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EXHIBIT 1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SAMSTOCK, L.L.C.
AND
DAVEL COMMUNICATIONS GROUP, INC.
DATED MAY 14, 1998
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TABLE OF CONTENTS
Page(s)
ARTICLE I - DEFINITIONS ............................................................. 1
ARTICLE II - PURCHASE AND SALE OF SHARES ............................................ 5
Section 2.1 Purchase and Sale .................................................. 5
Section 2.2 Consideration ...................................................... 5
ARTICLE III - THE CLOSING ........................................................... 5
Section 3.1 Time and Place ..................................................... 5
Section 3.2 Deliveries by the Company .......................................... 5
Section 3.3 Deliveries by the Purchaser ........................................ 6
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY .......................... 6
Section 4.1 Organization, Standing and Corporate Power ......................... 6
Section 4.2 Subsidiaries ....................................................... 7
Section 4.3 Capital Structure .................................................. 7
Section 4.4 Title to Stock and Warrants ........................................ 8
Section 4.5 Authority; Noncontravention ........................................ 8
Section 4.6 SEC Documents; Undisclosed Liabilities ............................. 9
Section 4.7 Absence of Certain Changes or Events ...............................10
Section 4.8 Litigation .........................................................10
Section 4.9 Employee Benefit Plans; ERISA ......................................11
Section 4.10 Taxes ..............................................................12
Section 4.11 Compliance with Laws ...............................................12
Section 4.12 No Other Agreements to Sell the Company or its Assets ..............13
Section 4.13 Contracts and Commitments ..........................................13
Section 4.14 Insurance ..........................................................14
Section 4.15 Affiliate Transactions .............................................14
Section 4.16 Proxy Statement ....................................................14
Section 4.17 Vote Required; Recommendation of Board .............................15
Section 4.18 Takeover Statutes ..................................................15
Section 4.19 Rights Agreement ...................................................15
Section 4.20 Brokers and Finders ................................................15
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER .............................15
Section 5.1 Organization .......................................................16
Section 5.2 Authority; Noncontravention ........................................16
Section 5.3 Investment Intent ..................................................16
Section 5.4 Proxy Statement ....................................................16
Section 5.5 Availability of Funds ..............................................17
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Section 5.6 Litigation .........................................................17
Section 5.7 Brokers and Finders ................................................17
ARTICLE VI - CONDUCT OF BUSINESS ....................................................17
Section 6.1 Conduct of Business ................................................17
Section 6.2 No Solicitation ....................................................19
ARTICLE VII - ADDITIONAL AGREEMENTS .................................................20
Section 7.1 Proxy Statement; Shareholder Meeting ...............................20
Section 7.2 Access to Information ..............................................20
Section 7.3 Further Action .....................................................20
Section 7.4 Notification of Certain Matters ....................................21
Section 7.5 Public Announcements ...............................................21
Section 7.6 Investment Agreement ...............................................21
Section 7.7 Fees and Expenses ..................................................21
ARTICLE VIII - CONDITIONS ...........................................................21
Section 8.1 Conditions to Each Party's Obligation ..............................21
Section 8.2 Condition to Obligations of the Company ............................22
Section 8.3 Conditions to Obligations of Purchaser .............................22
ARTICLE I - TERMINATION, AMENDMENT AND WAIVER .......................................23
Section 9.1 Termination ........................................................23
Section 9.2 Effect of Termination ..............................................24
ARTICLE X - SURVIVAL; INDEMNIFICATION ...............................................24
Section 10.1 Survival ...........................................................24
Section 10.2 Indemnification by Purchaser or the Company ........................24
Section 10.3 Third-Party Claims .................................................25
Section 10.4 Termination of Indemnification .....................................26
ARTICLE XI - MISCELLANEOUS ..........................................................26
Section 11.1 Counterparts .......................................................26
Section 11.2 Governing Law ......................................................26
Section 11.3 Entire Agreement ...................................................26
Section 11.4 Notices ............................................................26
Section 11.5 Assignment .........................................................27
Section 11.6 Interpretation .....................................................28
Section 11.7 Amendments; Waivers ................................................28
Section 11.8 Severability .......................................................28
Section 11.9 Consent to Jurisdiction ............................................28
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made this 14th day of May, 1998 by and
between Samstock, L.L.C., a Delaware limited liability company ("Purchaser"),
and Davel Communications Group, Inc., an Illinois corporation (the "Company").
WITNESSETH:
WHEREAS, the Company wishes to issue and sell to Purchaser, and Purchaser
wishes to purchase from the Company, 1,000,000 newly issued shares (the
"Shares") of common stock, no par value, of the Company ("Company Common
Stock") and warrants to purchase 218,750 shares of Company Common Stock (the
"Warrants") at an exercise price of $32.00 per share (which shall be
exercisable through the fourth anniversary of the Closing Date), upon the terms
and subject to the conditions of this Agreement.
WHEREAS, concurrently herewith, Purchaser and Xxxxx X. Xxxx ("Xxxx") have
entered into a Stock Purchase Agreement pursuant to which Hill has agreed to
sell to Purchaser, and Purchaser has agreed to purchase from Hill, 500,000
shares of Company Common Stock and warrants to purchase 131,250 shares of
Company Common Stock (the "Hill Stock Purchase Agreement"), upon the terms and
subject to the conditions set forth in such Agreement.
WHEREAS, concurrently herewith, Purchaser, on the one hand, and certain
directors and members of management of the Company (the "Management
Shareholders"), on the other, have entered into a Stock Purchase Agreement
pursuant to which the Management Shareholders have agreed to sell to Purchaser,
and Purchaser has agreed to purchase form the Management Shareholders, 123,900
shares of Company Common Stock (such Agreement, together with the Hill Stock
Purchase Agreement, the "Other Stock Purchase Agreements"), upon the terms and
subject to the conditions set forth in the Management Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Affiliate" shall mean, with respect to any person, any other
person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with such first person.
As used in this definition "control" (including, with correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
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Section 1.2 "Agreement" shall mean this Agreement, including the Exhibits
and Schedules attached hereto and incorporated herein by this reference.
Section 1.3 "Closing" shall have the meaning set forth in Section 3.1
hereof.
Section 1.4 "Closing Date" shall have the meaning set forth in Section 3.1
hereof.
Section 1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.6 "Company" shall mean Davel Communications Group, Inc., an
Illinois corporation.
Section 1.7 "Company Common Stock" shall have the meaning set forth in the
introductory clauses hereto.
