EXHIBIT 10.1
CORPORATE GOVERNANCE, LIQUIDITY AND VOTING AGREEMENT
This CORPORATE GOVERNANCE, LIQUIDITY AND VOTING AGREEMENT, by and among UBS
Capital II LLC ("UBS"), Davel Communications Group, Inc. ("Davel"), Davel
Holdings, Inc. ("Holdings"), and Peoples Telephone Company, Inc. (the
"Company"), is entered into as of July 5, 1998.
WHEREAS, concurrently with the execution and delivery of this Agreement,
Davel, Holdings and the Company have entered into an Agreement and Plan of
Merger and Reorganization (the "Merger Agreement"), dated the date hereof,
pursuant to which a newly formed subsidiary of Davel or Holdings will be merged
with and into the Company with the Company surviving as a wholly owned
subsidiary of Davel or Holdings (the "Peoples/Davel Merger");
WHEREAS, the consummation of the Peoples/Davel Merger and the other
transactions contemplated by the Merger Agreement (the "Transaction") is subject
to certain conditions, including the approval of the Merger Agreement by (i)
two-thirds of the holders of the outstanding shares of common stock, par value
$.01 per share, of the Company ("Peoples Common Stock") and the Series C
Cumulative Convertible Preferred Stock (the "Series C Preferred"), voting as a
single class, with each share of Series C Preferred entitled to one vote for
each share of Peoples Common Stock issuable upon the conversion thereof and (ii)
by the holders of a majority of the outstanding shares of the Series C Preferred
voting as a separate class;
WHEREAS, 160,000 shares of Series C Preferred have been authorized for
issuance, 150,000 shares of Series C Preferred have been issued and are
outstanding, and UBS is the holder of all 150,000 outstanding shares of Series C
Preferred (the "Preferred Shares");
WHEREAS, the Preferred Shares are convertible into an aggregate of
2,857,143 shares of Peoples Common Stock (the "Common Shares");
WHEREAS, under the terms of the Merger Agreement, upon the conversion of
all of the Preferred Shares into the Common Shares prior to the Effective Time,
as contemplated by this Agreement, UBS will be entitled to receive in the
Peoples/Davel Merger, in exchange for all of the Common Shares, 671,428 shares
of the common stock of Davel or, if applicable, Holdings (plus cash in lieu of
any fractional share); and
WHEREAS, as a condition to the willingness of the Company, Davel and
Holdings to enter into the Merger Agreement, UBS has agreed as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
COVENANTS OF UBS
Section 1.1 Agreement to Convert Preferred Shares. UBS covenants and
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agrees with the Company, Davel and Holdings that, not later than immediately
prior to the effective time of the Peoples/Davel Merger (the "Effective Time"),
UBS will convert all of the Preferred Shares into the Common Shares issuable
upon conversion of the Preferred Shares and will continue to hold the Common
Shares through the Effective Time. In addition, UBS covenants and agrees with
the Company, Davel and Holdings that it will, except as provided in Section 1.4,
continue to hold the Preferred Shares through the record date of the Peoples
Stockholders Meeting (as hereinafter defined) so that UBS is the holder of
record of all of the Series C Preferred entitled to vote at the Peoples
Stockholders Meeting.
Section 1.2 Agreement to Vote. At any meeting of the stockholders of
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the Company held prior to the Termination Date (as hereinafter defined), however
called ("Peoples Stockholders Meeting"), and at every reconvened meeting
following any adjournment or postponement thereof prior to the Termination Date,
or in connection with any written consent of the stockholders of the Company
executed prior to the Termination Date, UBS shall vote all of the Preferred
Shares in favor of the approval of the Merger Agreement, the Peoples/Davel
Merger and any actions required in furtherance thereof which requires
stockholder approval. Prior to the Termination Date and subject to Section 1.4,
UBS shall not enter into any agreement or understanding with any person,
directly or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of the Preferred Shares or the Common Shares issued upon
conversion thereof in any manner inconsistent with the preceding sentence.
Section 1.3 Proxies. (a) UBS hereby revokes any and all previous
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proxies granted with respect to matters set forth in Section 1.2 for the
Preferred Shares and the Common Shares.
(b) Prior to the Termination Date, UBS shall not grant any proxies or
powers of attorney with respect to matters set forth in Section 1.2, deposit any
of the Preferred Shares or Common Shares into a voting trust or enter into a
voting agreement, other than this Agreement, with respect to any of the
Preferred Shares or Common Shares, in each case with respect to such matters.
