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Exhibit 10.80
AGREEMENT AND PLAN OF MERGER
by and among
PHONETEL TECHNOLOGIES, INC.,
PHONETEL ACQUISITION CORP.
and
COMMUNICATIONS CENTRAL INC.
dated as of
March 14, 1997
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Index of Defined Terms
----------------------
Defined Term Section No.
------------ -----------
Agreement....................................................................................Recitals
Acquisition Proposal...........................................................................5.4(a)
Appointment Date..................................................................................5.1
Articles of Incorporation......................................................................1.2(a)
Average Net Revenue..............................................................................3.20
Balance Sheet.................................................................................3.10(a)
By-laws........................................................................................1.4(b)
Certificates...................................................................................2.2(b)
Closing...........................................................................................1.6
Closing Date......................................................................................1.6
Code...........................................................................................3.9(a)
Common Stock...................................................................................1.1(a)
Company......................................................................................Recitals
Company Agreements................................................................................3.4
Company Disclosure Schedule.......................................................................III
Company Material Adverse Effect................................................................3.1(a)
Company SEC Documents.............................................................................3.5
Company Surviving Corporation..................................................................1.4(b)
Confidentiality Agreement......................................................................5.2(a)
Copyrights....................................................................................3.11(c)
Dissenting Shareholders........................................................................2.1(c)
D&O Insurance..................................................................................5.8(b)
Effective Time....................................................................................1.5
Employment Agreement.............................................................................5.10
Encumbrances...................................................................................3.2(b)
Environmental Claim...........................................................................3.15(g)
Environmental Laws............................................................................3.15(g)
ERISA..........................................................................................3.9(a)
ERISA Affiliate................................................................................3.9(a)
Escrow Agent.....................................................................................1.10
Escrow Amount....................................................................................1.10
Exchange Act...................................................................................1.1(a)
Executive........................................................................................5.10
Financial Statements..............................................................................3.5
Financing Condition............................................................................1.1(a)
fully diluted basis............................................................................1.1(a)
GAAP..............................................................................................3.5
GBCC...........................................................................................1.2(a)
Governmental Entity...............................................................................3.4
Hazardous Materials...........................................................................3.15(g)
HSR Act........................................................................................1.1(a)
Indemnified Party..............................................................................5.8(a)
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Independent Directors..........................................................................1.3(c)
Intellectual Property.........................................................................3.11(c)
Licenses......................................................................................3.11(c)
Merger............................................................................................1.4
Merger Consideration...........................................................................2.1(c)
Minimum Condition..............................................................................1.1(a)
Offer..........................................................................................1.1(a)
Offer Documents................................................................................1.1(b)
Offer Price....................................................................................1.1(a)
Offer to Purchase..............................................................................1.1(a)
Options...........................................................................................2.4
Parent.......................................................................................Recitals
Patents.......................................................................................3.11(c)
Paying Agent...................................................................................2.2(a)
PBGC...........................................................................................3.9(b)
PCBs..........................................................................................3.15(e)
Plans..........................................................................................3.9(a)
Preferred Stock................................................................................3.2(a)
Proxy Statement................................................................................1.8(a)
Purchaser....................................................................................Recitals
Purchaser Common Stock............................................................................2.1
Purchaser Surviving Corporation................................................................1.4(a)
Rights ..........................................................................................3.18
Rights Agreement.................................................................................3.18
Schedule 14D-1.................................................................................1.1(b)
Schedule 14D-9.................................................................................1.2(b)
SEC............................................................................................1.1(b)
Secretary of State................................................................................1.5
Securities Act....................................................................................3.5
Shares.........................................................................................1.1(a)
Special Meeting................................................................................1.8(a)
Stock Option Plans................................................................................2.4
Subsidiary.....................................................................................3.1(a)
Superior Proposal..............................................................................5.4(b)
Surviving Corporation..........................................................................1.4(a)
Tax...........................................................................................3.10(k)
Taxes.........................................................................................3.10(k)
Tax Return....................................................................................3.10(k)
Termination Fee................................................................................8.1(b)
Title IV Plan..................................................................................3.9(a)
Trademarks....................................................................................3.11(c)
Transactions...................................................................................1.2(a)
Voting Debt....................................................................................3.2(a)
Warrants..........................................................................................2.4
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Table of Contents
Page
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ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer................................................................ 1
Section 1.2 Company Actions.......................................................... 4
Section 1.3 Directors................................................................ 6
Section 1.4 The Merger............................................................... 8
Section 1.5 Effective Time........................................................... 10
Section 1.6 Closing.................................................................. 10
Section 1.7 Directors and Officers of the
Surviving Corporation............................................... 10
Section 1.8 Shareholders' Meeting.................................................... 10
Section 1.9 Merger Without Meeting of Shareholders................................... 11
Section 1.10 Escrow................................................................... 12
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock.............................................. 12
Section 2.2 Exchange of Certificates................................................. 13
Section 2.3 Dissenters' Rights....................................................... 15
Section 2.4 Options and Warrants..................................................... 15
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 3.1 Organization............................................................. 17
Section 3.2 Capitalization........................................................... 17
Section 3.3 Authorization; Validity of Agreement;
Company Action...................................................... 19
Section 3.4 Consents and Approvals; No Violations.................................... 19
Section 3.5 SEC Reports and Financial Statements..................................... 20
Section 3.6 Absence of Certain Changes............................................... 21
Section 3.7 No Undisclosed Liabilities............................................... 21
Section 3.8 Litigation............................................................... 21
Section 3.9 Employee Benefit Plans................................................... 22
Section 3.10 Tax Matters; Government Benefits......................................... 24
Section 3.11 Intellectual Property.................................................... 27
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Section 3.12 Employment Matters....................................................... 28
Section 3.13 Compliance with Laws..................................................... 28
Section 3.14 Vote Required............................................................ 29
Section 3.15 Environmental Laws....................................................... 29
Section 3.16 Information in Proxy Statement........................................... 31
Section 3.17 Opinion of Financial Advisor............................................. 32
Section 3.18 Rights Agreement......................................................... 32
Section 3.19 Phones................................................................... 32
Section 3.20 Average Net Revenue...................................................... 32
Section 3.21 Brokers or Finders....................................................... 33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Section 4.1 Organization............................................................. 33
Section 4.2 Authorization; Validity of Agreement;
Necessary Action.................................................... 33
Section 4.3 Consents and Approvals; No Violations.................................... 34
Section 4.4 Information in Proxy Statement........................................... 34
Section 4.5 Financing................................................................ 35
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company........................................ 35
Section 5.2 Access; Confidentiality.................................................. 37
Section 5.3 Consents and Approvals................................................... 38
Section 5.4 No Solicitation.......................................................... 39
Section 5.5 Additional Agreements.................................................... 41
Section 5.6 Publicity................................................................ 41
Section 5.7 Notification of Certain Matters.......................................... 41
Section 5.8 Directors' and Officers' Insurance and
Indemnification..................................................... 42
Section 5.9 Purchaser Compliance..................................................... 43
Section 5.10 Severance Arrangements................................................... 43
Section 5.11 Financing................................................................ 43
Section 5.12 Additional Employee Covenants............................................ 43
Section 5.13 Senior Credit Refinancing................................................ 44
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ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger................................................ 44
Section 6.2 Condition to Parent's and the
Purchaser's Obligations to Effect
the Merger.......................................................... 45
ARTICLE VII
TERMINATION
Section 7.1 Termination.............................................................. 45
Section 7.2 Effect of Termination.................................................... 47
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses........................................................ 47
Section 8.2 Amendment and Modification............................................... 48
Section 8.3 Non-survival of Representations and
Warranties.......................................................... 48
Section 8.4 Notices.................................................................. 49
Section 8.5 Interpretation........................................................... 50
Section 8.6 Counterparts............................................................. 50
Section 8.7 Entire Agreement; No Third Party Benficiaries............................ 50
Section 8.8 Severability............................................................. 50
Section 8.9 Governing Law............................................................ 51
Section 8.10 Assignment............................................................... 51
ANNEX A Conditions of the Offer................................................................. A-1
EXHIBIT A Escrow Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of March 14, 1997, by and among PhoneTel Technologies,
Inc., an Ohio corporation ("Parent"), PhoneTel Acquisition Corp., a Georgia
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and
Communications Central Inc., a Georgia corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective shareholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 THE OFFER.