Section 1.8 "Company Preferred Stock" shall have the meaning set forth in
Section 4.3 hereto.
Section 1.9 "Company Stock Options" shall have the meaning set forth in
Section 4.3 hereof.
Section 1.10 "Contracts" shall have the meaning set forth in Section 4.13
hereof.
Section 1.11 "Disclosure Letter" shall have the meaning set forth in the
preface of Article IV hereof.
Section 1.12 "Employee Benefit Plans" shall mean all employee benefit
plans or programs maintained for the benefit of the current or former employees
or directors of the Company or any of its Subsidiaries that are sponsored,
maintained or contributed to by the Company or any of its Subsidiaries, or with
respect to which the Company or any of its Subsidiaries has any liability that
are "employee benefit plans" as defined in Section 3(3) of ERISA.
Section 1.13 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
Section 1.14 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Section 1.15 "Filed SEC Documents" shall have the meaning set forth in
Section 4.7 hereof.
Section 1.16 "GAAP" shall mean generally accepted accounting principles as
in effect in the United States consistently applied.
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Section 1.17 "Governmental Entity" shall mean any federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency.
Section 1.18 "Hill" shall mean Xxxxx X. Xxxx.
Section 1.19 "Hill Stock Purchase Agreement" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.20 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
Section 1.21 "Investment Agreement" shall mean the Investment Agreement
substantially in the form of Exhibit A hereto.
Section 1.22 "IRS" shall mean the Internal Revenue Service.
Section 1.23 "Liens" shall mean all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever.
Section 1.24 "Losses and Expenses" shall have the meaning set forth in
Section 10.2 hereof.
Section 1.25 "Management Shareholders" shall have the meaning set forth in
the introductory clauses hereto.
Section 1.26 "Material Adverse Effect" shall mean a material adverse
effect (or any development which, insofar as reasonably can be foreseen, in the
future is likely to have a material adverse effect) on the business, assets or
financial condition of the Company and its Subsidiaries, taken as a whole,
except for the impact of any order or determination by the Federal
Communications Commission or Federal appellate court concerning compensation
paid by interexchange carriers and local exchange carriers to payphone service
providers in the Federal Communications Commission CC Docket No. 96-128,
Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996.
Section 1.27 "Material Company Subsidiary" shall mean a Subsidiary of the
Company that constitutes a significant subsidiary within the meaning of Rule
1-02 of Regulation S-X of the SEC.
Section 1.28 "Other Stock Purchase Agreements" shall have the meaning set
forth in the introductory clauses hereto.
Section 1.29 "Permitted Liens" shall mean (i) Liens for Taxes that are not
yet due or delinquent or are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in accordance
with GAAP, (ii) mechanics' and other
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similar Liens arising in the ordinary course of business with respect to amounts
not yet overdue for a period of 45 days or amounts being contested in good faith
by appropriate proceedings if a reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made therefor, and (iii) Liens
which do not materially interfere with the use of any property or asset of the
Company or any of its Subsidiaries for its current use or which, individually or
in the aggregate, do not materially interfere with the ordinary conduct of
business of the Company and its Subsidiaries.
Section 1.30 "person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, Governmental Entity or other entity.
Section 1.31 "Proxy Statement" shall have the meaning set forth in Section
4.5 hereof.
Section 1.32 "Purchase Price shall have the meaning set forth in Section
2.2 hereof.
Section 1.33 "Purchaser" shall mean Samstock, L.L.C., a Delaware limited
liability company.
Section 1.34 "Rights Agreement" shall have the meaning set forth in
Section 4.3 hereof.
Section 1.35 "SEC" shall mean the Securities and Exchange Commission.
Section 1.36 "SEC Documents" shall have the meaning set forth in Section
4.6 hereto.
Section 1.37 "Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.38 "Shareholder Approval" shall have the meaning set forth in
Section 4.5 hereof.
Section 1.39 "Shareholders Agreement" shall mean the Shareholders
Agreement substantially in the form of Exhibit B hereto.
Section 1.40 "Shares" shall have the meaning set forth in the introductory
clauses hereto.
Section 1.41 "Subsidiary" of any person shall mean another person, an
amount of the voting securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such first person.
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Section 1.42 "Surviving Provisions" shall have the meaning set forth in
Section 9.2 hereof.
Section 1.43 "takeover proposal" shall have the meaning set forth in
Section 6.2 hereof.
Section 1.44 "Taxes" shall mean all federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax or penalties
applicable thereto.
Section 1.45 "Tax Returns" shall mean all federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended tax return relating to Taxes.
Section 1.46 "Warrant Agreement" shall mean an agreement to be entered
into by the Company and Purchaser pursuant to which the Company shall issue to
Purchaser the Warrants, which agreement, in form and substance, shall be
reasonably acceptable to Purchaser.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Company shall issue
and sell, and Purchaser shall purchase from the Company, the Shares and the
Warrants.
Section 2.2 Consideration. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Buyer shall pay to the Company
$28,000,000.00 (the "Purchase Price").
ARTICLE III
THE CLOSING
Section 3.1 Time and Place. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxxxxx &
Xxxxxxxxxxx, P.C., Two X. Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx at 10:00 a.m.
(local time) on the fifth business day following the date on which all of the
conditions to each party's obligations hereunder have been satisfied or waived
or at such other place or time as Purchaser and the Company may agree. The
date and time at which the Closing actually occurs is hereinafter referred to
as the "Closing Date."
Section 3.2 Deliveries by the Company. At the Closing, the Company shall
deliver the following to Purchaser:
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(a)(i) one or more stock certificates representing the Shares issued in
the name of Purchaser; and (ii) any other documents that are necessary to
transfer to Purchaser good and marketable title to the Shares free and clear of
any Lien;
(b) a duly executed counterpart of the Investment Agreement;
(c) a duly executed counterpart of the Shareholders Agreement;
(d) a duly executed counterpart of the Warrant Agreement and any other
documents that are necessary to transfer to Purchaser good and marketable title
to the Warrants; and
(e) all other documents, instruments and writings required to be
delivered by the Company at or prior to the Closing Date pursuant to this
Agreement.