Section 1.4 Transfer of Shares by UBS. Prior to the Termination Date,
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UBS shall not (a) pledge or place any encumbrance on any Preferred Shares or
Common Shares, other than pursuant to this Agreement, or (b) transfer, sell,
exchange or otherwise dispose of any Preferred Shares or Common Shares, in each
case, unless the pledgee, encumbrance holder, transferee, purchaser or acquiror
of such shares enters into a voting agreement with the Company containing
substantially the same terms as are set forth in Sections 1.1, 1.2, 1.3 and 1.4
of this Agreement.
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND
ADDITIONAL COVENANTS OF UBS
UBS represents, warrants and covenants to the Company, Davel and Holdings
that:
Section 2.1 Ownership. As of the date hereof, UBS is the beneficial
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owner of 150,000 Preferred Shares, free and clear of all liens, charges and
encumbrances. UBS will have the sole right to vote the Preferred Shares and,
upon the conversion of the Preferred Shares, UBS will be the beneficial and
record owner of, and have the sole right to vote, the Common Shares and, subject
to this Agreement, there will be no restrictions on rights of disposition or
other liens pertaining to the Common Shares. UBS has not agreed to subject any
Preferred Shares or Common Shares to any voting trust or other agreement,
arrangement or restriction with respect to the voting of the Preferred Shares or
the Common Shares.
Section 2.2 Authority and Non-Contravention. UBS has the right, power
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and authority to enter into this Agreement and, subject to the issuance to UBS
of the Common Shares, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by UBS and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of UBS. This Agreement has been
duly executed and delivered by UBS and constitutes a valid and binding
obligation of UBS, enforceable against UBS 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. Neither the
execution and delivery of this Agreement by UBS nor the consummation by UBS of
the transactions contemplated hereby will (i) materially violate, or require any
consent, approval or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to UBS, the Preferred Shares or,
upon issuance thereof to UBS, the Common Shares or (ii) violate or conflict
with the certificate of incorporation or bylaws of UBS or constitute a material
violation of or default under any contract, commitment, agreement,
understanding, arrangement or other restriction of any kind to which UBS is a
party or by which UBS or its assets are bound.
Section 2.3 Total Shares. As of the date hereof, UBS does not own,
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beneficially (other than through ownership of the Series C Preferred or through
options granted to representatives of UBS in their capacity as directors of the
Company) or of record, any shares of capital stock of the Company. Other than
the Preferred Shares and options granted to representatives of UBS in their
capacity as directors of the Company, UBS does not have any option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
Section 2.4 Notifications. Prior to the Termination Date, UBS will
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notify the Company promptly of the number of any shares of capital stock of the
Company acquired by UBS after the date hereof.
Section 2.5 Delivery of Affiliate Letter. In the event that counsel to
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the Company reasonably determines that UBS is an affiliate of the Company for
purposes of Rule 145 under the
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Securities Act of 1933, as amended, or for purposes of pooling-of-interests
accounting treatment, UBS agrees to execute and deliver to the Company not later
than 30 days prior to the Effective Time an Affiliate Letter substantially in
the form attached hereto as Exhibit A.
ARTICLE III
COVENANTS OF THE COMPANY, DAVEL AND HOLDINGS
Each of the Company, Davel and Holdings covenants to UBS on behalf of
itself that:
Section 3.1 Corporate Governance. Davel and Holdings agree that at the
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Effective Time and thereafter, Davel and Holdings shall exercise all authority
to cause Xxxxxxx X. Xxxxxxx or Xxxxxx X. Xxxxxxxxx, as determined by UBS
(including any principal or employee of UBS or one of its affiliates who is
appointed by UBS to replace such initial designee, the "UBS Designee") to be
elected as a member of the Board of Directors of Davel or, if the PhoneTel/Davel
Merger (as defined in the Merger Agreement, the "PhoneTel/Davel Merger") shall
have occurred, Holdings, in either case until the first anniversary of the
Effective Time; provided, however, that if UBS shall at any time during such
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one-year period be the beneficial owner of less than 95% of the number of shares
of common stock of Davel or, if applicable, Holdings received by UBS in the
Peoples/Davel Merger (i.e., 818,105 shares, subject to adjustment for stock
splits, combinations and reclassifications), then the UBS Designee shall
immediately thereupon resign as a member of such Board of Directors.
Section 3.2 Merger Consideration for the Preferred Shares. Davel,
---------------------------------------------
Holdings and the Company agree with UBS that, at the Effective Time, the
2,857,143 Common Shares into which UBS shall have converted the 150,000
Preferred Shares shall be entitled to receive therefor 671,428 shares of common
stock of Davel (or, if the PhoneTel/Davel Merger shall have occurred, of
Holdings), plus cash in lieu of any fractional share. In addition, in
consideration of accrued but unpaid dividends on the Preferred Shares plus the
agreed-upon future fair value of the Preferred Shares should they have remained
outstanding after the Effective Time, Davel and Holdings shall pay or cause to
be paid to UBS upon the consummation of the Peoples/Davel Merger an additional
189,735 (plus such additional number as will equal in value (calculated based on
the Exchange Ratio set forth in the Merger Agreement multiplied by the closing
price of the common stock of Davel on the trading day immediately prior to the
date hereof) any additional dividends on the Preferred Shares accruing after the
date hereof and prior to the Effective Time) shares (plus cash in lieu of any
fractional share) of the common stock of Davel (or, if the PhoneTel/Davel Merger
shall have occurred, of Holdings).