(a) As promptly as practicable (but in no event later than
five business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares (the "Shares") of common stock, $.01
par value per share (the "Common Stock"), of the Company (including the related
Rights (as defined in Section 3.18 of this Agreement)) at a price of $12.85 per
Share, net to the seller in cash (such price, or any such higher price per Share
as may be paid in the Offer, being referred to herein as the "Offer Price"),
subject to (i) there being validly tendered and not withdrawn prior to the
expiration of the Offer, that number of Shares which represents at least
seventy-five percent (75%) of the Shares outstanding on a fully diluted basis
(the "Minimum
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Condition"), (ii) the receipt by Parent of financing sufficient in amount to
enable it and the Purchaser to consummate the Offer and the Merger (as
hereinafter defined) and to refinance certain indebtedness for borrowed money of
the Company and to pay related fees and expenses (the "Financing Condition") and
(iii) the other conditions set forth in Annex A hereto, and shall consummate the
Offer in accordance with its terms. As used herein, "fully diluted basis" takes
into account issued and outstanding Shares and Shares subject to issuance under
outstanding stock options and warrants. The obligations of the Purchaser to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the Minimum
Condition, the Financing Condition and the other conditions set forth in Annex A
hereto. The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition, the Financing Condition and the other conditions set forth in Annex A
hereto. The Purchaser shall not amend or waive the Minimum Condition and shall
not decrease the Offer Price or decrease the number of Shares sought, or amend
any other condition of the Offer in any manner adverse to the holders of the
Shares without the written consent of the Company; provided, however, that if on
the initial scheduled expiration date of the Offer, which shall be twenty
business days after the date the Offer is commenced, all conditions to the Offer
shall not have been satisfied or waived, the Purchaser may, from time to time,
in its sole discretion, extend the expiration date for one or more periods
totalling not more than thirty days. Notwithstanding the foregoing, (i) Parent
or the Purchaser can waive, in writing, the Minimum Condition without the
written consent of the Company in the event that at least 50.1% of the Shares
outstanding on a fully diluted basis are validly tendered and not withdrawn on
or prior to the expiration of the Offer and (ii) the Purchaser may extend the
initial expiration date or any extension thereof, as the Purchaser reasonably
deems necessary to comply with any legal or regulatory requirements, including
but not limited to, the termination or expiration of any applicable waiting
periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). The Purchaser shall, on the terms and subject to the
prior satisfaction or waiver of the conditions of the Offer, accept for payment
and pay for Shares tendered as
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soon as it is legally permitted to do so under applicable law; provided,
however, that if, immediately prior to the initial expiration date of the Offer
(as it may be extended), the Shares tendered and not withdrawn pursuant to the
Offer equal more than seventy-five percent (75%) of the outstanding Shares, but
less than 90% of the outstanding Shares, the Purchaser may extend the Offer for
a period not to exceed twenty business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer.
Notwithstanding the foregoing, the Offer may not be extended beyond the date of
termination of this Agreement pursuant to Article VII hereof.
(b) As soon as practicable on the date the Offer is commenced,
Parent and the Purchaser shall file with the United States Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). Parent represents and warrants to
the Company that the Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information furnished by the Company to Parent or
the Purchaser, in writing, expressly for inclusion in the Offer Documents. The
Company represents and warrants to Parent and the Purchaser that the information
supplied by the Company to Parent or the Purchaser, in writing, expressly for
inclusion in the Offer Documents and Parent represents and warrants to the
Company that the information supplied by Parent or the Purchaser to the Company,
in writing, expressly for inclusion in the Schedule 14D-9 (as hereinafter
defined) will not contain any untrue statement of a material fact or omit to
state any material fact required
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to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) Each of Parent and the Purchaser will take all steps
necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Each of Parent and the
Purchaser, on the one hand, and the Company, on the other hand, will promptly
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material respect
and Parent will take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the opportunity to
review the Schedule 14D-1 before it is filed with the SEC. In addition, Parent
and the Purchaser will provide the Company and its counsel, in writing, with any
comments, whether written or oral, Parent, the Purchaser or their counsel may
receive from time to time from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
Section 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that its Board of Directors, at a meeting duly
called and held, has (i) unanimously determined that each of this Agreement, the
Offer and the Merger (as defined in Section 1.4 hereof) are fair to and in the
best interests of the shareholders of the Company, (ii) approved this Agreement
and the transactions contemplated hereby, including the Offer and the Merger
(collectively, the "Transactions"), and such approval constitutes approval of
the Offer, this Agreement and the Transactions, including the Merger, for
purposes of Section 14-2-1111 and Section 14-2-1132 of the Georgia Business
Corporation Code (the "GBCC") and Article VII of the Company's Amended and
Restated Articles of Incorporation (the "Articles of Incorporation"), such that
the provisions of Section 14-2-1111 and the restrictions contained in Section
14-2-1132 of the GBCC and Article VII of the Company's Articles of Incorpo-
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ration will not apply to the Transactions, and (iii) resolved to recommend that
the shareholders of the Company accept the Offer, tender their Shares thereunder
to the Purchaser and approve and adopt this Agreement and the Merger; provided,
that such recommendation may be withdrawn, modified or amended if, in the
opinion of the Board of Directors, only after receipt of advice from outside
legal counsel, failure to withdraw, modify or amend such recommendation would
result in the Board of Directors violating its fiduciary duties to the Company's
shareholders under applicable law. The Company represents and warrants that the
actions set forth in this Section 1.2(a) and all other actions it has taken in
connection therewith are sufficient to render the relevant provisions of such
Section 14-2-1111 and the restrictions contained in Section 14-2-1132 of the
GBCC and Article VII of the Company's Articles of Incorporation inapplicable to
the Offer and the Merger.
(b) As soon as practicable on the date the Offer is commenced,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the provisions of Section 5.4(b) hereof, contain the recommendation referred to
in clause (iii) of Section 1.2(a) hereof. The Company represents and warrants to
Parent and the Purchaser that the Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information furnished by Parent or the
Purchaser, in writing, expressly for inclusion in the Schedule 14D-9. The
Company further agrees to take all steps necessary to cause the Schedule 14D-9
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Each of the Company, on the one hand, and Parent and the Purchaser, on the other
hand, agrees promptly to correct any information provided by it for use in the
Schedule 14D-9
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if and to the extent that it shall have become false and misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given the opportunity to review the Schedule 14D-9 before it is filed with the
SEC. In addition, the Company agrees to provide Parent, the Purchaser and their
counsel, in writing, with any comments, whether written or oral, that the
Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
or other communications.
(c) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to the Purchaser mailing labels, security
position listings and any available listing, or computer file containing the
names and addresses of all record holders of the Shares as of a recent date, and
shall furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or cause to be delivered to
the Company all copies of such information then in its possession or the
possession of its agents or representatives.
Section 1.3 DIRECTORS.
(a) Promptly upon the purchase of and payment for Shares by
the Purchaser which represent at least a majority of the outstanding Shares,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of the total number of
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directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the number of
Shares so accepted for payment bears to the total number of Shares then
outstanding. In furtherance thereof, the Company shall, upon the request of
Parent, use its best reasonable efforts promptly either to increase the size of
its Board of Directors, including amending the By-Laws of the Company if
necessary to so increase the size of the Company's Board of Directors, or secure
the resignations of such number of its incumbent directors, or both, as is
necessary to enable Parent's designees to be so elected to the Company's Board
of Directors, and shall take all actions available to the Company to cause
Parent's designees to be so elected. At such time, the Company shall, if
requested by Parent, also cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary (as
defined in Section 3.1 hereof) of the Company and (iii) each committee (or
similar body) of each such board.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-l promulgated
thereunder in order to fulfill its obligations under Section 1.3(a) hereof,
including mailing to shareholders the information required by such Section 14(f)
and Rule 14f-1 as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or the Purchaser shall supply the Company
and be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. The provisions of this Section 1.3(b) are in addition to
and shall not limit any rights which the Purchaser, Parent or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the
Company's Board of Directors, until the Effective Time (as defined in Section
1.5 hereof), the Company's Board of Directors shall have at least three
directors who are directors on the date hereof and who
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would constitute Continuing Directors for purposes of Article VII of the
Company's Articles of Incorporation (the "Independent Directors"), provided
that, in such event, if the number of Independent Directors shall be reduced
below three for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there is only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate three persons to fill such
vacancies who shall not be shareholders, affiliates or associates of Parent or
the Purchaser and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Company's
Board of Directors, after the acceptance for payment of Shares pursuant to the
Offer and prior to the Effective Time (as hereinafter defined), the affirmative
vote of a majority of the Independent Directors shall be required to (a) amend
or terminate this Agreement by the Company, (b) exercise or waive any of the
Company's rights, benefits or remedies hereunder, or (c) take any other action
by the Company's Board of Directors under or in connection with this Agreement.
Section 1.4 THE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time, the Company and the
Purchaser shall consummate a merger (the "Merger") as set forth below.