Section 3.3 Deliveries by the Purchaser. At the Closing, Purchaser shall
deliver the following to the Company:
(a) the Purchase Price by interbank transfer of immediately available
funds to an account designated by the Company or by such other means as may be
agreed upon in writing by the Company and Purchaser;
(b) a duly executed counterpart of the Investment Agreement;
(c) a duly executed counterpart of the Shareholders Agreement;
(d) a duly executed counterpart of the Warrant Agreement; and
(e) all other documents, instruments and writings required to be
delivered by Purchaser at or prior to the Closing Date pursuant to this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser, except as set forth in
the Disclosure Letter delivered by the Company to Purchaser concurrently with
the execution of this Agreement (the "Disclosure Letter") by specific reference
to the relevant representation and warranty, as follows:
Section 4.1 Organization, Standing and Corporate Power. Each of the
Company and each of the Material Company Subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has the requisite power
and authority to carry on its business as now being conducted. Each of the
Company and each of its Subsidiaries is duly qualified or licensed to
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do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed (individually or in the aggregate)
would not have a Material Adverse Effect. The Company has delivered to
Purchaser complete and correct copies of its Articles of Incorporation and
By-laws and the articles of incorporation and by-laws or comparable
organizational documents of each of the Material Company Subsidiaries. The
Company is not in violation of any provision of its Articles of Incorporation
or By-laws and no Material Company Subsidiary is in violation of any provision
of its articles of incorporation, by-laws or comparable organizational
documents, except to the extent that such violations would not, individually or
in the aggregate, have a Material Adverse Effect.
Section 4.2 Subsidiaries. Section 4.2 of the Disclosure Letter sets forth
each Material Company Subsidiary and the ownership or interest therein of the
Company. All the outstanding shares of capital stock of each Material Company
Subsidiary have been validly issued and are fully paid and nonassessable and
are owned by the Company, by another Subsidiary of the Company or by the
Company and another Subsidiary of the Company, free and clear of all Liens.
Except for the capital stock of the Company's Subsidiaries, the Company does
not own, directly or indirectly, any capital stock or other ownership interest
in any corporation, partnership, limited liability company, joint venture or
other entity.
Section 4.3 Capital Structure. (a) The authorized capital stock of the
Company consists of 10,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $.01 per share ("Company Preferred
Stock"). At the close of business on May 12, 1998, (i)(A) 4,647,809 shares of
Company Common Stock were outstanding, all of which were validly issued, fully
paid and nonassessable and (B) no shares of Junior Participating Preferred
Stock were outstanding, all of which were validly issued, fully paid and
nonassessable and (ii)(A) 58,000 shares of Company Common Stock were reserved
for issuance upon the exercise of warrants and (B) 500,350 shares of Company
Common Stock were reserved for issuance upon the exercise of outstanding stock
options ("Company Stock Options") granted pursuant to the Davel Communications
Group, Inc. Director Stock Option Plan and the Davel Communications Group, Inc.
Stock Option Plan. Except as set forth above, at the close of business on May
14, 1998, and except pursuant to the Rights Agreement, dated April 22, 1998, by
and between the Company and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agreement"), no shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or outstanding, and, since such
date, no shares of capital stock or other voting securities or options in
respect thereof have been issued except upon the exercise of any Company Stock
Options. Except as set forth in this Section 4.3 and except for Company Stock
Options granted in the ordinary course of business to employees and directors
of the Company or its Subsidiaries and covering not in excess of an aggregate
of 350,000 shares of Company Common Stock for all such grants during the period
from the date of this Agreement through the Closing Date, there are not now,
and at the Closing Date there will not be, any options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is
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a party or by which any of them is bound relating to the issued or unissued
capital stock of the Company or any of its Subsidiaries, or obligating the
Company or any of its Subsidiaries to issue, transfer, grant or sell any shares
of capital stock or other equity interests in, the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such option, warrant, call, right, commitment,
agreement, arrangement or understanding. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth
in the Rights Agreement, there are not any outstanding contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its Subsidiaries,
or make any material investment (in the form of a loan, capital contribution or
otherwise) in, any of the Company's Subsidiaries or any other person.
Section 4.4 Title to Stock and Warrants. The Shares and the Warrants,
upon issuance on the terms and conditions set forth in this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable. At the Closing,
Purchaser will acquire good and marketable title to the Shares and the
Warrants, free and clear of all Liens. Upon issuance of shares of Company
Common Stock pursuant to the Warrants, such shares will be duly authorized,
validly issued, fully paid and nonassessable, and Purchaser will acquire good
and marketable title to such shares.
Section 4.5 Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of the issuance of the Shares by the holders of Company Common Stock
("Shareholder Approval"), to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company, subject to Shareholder Approval. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally. The execution and delivery of this Agreement by the Company do not,
and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries under (i) the Articles of Incorporation or
By-laws of the Company or the comparable organizational documents of any of the
Company's Subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of the Material Company
Subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any
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judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of the Material Company Subsidiaries or their respective
properties or assets of which the Company is aware, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults, rights or
Liens, that individually or in the aggregate, would not (x) have a Material
Adverse Effect, (y) prevent the Company from performing its obligations under
this Agreement in any material respect or (z) prevent or delay in any material
respect the consummation of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity, is required by or with respect to the
Company or any of the Material Company Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated by this Agreement, except (i) the
filing of a notification and report form by Hill as the ultimate parent entity
of the Company under the HSR Act, (ii) the filing with the SEC of a proxy
statement relating to the meeting of the Company's shareholders to be held in
connection with the transactions contemplated by this Agreement (together with
any amendments or supplements thereto, the "Proxy Statement") and such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement and (iii)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not prevent or
delay in any material respect the consummation of the transactions contemplated
by this Agreement or otherwise prevent the Company from performing its
obligations under this Agreement in any material respect or have, individually
or in the aggregate, a Material Adverse Effect.
Section 4.6 SEC Documents; Undisclosed Liabilities. To its knowledge, the
Company has filed all required reports, schedules, forms, statements and other
documents with the SEC since December 31, 1994 (as such documents have been
amended prior to the date hereof, the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
SEC Documents, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
such statements have been modified or superseded by a later Filed SEC Document.