Section 3.3 Registration Rights. UBS, the Company, Davel and Holdings
-------------------
agree that, as of the Effective Time, all of the rights of UBS and all of the
obligations of the Company and its successors and assigns as set forth in the
Registration Rights Agreement, dated as of July 19, 1995, by and among the
Company, UBS and Appian Capital Partners, L.L.C. (as amended, the "Existing
Registration Agreement") shall terminate and, with respect to such parties, the
Existing Registration Agreement shall be of no further force or effect. In lieu
thereof, in the event that the UBS Designee resigns or is otherwise no longer
serving or, in accordance with Section 3.1, is no longer entitled to
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serve as a member of the Board of Directors of Davel or Holdings, the provisions
set forth in Exhibit B hereto shall become effective.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS OF
THE COMPANY, DAVEL AND HOLDINGS
Each of the Company, Davel and Holdings represents, warrants and
covenants to UBS on behalf of itself that:
Section 4.1 Authority and Non-Contravention. It has the right, power
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and authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
it and the consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary action on the part of it. This Agreement
has been duly executed and delivered by it and constitutes a valid and binding
obligation of it, enforceable against it 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. Neither the
execution and delivery of this Agreement nor the consummation by it of the
transactions contemplated hereby will (i) materially violate, or require any
consent, approval or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to it or (ii) violate or conflict
with the certificate or articles of incorporation or by laws of it or constitute
a material violation of or default under any contract, commitment, agreement,
understanding, arrangement or other restriction of any kind to which it is a
party or by which it or its assets are bound.
ARTICLE V
MISCELLANEOUS
Section 5.1 Expenses. All costs and expenses incurred in connection
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with this Agreement shall be paid by the party incurring such costs or expenses;
provided, however, that the Company shall pay reasonable fees and expenses of
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counsel to UBS incurred in connection with the negotiation and execution of this
Agreement.
Section 5.2 Further Assurances. From time to time, at the request of
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the Company, Davel or Holdings in the case of UBS, or at the request of UBS in
the case of the Company, Davel or Holdings, and without further consideration,
each party shall execute and deliver or cause to be executed and delivered such
additional documents and instruments and take all such further action as may be
reasonably necessary or desirable to consummate the transactions contemplated by
this Agreement.
Section 5.3 Specific Performance. Each party hereto agrees that the
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other parties hereto would be irreparably damaged if for any reason it fails to
perform any of its obligations under this
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Agreement, and that the other parties would not have an adequate remedy at law
for money damages in such event. Accordingly, the aggrieved party shall be
entitled to seek specific performance and injunctive and other equitable relief
to enforce the performance of this Agreement by the other parties hereto. This
provision is without prejudice to any other rights that each party may have
against the other parties hereto for any failure to perform their obligations
under this Agreement.
Section 5.4 Amendments, Termination. This Agreement may not be modified
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or amended except by an instrument or instruments in writing signed by each
party hereto. The representations, warranties, covenants and agreements set
forth in Article I, Article II, Article III (other than Sections 3.1 and 3.3
thereof) and Article IV shall terminate, except with respect to liability for
prior breaches thereof, upon the earliest to occur of (i) termination of the
Merger Agreement in accordance with its terms, (ii) the Closing Date (as defined
in the Merger Agreement) and (iii) the date, if any, upon which the Company's
Board of Directors withdraws, modifies or changes its recommendation or approval
of the Merger Agreement or the Peoples/Davel Merger in a manner adverse to Davel
and Holdings (the "Termination Date").
Section 5.5 Assignment. Subject to Section 1.4 hereof and the
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provisions of Exhibit B, neither this Agreement nor any of the rights, interests
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. 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 5.6 Entire Agreement. This Agreement (including the documents
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referred to herein) (a) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both oral and written 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 hereto any rights or remedies.
Section 5.7 Notices. All notices and other communications hereunder
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shall be in writing and shall be deemed given if delivered personally, sent by
documented overnight delivery service or telecopied with confirmation of
receipt, to the parties at the addresses specified below (or at such other
address or telecopy or telex number for a party as shall be specified by like
notice):
If to the Company, to:
Peoples Telephone Company, Inc.
