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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 (Fee required)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
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[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required)
COMMISSION FILE NUMBER 0-16715
PHONETEL TECHNOLOGIES, INC.
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(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
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OHIO 34-1462198
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(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO,)
INCORPORATION OR ORGANIZATION)
1127 EUCLID AVENUE, SUITE 650, STATLER OFFICE TOWER 44115-1601
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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(216) 241-2555
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(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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NONE NONE
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SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
COMMON STOCK, $0.01 PAR VALUE
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(TITLE OF CLASS)
CHECK WHETHER THE ISSUER: (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR PAST 90 DAYS. YES _X_ NO ___
CHECK IF THERE IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM 405 OF
REGULATION S-B IS NOT CONTAINED IN THIS FORM, AND NO DISCLOSURE WILL BE
CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR
INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM
10-KSB OR ANY AMENDMENT TO THIS FORM 10-KSB. [ X ]
Revenues for the year ended December 31, 1995 $18,717,983.
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 31, 1996 was $15,441,038.
The number of shares outstanding of the registrant s Common Stock, $.01 par
value, as of March 31, 1996 was 3,391,529.
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
Documents Incorporated by Reference
Portions of the Registrant's Proxy Statement for use at the 1996 Annual Meeting
of Shareholders are incorporated by reference in Part III hereof.
page 1 of 30 pages
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PART I
ITEM 1. BUSINESS
(A) BUSINESS DEVELOPMENT
PhoneTel Technologies, Inc. (the "Company") was incorporated under the laws of
the State of Ohio on December 24, 1984. The Company operates in an industry
which encompasses (1) the installation, in and on property owned by others, of
commercial private pay telephones on a revenue sharing basis, (2) the sale of
operator assisted long distance services, and (3) national and regional
account management and consulting. The Company's executive offices are located
at 1127 Euclid Avenue, Suite 650, Cleveland, Ohio 44115-1601 and its telephone
number is (216) 241- 2555.
(B) BUSINESS OF ISSUER
The Company is a telecommunications company engaged in (1) the installation of
commercial private pay telephones on a revenue sharing basis, (2) the sale of
operator assisted long distance and other access services, and (3) national
and regional account management pursuant to which it manages certain
telecommunications operations for owners and managers of properties such as
shopping malls, hospitals and hotels. The Company has grown its revenue base
over the last three years from 2,185 installed phones in 1993 to 14,622
installed phones as of March 15, 1996. This growth was achieved through
acquisitions and new phone installations resulting from the Company's marketing
efforts. The Company acquired 2,155 installed phones on March 25, 1994; 3,237
installed phones on September 22, 1995; 1,200 installed phones on October 16,
1995; and 4,629 installed phones on March 15, 1996. For a description of the
recent acquisitions, see Item 6. Management's discussion and analysis of
financial condition and results of operations - Acquisitions and Liquidity,
capital stock and long-term debt activity transactions.
PRODUCTS
Pay telephones
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The Company owns and installs pay telephones, and pays the location owner, or
controlling party, a share of the pay telephone's revenues. The Company also
sells to and installs for third parties and offers a maintenance program to
such purchasers.
The Company's pay telephones are microprocessor-based, enabling the Company's
telephones to perform substantially all the necessary coin-driven functions
independent of a central office. The Company's telephones are equipped with an
audit feature linked by modem to the Company's central computer. This allows
remote information access and reprogramming, self-diagnostics, and provides
information regarding the total coin revenue that had been deposited in the
telephone which permits remote auditing and verification of coin collections.
In addition to verification of coin revenues, this remote communication ability
eliminates the necessity of dispatching service technicians to telephone
locations for such matters as rate changes and other software-dependent
functions.
The Company's pay telephones comply with state and federal regulations relating
to refunding
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coins for no answers or busy signals, coin-free emergency calls, directory
assistance and access to the Company's or other operator service centers (See
Regulation).