(a) In the event that Parent, the Purchaser and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the Shares
of the Company, pursuant to the Offer or otherwise, then, at the election of
Parent, pursuant to the Merger (i) the Company shall be merged with and into the
Purchaser and the separate corporate existence of the Company shall thereupon
cease, (ii) the Purchaser shall be the successor or surviving corporation in the
Merger (sometimes hereinafter referred to as the "Purchaser Surviving
Corporation" or the "Surviving Corporation") and shall continue to be governed
by the laws of the State of Georgia, and (iii) all the rights, privileges,
immunities, powers and franchises of the Company shall vest in the Purchaser
Surviving Corporation and, except as otherwise provided for in this
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Agreement, all obligations, duties, debts and liabilities of the Company shall
be the obligations, duties, debts and liabilities of the Purchaser Surviving
Corporation.
(b) Except in the event Section 1.4(a) above applies, then,
pursuant to the Merger (i) the Purchaser shall be merged with and into the
Company and the separate corporate existence of the Purchaser shall cease, (ii)
the Company shall be the successor or surviving corporation in the Merger
(sometimes hereinafter referred to as the "Company Surviving Corporation" or the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Georgia, and (iii) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this Section 1.4(b). Pursuant
to the Merger, (x) the Articles of Incorporation shall be amended in its
entirety to read as the Articles of Incorporation of the Purchaser, in effect
immediately prior to the Effective Time, except that Article FIRST thereof shall
read as follows: "FIRST: The name of the corporation is Communications Central
Inc." and, as so amended, shall be the Articles of Incorporation of the Company
Surviving Corporation until thereafter amended as provided by law and such
Articles of Incorporation, except that if the Purchaser shall acquire less than
seventy-five percent of the outstanding Shares pursuant to the Offer or
otherwise, the Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Company Surviving Corporation until thereafter amended as provided by law
and such Articles of Incorporation, and (y) the By-Laws of the Purchaser (the
"By-laws"), as in effect immediately prior to the Effective Time, shall be the
By-laws of the Company Surviving Corporation until thereafter amended as
provided by law, by the Articles of Incorporation of the Company Surviving
Corporation or by such By-laws, except that if the Purchaser shall acquire less
than seventy-five percent of the outstanding Shares pursuant to the Offer, the
By-laws of the Company, as in effect immediately prior to the Effective Time
shall be the By-laws of the Company Surviving Corporation until thereafter
amended as provided by law, by the Articles of Incorporation
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of the Company Surviving Corporation or by such By-laws. The Merger shall have
the effects specified in the GBCC.
Section 1.5 EFFECTIVE TIME. Parent, the Purchaser and the
Company will cause a Certificate of Merger to be executed and filed on the
Closing Date (as defined in Section 1.6 hereof) (or on such other date as Parent
and the Company may agree) with the Secretary of State of Georgia (the
"Secretary of State") as provided in the GBCC. The Merger shall become effective
on the date on which the Certificate of Merger is duly filed with the Secretary
of State or such time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
Section 1.6 CLOSING. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on the second business day after satisfaction or
waiver of all of the conditions set forth in Article VI hereof, or such other
date as may be agreed to by the parties in writing (the "Closing Date"), at the
office of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, 919 Third Avenue, New York,
New York, unless another place is agreed to in writing by the parties hereto.
Section 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION. The directors and officers of the Purchaser at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Articles of Incorporation and the
By-laws of the Surviving Corporation.
Section 1.8 SHAREHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law and subject to the fiduciary duties of the Board of
Directors:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders (the "Special Meeting") as promptly
as practicable fol-
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lowing the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement;
(ii) prepare and file with the SEC a preliminary proxy
or information statement relating to the Merger and this Agreement and
use its best efforts (x) to obtain and furnish the information required
to be included by the SEC in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, to respond promptly to
any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information
statement, including any amendment or supplement thereto (the "Proxy
Statement") to be mailed to its shareholders, provided that no
amendment or supplement to the Proxy Statement will be made by the
Company without consultation with Parent and its counsel and (y) to
obtain the necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) include in the Proxy Statement the recommendation
of the Board of Directors that shareholders of the Company vote in
favor of the approval of the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares
then owned by it, the Purchaser or any of its other Subsidiaries and affiliates
in favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.9 MERGER WITHOUT MEETING OF SHAREHOLDERS.
Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser and
any other Subsidiaries of Parent shall acquire in the aggregate at least 90% of
the outstanding Shares of the Company, pursuant to the Offer or otherwise, the
parties hereto shall, at the request of Parent and subject to Article VI hereof,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
shareholders of the Company, in accordance with Section 14-2-1104 of the GBCC.
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Section 1.10 ESCROW. Simultaneously herewith, Parent, the
Company and First Union National Bank of Georgia, a national banking
association, as escrow agent (the "Escrow Agent"), are entering into an Escrow
Agreement in the form attached hereto as Exhibit A, and Parent is depositing
$5,000,000 (the "Escrow Amount") with the Escrow Agent, to be held and disposed
of by the Escrow Agent pursuant to the Escrow Agreement. In the event that the
Merger Agreement is terminated solely due to the failure of either (i) the
Minimum Condition (provided at least 50.1% of the Shares outstanding on a fully
diluted basis have been validly tendered and not withdrawn) and neither Parent
nor the Purchaser has waived the Minimum Condition, or (ii) the Financing
Condition (unless the failure of such Financing Condition is due solely to the
failure of the Company to satisfy its obligations under Sections 5.11 and 5.13
hereof), then the Company shall be entitled to receive the entire Escrow
Amount, as liquidated damages, and neither the Company nor Parent nor the
Purchaser shall have any other rights or remedies in respect of this Agreement.
Delivery of funds by the Escrow Agent to the applicable parties shall be made
pursuant to the terms of the Escrow Agreement.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or holders of common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) THE PURCHASER COMMON STOCK. Each issued and outstanding
share of the Purchaser Common Stock shall be converted into and become one fully
paid and nonassessable share of common stock of the Company Surviving
Corporation or shall remain outstanding and constitute one fully paid and
non-assessable share of the Purchaser Surviving Corporation, as the case may be,
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
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(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. All
Shares that are owned by the Company as treasury stock and any Shares owned by
Parent, the Purchaser or any other wholly owned Subsidiary of Parent shall be
cancelled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) EXCHANGE OF SHARES. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 2.1(b) above and
any Shares which are held by shareholders exercising appraisal rights pursuant
to Article 13 of the GBCC ("Dissenting Shareholders")) shall be converted into
the right to receive the Offer Price, payable to the holder thereof, without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2 hereof.
All such Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.2
hereof, without interest, or the right, if any, to receive payment from the
Surviving Corporation of the "fair value" of such Shares as determined in
accordance with Article 13 of the GBCC.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders of
the Shares in connection with the Merger (the "Paying Agent") to receive in
trust the funds to which holders of the Shares shall become entitled pursuant to
Section 2.1(c) above. Such funds shall be invested by the Paying Agent as
directed by Parent or the Surviving Corporation.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to
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Section 2.1 hereof into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be cancelled. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE SHARES.
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of the Shares
on the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
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(d) TERMINATION OF FUND; NO LIABILITY. At any time following
six months after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which had not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 2.3 DISSENTERS' RIGHTS. If any Dissenting Shareholder
shall demand to be paid the fair value of such holder's Shares, as provided in
Article 13 of the GBCC, the Company shall give Parent notice thereof and Parent
shall have the right to participate in all negotiations and proceedings with
respect to any such demands. Neither the Company nor the Surviving Corporation
shall, except with the prior written consent of Parent, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Shareholder shall thereupon be treated as though such Shares had been
converted into the Merger Consideration pursuant to Section 2.1 hereof.
Section 2.4 OPTIONS AND WARRANTS. At the Effective Time, each
holder of a then outstanding option (collectively, the "Options") or warrant
(collectively, the "Warrants") to purchase Shares granted by the Company,
whether or not then exercisable, shall in settlement thereof, receive for each
Share subject to such Option or Warrant an amount (subject to any applicable
withholding tax) in cash equal to the difference between the Offer Price and the
per Share exercise price of such Option or Warrant to the extent such difference
is a positive number. Prior to the Effective Time, the Company shall use its
best efforts to obtain all necessary consents or
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releases from holders of Options or Warrants, to the extent required by the
terms of the plans or agreements governing such Options or Warrants, as the case
may be, or pursuant to the terms of any Option or Warrant granted thereunder,
and take all such other lawful action as may be necessary to give effect to the
transactions contemplated by this Section 2.4 (except for such action that may
require the approval of the Company's shareholders). Except as otherwise agreed
to by Parent or the Purchaser and the Company, the Company shall take all action
necessary to ensure that (i) the Company's 1991 Stock Option Plan, 1993 Stock
Option Plan, as amended and restated as of October 11, 1995, and the Stock
Option Plan for Directors (collectively, the "Stock Option Plans") shall have
been terminated as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any Subsidiary thereof, shall
be cancelled as of the Effective Time, and (ii) following the Effective Time,
(a) no participant in any Stock Option Plan or other plans, programs or
arrangements shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof and all such plans
have been terminated, and (b) the Company will not be bound by any convertible
security, option, warrant, right or agreement which would entitle any person to
own any capital stock of the Company, the Surviving Corporation or any
Subsidiary thereof.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as disclosed in the schedule attached to this Agreement
setting forth exceptions to the Company's representations and warranties set
forth herein (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and the Purchaser as set forth below. The Company Disclosure
Schedule will be arranged in sections corresponding to sections of this
Agreement to be modified thereby.