0000 X.X. 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with copies to:
Steel Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000-0000
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Attention: Xxx X. Xxxxxx, P.A.
Facsimile: (000) 000-0000
and
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to Davel or Holdings, to:
Davel Communications Group, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: R. Xxxxx Xxxx
Facsimile: (000) 000-0000
If to UBS, to:
UBS Capital II LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
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Section 5.8 Governing Law. This Agreement shall be governed by, and
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construed in accordance with, the laws of the State of New York regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 5.9 Counterparts. This Agreement may be executed in two or more
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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 in original or facsimile form.
Section 5.10 Interpretation. The headings contained in this Agreement
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are inserted for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 5.11 Severability. Any provision hereof which is invalid or
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unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 5.12 Consent to Jurisdiction. Each party hereto irrevocably
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submits to the nonexclusive jurisdiction of (a) the state courts of the State of
New York and (b) the United States federal district courts located in the State
of New York for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby.
Section 5.13 Attorney's Fees. If any action at law or in equity is
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necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the date first above written.
UBS CAPITAL II LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
Title: Managing Director
PEOPLES TELEPHONE COMPANY, INC.
By: /s/ E. Xxxxx Xxxxxxx
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Name: E. Xxxxx Xxxxxxx
Title: CEO/President
DAVEL HOLDINGS, INC.
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
Title: President
DAVEL COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
Title: Chairman
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EXHIBIT A
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Davel Communications Group, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $.01
per share ("Peoples Common Stock"), of Peoples Telephone Company, Inc., a New
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York corporation ("Peoples"), is entitled to receive in connection with the
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merger (the "Merger") of Peoples with and into a wholly owned subsidiary of
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Davel Communications Group, Inc., an Illinois corporation ("Davel"), shares of
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common stock, no par value (the "Davel Common Stock"), of Davel. [SUBSTITUTE
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DAVEL HOLDINGS, INC. FOR DAVEL COMMUNICATIONS GROUP, INC. THROUGHOUT THIS LETTER
IF PHONETEL/DAVEL MERGER HAS OCCURRED.] The undersigned has been advised that
the undersigned may be deemed an "affiliate" of Peoples within the meaning of
Rule 145 ("Rule 145") promulgated under the Securities Act of 1933, as amended
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(the "Securities Act"), by the Securities and Exchange Commission (the "SEC")
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and may be deemed an "affiliate" of Peoples for purposes of qualifying the
Merger for pooling of interests accounting treatment under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations. Nothing
contained herein should be construed as an admission that I am an "affiliate" of
Peoples as described in the immediately preceding sentence.
If, in fact, the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the shares of Davel
Common Stock received by the undersigned in exchange for any shares of Peoples
Common Stock in connection with the Merger may be restricted unless such
transaction is registered under the Securities Act or an exemption from such
registration is available. The undersigned understands that such exemptions are
limited and the undersigned has obtained or will obtain advice of counsel as to
the nature and conditions of such exemptions, including information with respect
to the applicability to the sale of such securities of Rules 144 and 145(d)
promulgated under the Securities Act. The undersigned understands that Davel
will not be required to maintain the effectiveness of any registration statement
under the Securities Act for the purposes of sale, transfer or other disposition
of shares of Davel Common Stock by the undersigned (other than pursuant to the
Registration Rights Agreement, dated _______, 1998, between Davel and the
undersigned) or take any action (other than to comply with the reporting
requirements of the Securities Exchange Act of 1934, as amended, so long as it
is subject to such requirements) to make compliance with an exemption from
registration available to the undersigned.
The undersigned hereby represents to and covenants with Davel that the
undersigned will not sell, assign or transfer any of the shares of Davel Common
Stock received by the undersigned in exchange for shares of Peoples Common Stock
in connection with the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in the opinion of the
general counsel of Davel or other counsel reasonably satisfactory to Davel or as
described in a "no-action" or
A-1
interpretive letter from the staff of the SEC specifically issued with respect
to a transaction to be engaged in by the undersigned, is not required to be
registered under the Securities Act.
The undersigned hereby further represents to and covenants with Davel
that from the date that is 30 days prior to the Effective Time (as defined in
the Agreement and Plan of Merger, dated as of _______, 1998, by and among Davel,
Davel Holdings, Inc. and Peoples), the undersigned will not sell, transfer or
otherwise dispose of any shares of Peoples Common Stock held by the undersigned
and that the undersigned will not sell, transfer or otherwise dispose of any
shares of Davel Common Stock received by the undersigned in the Merger until
after such time as results covering at least 30 days of post-Merger combined
operations of Peoples and Davel have been published by Davel, in the form of a
quarterly earnings report, an effective registration statement filed with the
SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public filing
or announcement which includes such combined results of operations, except after
prior written notice to Davel of the undersigned's intention to make such sale
and Davel's determination that such sale would not reasonably be expected to
adversely affect the qualification of the Merger as a pooling-of-interests.