SERVICES
Revenue sharing pay telephones
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Since August 1985, the Company has been in the pay telephone business, whereby
it installs, in property owned or controlled by others, commercial private pay
telephones on a revenue sharing basis. The Company installs and services the
pay telephone, collects the coins and issues checks to the owner or occupant
for its share of the revenue. Coin collection and equipment service are
provided by Company employees and subcontractors. As of December 31, 1995, the
Company had 9,723 installed pay telephones in service compared to 4,744 on
December 31, 1994. As of March 15, 1996, the phone count was 14,622.
Typically, the Company enters into five to ten-year contracts for this service
with the owner or occupant. However, the duration of the contract and the
commission arrangement depends on the location, number of telephones and
revenue potential of the account.
At December 31, 1995, the Company operated installed pay telephones in 26
states. The Company's primary markets are Florida, Texas, Missouri, Ohio,
Illinois, Tennessee, and South Carolina.
Operator assisted long distance services
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The Company commenced providing operator assisted long distance services on
April 1, 1988. Providing operator services allows the Company to receive
non-coin revenue from long distance calls. Non-coin revenue is derived from
such sources as calling card calls, person-to-person calls, collect calls and
calls billed to a third party. The Company receives these revenues from long
distance calls placed from Company-owned pay telephones, from pay telephones of
local telephone companies that are presubscribed to the Company's service, pay
telephones owned by other private pay telephone owners and from hotel and
hospital rooms. Presubscription allows a location owner, which has a local
telephone company-owned pay telephone on its premises, to elect the operator
service provider of its choice to provide the interLATA (long distance)
operator service for calls originating from those pay telephones. Local
telephone companies are those traditionally classified as public utilities such
as the regional Bell Companies, United Telephone and GTE. The location owner
generally receives a commission from the operator service provider based on a
percentage of the long distance call revenue.
The Company's operator service center handled 3,001 Company owned pay
telephones and 1,956 other non-Company owned telephones as of December 31,
1995. In certain geographic areas where the transmission charges make it less
profitable for the Company to handle calls, the Company subcontracts the
operator assisted service for its pay telephones to another operator service
provider. The Company receives commissions for these calls from the other
operator service providers.
In December 1995, management decided to outsource the entire operator service
center operations in lieu of expending the necessary funds to upgrade and
expand its operator service
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center and the related telecommunications equipment. Management believes that
a single subcontractor will be able to handle all of the Company's operator
traffic at a lower cost to the Company. Management anticipates that the
transfer of all its operator service center traffic to the subcontractor will
be completed by March 31, 1996. (See Item 6. Management's discussion and
analysis of financial condition and results of operations.)
During 1993, the Company entered into carrier agreements with Frontier
Communication International Inc. ("Frontier") and LCI International, Inc.
("LCI"), whereby Frontier and LCI provide network facilities to the Company.
These agreements allowed the Company to significantly expand the areas to which
presubscription services can be offered. A presubscribed phone is one which is
owned by a regulated local telephone company, but to which the Company provides
long distance operator services.
National and regional account management
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The Company offers national and regional account management services to owners
and managers of multi-location enterprises, such as shopping centers,
educational institutions, hospitals, hotels, entertainment complexes and other
retail establishments. In 1992, the Company entered into a management
agreement with The Edward J. DeBartolo Corporation ("EJDC") and other
affiliates of EJDC (collectively "DeBartolo"). Under the agreement, which has
a ten-year term, the Company acts as manager of the pay telephone equipment for
DeBartolo-owned and/or managed properties. See Significant customer section
below. Additionally, in 1992 the Company entered into a ten-year management
agreement with The Cafaro Company ("Cafaro") of Youngstown, Ohio. As a result
of this agreement, the Company provides various telecommunication services to
Cafaro's mall properties nationwide. These services include providing pay
telephones and operator services in all of Cafaro's wholly-owned properties.
SIGNIFICANT CUSTOMER
For the year ended December 31, 1995, approximately 15% of the Company's total
revenue was derived from its agreement with DeBartolo as compared to 18% for
the year ended December 31, 1994. The Company estimates that DeBartolo will
represent approximately 10% of the total combined pro forma revenues of the
Company for 1996 after consideration of the Company's latest acquisitions. The
Company expects to continue expanding its installed pay telephone base through
an ongoing program of direct selling and strategic acquisitions. As a
consequence of this program, the Company expects that the percentage of its
revenues derived from the DeBartolo agreement will continue to decrease.