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Section 3.1 ORGANIZATION. (a) Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect (as defined below). As used in this Agreement,
the term "Subsidiary" shall mean all corporations or other entities in which the
Company or the Parent, as the case may be, owns a majority of the issued and
outstanding capital stock or similar interests. As used in this Agreement,
"Company Material Adverse Effect" with reference to any events, changes or
effects, shall mean that such events, changes or effects are materially adverse
to the Company and its Subsidiaries, taken as a whole.
(b) The Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Company Material Adverse Effect. Except
as disclosed in Section 3.1 of the Company Disclosure Schedule, the Company does
not own any equity interest in any corporation or other entity.
Section 3.2 CAPITALIZATION. (a) The authorized capital stock
of the Company consists of 50,000,000 shares of Common Stock and 2,000,000
shares of preferred stock, par value $.01 per share (the "Preferred Stock"). As
of the date hereof, (i) 6,054,556 Shares are issued and outstanding, (ii) none
of the Shares are issued and held in the treasury of the Company, (iii) none of
the Preferred Stock is issued and outstanding, and (iv) 1,137,282 Shares are
reserved for issuance upon the exercise of outstanding Warrants or Options.
Section 3.2(a) of the Company Disclosure Schedule discloses the number of shares
subject to each outstanding Option and Warrant and the exercise price thereof.
All the out-
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standing shares of the Company's capital stock are, and all Shares which may be
issued pursuant to the exercise of outstanding Options or Warrants will be, when
issued in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable. There are no bonds, debentures, notes or
other indebtedness having general voting rights (or convertible into securities
having such rights) ("Voting Debt") of the Company or any of its Subsidiaries
issued and outstanding. Except as set forth above and except for the
transactions contemplated by this Agreement, as of the date hereof, (i) there
are no shares of capital stock of the Company authorized, issued or outstanding,
(ii) there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any of its Subsidiaries, obligating the Company or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment and (iii) except as disclosed
in Section 3.2(a) of the Company Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Shares, or the capital stock of the Company or
of any Subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity.
(b) Except as disclosed in Section 3.2(b) of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each of
its Subsidiaries are owned beneficially and of record by the Company or one of
its Subsidiaries, directly or indirectly, and all such shares have been validly
issued and are fully paid and nonassessable and are owned by either the Company
or one of its Subsidiaries free and clear of all liens, charges, claims or
encumbrances ("Encumbrances").
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(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries.
Section 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY
ACTION. The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by the Company of this Agreement, and the consummation
by it of the Transactions, have been unanimously approved and duly authorized by
its Board of Directors and no other corporate action on the part of the Company
is necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by it of the Transactions, except that
consummation of the Merger may require approval of the Company's shareholders as
contemplated by Section 1.8 hereof. This Agreement has been duly executed and
delivered by the Company and, assuming due and valid authorization, execution
and delivery hereof by Parent and the Purchaser, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, or other laws affecting creditors'
rights generally or by the availability of equitable remedies generally.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
the filings disclosed in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by the Company,
the consummation of the Transactions or compliance by the Company with any of
the provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation, the By-laws or similar
organizational documents of the Company or any of its Subsidiaries, (ii) require
any filing with, or permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (a "Governmental Entity"), (iii) result in a
violation or
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breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
(the "Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, excluding from the foregoing clauses (ii),
(iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect or have
a material adverse effect on the ability of the Company to consummate the
Transactions. Section 3.4 of the Company Disclosure Schedule sets forth a list
of all third party consents and approvals required to be obtained in connection
with this Agreement under the Company Agreements prior to the consummation of
the Transactions.
Section 3.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Company
has filed with the SEC, and has heretofore made available to Parent, true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1995 under the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act") (as such documents
have been amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents, including,
without limitation, any financial statements or schedules included therein (a)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC. The financial statements of the Company included in the Company
SEC Documents (the "Financial Statements") have been prepared from, and are in
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accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
Section 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.6 of the Company Disclosure Schedule or in the Company SEC Documents
filed prior to the date hereof, since December 31, 1996, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course and (i) there have not occurred any events or changes (including
the incurrence of any liabilities of any nature, whether or not accrued,
contingent or otherwise) having, individually or in the aggregate, a Company
Material Adverse Effect and (ii) the Company has not taken any action which
would have been prohibited under Section 5.1 hereof.
Section 3.7 NO UNDISCLOSED LIABILITIES. Except (a) as
disclosed in the Financial Statements and (b) for liabilities and obligations
(i) incurred in the ordinary course of business and consistent with past
practice since December 31, 1996, (ii) pursuant to the terms of this Agreement,
(iii) as disclosed in Section 3.7 of the Company Disclosure Schedule, or (iv) as
disclosed in Section 3.8 of the Company Disclosure Schedule, neither the Company
nor any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise.
Section 3.8 LITIGATION. Except as disclosed in Section 3.8 of
the Company Disclosure Schedule, as of the date hereof, there are no suits,
claims, actions, proceedings, including, without limitation, arbitration
proceedings or alternative dispute resolution proceedings, or investigations
pending or, to the knowledge of the Company, threatened against the Company or
any of its
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Subsidiaries before any Governmental Entity that, either individually or in the
aggregate, would be reasonably likely to have a Company Material Adverse Effect.
Section 3.9 EMPLOYEE BENEFIT PLANS.
(a) Section 3.9(a) of the Company Disclosure Schedule contains
a true and complete list of each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or
other "pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by the Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the benefit
of any employee or former employee of the Company or any Subsidiary (the
"Plans"). Each of the Plans that is subject to section 302 or Title IV of ERISA
or section 412 of the Internal Revenue Code of 1986, as amended (the "Code") is
hereinafter referred to in this Section 3.9 as a "Title IV Plan." Neither the
Company, any Subsidiary nor any ERISA Affiliate has any commitment or formal
plan, whether legally binding or not, to create any additional employee benefit
plan or modify or change any existing Plan that would affect any employee or
former employee of the Company or any Subsidiary.
(b) No liability under Title IV or section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC") (which premiums
have been paid when due).
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(c) [Reserved.]
(d) With respect to each Title IV Plan, the present value of
accrued benefits under such Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such Plan's
actuary with respect to such Plan did not exceed, as of its latest valuation
date, the then current value of the assets of such Plan allocable to such
accrued benefits.
(e) No Title IV Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Title IV Plan a plan described in
section 4063(a) of ERISA. Neither the Company nor any ERISA Affiliate has made
or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA (or any liability
resulting therefrom has been satisfied in full).
(f) Each Plan has been operated and administered in accordance
with its terms and applicable law, including but not limited to ERISA and the
Code.
(g) Each Plan intended to be "qualified" within the meaning of
section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to the qualified status of such Plan
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, and nothing has occurred since the
issuance of such letter which could reasonably be expected to cause the loss of
the tax-qualified status of such Plan and the related trust maintained
thereunder. Each Plan intended to satisfy the requirements of Section 501(c)(9)
has satisfied such requirements.
(h) No Plan provides medical, surgical, hospitalization, death
or similar benefits (whether or not insured) for employees or former employees
of the Company or any Subsidiary for periods extending beyond their retirement
or other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his or her
beneficiary).
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(i) Except as disclosed in Section 3.9(i) of the Company
Disclosure Schedule or as set forth in Section 5.10 of this Agreement, the
consummation of the transactions contemplated by this Agreement will not, either
alone or in combination with another event, except as expressly provided in
Section 2.4 of this Agreement, (a) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (b) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(j) There are no pending, threatened or anticipated claims by
or on behalf of any Plan, by any employee or beneficiary covered under any such
Plan, or otherwise involving any such Plan (other than routine claims for
benefits) which could have a material adverse effect upon the Plans or have a
Company Material Adverse Effect.
(k) Notwithstanding anything in this Section 3.9 to the
contrary, the representations and warranties set forth in Sections 3.9(c), (f),
and (j) hereof shall not be deemed to be breached unless such breaches, either
individually or in the aggregate, would have a Company Material Adverse Effect.
Section 3.10 TAX MATTERS; GOVERNMENT BENEFITS.