In the event of a sale or other disposition by the undersigned of
shares of Davel Common Stock pursuant to Rule 145 or other exempt transaction,
the undersigned will supply Davel with evidence of compliance with such Rule, in
the form of a letter in the form of Annex I hereto or the opinion of counsel or
no-action letter referred to above, as the case may be. The undersigned
understands that Davel may instruct its transfer agent to withhold the transfer
of any shares of Davel Common Stock disposed of by the undersigned, but that
(provided such transfer is not prohibited by any other provision of this letter
agreement) upon receipt of such evidence of compliance, Davel shall cause the
transfer agent to effectuate the transfer of the shares of Davel Common Stock
sold as indicated in such letter.
The undersigned acknowledges and agrees that the legend set forth
below will be placed on certificates representing the Davel Common Stock
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legend will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to Davel from counsel reasonably satisfactory to Davel to the
effect that such legend is no longer required for purposes of the Securities
Act.
There will be placed on the certificates for Davel Common Stock issued
to the undersigned, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO A
BUSINESS COMBINATION WHICH IS BEING ACCOUNTED FOR AS A POOLING OF INTERESTS, IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE NOT BEEN ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED (I) UNTIL SUCH TIME AS DAVEL SHALL HAVE PUBLISHED FINANCIAL RESULTS
COVERING AT LEAST 30 DAYS OF COMBINED OPERATIONS AFTER THE EFFECTIVE TIME AND
(II) EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933."
A-2
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Davel
Common Stock and (ii) the receipt by Davel of this letter is an inducement to
Davel's obligations to consummate the Merger.
Very truly yours,
A-3
ANNEX I TO EXHIBIT A
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[Date]
[Name]
On __________, the undersigned sold shares of common stock (the "Davel
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Common Stock") of Davel Communications Group, Inc., an Illinois corporation
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("Davel"), which were received by the undersigned in connection with the merger
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of Peoples Telephone Company, Inc. with and into a wholly owned subsidiary of
Davel.
Based upon the most recent report or statement filed by Davel with the
Securities and Exchange Commission, the shares of Davel Common Stock sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
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The undersigned hereby represents that the shares of Davel Common
Stock were sold in "brokers' transactions" within the meaning of Section 4(4) of
the Securities Act or in transactions directly with a "market maker" as that
term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as
amended. The undersigned further represents that the undersigned has not
solicited or arranged for the solicitation of orders to buy the Davel Common
Stock, and that the undersigned has not made any payment in connection with the
offer or sale of the Davel Common Stock to any person other than to the broker
who executed the order in respect of such sale.
Very truly yours,
A-4
EXHIBIT B
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(a) All capitalized terms used but not defined in this Exhibit B shall
have the meanings assigned to them in the Agreement to which this Exhibit B is
attached. For purposes of the provisions contained in this Exhibit B:
(i) The term "Common Stock" means the common stock, no par value
of Davel or, if the PhoneTel/Davel Merger (as defined in the Merger
Agreement) has occurred, the common stock, par value $.01 per share, of
Holdings.
(ii) The term "Holder" means, at any given time, UBS, provided that
UBS owns of record shares of Common Stock of the Issuer at such time, and
any affiliate of UBS who then owns of record Registrable Securities,
provided that such affiliate has previously executed and delivered a
written counterpart to this Agreement.
(iii) The term "Issuer" means Davel or Holdings, as applicable.
(iv) The term "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act.
(v) The term "Registrable Securities" means shares of Common Stock
of the Issuer held, from time to time, by any Holder.
(vi) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar
effect) promulgated under the Securities Act.
(vii) The term "SEC" means the Securities and Exchange Commission or
any governmental agency that is a successor thereto.
(viii) The term "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(ix) The term "Shelf Registration Statement" means a registration