SUPPLIERS
The Company currently purchases its pay telephones from Protel, Inc. ("Protel")
and Intellical, Inc. ("Intellical"). The Company believes that it can purchase
pay telephones from other manufacturers on terms comparable to those of Protel
and Intellical.
The Company currently purchases network facilities primarily from Frontier and
LCI. The Company believes that it can purchase network facilities from other
carriers on terms comparable to those currently negotiated with Frontier and
LCI.
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The Company purchases its telephone enclosures from Telfab, Inc., Modular
Systems, Inc., Acoustical Development Corporation and Phillips & Brooks/Gladwin
Inc.
MARKETING AND PROMOTION
The Company's products and services are marketed through (1) employee, officer
and director solicitation of location owners and/or occupants, (2) independent
contractor sales representatives, (3) advertising in trade publications, (4)
the use of booths at trade shows, and (5) referrals from existing accounts.
The Company directs a major portion of its marketing efforts for commercial
private pay telephones to multi-station accounts such as shopping malls, where
collection and maintenance are more efficient and vandalism is minimal. The
Company also solicits high volume, single station accounts.
The Company's principal marketing areas are discussed above under the specific
discussions of products and services.
SERVICEMARK
The Company uses the Servicemark "PhoneTel" on its telephones, letterhead, and
in various other manners. On November 22, 1988, the United States Patent and
Trademark Office granted the Company a Certificate of Registration for the
Servicemark "PhoneTel" for providing telecommunications services for a period
of twenty years.
REGULATION
Telecommunications is an industry significantly impacted by governmental
statutes and regulations, both Federal and state. These regulations are
generally promulgated by the Federal Communications Commission ("FCC") pursuant
to the Communications Act of 1934, as amended ("the Communications Act") or the
public service or utility commissions of the various states. There is, from
time to time, legislation enacted by Congress or the various state legislatures
that affects the industry. From time to time, court decisions may also have a
significant effect on the industry as well. The Company must obtain approval
from each state public utilities' commission prior to the operation of a phone
in the applicable state.
Federal
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The Company is subject to regulation under the Communications Act and the FCC
as a payphone service provider ("PSP") (i.e.,the provision of public or
semi-public pay telephones and the provision of inmate telephone service in
correctional institutions and any ancillary services) and/or as an operator
service provider ("OSP") (i.e., a provider of operator assistance in the
billing or completion (or both) of an interstate telephone call). Pursuant to
Section 226(h), of the Communications Act, the Company must file informational
tariffs with the FCC specifying the rates, terms and conditions of service and
reasonable estimates of traffic priced at each of the rates. The FCC may, if
it appears that tariffed rates and conditions are unjust or unreasonable,
require the Company (1) to demonstrate that its rates and charges are just and
reasonable, and/or (2) to announce that its rates are available on request at
the beginning of each call.
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In addition, the Company must comply or ensure compliance with certain billing
and consumer information requirements. For example, the Company is not
permitted to bill consumers for unanswered calls, bill for calls that do not
reflect the location or the origination of the call, or bill the call from any
location other than that where the call is made, unless the consumer's consent
is explicitly obtained. Additionally, the Company must post certain
information at or near the telephone and "brand" the call (I.E., identify
itself to the consumer) in accordance with the FCC's requirements. Further,
the Company also must allow consumers to access the interexchange carrier of
their choice by entering a specific code number (10XXX) or an "800" or "950"
number. The Company cannot charge consumers a different access rate when they
elect to use an interstate access code rather than the OSP. These FCC
regulations adopted pursuant to Section 226 are subject to change, elimination
or invalidation by the agency, Congress and the courts and there can be no
assurance that the Company will not be adversely affected by such changes, if
any, in these regulations.
Congress recently enacted Section 276 of the Communications Act, which requires
the FCC to adopt certain final rules as described below by November 8, 1996.