The consolidated financial statements of the Company included in the SEC
Documents have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and the consolidated Subsidiaries of the Company as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and the absence of footnotes). Except as set forth
in the Filed SEC Documents and for liabilities incurred in the ordinary course
of business after the date hereof or incurred as permitted by this Agreement,
neither the Company nor any of the Company's Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute,
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contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company and its consolidated Subsidiaries or in the notes
thereto and which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
Section 4.7 Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents") or as specifically permitted by this
Agreement, since the date of the most recent audited financial statements
included in the Filed SEC Documents, the Company has conducted its business
only in the ordinary course, and there has not been:
(a) any change or effect (or any development that, insofar as can
reasonably be foreseen, is likely to result in a change or effect) which,
individually or in the aggregate, has had or would reasonably be expected to
have, a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock;
(c) any split, combination or reclassification of any of the Company's
capital stock or any issuance or the authorization of any issuance of any other
securities in exchange or in substitution for shares of the Company's capital
stock;
(d) (i) any granting by the Company or any of its Subsidiaries to any
executive officer of the Company or any such Subsidiary of any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the
date hereof, (ii) any granting by the Company or any of its Subsidiaries to any
such executive officer of any increase in severance or termination pay, except
as was required under any employment, severance or termination agreements in
effect as of the date hereof or (iii) any entry by the Company or any of its
Subsidiaries into any employment, severance or termination agreement with any
such executive officer;
(e) any damage destruction or loss, not covered by insurance, that has
had or would reasonably be expected to have a Material Adverse Effect; or
(f) any change in accounting methods, principles or practices by the
Company or any Material Company Subsidiary materially and adversely affecting
its assets, liabilities or business, except insofar as may have been required
by a change in GAAP.
Section 4.8 Litigation. Except as disclosed in the Filed SEC Documents,
there is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
that, individually or in the aggregate, would reasonably be expected to (i)
have a Material Adverse Effect, (ii) prevent the Company from performing its
obligations under this Agreement in any material respect or (iii) prevent or
delay in any material respect the consummation of the transactions contemplated
by this
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Agreement, and there is not any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or any of
its Subsidiaries that has had or would reasonably be expected to have, a
Material Adverse Effect.
Section 4.9 Employee Benefit Plans; ERISA. (a) With respect to each
Employee Benefit Plan: (i) each Employee Benefit Plan has been administered in
compliance in all material respects with its terms including any provisions
relating to contributions thereunder, and is in compliance in all material
respects with the applicable provisions of ERISA, the Code and all other
federal, state and other applicable laws, rules and regulations, as they relate
to such Employee Benefit Plans (including funding, filing, termination,
reporting, disclosure and continuation coverage obligations pursuant to Title V
of the Consolidate Omnibus Budget Reconciliation Act of 1985, as amended; (ii)
no "employee pension benefit plan" (as defined in Section 3(2) of ERISA) has
been the subject of a "reportable event" (as defined in Section 4043 of ERISA)
and there have been no non-exempt "prohibited transactions" (as described in
Section 4975 of the Code or in Part 4 of Subtitle I of ERISA) with respect to
any Employee Benefit Plan; (iii) each Employee Benefit Plan which is intended
to be "qualified" within the meaning of Section 401(a) of the Code is so
qualified, and any trust created pursuant to any such Employee Benefit Plan is
exempt from federal income tax under Section 501(a) of the Code and the IRS has
issued each such Employee Benefit Plan a favorable determination letter which,
to the Company's knowledge, is currently applicable, except to the extent such
failure to be qualified, exempt or applicable, would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect; (iv) the
Company is not aware of any circumstances or event which would be reasonably
likely to jeopardize the tax-qualified status of any such Employee Benefit Plan
or the tax-exempt status of any related trust, or would cause the imposition of
any liability, penalty or tax under ERISA or the Code with respect to any
Employee Benefit Plan; (v) no material unsatisfied liabilities to participants,
the IRS, the United States Department of Labor, the Pension Benefit Guaranty
Corporation or to any other person or entity have been incurred as a result of
the termination of any Employee Benefit Plan; and (vi) there has been no event
with respect to an Employee Benefit Plan which would require disclosure under
Section 4062(c), 4063(a) or 4041(e) of ERISA.
(b) No Employee Benefit Plan would result in the payment to any employee,
officer or director of the Company or any of its Subsidiaries of any money or
other property or rights or accelerate or provide any other rights or benefits
to any such employee, officer or director as a direct result of the
transactions contemplated by this Agreement.
(c) Except as disclosed in the Filed SEC Documents, since the date of the
most recent audited financial statements included in the most recent Filed SEC
Documents, there has not been any adoption or amendment in any material respect
by the Company or any of its Subsidiaries of any Employee Benefit Plan or
collective bargaining agreement providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries.
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(d) The Company has not promised or vested, by plan document or written
or oral communication, the right of any employee, former employee, retiree,
beneficiary or other person to lifetime benefits under any "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA.
(e) No Employee Benefit Plan excludes from participation in such plan any
individual performing services for the Company or an ERISA Affiliate on the
basis of such individual's status as an independent contractor, unless such
individual actually meets the requirements for status as an independent
contractor based on Internal Revenue Service Revenue Ruling 87-41, 1987-1 C.B.
296, except to the extent any such exclusion would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
(f) No "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) is a multi-employer plan within the meaning of Sections 3(37) or
4001(a)(3) of ERISA. The Company has not withdrawn or partially withdrawn from
any multi-employer plan, or has any liability, jointly or otherwise, for any
withdrawal liability demanded or yet to be demanded under Title IV of ERISA by
any multi-employer plan for a complete or partial withdrawal.
Section 4.10 Taxes. (a) The Company and each of its Subsidiaries have
timely filed (or have had timely filed on their behalf) or will file or cause
to be timely filed, all material Tax Returns required by applicable law to be
filed by any of them prior to or as of the Closing Date. All such Tax Returns
are, or will be at the time of filing, true, complete and correct in all
material respects, except where the failure to be true, complete and correct
would not be reasonably likely to have a Material Adverse Effect.
(b) The Company and each of its Subsidiaries have paid (or have had paid
on their behalf), or where payment is not yet due, have established (or have
had established on their behalf and for their sole benefit and recourse), or
will establish or cause to be established on or before the Closing Date, an
adequate accrual for the payment of, all material Taxes due with respect to any
period ending prior to or as of the Closing Date. The Company and each of its
Subsidiaries have made all material deposits required by law to be made with
respect to employee withholding and other employment Taxes.
(c) No audit by any Governmental Entity is presently in progress, or, to
the knowledge of the Company, threatened, with respect to any Tax Returns filed
by, or Taxes due from the Company or any of its Subsidiaries. There are no Tax
Liens other than Permitted Liens on any of the assets or properties of the
Company or any of its Subsidiaries.