statement intended to effect a shelf registration in connection with a Rule
415 Offering.
(b) On a single occasion, the Issuer shall, upon the written request of
Holder, prepare and file with the SEC a registration statement with respect to
all or any portion of (or at the request of UBS a Shelf Registration Statement
with respect to all shares of) the Issuer's Common Stock acquired by UBS in or
in connection with the Peoples/Davel Merger for distribution of such stock in
the manner or manners specified in such request and use its reasonable best
efforts to cause such registration statement to become effective and keep such
registration statement effective until such time as such shares have been sold
or disposed of thereunder or sold, transferred or otherwise disposed of to a
person that is not a Holder (but in any event, with respect to a registration
statement other than a Shelf Registration Statement, no later than the third
anniversary of the date such
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registration statement becomes effective); provided, however, that Holder shall
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not be entitled to demand registration of Common Stock pursuant to this
paragraph (b) in an underwritten public offering if, at the time of such
request, such Holder does not beneficially own at least 25% of the number of
shares of Common Stock received by UBS in or in connection with the
Peoples/Davel Merger; and provided further that if, at any time after giving a
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written request for registration (other than a shelf registration) and prior to
the effective date of the registration statement filed in connection with such
request, the managing underwriters of such offering determine that the aggregate
amount of shares requested to be registered by the Holders of the Registrable
Securities, together with the amount of shares requested by all persons and
entities ("Other Persons") exercising (with respect to such offering) incidental
registration rights granted to such Other Persons by Davel or Holdings, could
materially and adversely affect such offering, then the Issuer may reduce the
number of Registrable Securities of such Holders to be included in such offering
to the maximum number of shares that the underwriters deem advisable, and the
Issuer will allocate the number of securities to be registered among such
Holders and Other Persons on a pro rata basis in accordance with the number of
shares each Holder and Other Person initially requested to be sold (it being
understood that if, as a result of such reduction and allocation, less than 75%
of the Registrable Securities requested by such Holders to be included in such
offering are so included, then the Holders shall again be entitled to the
benefits of this paragraph (b)). Notwithstanding the foregoing, if the Issuer
shall furnish to Investor a certificate signed by the Chief Executive, Chief
Operating, or Chief Financial Officer of the Issuer stating that, in the good
faith judgment of a majority of the Issuer's directors, it would be materially
detrimental to the Issuer for such registration statement to be filed, the
Issuer shall have the right to defer such filing for a period of not more than
90 days after receipt of UBS' request; provided that the Issuer may not utilize
this right more than once in any 12-month period.
(c) If the Issuer proposes to register any Common Stock to be issued by
it or held by any other person ("Other Securities") in a public offering under
the Securities Act, on a form and in a manner which would permit registration of
Registrable Securities for sale to the public under the Securities Act, it will
give prompt written notice to each Holder of its intention to do so, and upon
the written request of a Holder delivered to the Issuer within fifteen business
days after the giving of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of disposition thereof), the Issuer will use its reasonable best
efforts to effect, in connection with the registration of the Other Securities,
the registration under the Securities Act of all Registrable Securities which
the Issuer has been so requested to register by such Holder, to the extent
required to permit the disposition (in accordance with the intended method or
methods thereof as aforesaid) of the Registrable Securities so to be registered,
provided that:
--------
(i) if, at any time after giving such written notice of its intention
to register any Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, the
managing underwriters of such offering or offerings determine that the
aggregate amount of shares to be registered by the Holders of the
Registrable Securities, together with all other shares requested by all
other persons or entities to be included in such offering, could materially
and adversely affect such offering, then the Issuer may reduce the number
of Registrable Securities of such Holders or such other persons or entities
to be included in such offering to the maximum number of shares that the
underwriters deem advisable, and the Issuer will allocate the number of
securities to be
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registered among such Holders and other persons or entities on a pro rata
basis in accordance with the number of shares each Holder and other person
or entity initially requested to be sold.
(ii) the Issuer shall not be required to effect any registration of
Registrable Securities under this paragraph (c) incidental to the
registration of any of its securities in connection with (A) mergers,
acquisitions or exchange offers on Form S-4 or any successor form, (B)
dividend reinvestment plans or (C) stock option or other employee benefit
plans; and
(iii) Holders, cumulatively, shall have the right to exercise
registration rights pursuant to this paragraph (c) without limit during the
term hereof.
No registration of Registrable Securities effected under this paragraph (c)
shall relieve the Issuer of its obligation to effect a registration of
Registrable Securities pursuant to paragraphs (b) or (c).
(d) Whenever the Issuer is required to effect a registration statement
pursuant to paragraphs (b) or (c), the Issuer shall, as expeditiously as
reasonably possible:
(i) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
thereby.
(ii) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities covered by
such registration statement owned by them.
(iii) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such states or other jurisdictions as shall
be reasonably requested by any Holder, provided that the Issuer shall not
be required to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions where it is not so
subject.
(iv) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and then use its best efforts to promptly
correct such statement or omission. Notwithstanding the foregoing and
anything to the contrary set forth in this paragraph (d), each Holder
acknowledges that the Issuer shall have the right to suspend the use of the
prospectus forming a part of a registration statement if such offering
would interfere with a pending corporate transaction or for other reasons
until such time as an amendment to the registration statement has been
filed by the Issuer and declared effective by the SEC, or until such time
as the Issuer
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has filed an appropriate disclosure report with the SEC. Each Holder hereby
covenants that it will (i) keep any such notice strictly confidential, and
(ii) not sell any shares of Common Stock pursuant to such prospectus during
the period commencing at the time at which the Issuer gives the Holder
notice of the suspension of the use of such prospectus and ending at the
time the Issuer gives the Holder notice that it may thereafter effect sales
pursuant to such prospectus. The Issuer shall only be able to suspend the
use of such prospectus for periods aggregating no more than 90 days in
respect of any registration.