(a) Except as disclosed in Section 3.10(a) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries have duly filed
(or there has been filed on its behalf) all Tax Returns (as hereinafter defined)
that are required to be filed and have duly paid or caused to be duly paid in
full or made provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of all Taxes (as
hereinafter defined) shown due on such Tax Returns. All such Tax Returns are
correct and complete in all material respects and accurately reflect all
liability for Taxes for the periods covered thereby. All Taxes owed and due by
the Company and each of its Subsidiaries for results of operations through June
30, 1996 (whether or not shown on any Tax Return) have been paid or have been
adequately reflected on the Company's balance sheet as of June 30, 1996 included
in the Financial Statements (the "Balance Sheet"). Since June 30, 1996,
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the Company has not incurred liability for any Taxes other than in the ordinary
course of business. Neither the Company nor any of its Subsidiaries has received
written notice of any claim made by an authority in a jurisdiction where neither
the Company nor any of its Subsidiaries file Tax Returns, that the Company is or
may be subject to taxation by that jurisdiction.
(b) Except as disclosed in Section 3.10(b) of the Company
Disclosure Schedule, there are no liens for Taxes upon any property or assets of
the Company or any of its Subsidiaries except for liens for Taxes not yet due.
(c) The federal income Tax Returns of the Company and its
Subsidiaries have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of federal income Taxes for
such periods have expired) for all periods through and including June 30, 1992,
and, except as disclosed in Section 3.10(c) of the Company Disclosure Schedule,
no deficiencies were asserted as a result of such examinations that have not
been resolved or fully paid. Neither the Company nor any of its Subsidiaries has
waived any statute of limitations in any jurisdiction in respect of Taxes or Tax
Returns or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(d) The deductibility of compensation paid by the Company or
any of its Subsidiaries will not be limited by Section 162(m) of the Code.
(e) Except as disclosed in Section 3.10(e) of the Company
Disclosure Schedule, no federal, state, local or foreign audits, examinations or
other administrative proceedings have been commenced or, to the Company's
knowledge, are threatened with regard to any Taxes or Tax Returns of the Company
or of any of its Subsidiaries. No written notification has been received by the
Company or by any of its Subsidiaries that such an audit, examination or other
proceeding is pending or threatened with respect to any Taxes due from or with
respect to or attributable to the Company or any of its Subsidiaries or any Tax
Return filed by or with respect to the Company or any of its Subsidiaries. To
the Company's knowledge, there is no dispute or claim concerning any Tax
liability
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of the Company, or any of its Subsidiaries either claimed or raised by any
taxing authority in writing.
(f) Except as disclosed in Section 3.10(f) of the Company
Disclosure Schedule, no power of attorney granted by either the Company or any
of its Subsidiaries is currently in force.
(g) Except as disclosed in Section 3.10(g) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any agreement, plan, contract or arrangement that could result, separately or
in the aggregate, in a payment of any "excess parachute payments" within the
meaning of section 280G of the Code.
(h) Except as disclosed in Section 3.10(h) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has filed a
consent pursuant to section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
(i) Except as disclosed in Section 3.10(i) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any tax sharing, tax indemnity or other agreement or arrangement with any
entity not included in the Company's consolidated financial statements most
recently filed by the Company with the SEC.
(j) Except as disclosed in Section 3.10(j) of the Company
Disclosure Schedule, none of the Company or any of its Subsidiaries has been a
member of any affiliated group within the meaning of section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
state, local or foreign law (other than a group the common parent of which is
the Company), or has any liability for Taxes of any person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
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(k) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges,
fees, duties, levies, penalties or other assessments imposed by any
federal, state, local or foreign governmental authority, including, but
not limited to, income, gross receipts, excise, property, sales, gain,
use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum estimated,
and other taxes, and shall include interest, penalties or additions
attributable thereto; and
(ii) "Tax Return" shall mean any return, declaration,
report, claim for refund, or information return or statement relating
to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
Section 3.11 INTELLECTUAL PROPERTY.
(a) Except as disclosed in Section 3.11(a) of the Company
Disclosure Schedule, the Company and its Subsidiaries own or have adequate
rights to use all items of Intellectual Property (as defined below) necessary to
conduct the business of the Company and its Subsidiaries as presently conducted
or as currently proposed to be conducted, free and clear of all Encumbrances
(other than Encumbrances which, individually or in the aggregate, would not have
a Company Material Adverse Effect).
(b) To the knowledge of the Company, the conduct of the
Company's and its Subsidiaries' business and the Intellectual Property owned or
used by the Company and its Subsidiaries, do not infringe any Intellectual
Property rights or any other proprietary right of any person other than
infringements which, individually or in the aggregate, would not have a Company
Material Adverse Effect. The Company and its Subsidiaries have received no
notice of any allegations or threats that the Company's and its Subsidiaries'
use of any of the Intellectual Property infringes upon or is in conflict with
any Intellectual Property or proprietary rights of any third party other than
infringements or conflicts which individually or in the aggregate would not have
a Company Material Adverse Effect.
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(c) As used in this Agreement, "Intellectual Property" means
all of the following: (i) U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same (the "Trademarks"); (ii)
issued U.S. and foreign patents and pending patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, reexaminations, and extension thereof, any counterparts claiming
priority therefrom, utility models, patents of importation/confirmation,
certificates of invention and like statutory rights (the "Patents"); (iii) U.S.
and foreign registered and unregistered copyrights (including, but not limited
to, those in computer software and databases), rights of publicity and all
registrations and applications to register the same (the "Copyrights"); (iv) all
categories of trade secrets as defined in the Uniform Trade Secrets Act
including, but not limited to, business information; and (v) all licenses and
agreements pursuant to which the Company has acquired rights in or to any
Trademarks, Patents, or Copyrights, or licenses and agreements pursuant to which
the Company has licensed or transferred the right to use any of the foregoing
("Licenses").
Section 3.12 EMPLOYMENT MATTERS. To the knowledge of the
Company, no key employee disclosed in Section 3.12 of the Company Disclosure
Schedule has any plans to terminate such employee's employment with the Company
or any of its Subsidiaries as a result of the Transactions or otherwise. Neither
the Company nor any of its Subsidiaries has experienced any strikes, collective
labor grievances, other collective bargaining disputes or claims of unfair labor
practices in the last five years. To the Company's knowledge, there is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company and its Subsidiaries.
Section 3.13 COMPLIANCE WITH LAWS. The Company and its
Subsidiaries are in compliance with, and have not violated any applicable law,
rule or regulation of any United States federal, state, local, or foreign
government or agency thereof which affects the business, properties or assets of
the Company and its Subsidiaries, and no notice, charge, claim, action or
assertion has been received by the Company or any of its Subsidiaries
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or has been filed, commenced or, to the Company's knowledge, threatened against
the Company or any of its Subsidiaries alleging any such violation, except for
any matter otherwise covered by this sentence which would not have, individually
or in the aggregate, a Company Material Adverse Effect. All licenses, permits
and approvals required under such laws, rules and regulations are in full force
and effect except where the failure to be in full force and effect would not
have a Company Material Adverse Effect.
Section 3.14 VOTE REQUIRED. The affirmative vote of the
holders of a majority of the outstanding Shares in favor of the Merger is the
only vote of the holders of any class or series of the Company's capital stock
which may be necessary to approve this Agreement and the Transactions.
Section 3.15 ENVIRONMENTAL LAWS.
(a) Except as disclosed in Section 3.15(a) of the Company
Disclosure Schedule, to the knowledge of the Company, the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws (as
defined below) (which compliance includes, without limitation, the possession by
the Company and its Subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof), except where failure to be in compliance,
either individually or in the aggregate, would not have a Company Material
Adverse Effect.
(b) Except as disclosed in Section 3.15(b) of the Company
Disclosure Schedule, to the knowledge of the Company, there is no Environmental
Claim (as defined below) pending or, to the Company's knowledge, threatened
against the Company or any of the Subsidiaries or, to the Company's knowledge,
against any person or entity whose liability for any Environmental Claim the
Company or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law which Environmental Claim would have,
either individually or in the aggregate, a Company Material Adverse Effect.
(c) Except as disclosed in Section 3.15(c) of the Company
Disclosure Schedule, to the knowledge of the Company, there are no past or
present actions, activi-
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ties, circumstances, conditions, events or incidents, including, without
limitation, the release or presence of any Hazardous Material (as defined
below), which could form the basis of any Environmental Claim against the
Company or any of its Subsidiaries, or to the Company's knowledge, against any
person or entity whose liability for any Environmental Claim the Company or any
of its Subsidiaries has or may have retained or assumed either contractually or
by operation of law, which Environmental Claim would have, either individually
or in the aggregate, a Company Material Adverse Effect.