Specifically, the FCC must adopt rules that: (1) establish a per-call
compensation plan to ensure that all PSPs are fairly compensated for each and
every completed intrastate and interstate call using their payphone, with the
exception of emergency calls and telecommunications relay service calls for
hearing-disabled individuals; (2) discontinue the intrastate and interstate
carrier access charge payphone service elements and payments in effect on such
date of enactment, and all intrastate and interstate payphone subsidies from
basic exchange and exchange access revenues, in favor of a compensation plan;
(3) prescribe a set of nonstructural safeguards for Regional Bell Operating
Company's ("RBOC"'s) payphone service which shall be equal to, at a minimum,
those adopted in the FCC's COMPUTER INQUIRY III (CC Docket No. 90-623)
proceeding; (4) provide for RBOC payphone service providers to have the same
right that independent telephone providers have to negotiate with the location
provider on the location provider's selecting and contracting with, and,
subject to the terms of any agreement with the location provider, to select and
contract with, the carriers that carry interLATA calls from their payphones,
unless the Commission determines in the rulemaking pursuant to this section
that it is not in the public interest; (5) provide for all PSPs to have the
right to negotiate with the location provider on the location provider's
selecting and contracting with, and subject to the terms of any agreement with
the location provider, to select and contract with, the carriers that carry
intraLATA calls from their payphones; and (6) ensure that "public interest
payphones" (I.E., payphones provided in the interest of public health, safety,
and welfare) are maintained and supported equitably. When effective, these
rules will replace the FCC's current "flat fee" compensation scheme whereby
interexchange carriers compensate PSPs $6.00 per payphone per month for
completed interstate access code calls.
In addition, pursuant to Section 276, any RBOC that provided payphone service
must, by the effective date of the FCC's rules adopted thereunder, (1) not
subsidize its payphone service directly or indirectly from its telephone
exchange service operations or its exchange access operations, and (2) not
prefer or discriminate in favor of its payphone service. Section 276 also
preempts state law inconsistent with its provisions. The Company believes that
the changes to the applicable law mandated by Section 276, particularly the
change from the flat fee to the per call compensation scheme, will be
beneficial to the Company. Section 276, however, has not yet been implemented
by the FCC nor interpreted by the courts and there can be no assurance that the
rules and policies ultimately adopted thereunder will not adversely affect the
Company.
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State
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With respect to telecommunications, each state has the right to regulate
customer owned pay telephones and all intrastate telephone service. These
regulations are promulgated by public service commissions in each state. In
order for the Company to process intrastate operator service, and in some
jurisdictions, in order for the Company to operate its own pay telephones, it
is necessary to become certificated and have tariffs filed. The procedure and
length of time for the process varies from state to state.
In almost all states, only the local telephone companies are permitted to
process local intraLATA operator assisted calls. (The 1996 Telecommunications
Act requires the FCC to review this practice and take corrective action.) LATA
is an acronym for Local Access and Transport Area. LATA's were established
pursuant to the Modification of Final Judgement resolving the U.S. Government's
anti-trust lawsuit against AT&T. LATA's are areas within which a divested RBOC
may provide service. Using the similar rationale as for dial-around
compensation described above, several states have ruled that private pay
telephone owners are entitled to compensation from the local telephone
companies for the use of their equipment and facilities to route and process
these calls and a number of other states are studying this problem as well.
COMPETITION
The commercial private pay telephone industry is highly competitive and has
been dominated by local telephone companies. Competition for regional
locations comes primarily from the local telephone companies and other private
pay telephone companies such as Peoples Telephone Company, Inc., Communications
Central, Inc., Cherokee Communications, Inc., and Davel Communications Group.
As a result of deregulation in 1987, the Company directly competes in the
operator service market with AT&T and other private operator service providers.
In addition to AT&T, the Company believes that its major competitors are MCI
and U.S. Sprint. Other competitors include Oncore Communications, Inc.,
Opticom, a division of One Call Communications, Inc., Conquest
Telecommunications Service Company, American Network Exchange Inc. ("Amnex"),
and U.S. Long Distance, Inc. each of which has greater financial resources than
the Company.
SEASONALITY
The seasonality of the Company's revenues from vended pay telephones, reselling
operator assisted long distance services, and national and regional account
management parallels that of the location from which the calls are placed.
Since a large concentration of the Company's telephones are in shopping malls,
the greatest portion of the Company s revenue is earned in the fourth quarter
due to the increased holiday traffic. Phones in northern states located
outdoors experience reduced revenues in the months of January and February.