Section 4.11 Compliance with Laws. Neither the Company nor any of its
Subsidiaries has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business or operations, except for violations and failures to
comply that could not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
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Section 4.12 No Other Agreements to Sell the Company or its Assets. Other
than this Agreement, the Company has no legal obligation, absolute or
contingent, to any other person to sell any material portion of the assets or
properties of the Company or any of its Subsidiaries, to sell any material
portion of the capital stock or other ownership interests of the Company or any
of its Subsidiaries or to effect any merger, consolidation or other
reorganization of the Company or any of its Subsidiaries or to enter into any
agreement with respect thereto.
Section 4.13 Contracts and Commitments. (a) Section 4.13 of the
Disclosure Letter contains a complete and accurate list of all written
contracts, plans or agreements ("Contracts") of the following categories to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound as of the date of this Agreement:
(i) employment Contracts pursuant to which any person
receives annual compensation in excess of $125,000, including
contracts to employ executive officers and other contracts with
officers, directors or shareholders of the Company, and all severance,
change in control or similar arrangements with any executive officers
of the Company;
(ii) Contracts with executive officers of the Company or any
of its Subsidiaries pursuant to which any such officer or employee
would be entitled to receive any severance, change in control or
similar payment upon Hill ceasing to own a stated amount or percentage
of outstanding Company Common Stock or other voting securities of the
Company, (whether or not the receipt of such payment by any such
executive officer would also require the termination of employment of
such executive officer);
(iii) promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments providing for the
lending of money, whether as borrower, lender or guarantor, in excess
of $1 million;
(iv) Contracts for the purchase of inventory or equipment which
are not cancelable (without material penalty, cost or other liability)
within one year and other Contracts, whether or not made in the
ordinary course of business, involving annual expenditures or
liabilities in excess of $2 million which are not cancelable (without
material penalty, cost or other liability) within 90 days;
(v) Contracts pursuant to which the Company or any of its
Subsidiaries receives annual revenues in excess of $1,000,000;
(vi) Contracts containing covenants limiting the freedom of the
Company or any of the Material Company Subsidiaries to engage in any
line of business or compete with any person;
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(vii) any Contract restricting the ownership or voting of the
capital stock of the Company or any of its Subsidiaries, other than as
contemplated by this Agreement or the exhibits hereto;
(viii) joint venture or partnership agreements; and
(ix) any Contract pending for the acquisition, directly or
indirectly (by merger or otherwise) of material assets or capital
stock of another person.
True and complete copies of the written Contracts identified in Section 4.13 of
the Disclosure Letter have been delivered or made available to Purchaser or its
representatives.
Section 4.14 Insurance. All material fire and casualty, general
liability, business interruption, product liability, workers' compensation,
vehicular and other insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, provide adequate coverage
for normal risks incident to the businesses of the Company and its Subsidiaries
and their respective properties and assets, and are in character and amount
substantially equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards, except for any
such failures to maintain insurance policies that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Section 4.15 Affiliate Transactions. Except as set forth in the Filed SEC
Documents, from December 31, 1997 through the date of this Agreement there have
been no transactions, agreements, arrangements or understandings between the
Company or any of its Subsidiaries, on the one hand, and Affiliates of the
Company or any of it Subsidiaries or other persons, on the other hand, that
would be required to be disclosed under Item 404 of Regulation S-K under the
Securities Act.
Section 4.16 Proxy Statement. None of the information included or
incorporated by reference by the Company in the Proxy Statement, will, at the
date it is first mailed to the Company's shareholders and at the time of the
meeting of the Company's shareholders held for the purpose of obtaining
Shareholder Approval, contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by the Company with
respect to statements made therein based on information supplied by Purchaser
and its Affiliates for inclusion in the Proxy Statement. The Proxy Statement
will comply in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no representation is made
by the Company with respect to statements made therein based on information
supplied by Purchaser and its Affiliates for inclusion in the Proxy Statement.
Section 4.17 Vote Required; Recommendation of Board. The affirmative vote
of a majority of the outstanding shares of Company Common Stock is the only
vote of the holders
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of any class or series of the Company's capital stock necessary to approve the
issuance of the Shares by the Company to Purchaser as contemplated by this
Agreement. The Board of Directors of the Company, or an authorized Committee
of such Board, at a meeting duly called and held has (i) unanimously approved
this Agreement and the transactions contemplated hereby, (ii) determined that
the transactions contemplated by this Agreement are fair to the Company and its
shareholders and (iii) resolved to recommend to such holders that they approve
the issuance of the Shares by the Company to Purchaser as contemplated by this
Agreement and that such matter be submitted to the Company's shareholders. The
Company hereby agrees to the inclusion in the Proxy Statement of the
recommendations of the Board of Directors of the Company described in this
Section 4.17.
Section 4.18 Takeover Statutes. To the knowledge of the Company, no "fair
price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation enacted under state or federal law
applicable to the Company is applicable to the transactions contemplated by
this Agreement.
Section 4.19 Rights Agreement. The Company's Board of Directors has taken
all necessary action to provide that Purchaser will not become an "Acquiring
Person," that no "Triggering Event, "Share Acquisition Date" or "Distribution
Date" (as such terms are defined in the Rights Agreement), will occur, and that
the Rights Agreement will not be applicable to the execution or delivery of
this Agreement or any amendment hereto or the consummation of the transactions
contemplated by this Agreement. The Company has provided to Purchaser written
evidence, reasonably satisfactory to Purchaser, of the foregoing.
Section 4.20 Brokers and Finders. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The fees incurred and to be incurred by the Company
in connection with this Agreement and the transactions contemplated by this
Agreement for the persons listed in Section 4.20 of the Disclosure Letter are
set forth in Section 4.20 of the Disclosure Letter. The Company has furnished
to Purchaser true and complete copies of all the agreements referred to in
Section 4.20 of the Disclosure Letter and all indemnification and other
agreements related to the engagement of the persons so listed.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
Section 5.1 Organization. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
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Section 5.2 Authority; Noncontravention. Purchaser has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally. The execution and delivery of this Agreement by Purchaser do not,
and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under (i) the organizational documents of Purchaser or (ii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment , order, decree, statute, law, ordinance, rule
or regulation applicable to Purchaser or its properties or assets, other than,
in the case of clause (ii), any such conflicts, violations or defaults that,
individually or in the aggregate, would not (x) prevent Purchaser from
performing its obligations under this Agreement in any material respect or (y)
prevent or delay in any material respect the consummation of the transactions
contemplated by this Agreement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity, is
required by or with respect to Purchaser in connection with the execution and
delivery of this Agreement by Purchaser or the consummation by Purchaser of the
transactions contemplated by this Agreement, except (i) the filing of a
notification and report form by Purchaser under the HSR Act and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not prevent or delay in any
material respect the consummation of the transactions contemplated by this
Agreement or otherwise prevent Purchaser from performing its obligations under
this Agreement in any material respect.