(d) Except as disclosed in Section 3.15(d) of the Company
Disclosure Schedule, to the knowledge of the Company, the Company and its
Subsidiaries have not, and to the Company's knowledge, no other person has,
placed, stored, deposited, discharged, buried, dumped or disposed of Hazardous
Materials or any other wastes produced by, or resulting from, any business,
commercial or industrial activities, operations or processes, on, beneath or
adjacent to any property currently or formerly owned, operated or leased by the
Company or any of its Subsidiaries, except (x) for inventories of such
substances to be used, and wastes generated therefrom, in the ordinary course of
business of the Company and its Subsidiaries, or (y) which would not, either
individually or in the aggregate, have a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the
foregoing, except as disclosed in Section 3.15(e) of the Company Disclosure
Schedule, to the knowledge of the Company, none of the properties owned,
operated or leased by the Company or any of its Subsidiaries contain any:
underground storage tanks; asbestos; polychlorinated biphenyls ("PCBs");
underground injection ▇▇▇▇▇; radioactive materials; or septic tanks or waste
disposal pits in which process wastewater or any Hazardous Materials have been
discharged or disposed the existence of which, individually or in the aggregate,
could reasonably be expected to have a Company Material Adverse Effect.
(f) The Company has made available to Parent for review copies
of all environmental reports or studies in its possession.
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(g) For purposes of this Agreement, (i) "Environmental Laws"
means all federal, state, local and foreign laws and regulations relating to
pollution or protection of human health or the environment, including, without
limitation, laws relating to releases or threatened releases of Hazardous
Materials or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, release, disposal, transport or handling of Hazardous
Materials and all laws and regulations with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials; (ii) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or Release, of any
Hazardous Materials at any location, whether or not owned, leased or operated by
the Company or any of its Subsidiaries, or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law; (iii)
"Hazardous Materials" means all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined as such by, or
regulated as such under, any Environmental Law.
Section 3.16 INFORMATION IN PROXY STATEMENT. The Proxy
Statement, if any (or any amendment thereof or supplement thereto), will not, at
the date mailed to Company shareholders and at the time of the meeting of
Company shareholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information supplied in writing by Parent or the Purchaser for
inclusion in the Proxy Statement. The Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
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Section 3.17 OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of ▇.▇. ▇▇▇▇▇▇▇▇ & Co., dated the date hereof, to the
effect that, as of such date, the consideration to be received in the Offer and
the Merger by the Company's shareholders is fair to the Company's shareholders
from a financial point of view, a copy of which opinion has been delivered to
Parent and the Purchaser.
Section 3.18 RIGHTS AGREEMENT. The Company has taken all
action which may be necessary under the Shareholder Rights Agreement dated as of
July 25, 1995 between the Company and First Union National Bank of North
Carolina, as Rights Agent (the "Rights Agreement"), so that the execution of
this Agreement and any amendments hereto by the parties hereto and the
consummation of the transactions contemplated hereby shall not cause (i) Parent
and/or the Purchaser to become an Acquiring Person (as defined in the Rights
Agreement), (ii) a Distribution Date, a Stock Acquisition Date or a Triggering
Event (as such terms are defined in the Rights Agreement) to occur, irrespective
of the number of Shares acquired pursuant to the Offer and (iii) the Rights
Agreement is otherwise inapplicable to this Agreement and the transactions
contemplated hereby, including the Offer and the Merger. The Company has
furnished to Parent a true and complete copy of Amendment No. 1 to the Rights
Agreement, which is in full force and effect.
Section 3.19 PHONES. Except as disclosed in Section 3.19 of
the Company Disclosure Schedule, the Company has good and marketable title, free
of all Encumbrances, to at least 20,000 pay telephones and at least 5,800 prison
phones in operation, subject to enforceable site location agreements and
generating income for the Company. The average term of such site location
agreements for each telephone (excluding prison phones) is at least 40 months
and the average term of such site location agreements for each prison phone is
at least 28 months.
Section 3.20 AVERAGE NET REVENUE. As of the date hereof and as
of the Closing, the Average Net Revenue shall be at least $90 per pay telephone
(excluding prison phones) and $145 per prison phone in operation as of the date
of this Agreement. For purposes of this Agreement, "Average Net Revenue" for
such pay telephones
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shall mean the average of the monthly gross revenues minus telephone bills and
commissions (assuming dial-around compensation is based on the state of the law
existing prior to September 20, 1996) for the 18 months prior to the date of
this Agreement. Average Net Revenue from operator service providers shall only
include revenues received by the Company from such providers.
Section 3.21 BROKERS OR FINDERS. The Company represents, as to
itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee from the Company
or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement except for ▇.▇. ▇▇▇▇▇▇▇▇ & Co., whose fees are
set forth in the engagement letter attached as Section 3.21 of the Company
Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
as set forth below.
Section 4.1 ORGANIZATION. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Ohio and the
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of Georgia.
Section 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY
ACTION. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and the consummation of the Transactions have been duly authorized by
the Boards of Directors of Parent and the Purchaser and by Parent as the sole
shareholder of the Purchaser and no other corporate action on the part of Parent
and the Purchaser is necessary to authorize the execution and delivery by Parent
and the Purchaser of this Agreement and the consummation of the Transactions.
This Agreement
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has been duly executed and delivered by Parent and the Purchaser and, assuming
due and valid authorization, execution and delivery hereof by the Company, is a
valid and binding obligation of each of Parent and the Purchaser enforceable
against each of them in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, reorganization,
or other laws affecting creditors' rights generally or by the availability of
equitable remedies generally.
Section 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by Parent or
the Purchaser, the consummation by Parent or the Purchaser of the Transactions
or compliance by Parent or the Purchaser with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the Articles of
Incorporation or Code of Regulations of Parent or the Articles of Incorporation
or By-Laws of the Purchaser, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent, or any of its Subsidiaries or the
Purchaser is a party or by which any of them or any of their respective
properties or assets may be bound, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such violations, breaches or defaults which would
not, individually or in the aggregate, have a material adverse effect on the
ability of Parent and the Purchaser to consummate the Transactions.
Section 4.4 INFORMATION IN PROXY STATEMENT. None of the
information supplied by Parent or the Purchaser in writing specifically for
inclusion or incorporation by reference in the Proxy Statement, if any, will,
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41
at the date mailed to shareholders and at the time of the meeting of
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
Section 4.5 FINANCING. Parent has received a highly confident
letter for the funds sufficient to finance the transactions contemplated herein
and has made available to the Company a true and correct copy of such letter.
ARTICLE V
COVENANTS
Section 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement or (ii) as agreed in writing by Parent, after the date hereof, and
prior to the time the designees of Parent have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 hereof (the "Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use its best efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees, creditors and business partners;
(b) the Company will not, directly or indirectly, (i) except
upon exercise of Warrants or Options or other rights to purchase shares of
Common Stock outstanding on the date hereof, issue, sell, transfer or pledge or
agree to sell, transfer or pledge any treasury stock of the Company or any
capital stock of any of its Subsidiaries beneficially owned by it, (ii) amend
its Articles of Incorporation or By-laws or similar organizational documents; or
(iii) split, combine or reclassify the outstanding Shares or any outstanding
capital stock of any of the Subsidiaries of the Company;
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42
(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares reserved for issuance on the date hereof
pursuant to the exercise of Warrants or Options outstanding on the date hereof;
(iii) transfer, lease, license, sell or dispose of any assets, or incur any
indebtedness or other liability other than in the ordinary course of business,
or mortgage, pledge or encumber any assets or modify any indebtedness; or (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i)
grant any increase in the compensation payable or to become payable by the
Company or any of its Subsidiaries to any of its executive officers or (ii)(A)
adopt any new, or (B) amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing bonus,
incentive compensation, deferred compensation, severance, profit sharing, stock
option, stock purchase, insurance, pension, retirement or other employee benefit
plan, agreement or arrangement; or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries shall
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent;
(f) neither the Company nor any of its Subsidiaries shall
enter into any contract or transaction relating to the purchase of assets other
than in the ordinary course of business;
(g) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP, neither
the Company nor any
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of its Subsidiaries shall make any material Tax election, change any material
Tax election already made, adopt any material Tax accounting method, change any
material Tax accounting method unless required by GAAP, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment or any waiver of the statute of limitations for any such claim or
assessment; and
(h) neither the Company nor any of its Subsidiaries will enter
into any agreement with respect to the foregoing or take any action with the
intent of causing any of the conditions to the Offer set forth in Annex A not to
be satisfied.
Section 5.2 ACCESS; CONFIDENTIALITY. (a) Upon reasonable
notice, the Company shall (and shall cause each of its Subsidiaries to) afford
to the officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Appointment Date, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request, including without limitation, true and
complete copies of each Plan of the Company or of any of its Subsidiaries and
any amendments thereto (or if any Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, any summary plan
description under ERISA or the Code and the most recent determination letter
received from the Internal Revenue Service with respect to each such Plan
intended to qualify under Section 401 of the Code. Access shall include the
right to conduct such environmental studies and tests as Parent, in its
reasonable discretion, shall deem appropriate; provided, however, that such
studies and tests must be performed prior to April 15, 1997 and must be
performed in such a way as not to disrupt materially the Company's business.
