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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:
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ARTICLE I
COVENANTS OF UBS
Section 1.1 Agreement to Convert Preferred Shares. UBS covenants and
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
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
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,
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
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
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,
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
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
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
Effective Time and thereafter, Davel and Holdings shall exercise all authority
to cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, 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
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
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
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
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
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
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
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
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
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
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.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Steel ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, P.A.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Davel or Holdings, to:
Davel Communications Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to UBS, to:
UBS Capital II LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Section 5.8 Governing Law. This Agreement shall be governed by, and
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 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
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
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
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
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Managing Director
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PEOPLES TELEPHONE COMPANY, INC.
By: /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: CEO/President
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DAVEL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
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Title: President
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DAVEL COMMUNICATIONS GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
-----------------------------
Title: Chairman
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EXHIBIT A
Davel Communications Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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 York
corporation ("Peoples"), is entitled to receive in connection with the merger
(the "Merger") of Peoples with and into a wholly owned subsidiary of Davel
Communications Group, Inc., an Illinois corporation ("Davel"), shares of common
stock, no par value (the "Davel Common Stock"), of Davel. [SUBSTITUTE 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 (the
"Securities Act"), by the Securities and Exchange Commission (the "SEC") 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"
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or 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."
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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
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ANNEX I TO EXHIBIT A
[Date]
[Name]
On __________, the undersigned sold shares of common stock (the "Davel
Common Stock") of Davel Communications Group, Inc., an Illinois corporation
("Davel"), which were received by the undersigned in connection with the merger
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").
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,
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EXHIBIT B
(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
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other than a Shelf Registration Statement, no later than the third anniversary
of the date such registration statement becomes effective); provided, however,
that Holder shall 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
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
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16
underwriters deem advisable, and the Issuer will allocate the number of
securities to be 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
B-3
17
statement has been filed by the Issuer and declared effective by the
SEC, or until such time as the Issuer 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 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 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.
(vi) 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.
B-4
18
(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) 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
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20
expenses of such separate counsel shall be borne by the indemnifying
party; provided, however, that, 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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21
(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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