EMPLOYEES
The Company had 156 employees at December 31, 1995 and considers its relations
with its employees to be satisfactory.
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ITEM 2. PROPERTIES
The Company's principal office and operator service facilities are located at
1127 Euclid Avenue, 650 Statler Office Tower, Cleveland, Ohio where the Company
leases approximately 15,200 square feet of space at a monthly rental of
$12,728. The lease commenced on December 1, 1992 and is scheduled to terminate
in December 1997. The monthly rent will increase to $13,933 in 1996 and
$15,200 in 1997. The lease also contains five, one year renewal options. The
Company also leases approximately 3,000 square feet of warehouse space,
currently for $1,700 per month, at 3843 St. Clair Avenue, Cleveland, Ohio. As
of December 31, 1995, the Company also maintains service/sales offices in
leased premises in Orlando, Ocala, and Tampa, Florida; Las Vegas, Nevada;
Dallas, Texas; St. Louis, Missouri; Chicago, Illinois, and Detroit, Michigan at
an aggregate monthly rental of $15,666.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings as to which the
outcome would have a material adverse effect on the Company's financial
position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1995, no matters were submitted to a vote of the
Company's shareholders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(A) MARKET INFORMATION
The Company's Common Stock, $0.01 par value ("Common Stock") is listed on
NASDAQ under the symbol "PNTL". Quotations for the Company's Common Stock are
available through NASDAQ.
The following table sets forth the quarterly high and low bid sales prices of
the Company's Common Stock for the periods indicated as reported by NASDAQ.
The high and low bid sales prices have been adjusted to reflect the one for six
reverse stock split which became effective on December 26, 1995.
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1995 1994
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High Low High Low
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1st Quarter $7 1/8 $4 7/8 $20 1/4 $14 1/4
2nd Quarter 8 1/4 4 7/8 15 3/4 8 5/8
3rd Quarter 8 1/4 5 7/16 9 3/8 6
4th Quarter 8 5/8 5 1/4 11 1/4 6 3/4
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(B) HOLDERS
As of March 31, 1996, there were approximately 303 stockholders of record of
the Company's Common Stock. The number of record holders does not take into
account shares held in nominee or "street" name for the account of beneficial
owners.
(C) DIVIDENDS
On February 23, 1996, the Company created three new classes of preferred stock:
(i) Series A Special Convertible Preferred Stock, $0.20 par value, $0.20 Stated
Value, 250,000 authorized shares, with each share immediately convertible into
20 shares of Common Stock, and non-voting, ("Series A Preferred"); (ii) Series
B Special Convertible Preferred Stock, $0.20 par value, $120 Stated Value,
250,000 authorized shares, with each share immediately convertible into 20
shares of Common Stock, and non-voting ("Series B Preferred"); and (iii) 14%
Convertible Cumulative Redeemable Preferred Stock, without par value, $60
Stated Value, non-voting, 200,000 authorized shares, and with each share
immediately convertible into 10 shares of Common Stock ("14% Preferred"). Each
share of the 14% Preferred is entitled to receive a quarterly dividend of 0.035
shares of 14% Preferred.
The Company's 10% Cumulative Non-Voting Redeemable Preferred Stock ("10%
Non-Voting Preferred") has a liquidation preference of $10 per share. Under
the terms of the 10% Non-Voting Preferred, which was issued in connection with
the acquisition of World Communications, Inc. by the Company, from December
1996 through November 1997 the Company can be required by each holder of the
10% Non-Voting Preferred to repurchase their shares for $30 per share. At the
time of the World acquisition, the Company entered into a Voting and Proxy
Agreement ("the Agreement") with certain common stockholders of the Company
("Holders") representing, in the aggregate, over 50% of the then outstanding
Common Stock of the Company. The Agreement has also been signed by the holders
of the Nominal Value Warrants and Series A Preferred such that common
shareholders representing over 50% of the Common Stock have signed the
Agreement. Under the terms of the Agreement, the Holders agreed to call a
special meeting of the shareholders by June 1996 at which time the Holders will
propose that each share of the 10% Non-Voting Preferred be made convertible
into 1.67 shares of the Company's Common Stock (a total of 885,992 shares).