After the Appointment Date, the Company shall provide Parent and such persons as
Parent shall designate with all such information, at such time as Parent shall
request.
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Unless otherwise required by law and until the Appointment Date, Parent and the
Purchaser will hold any such information which is non-public in confidence in
accordance with, and will otherwise abide by, the provisions of the
Confidentiality Agreement between the Company and Parent dated July 25, 1996
(the "Confidentiality Agreement").
(b) Following the execution of this Agreement, Parent and the
Company shall cooperate with each other and make all reasonable efforts to
minimize any disruption to the business which may result from the announcement
of the Transactions.
Section 5.3 CONSENTS AND APPROVALS. (a) Each of the Company,
Parent and the Purchaser shall take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect
to this Agreement and the Transactions (which actions shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their Subsidiaries
in connection with this Agreement and the Transactions. Each of the Company,
Parent and the Purchaser shall, and shall cause its Subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party required to
be obtained or made by Parent, the Purchaser, the Company or any of their
Subsidiaries in connection with the Transactions or the taking of any action
contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
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Section 5.4 NO SOLICITATION. (a) Neither the Company nor any
of its Subsidiaries shall (and the Company and its Subsidiaries shall cause
their respective officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent or
any of its affiliates or representatives) concerning any proposal or offer to
acquire all or a substantial part of the business and properties of the Company
or any of its Subsidiaries or any capital stock of the Company or any of its
Subsidiaries, whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving the Company or any Subsidiary, division or
operating or principal business unit of the Company (an "Acquisition Proposal"),
except that nothing contained in this Section 5.4 or any other provision hereof
shall prohibit the Company or the Company's Board of Directors from (i) taking
and disclosing to the Company's shareholders a position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the Company's
shareholders as, in the good faith judgment of the Board of Directors, after
receiving advice from outside counsel, is required under applicable law;
provided that, except as permitted by this Section 5.4, neither the Board of
Directors of the Company nor any committee thereof shall (x) approve or
recommend or propose to approve or recommend any Acquisition Proposal, (y) enter
into any agreement with respect to any Acquisition Proposal, or (z) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or the
Purchaser, the approval or recommendation by such Board of Directors or any such
committee of the Offer, this Agreement or the Merger. The Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
(b) Notwithstanding the foregoing, prior to the acceptance of
Shares pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any corporation, partnership, person or other
entity or group pursuant to appropriate
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confidentiality agreements, and may negotiate and participate in discussions and
negotiations with such entity or group concerning an Acquisition Proposal if (x)
such entity or group has on an unsolicited basis submitted a bona fide written
proposal to the Company relating to any such transaction which the Board of
Directors determines in good faith, after receiving advice from a nationally
recognized investment banking firm, represents a superior transaction to the
Offer and the Merger and which the Board of Directors determines in good faith
can be fully financed and (y) in the opinion of the Board of Directors of the
Company, only after receipt of advice from outside legal counsel to the Company,
the failure to provide such information or access or to engage in such
discussions or negotiations could reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's shareholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company shall within one
business day following receipt of a Superior Proposal notify Parent of the
receipt of the same. The Company shall promptly provide to Parent any material
non-public information regarding the Company provided to any other party which
was not previously provided to Parent. At any time after two business days
following notification to Parent of the Company's intent to do so (which
notification shall include the identity of the bidder and the material terms and
conditions of the proposal) and if the Company has otherwise complied with the
terms of this Section 5.4(b), the Board of Directors may withdraw or modify its
approval or recommendation of the Offer.
(c) In the event of a Superior Proposal which (i) is to be
paid entirely in cash and (ii) is not subject to any financing condition or
contingency, the Company may enter into an agreement with respect to such
Superior Proposal no sooner than four days after giving Parent written notice of
its intention to enter into such agreement; provided that the Purchaser or
Parent has not, prior to the expiration of such four-day period, advised the
Company of its intention to raise the Offer Price to match such Superior
Proposal and has waived the Financing Condition (unless the sole reason for the
Financing Condition not to be waived is the failure of the Company to satisfy
its obligations under Sections 5.11 and 5.13 hereof). Upon expiration of such
four-day period without such
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action by the Purchaser or Parent, the Company may enter into an agreement with
respect to such Superior Proposal (with the bidder and on terms no less
favorable than those specified in such notification), provided it shall
concurrently with entering into such agreement pay or cause to be paid to Parent
the amount specified in Section 8.1(b) hereof.
Section 5.5 ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of the Minimum Condition, the
Financing Condition and all conditions set forth in Annex A attached hereto and
Article VI hereof, and to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the officers and directors of the Company, Parent
and the Purchaser shall use all reasonable efforts to take, or cause to be
taken, all such necessary actions.
Section 5.6 PUBLICITY. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other Transactions without the prior
consultation of the other party, except as such party believes, after receiving
the advice of outside counsel, may be required by law or by any listing
agreement with a national securities exchange or trading market.
Section 5.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent and Parent shall give prompt notice to the Company,
of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or
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48
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Company, Parent or the Purchaser, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.7 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 5.8 DIRECTORS' AND OFFICERS' INSURANCE AND
INDEMNIFICATION. (a) For six years after the Effective Time, the Surviving
Corporation (or any successor to the Surviving Corporation) shall indemnify,
defend and hold harmless the present and former officers and directors of the
Company and its Subsidiaries, and persons who become any of the foregoing prior
to the Effective Time (each an "Indemnified Party") against all losses, claims,
damages, liabilities, costs, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of the Parent or the Surviving Corporation which consent
shall not unreasonably be withheld)) arising out of actions or omissions
occurring at or prior to the Effective Time to the full extent permissible under
applicable Georgia law, the terms of the Company's Articles of Incorporation or
the By-laws, as in effect at the date hereof; provided that, in the event any
claim or claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the
Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of not less than six years after the Effective Time;
provided, that the Parent may substitute therefor policies of substantially
equivalent coverage and amounts containing terms no less favorable to such
former directors or officers; provided, further, if the existing D&O Insurance
expires, is terminated or cancelled during such period, Parent or the Surviving
Corporation will use all reasonable efforts to obtain substantially similar D&O
Insurance; provided, further, however, that in no event shall Parent be required
to pay aggregate premiums for insur-
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ance under this Section 5.8(b) in excess of $103,250; and provided, further,
that if the Parent or the Surviving Corporation is unable to obtain the amount
of insurance required by this Section 5.8(b) for such aggregate premium, Parent
or the Surviving Corporation shall obtain as much insurance as can be obtained
for an annual premium not in excess of $103,250.
Section 5.9 PURCHASER COMPLIANCE. Parent shall cause the
Purchaser to comply with all of its obligations under or related to this
Agreement.
Section 5.10 SEVERANCE ARRANGEMENTS. Parent shall cause the
Surviving Corporation to honor the severance arrangements set forth in the
Employment Agreement dated as of November 6, 1995 (the "Employment Agreement")
by and between Communications Central of Georgia, Inc., a Georgia corporation
and wholly owned Subsidiary of the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the
"Executive"), except to the extent modified or superseded by any separate
agreement which may be entered into by the Executive and Parent or the Purchaser
or any of their respective Subsidiaries.
Section 5.11 FINANCING. Parent shall endeavor in good faith to
secure funds sufficient for Parent and the Purchaser to consummate the
transactions contemplated hereby. The Company shall provide such assistance as
Parent may reasonably request in connection with securing such funds, including,
without limitation, using its reasonable best efforts to (a) make available on a
timely basis such financial information of the Company and its Subsidiaries as
may reasonably be required in connection with any such financing, (b) obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants and opinion letters from the Company's attorneys,
with such letters to be in customary form and to cover matters of the type
customarily covered by accountants and attorneys in such transactions, and (c)
make available representatives of the Company and its accountants and attorneys
in connection with any such financing, including for purposes of due diligence
and marketing efforts related thereto.
Section 5.12 ADDITIONAL EMPLOYEE COVENANTS. The Company shall,
within five business days of the date hereof, deliver to Parent covenants not to
compete in a
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form reasonably satisfactory to Parent for each of ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Section 5.13 SENIOR CREDIT REFINANCING. At the request of
Parent, the Company shall take all action reasonably necessary to assist Parent
and the Purchaser in refinancing the Company's senior secured credit facility
upon the purchase of and payment for Shares by the Purchaser pursuant to the
Offer, including without limitation (i) borrowing such replacement
indebtedness obtained by Parent or the Purchaser from Parent or the Purchaser,
(ii) providing subsidiary guarantees of such indebtedness to Parent or the
Purchaser; (iii) pledging the Company's assets as security for such
indebtedness; and (iv) arranging for releases of liens which secure prior
indebtedness against the Company's assets.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part
jointly by the Company and Parent to the extent permitted by applicable law:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the Shares, if
required by applicable law in order to consummate the Merger;
(b) STATUTES; COURT ORDERS. No statute, rule or regulation
shall have been enacted or promulgated by any governmental authority which
prohibits the consummation of the Merger; and there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Merger;
(c) PURCHASE OF SHARES IN OFFER. Parent, the Purchaser or
their affiliates shall have purchased Shares pursuant to the Offer, except that
this condition shall not apply if Parent, the Purchaser or their affiliates
shall have failed to purchase Shares pursuant to the
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51
Offer in breach of their obligations under this Agreement; and
(d) HSR APPROVAL. The applicable waiting period under the HSR
Act shall have expired or been terminated.