Section 5.3 Investment Intent. Purchaser is purchasing the Shares for
investment, and not with a view toward, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the Shares. Purchaser is an "accredited investor" as defined in Rule 501 of
Regulation D adopted by the SEC under the Securities Act.
Section 5.4 Proxy Statement. None of the information supplied by
Purchaser for inclusion in the Proxy Statement will, at the date it is first
mailed to the Company's shareholders and at the time of the meeting of the
Company's shareholders held for the purpose of obtaining Shareholder Approval,
contain any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 5.5 Availability of Funds. Purchaser has sufficient funds
available to pay the Purchase Price on the Closing Date.
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Section 5.6 Litigation. There is no suit, action or proceeding pending
or, to the knowledge of Purchaser, threatened against or affecting Purchaser
that, individually or in the aggregate, would reasonably be expected to (i)
prevent Purchaser from performing its obligations under this Agreement in any
material respect or (ii) prevent or delay in any material respect the
consummation of the transactions contemplated by this Agreement.
Section 5.7 Brokers and Finders. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS
Section 6.1 Conduct of Business. During the period from the date of this
Agreement to the Closing Date, the Company shall, and shall cause each of its
Subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and in
compliance in all material respects with all applicable laws and regulations
and, to the extent consistent therewith, use commercially reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers and others having business dealings
with them. Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Closing Date, the Company shall not, and
shall not permit any of its Subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly owned
Subsidiary of the Company to its parent, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
Subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than the issuance of shares of Company Common Stock reserved
for issuance as described in the second sentence of Section 4.3);
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(iii) amend its articles of incorporation, by-laws or
comparable organizational documents in a manner that would be
reasonably likely to adversely affect Purchaser;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, limited liability company, joint venture, association or
other business organization or division thereof other than
acquisitions not exceeding $50 million in the aggregate or (y) any
assets that are material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole;
(v) enter into any agreement with respect to a takeover
proposal;
(vi) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien (other than Permitted Liens) or otherwise dispose
of any of its properties or assets, other than in the ordinary course
of business;
(vii) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except as otherwise permitted by the Company's
existing senior credit facility, or (z) make any loans, advances
(other than advances to employees in the ordinary course of business
consistent with prior practice) or capital contributions to, or
investments in , any other person, other than to the Company or any
direct or indirect wholly owned Subsidiary of the Company;
(viii) make or agree to make any new capital expenditures
outside the ordinary course of business which, in the aggregate,
exceed $2.5 million;
(ix) except in the ordinary course of business pursuant to
existing employment agreements or Employee Benefit Plans, as described
in the Disclosure Letter or as required by applicable laws, (A)
increase the compensation payable or to become payable to its
executive officers or employees, (B) grant any severance or
termination pay to, or enter into any employment or severance
agreement with, any director, executive officer or employee of the
Company or any of its Subsidiaries or (C) establish, adopt, enter into
or amend in any material respect or take action to accelerate any
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rights or benefits under any collective bargaining agreement or any
Employee Benefit Plan, except as contemplated by this Agreement;
(x) without limiting the generality of clause (ix) above, make
any amendment to any Employee Benefit Plan solely as a result of this
Agreement or in contemplation of the issuance of Shares contemplated
by this Agreement; or
(xi) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 6.2 No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize any officer, director
or employee of or any investment banker, attorney or other advisor or
representative of, the Company or any of the Company's Subsidiaries to, (i)
solicit, initiate or encourage the submission of any takeover proposal (as
defined below), (ii) enter into any agreement with respect to any takeover
proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any takeover proposal; provided;
however, that the Company or its Board of Directors may comply with Rule 14e-2
promulgated under the Exchange Act with regard to a takeover proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any executive officer of the Company or
any of the Company's Subsidiaries or any investment banker, attorney or other
advisor or representative of the Company or any of the Company's Subsidiaries
at the direction of the Company or acting within the scope of his, her or its
authority, whether or not such person is purporting to act on behalf of the
Company or any of the Company's Subsidiaries or otherwise, shall be deemed to
be a breach of this Section 6.2(a) by the Company. For purposes of this
Agreement, "takeover proposal" means any proposal for a merger, consolidation
or other business combination involving the Company or any of its Subsidiaries
or any proposal or offer to acquire from the Company or Hill in any manner,
directly or indirectly, more than 10% of any class of voting securities of the
Company or any of the Company's Subsidiaries, or assets representing more than
20% of the total assets of the Company and its Subsidiaries, taken as a whole,
as reflected on the Company's balance sheet as of March 31, 1998, other than
the transactions contemplated by this Agreement. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations by the Company or any of its officers, investment bankers,
attorneys or other advisors or representatives with any parties conducted
heretofore on the Company's behalf with respect to any of the foregoing.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Purchaser, the adoption, approval or recommendation by the
Company's Board of Directors or
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any such committee of this Agreement or (ii) approve or recommend, or propose
to approve or recommend, any takeover proposal.
(c) The Company promptly shall advise Purchaser orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. The Company will keep Purchaser promptly and fully informed
in all material respects of the status and details of any such takeover proposal
or inquiry.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Proxy Statement; Shareholder Meeting. (a) As soon as
practicable following the date of this Agreement, the Company shall prepare and
file with the SEC the Proxy Statement. The Company will use its reasonable
best efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable thereafter.
(b) The Company will, as soon as practicable following SEC clearance of
the Proxy Statement, duly call, give notice of, convene and hold a meeting of
its shareholders for the purpose of obtaining Shareholder Approval. The
Company will, through its Board of Directors, recommend to its shareholders
approval of the issuance of the Shares by the Company to Purchaser, as
contemplated by this Agreement. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 7.1(b) shall not be altered by the commencement,
public proposal, public disclosure or communication to the Company of any
takeover proposal.
Section 7.2 Access to Information. The Company shall, and shall cause
each of its Subsidiaries to, afford to Purchaser and to the officers,
employees, accountants, counsel, financial advisors and other representatives
of Purchaser, reasonable access during normal business hours during the period
prior to the Closing Date to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each of its Subsidiaries to, furnish promptly to Purchaser (a)
a copy of each report, schedule, registration statement or other document filed
by it during such period pursuant to the requirements of federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as Purchaser may reasonably request.