Such number of shares had a fair value at the date of acquisition approximately
equal to the stated value of the 10% Non-Voting Preferred. Under the terms of
the Agreement, the Holders have agreed to vote in favor of the proposal. Once
the 10% Non-Voting Preferred is convertible, the Company cannot be required to
redeem the 10% Non-Voting Preferred. No dividends were paid on the 10%
Non-Voting Preferred in 1995 and no dividends are payable or accrue for nine
months from date of issuance or if the stock is converted to Common Stock. In
addition, certain holders of the 10% Non-Voting Preferred and the Company
entered into a separate Voting and Proxy Agreement which provides that such
holders shall vote the shares of 10% Non-Voting Preferred held by them to
approve the foregoing grant of conversion rights.
The Company's 10% Cumulative Redeemable Preferred Stock ("10% Cumulative
Preferred") was issued to a significant customer in 1992 (see Significant
customer above). No dividends were paid on the 10% Cumulative Preferred in
1995 or 1994 and all outstanding shares of the 10% Cumulative Preferred were
redeemed on March 15, 1996.
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All outstanding shares of the Company's 8% Cumulative Redeemable Preferred
Stock ("8% Preferred") were redeemed on March 15, 1996. Dividends paid on the
8% Preferred were $36,000 and $30,000 in 1995 and 1994, respectively, and are
reflected in the accumulated deficit.
All outstanding shares of the Company's 7% Cumulative Convertible Redeemable
Preferred Stock ("7% Preferred") were redeemed on March 15, 1996. Dividends
paid on the 7% Preferred were $4,375 and $21,875 in 1995 and 1994,
respectively, and are reflected in the accumulated deficit.
The Company has not paid any cash dividends on its Common Stock and does not
anticipate paying cash dividends in the foreseeable future. No dividends can
be paid on the Common Stock until all dividends declared on the preferred stock
have been paid. It is the current policy of the Company's Board of Directors
to retain any earnings to finance the growth and development of the Company's
business. Payment of cash dividends, if made in the future, will be determined
by the Company's Board of Directors based on the conditions then existing,
including the Company's financial condition, capital requirements, cash flow,
profitability, business outlook and other factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ACQUISITIONS AND MERGERS
On March 15, 1996, the Company completed the acquisition of the outstanding
common stock of International Pay Phones, Inc. (a South Carolina company) and
International Pay Phones, Inc. (a Tennessee company) (collectively "IPP"),
companies affiliated through common ownership and management. The Company
acquired 2,101 installed phones for a purchase price of $3,496,487 in cash,
555,589 unregistered shares of the Company's Common Stock, 5,453 shares of 14%
Preferred (immediately convertible into 54,530 shares of Common Stock), and
warrants to purchase 117,785 shares of the Company's Common Stock at a nominal
exercise price per share. Additionally, the Company assumed approximately
$1,757,000 in liabilities, of which $1,551,796 was repaid by the Company on
March 15, 1996. The cash purchase price included three five year non-compete
agreements, with an aggregate value of $60,000, with three of IPP's former
officers. The acquisition will be recorded as a purchase and the difference
between the fair value of the tangible assets acquired and the total purchase
price will be recorded as an increase to intangibles and amortized over the
life of the acquired location contracts which is estimated to be 36 to 60
months.
On March 15, 1996, the Company completed a Share Purchase Agreement with
Paramount Communications Systems, Inc. (a Florida corporation) ("Paramount").
Under the terms of the Agreement, the Company acquired 2,528 installed phones
for a cash purchase price of $9,618,553, 8,333 shares of 14% Preferred
(immediately convertible into 83,330 shares of Common Stock), warrants to
purchase 179,996 shares of the Company's Common Stock at a nominal exercise
price per share, and the Company assumed outstanding liabilities of
approximately $733,000, of which $693,446 was repaid on March 15, 1996. The
purchase price included a five year consulting and non-compete agreement,
valued at $50,000, with one of Paramount's former officers. The acquisition
will be recorded as a purchase and the difference between the fair value of the
tangible assets acquired and the total purchase price will be
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recorded as an increase to intangibles and amortized over the life of the
acquired location contracts which is estimated to be 36 to 60 months.
