower"), promises to pay to the order of INTERNATIONALE
NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation, (the "Lender"),
at the times provided in the Credit Agreement referenced hereinafter, the
principal sum of FOURTEEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($14,500,000.00) or, if less, the outstanding principal amount of the Term Loan
made by the Lender pursuant to that certain Credit Agreement, dated as of March
15, 1996 (together with all amendments and other modifications, if any, from
time to time hereafter made thereto, the "Credit Agreement"; capitalized terms
used herein and not defined herein shall have the meaning ascribed to them in
the Credit Agreement), among the Borrower, Internationale Nederlanden (U.S.)
Capital Corporation, as Agent, and the various lenders (including the Lender)
as are, or may from time to time become, parties thereto. Notations indicating
the Term Loan made by the Lender pursuant to the Credit Agreement and all
payments on account of the principal thereof may be endorsed by the holder
hereof on the grid schedule attached to this Note, as provided in the Credit
Agreement.
The unpaid principal amount of this Note from time to time shall bear
interest as provided in Section 3.4 of the Credit Agreement. All payments of
principal of and interest on this Note shall be payable in lawful currency of
the United States of America to the account designated by the Agent (and as to
which the Agent has notified the Borrower) in immediately available funds.
54
This Note is a Term Note referenced in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Note and on
which such Indebtedness may be declared to be or may automatically become
immediately due and payable.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
The Borrower hereby waives all requirements as to diligence,
presentment, demand of payment, protest and notice of any kind with respect to
this Note. All amounts owing hereunder are payable by the Borrower without
relief from any valuation or appraisal laws.
PHONETEL TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxx
------------------------------
Xxxxx X. Xxxx
Chairman and
Chief Executive Officer
-2-
55
Schedule to Term Note
Schedule of Term Loan and Repayments
Person
Amount of Amount of Outstanding Making
Date Term Loan Repayment Balance Notation
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