Section 7.3 Further Action. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. From time to time
after the Closing Date, without further consideration, the Company will, at its
own expense,
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execute and deliver such documents to Purchaser as Purchaser may reasonably
request in order more effectively to vest in Purchaser good and marketable
title to the Shares.
Section 7.4 Notification of Certain Matters. The Company shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Company or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 7.4 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 7.5 Public Announcements. The Company and Purchaser shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by
the rules and regulations of the National Association of Securities Dealers,
Inc.
Section 7.6 Investment Agreement. The Company and Purchaser shall execute
and deliver each of the Investment Agreement and the Shareholders Agreement at
or prior to the Closing.
Section 7.7 Fees and Expenses. All fees and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not such transactions
are consummated.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation. The respective
obligation of each party to effect the transactions contemplated by this
Agreement is subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) Shareholder Approval. The Company shall have obtained
Shareholder Approval.
(b) Antitrust. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the
HSR Act shall have been terminated or shall have expired.
(c) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, ruling, injunction or other order (whether
temporary, preliminary or permanent) shall have been enacted, promulgated
or enforced by any Governmental Entity of
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competent jurisdiction which prohibits, restrains, enjoins or restricts
the consummation of the transactions contemplated by this Agreement;
provided, however, that each of the parties shall have used its
reasonable best efforts to cause any such decree, ruling, injunction or
other order to be vacated or lifted.
(d) There shall not be pending any suit, action or proceeding by
any Governmental Entity seeking to impose, and neither the Company nor
Purchaser shall be subject to any order, decree, ruling or injunction
(whether temporary, preliminary or permanent) which would impose,
limitations on the ability of Purchaser to acquire or hold, or exercise
full rights of ownership of, the Shares, including the right to vote the
Shares on all matters properly presented to the shareholders of the
Company.
(e) The closing of the transactions contemplated by the Other Stock
Purchase Agreements shall be occurring concurrently with the Closing.
Section 8.2 Condition to Obligations of the Company. The obligations of
the Company to effect the transactions contemplated by this Agreement are
further subject to the satisfaction or waiver at or prior to the Closing Date
of the following additional conditions:
(a) Purchaser shall have performed in all material respects all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date, and the representations and
warranties of Purchaser contained in this Agreement that are qualified as
to materiality shall be true and correct and the representations and
warranties of Purchaser contained in this Agreement that are not so
qualified shall be true and correct in all material respects (except to
the extent that such failures to be true and correct in the aggregate
shall not have had and shall not be reasonably likely to have a Material
Adverse Effect), in each case as of the date of this Agreement and as of
the Closing Date, except to the extent any such representation or
warranty expressly relates to an earlier date (in which case as of such
date), and Purchaser shall have received a certificate signed on behalf
of Purchaser by an executive officer thereof to such effect.
(b) The Company shall have received an opinion of Xxxxxxxxx &
Xxxxxxxxxxx, in form and substance reasonably satisfactory to the
Company.
Section 8.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated by this Agreement are further
subject to the satisfaction or waiver at or prior to the Closing Date of the
following additional conditions:
(a) The Company shall have performed in all material respects all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date, and the representations and
warranties of the Company contained in this Agreement that are qualified
as to materiality shall be true and correct and the
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representations and warranties of the Company contained in this Agreement
that are not so qualified shall be true and correct in all material
respects (except to the extent that such failures to be true and correct
in the aggregate shall not have had and shall not be reasonably likely to
have a Material Adverse Effect), in each case as of the date of this
Agreement and as of the Closing Date, except to the extent any such
representation or warranty expressly relates to an earlier date (in which
case as of such date), and the Company shall have received a certificate
signed on behalf of the Company by an executive officer thereof to such
effect.
(b) The modifications to the employment agreements referenced in
Section 4.7(iii) of the Disclosure Letter shall have been made, as
described in such Section of the Disclosure Letter.
(c) Purchaser shall have received an opinion of Xxxxxxxx & Xxxxx,
in form and substance reasonably satisfactory to Purchaser.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of Purchaser and the Company; or
(b) by either Purchaser or the Company:
(i) if, at a duly held shareholders meeting of the Company
or any adjournment thereof at which Shareholder Approval is voted
upon, Shareholder Approval shall not have been obtained;
(ii) if the transactions contemplated by this Agreement
shall not have been consummated by October 31, 1998 (other than due
to the failure of the party seeking to terminate this Agreement to
perform its obligations under this Agreement required to be
performed at or prior to the Closing Date);
(iii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Agreement which (A)
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would give rise to the failure of a condition set forth in Section
8.2(a) or 8.3(a), as applicable, and (B) cannot be or has not been
cured within 30 days after the giving of written notice to the
breaching party of such breach (provided that the terminating party
is not then in breach of any representation, warranty, covenant or
other agreement that would give rise to a failure of a condition as
described in clause (A) above); or
(v) in the event that (A) all the conditions to the
obligation of such party to effect the transactions contemplated by
this Agreement set forth in Section 8.1 shall have been satisfied
and (B) any condition to the obligation of such party to effect such
transactions set forth in Section 8.2 (in the case of the Company)
or Section 8.3 (in the case of Purchaser) is not capable of being
satisfied prior to the end of the period referred to in subsection
(b)(ii) above.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement by either Purchaser or the Company as provided in Section 9.1 hereof,
this Agreement shall forthwith become void (except as set forth in this Section
9.2, in Section 7.5 and Article XI (other than Section 11.5) hereof, which
shall survive such termination (the "Surviving Provisions")) and there shall be
no liability on the part of Purchaser or the Company except for any breach of
any of its obligations under the Surviving Provisions. Notwithstanding the
foregoing, no party hereto shall be relieved from liability for any material
breach of this Agreement.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.1 Survival. The representations and warranties given by the
Company to Purchaser in this Agreement, and the representations and warranties
given by Purchaser to the Company in this Agreement, shall survive the Closing
until the second anniversary of the Closing Date; provided, however, that the
representations and warranties given by the Company to Purchaser in Sections
4.1, 4.4 and 4.5, and by Purchaser to the Company in Sections 5.1, 5.2 and 5.3,
shall survive the Closing indefinitely and shall not terminate.