(v) Make available for inspection by any Holder of Registrable
Securities included in such registration statement, any underwriter
participating in any offering pursuant to such registration statement, and
any attorney, accountant or other agent retained by any such Holder or
underwriter (collectively, the "Inspectors"), all financial and other
records and other information, pertinent corporate documents and properties
of any of the Issuer and its subsidiaries and affiliates (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibilities; provided, however, that the Records
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that the Issuer determines, in good faith, to be confidential and which it
notifies the Inspectors in writing are confidential shall not be disclosed
to any Inspector unless such Inspector signs a confidentiality agreement
reasonably satisfactory to the Issuer (which shall permit the disclosure of
such Records in such registration statement or the related prospectus if
necessary to avoid or correct a material misstatement in or material
omission from such registration statement or prospectus) and either (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction; provided, further, that (A) any decision regarding
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the disclosure of information pursuant to subclause (i) shall be made only
after consultation with counsel for the applicable Inspectors and the
Issuer and (B) with respect to any release of Records pursuant to subclause
(ii), each Holder of Registrable Securities agrees that it shall, promptly
after learning that disclosure of such Records is sought in a court having
jurisdiction, give notice to the Issuer so that the Issuer, at the Issuer's
expense, may undertake appropriate action to prevent disclosure of such
Records.
(v) Enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
Holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities (including obtaining
opinions of counsel and "cold comfort" letters and updates thereof from the
Issuer's independent certified public accountants).
(e) It shall be a condition precedent to the obligations of the Issuer to
take any action pursuant to this Agreement with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish to the Issuer
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of such Holder's Registrable Securities and as may be
required from time to time to keep such registration current.
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(f) All expenses incurred by or on behalf of the Issuer in connection
with registrations, filings or qualifications pursuant to paragraphs (b) or (c),
including, without limitation, all registration, filing and qualification fees,
printers' and accounting fees, and fees and disbursements of counsel for the
Issuer, shall be borne by the Issuer. In no event shall the Issuer be obligated
to bear any underwriting discounts or commissions or brokerage fees or
commissions relating to Registrable Securities or, except as otherwise set forth
herein, the fees and expenses of counsel to the selling Holders.
(g) In the event of registration of any Registrable Securities hereunder:
(i) To the extent permitted by law, the Issuer will indemnify and
hold harmless each Holder and the affiliates of such Holder, and their
respective directors, officers, general and limited partners, agents and
representatives (and the directors, officers, affiliates and controlling
persons thereof), and each other person, if any, who controls such Holder
within the meaning of the Securities Act, against any losses, claims,
damages, or liabilities ("Losses"), joint or several, to which they may
become subject under the Securities Act or other federal or state law,
insofar as such Losses (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus (provided that this indemnity shall
not apply to the extent that the Losses are attributable to an untrue
statement or alleged untrue statement of any material fact or omission or
alleged omission to state a material fact in a preliminary prospectus that
was corrected in a final prospectus which was provided to the Holder on a
timely basis but which the Holder or the underwriters failed to deliver to
the purchaser within the time required by applicable securities laws)
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to
be stated therein, or necessary to make the statements therein not
misleading (but only if such omission is not corrected in the final
prospectus), or (iii) any violation or alleged violation by the Issuer in
connection with the registration of Registrable Securities under the
Securities Act, any state securities law or any rule or regulation
promulgated under the Securities Act or any state securities law; and the
Issuer will pay to each such Holder, affiliate or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Loss or action;
provided, however, that the indemnity contained in this subparagraph (g)(i)
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shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Issuer (which consent shall not be unreasonably withheld),
nor shall the Issuer be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by or on behalf of such Holder or its Affiliates or
controlling person. Each indemnified party shall furnish such information
regarding itself or the claim in question as an indemnifying party may
reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting
therefrom.
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(ii) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Issuer, each of its directors, each of its
officers who has signed the registration statement, each person, if any,
who controls the Issuer within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other
Holder, against any Losses, joint or several, to which any of the foregoing
persons may become subject, under the Securities Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subparagraph (g)(ii) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
--------
however, that the indemnity contained in this subparagraph (g)(ii) shall
-------
not apply to amounts paid in settlement of any such Loss or action if such
settlement is effected without the consent of such Holder, which consent
shall not be unreasonably withheld; provided, that, in no event shall any
--------
indemnity under this subparagraph (g)(ii) exceed the gross proceeds from
the offering received by such Holder.