Section 6.2 CONDITION TO PARENT'S AND THE PURCHASER'S
OBLIGATIONS TO EFFECT THE MERGER. The obligations of Parent and the Purchaser to
consummate the Merger are further subject to the fulfillment of the condition
that all actions contemplated by Section 2.4 hereof shall have been taken, which
may be waived in whole or in part by Parent and the Purchaser.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. This Agreement may be terminated and
the Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after shareholder approval thereof:
(a) By the mutual written consent of Parent
and the Company; or
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any
Shares being purchased therein or (y) the Purchaser shall not have
accepted for payment all Shares tendered pursuant to the Offer by May
19, 1997; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as
the case may be, to purchase the Shares pursuant to the Offer on or
prior to such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable
ef-
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52
forts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable; or
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(i) if the Company is at such time in
breach of its obligations under this Agreement such as to cause a
Company Material Adverse Effect; or
(ii) if Parent or the Purchaser shall have breached in
any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which breach cannot be or has not been cured, in all material respects,
within 30 days after the giving of written notice to Parent or the
Purchaser, as applicable; or
(iii) in connection with entering into a definitive
agreement in accordance with Section 5.4(c) hereof, provided it has
complied with all provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the amount
specified in Section 8.1(b) hereof; or
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by
Parent or the Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A
hereto, Parent, the Purchaser, or any of their affiliates shall have
failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
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53
(ii) if prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in this Agreement which (A) would
give rise to the failure of a condition set forth in paragraph (f) or
(g) of Annex A hereto and (B) cannot be or has not been cured, in all
material respects, within 30 days after the giving of written notice to
the Company; or
(iii) upon the occurrence of any event set
forth in paragraph (e) of Annex A hereto.
Section 7.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to its terms, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
the Purchaser, Parent or the Company except (A) for fraud or for breach of this
Agreement prior to such termination and (B) as set forth in the last sentence of
Section 5.2(a) and Sections 7.2 and 8.1 hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 FEES AND EXPENSES. (a) Except as contemplated by
this Agreement, including Sections 8.1(b) and (c) hereof, all costs and expenses
incurred in connection with this Agreement and the consummation of the
Transactions shall be paid by the party incurring such expenses.
(b) If (i) Parent terminates this Agreement pursuant to
Section 7.1(d)(iii) hereof, (ii) the Company terminates this Agreement pursuant
to Section 7.1(c)(iii) hereof, or (iii) either the Company or Parent terminates
this Agreement pursuant to Section 7.1(b)(i) and prior thereto there shall have
been publicly announced another Acquisition Proposal or an event set forth in
paragraph (h) of Annex A shall have occurred, the Company shall pay to Parent,
an amount equal to the greater of $2,000,000 (the "Termination Fee"), or an
amount equal to Parent's
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54
actual, reasonable and reasonably documented out-of-pocket fees and expenses
incurred by Parent and the Purchaser in connection with the Offer, the Merger,
this Agreement, the consummation of the Transactions and the financing therefor,
which shall be payable in same day funds, provided that in no event shall the
Company be obligated to pay any such fees and expenses in excess of $2,500,000.
The Termination Fee or Parent's good faith estimate of its expenses, as the case
may be, shall be paid concurrently with any such termination, together with
delivery of a written acknowledgement by the Company of its obligation to
reimburse Parent for its actual expenses in excess of such estimated expenses
payment.
(c) If the Company terminates this Agreement pursuant to (i)
Section 7.1(b) and the sole reason for the Purchaser's failure to purchase
Shares in the Offer is the Parent's failure to satisfy the Financing Condition
(except if the sole reason for Parent's failure to satisfy the Financing
Condition is the failure of the Company to satisfy its obligations under
Sections 5.11 and 5.13 hereof), or (ii) Section 7.1(c) hereof, then Parent
shall pay to the Company an amount equal to the Company's reasonable legal fees
and expenses incurred, as of the date of such termination, with respect to this
Agreement and the Transactions.
Section 8.2 AMENDMENT AND MODIFICATION. Subject to
applicable law, this Agreement may be amended, modified and supplemented in any
and all respects, whether before or after any vote of the shareholders of the
Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 1.2(a)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the shareholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 8.3 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
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Section 8.4 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
PhoneTel Technologies, Inc.
650 Statler Office Building
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chairman
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) and, if to the Company, to:
Communications Central Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hunton & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Section 8.5 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, the term "affiliates"
shall have the meaning set forth in Rule 12b-2 of the Exchange Act.
Section 8.6 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement, the Escrow Agreement and the Confidentiality Agreement
(including the documents and the instruments referred to herein and therein)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof. This Agreement and the Escrow Agreement are
not intended to confer upon any person other than the parties hereto or thereto
any rights or remedies hereunder or thereunder.
Section 8.8 SEVERABILITY. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court asking such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to express-
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57
ing the intention of the invalid or unenforceable term or provision.
Section 8.9 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Georgia without giving
effect to the principles of conflicts of law thereof.
Section 8.10 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
PHONETEL TECHNOLOGIES, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chairman
PHONETEL ACQUISITION CORP.
By /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chairman
COMMUNICATIONS CENTRAL INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
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59
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as to
any Shares not then paid for, if (i) any applicable waiting period under the HSR
Act has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, or (iii) at any time on or after the date of the Merger Agreement and
before the time of acceptance for payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser, in its
judgment reasonably exercised, to have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the Company
or any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective Subsidiaries or affiliates) of all or a material portion
of their or the Company's businesses or assets, or to compel Parent or the
Purchaser or their respective Subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the Purchaser of any Shares under the
Offer, seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or seeking to obtain from the Company, Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (iii) seeking to impose material limi-
A-1
60
tations on the ability of the Purchaser, or render the Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant to
the Offer and the Merger, (iv) seeking to impose material limitations on the
ability of the Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to the Company's
shareholders, or (v) which otherwise is reasonably likely to have a Company
Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated, or deemed
applicable, pursuant to an authoritative interpretation by or on behalf of a
Government Entity, to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity, other than the application to the Offer or the
Merger of applicable waiting periods under HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ Stock Market for a period in
excess of 24 hours (excluding suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions), (ii) any decline in either the Dow ▇▇▇▇▇ Industrial Average or the
Standard & Poor's Index of 400 Industrial Companies or in the New York Stock
Exchange Composite Index in excess of 15% measured from the close of business on
the trading day next preceding the date of the Merger Agreement, (iii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States (whether or not mandatory), (iv) a commencement of a
war, armed hostilities or other international or national calamity directly or
indirectly involving the United States, (v) any limitation (whether or not
mandatory) by any United States governmental authority on the extension of
credit generally by banks or other financial institutions, (vi) a change in
general financial, bank or capital market conditions which materially and
adversely affects the ability of financial institu-
A-2
61
tions in the United States to extend credit or syndicate loans or (vii) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof;
(d) there shall have occurred any events after the date of the
Merger Agreement which, either individually or in the aggregate, would have a
Company Material Adverse Effect;
(e) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Acquisition Proposal;
(f) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and correct, in each case (i) as
of the date referred to in any representation or warranty which addresses
matters as of a particular date, or (ii) as to all other representations and
warranties, as of the date of the Merger Agreement and as of the scheduled
expiration of the Offer, unless the inaccuracies (without giving effect to any
materiality or material adverse effect qualifications or materiality exceptions
contained therein) under such representations and warranties, taking all the
inaccuracies under all such representations and warranties together in their
entirety, would not, individually or in the aggregate, result in a Company
Material Adverse Effect;
(g) the Company shall have failed to perform any obligation or
to comply with any agreement or covenant to be performed or complied with by it
under the Merger Agreement other than any failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in
Rule 13d-3 promulgated under the Exchange Act), of at least 20% of the
outstanding Common Stock of the Company;
(i) the Merger Agreement shall have been terminated in
accordance with its terms; or
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62
(j) Parent shall not have satisfied the Financing Condition.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser not in violation of the Merger Agreement) and may be
waived by Parent or the Purchaser in whole or in part at any time and from time
to time in the sole discretion of Parent or the Purchaser, subject in each case
to the terms of the Merger Agreement. The failure by Parent or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
A-4