Section 10.2 Indemnification by Purchaser or the Company. (a) From and
after the Closing Date, Purchaser shall indemnify and hold harmless the
Company, the Company's Affiliates, each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors
and assigns of any of the foregoing from and against any and all damages,
claims, losses, expenses, costs, obligations and liabilities including without
limiting the generality of the foregoing, liabilities for all reasonable
attorneys' fees and expenses (including attorney and expert fees and expenses
incurred to enforce the terms of this Agreement) (collectively, "Losses and
Expenses") suffered or incurred by any such indemnified person arising from,
relating to or otherwise in respect of, (i) any breach of, or inaccuracy in,
any representation or warranty of Purchaser contained in this Agreement or in
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the certificate delivered pursuant to Section 8.2(a) of this Agreement; and
(ii) any breach of any covenant of Purchaser contained in this Agreement.
(b) From and after the closing date, the Company shall indemnify and
hold harmless Purchaser, Purchaser's Affiliates, each of their respective
directors, officers, employees and agents, and each of the heirs, executors,
successors and assigns of any of the foregoing from and against any and all
Losses and Expenses suffered or incurred by any such indemnified person arising
from, relating to or otherwise in respect of, (i) any breach of, or inaccuracy
in, any representation or warranty of the Company contained in this Agreement or
in the certificate delivered pursuant to section 8.3(a) of this Agreement, and
(ii) any breach of any covenant of the Company contained in this Agreement.
Section 10.3 Third-Party Claims. If a claim by a third party is made
against an indemnified person hereunder, and if such indemnified person intends
to seek indemnity with respect thereto under this Article, such indemnified
person shall promptly notify the indemnifying person in writing of such claims
setting forth such claims in reasonable detail, provided that failure of such
indemnified person to give prompt notice as provided herein shall not relieve
the indemnifying person of any of its obligations hereunder, except to the
extent that the indemnifying person is materially prejudiced by such failure.
The indemnifying person shall have twenty (20) days after receipt of such
notice to undertake, through counsel of its own choosing, subject to the
reasonable approval of such indemnified person, and at its own expense, the
settlement or defense thereof, and the indemnified person shall cooperate with
it in connection therewith; provided, however, that the indemnified person may
participate in such settlement or defense through counsel chosen by such
indemnified person, provided that the fees and expenses of such counsel shall
be borne by such indemnified person. If the indemnifying person shall assume
the defense of a claim, it shall not settle such claim without the prior
written consent of the indemnified person, (i) unless such settlement includes
as an unconditional term thereof the giving by the claimant of a release of the
indemnified person from all liability with respect to such claim or (ii) if
such settlement involves the imposition of equitable remedies or the imposition
of any material obligations on such indemnified person other than financial
obligations for which such indemnified party will be indemnified hereunder. If
the indemnifying person shall assume the defense of a claim, the fees of any
separate counsel retained by the indemnified person shall be borne by such
indemnified person unless there exists a conflict between them as to their
respective legal defenses (other than one that is of a monetary nature), in
which case the indemnified person shall be entitled to retain separate counsel,
the reasonable fees and expenses of which shall be reimbursed by the
indemnifying person. If the indemnifying person does not notify the
indemnified person within thirty (30) days after the receipt of the indemnified
person's notice of a claim of indemnity hereunder that it elects to undertake
the defense thereof, the indemnified person shall have the right to contest,
settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
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Section 10.4 Termination of Indemnification. The obligations to indemnify
and hold harmless a party hereto, (a) with respect to any breach of, or
inaccuracy in, any representation or warranty contained in this Agreement shall
terminate when the applicable representation or warranty terminates and (b)
with respect to any breach of covenant or agreement set forth in this Agreement
shall not terminate; provided, however, that as to clause (a) above such
obligation to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the
indemnifying party.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same Agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
Section 11.2 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 11.3 Entire Agreement. This Agreement (including the documents
referred to herein) (a) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement and (b) is not intended to
confer upon any person other than the parties any rights or remedies.
Section 11.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, to the appropriate address or telecopy number set forth below (or at
such other address or telecopy number for a party as shall be specified by like
notice):
(a) If to Purchaser:
Samstock, L.L.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: F. Xxxxxx Xxxxx
Telecopy Number: 312.454.1671
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with a copy to:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy Number: 312.454.0335
(b) If to Company, to:
Davel Communications Group, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Xx.
Telecopy: 813.626.9610
With a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: R. Xxxxx Xxxx
Telecopy Number: 312.861.2200
Section 11.5 Assignment. Neither this Agreement nor any of the rights,
interest or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Purchaser may assign any of
or all of its rights and obligations under this Agreement to any person that is
an Affiliate of Xxxxxx Xxxx or an Affiliate of any one or more trusts
established for the benefit of Xxxxxx Xxxx and/or members of his family without
the consent of any other party; provided that such assignment shall not relieve
Purchaser of its obligations hereunder. Subject to the preceding sentence,
this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.
Section 11.6 Interpretation. The table of contents and headings contained
in this Agreement are inserted for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement. All
references to a Section, articles, Schedule or Exhibit contained herein mean
Sections or Articles of this Agreement unless otherwise stated. All
capitalized terms defined herein are equally applicable to both the singular
and plural forms of such terms.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
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Section 11.7 Amendments; Waivers. (a) This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by each
party hereto.
(b) The failure of any party hereto to comply with any
representation, warranty, covenant or agreement contained in this Agreement may
be waived only by a written instrument signed by the party granting such waiver.
No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty, covenant or
agreement contained in this Agreement, and no failure by any party to take any
action with respect to any breach of this Agreement or default by any other
party shall constitute a waiver of such party's right to enforce any provision
hereof or to take any such action. The waiver by any party hereto of a breach of
any provision hereunder shall not operate as a waiver of any prior or subsequent
breach of the same or any other provision hereunder.
Section 11.8 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 11.9 Consent to Jurisdiction. Each party hereto irrevocably
submits to the nonexclusive jurisdiction of (a) the state courts of the State
of Illinois and (b) the federal district courts located in the State of
Illinois for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Xxxx General Partnership, Inc.
By: /s/ Xxx Xxxxxxxx
-------------------------------------
Name:
Title:
DAVEL COMMUNICATIONS GROUP, INC.
By:
--------------------------------------
Name:
Title:
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties as of the date first above written.
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C.
by Xxxx General Partnership, Inc.
By:
-------------------------------------
Name:
Title:
DAVEL COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxx Xxxx
--------------------------------------
Name:
Title:
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