(iii) Promptly after receipt by an indemnified party of notice of
the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this paragraph (g), deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties. The failure to deliver
written notice to the indemnifying party within a reasonable time after the
commencement of any such action, if materially prejudicial to its ability
to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this paragraph (g) to the extent
of such prejudice, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this paragraph (g). The
indemnified party shall have the right, but not the obligation, to
participate in the defense of any action referred to above through counsel
of its own choosing and shall have the right, but not the obligation, to
assert any and all separate defenses, cross claims or counterclaims which
it may have, and the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (A) the employment of such counsel
has been specifically authorized in advance by the indemnifying party, (B)
there is a conflict of interest that prevents counsel for the indemnifying
party from adequately representing the interests of the indemnified party
or there are defenses available to the indemnified party that are different
from, or additional to, the defenses that are available to the indemnifying
party, (C) the indemnifying party does not employ counsel that is
reasonably satisfactory to the indemnified party within a reasonable period
of time, or (D) the indemnifying party fails to assume the defense or does
not reasonably contest such action in good faith, in which case, if the
indemnified party notifies the indemnifying party that it elects to employ
separate counsel, the indemnifying party shall not have the right to assume
the defense of such action on behalf of the indemnified party and the
reasonable fees and expenses of such separate
B-6
counsel shall be borne by the indemnifying party; provided, however, that,
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the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one separate firm (in addition to, to the
extent reasonably necessary to employ local counsel, one firm acting as
local counsel) for all indemnified parties.
(iv) If the indemnification provided for in this paragraph (g) is
unavailable to an indemnified party in respect of any Losses (other than in
accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and such indemnified party, on the
other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party, on the one
hand, and indemnified party, on the other hand, shall be determined by
reference to, among other things, whether any action in question, including
any untrue statement of a material fact or omission or alleged omission to
state a material fact, has been taken by, or relates to information
supplied by, such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent any such action, statement or omission. The amount paid
or payable by a party as a result of any Losses shall be deemed to include
any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. No contribution required by this
paragraph to be made by any Holder shall exceed the gross proceeds from the
offering received by such Holder.
(v) The obligations of the Issuer and the Holders under this
paragraph (g) shall survive the completion of any offering of Registrable
Securities in a registration statement under this Agreement.
(vi) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement (if any) entered into in connection with any
underwritten public offering of the Registrable Securities are in conflict
with the foregoing provisions, the provisions in such underwriting
agreement shall control.
(h) With a view to making available to the holders the benefits of Rule
144 and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Issuer to the public without registration or
pursuant to a registration on Form S-3, the Issuer agrees to:
(i) use its reasonable best efforts to make and keep public
information available, as those terms are understood and defined in Rule
144;
(ii) use its reasonable best efforts to file with the SEC in a
timely manner all reports and other documents required under the Securities
Act and the Securities Exchange Act of 1934, as amended; and
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(iii) furnish to any Holder forthwith upon request (i) a written
statement by the Issuer as to its compliance with the reporting
requirements of Rule 144, or as to whether it qualifies as a registrant
whose securities may be resold pursuant to Form S-3, (ii) a copy of the
most recent annual or quarterly report of the Issuer and such other reports
and documents so filed by the Issuer, and (iii) such other information (and
the Issuer shall take such action) as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such
form.
(i) The rights to cause the Issuer to register Registrable Securities
pursuant to this Agreement may only be assigned by a Holder to a transferee or
assignee of any Registrable Securities if such transferee or assignee is or
becomes a Holder in connection with such transfer or assignment.
(j) The observance by the Issuer of any provision of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with the written consent of the Holders of a majority of the
Registrable Securities, and any waiver effected in accordance with this
paragraph shall be binding upon each Holder of Registrable Securities.
(k) Each Holder of Registrable Securities, if requested by an underwriter
of any registered public offering of Issuer securities being sold in a firm
commitment underwriting, agrees not to sell or otherwise transfer or dispose of
any Common Stock (or other voting securities of the Issuer) held by such Holder
other than shares of Registrable Securities included in the registration during
the seven days prior to, and during a period of up to 180 days following, the
effective date of the registration statement. Such agreement shall be in
writing in a form reasonably satisfactory to the Issuer and such underwriter.
The Issuer may impose stop-transfer instructions with respect to the securities
subject to the foregoing restriction until the end of the required stand-off
period. Notwithstanding the foregoing, Holder shall only be bound by the
provisions of this paragraph (k) if all other holders of Common Stock entitled
to registration rights are similarly restricted.
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