On October 16, 1995, the Company consummated its acquisition of the outstanding
common stock of Public Telephone Corporation (an Indiana corporation)
("Public") in a transaction accounted for as a purchase. The company acquired
current assets of $54,742, approximately 1,200 installed telephones, assumed
approximately $2,800,000 in debt and outstanding liabilities of Public and
issued 224,879 unregistered shares of the Company's Common Stock to the
shareholders of Public. In connection with the acquisition, the Company
entered into five year non-compete agreements with two of Public's former
owners which require both cash payments and the issuance, in the aggregate, of
80,000 shares of the Company's Common Stock.
On September 22, 1995, the Company consummated its merger with World
Communications, Inc. (a Missouri corporation) ("World") in a transaction
accounted for as a purchase. The Company acquired current assets of $256,571,
3,237 installed telephones, assumed approximately $6,900,000 in debt and
outstanding liabilities of World and issued 402,500 unregistered shares of the
Company's Common Stock and 530,534 shares of the Company's 10% Non-Voting
Preferred. In connection with the acquisition, the Company entered into two
year non-compete and employment agreements with three of World's former
officers. These non-compete and employment agreements require, in the
aggregate, payment of $625,000 over a two year period.
On March 25, 1994, the Company acquired substantially all of the assets of
Alpha Pay Phones-IV L.P. ("Alpha"). The acquired assets included 2,155
installed telephones for a cash purchase price of $2,334,215, a note payable to
sellers of $1,100,620 and assumption by the Company of outstanding Alpha
liabilities of $2,164,038.
The Public, World, and Alpha acquisitions were accounted for using the purchase
method and, accordingly, the purchase price was allocated to the net assets
acquired, based on their estimated fair values. The results of operations of
each acquired company have been, or will be, included in the results of
operations of the Company from the date of the respective acquisition.
LIQUIDITY, CAPITAL STOCK AND LONG-TERM DEBT ACTIVITY TRANSACTIONS
In a transaction consummated on March 15, 1996, the Company borrowed
$30,530,954 (out of a total credit facility commitment of $37,250,000) from
Internationale Nederlanden (U.S.) Capital Corporation and one other lender
(collectively know as "ING"). The Company has available under the credit
facility $6,700,000 to fund future acquisitions and for general working capital
purposes. The Company used the funds to complete the Paramount and IPP
acquisitions, to repay all outstanding long-term debt and capital lease
obligations which had a secured interest in the Company's installed phones, to
redeem the 10% Cumulative Preferred, 7% Preferred and 8% Preferred and to pay
related transaction fees. The ING credit facility requires monthly interest
payments at prime plus 5% and contains various covenants restricting the
Company's ability to pay dividends or incur additional debt, among other
conditions, and also contains financial covenants requiring minimum net worth,
working capital and earnings before interest, depreciation and amortization
among other covenants. The credit facility also contains a subjective
acceleration clause which states that in the event of a material adverse change
in the business, as determined by ING, ING can call the debt at its discretion.
ING has waived their right to exercise this subjective acceleration clause
through April 1, 1997. Principal payments commence September 1997 and continue
quarterly through June 1999 at which time the
page 11 of 30 pages
<PAGE> 12
remaining principal balance is due. The amount of principal payments is
contingent upon numerous factors, including the borrowing base and cash flow of
the Company. Based on amounts borrowed at March 15, 1996, the estimated
principal payment in September 1997 would be $534,000, increasing to $884,000
quarterly for 1998. All of the Company's installed phones are pledged as
collateral to the ING credit facility.
The majority of the ING credit facility (currently $29,000,000) can be
converted into Series B Preferred at the ratio of 833 shares for each $100,000
in outstanding debt and accrued interest. Additionally, ING received warrants
to purchase 204,824 shares of Series A Preferred at an exercise price of $0.20
per share. Each share of Series A Preferred and Series B Preferred is
convertible into 20 shares of Common Stock. The estimated fair value of the
warrants on the date of grant will be recorded as interest expense over the
term of the ING credit facility. The Company has estimated the annual non-cash
interest expense will be in excess of $3,000,000.
On March 15, 1996, concurrent with the ING transaction, the Company redeemed
the 10% Cumulative Preferred, the 8% Preferred, and the 7% Preferred. The
redemption price was $1,117,371 and 34,434 shares of 14% Preferred. In the
aggregate, $6,475,011 of the Company's outstanding obligations, including
portions of the purchase price for the pending acquisitions, was liquidated by
issuing 107,918 shares of 14% Preferred. The approximately $2,000,000 excess
of the redemption price of the preferred issues redeemed over their aggregate
carrying value will be recorded as a reduction of earnings available to common
shareholders during the first quarter of 1996.
On March 15, 1996, warrants to purchase 2,018,946 shares of Common Stock at a
nominal exercise price per share ("Nominal Value Warrants") were issued in
conjunction with the IPP and Paramount acquisitions, redemption of the 10%
Cumulative Preferred, 8% Preferred, and the 7% Preferred, and conversion of
certain debt of the Company to the 14% Preferred. The warrants expire on March
13, 2001.
As of March 15, 1996, the Company has reserved 14,366,022 shares of Common
Stock for issuance under the following scenarios: (1) conversion of
$29,000,000 of ING outstanding debt into 241,667 shares of Series B Preferred
Stock which is then immediately convertible into 4,833,333 shares of Common
Stock; (2) exercise of warrants to purchase 204,824 shares of Series A
Preferred Stock at $0.20 per share, immediately convertible into 4,096,480
shares of Common Stock; (3) conversion of 107,918 shares of 14% Preferred into
1,079,179 shares of Common Stock; (4) conversion, upon Shareholder approval, of
530,534 shares of 10% Non-Voting Preferred into 885,992 shares of Common Stock;
(5) exercise of 2,018,942 Nominal Value Warrants; (6) exercise of 980,351
warrants at prices ranging from $5.70 to $15.75 per share; and (7) exercise of
471,745 stock options at prices ranging from $3.00 to $19.50 per share.
In 1995, the Company sold 472,056 shares of its Common Stock to officers,
directors, creditors and affiliates of the Company, and to others at average
prices ranging from $4.50 to $5.20 per share. In 1994, the Company sold
136,111 shares for an average price of $10.84 per share. Additionally, certain
warrants and options were exercised in 1995 to purchase 8,333 shares of the
Company's Common Stock at a per share price of $4.20. In 1994, 87,931 shares
were purchased through the exercise of stock options and warrants at an average
price of $6.29 per share. The proceeds of these sales were utilized to
pay-down debt and other liabilities, partially fund the Alpha acquisition, and
for other working capital requirements.
page 12 of 30 pages
<PAGE> 13
Additionally, in 1995, the Company issued unregistered shares of common stock
for the following non-cash transactions: (i) 91,383 common shares for
services, aggregating $529,446, rendered by directors and third parties; (ii)
30,231 common shares for payment of outstanding debt and interest, aggregating
$137,678, payable to directors and third party creditors; and (iii) 23,809
common shares issued for an acquisition deposit. The acquisition was completed
on March 15, 1996. In 1994, the Company issued 8,389 common shares for
services, aggregating $76,498, and 5,278 common shares for debt financing costs
aggregating $99,689.
At December 31, 1995, long-term debt, including the current portion, was
$10,328,913 and obligations under capital leases, including the current
portion, amounted to $3,532,937 compared with $3,878,656 and $302,612 at
December 31, 1994, respectively, an increase of $6,450,257 in long-term debt
and $3,230,325 in obligations under capital leases. This increase is mostly
attributable to debt incurred in connection with the World and Public
acquisitions, and shareholder loans used mostly for acquisition deposits and
working capital. On March 15, 1996, the Company repaid $9,214,468 of the
long-term debt and $3,243,965 of the obligations under capital leases.
The Company had a working capital deficit of $4,843,524 at December 31, 1995,
compared to a working capital deficit of $4,032,635 at December 31, 1994, an
increase of $810,889. Cash flows used in operations in 1995 amounted to
$579,133, a decrease of $2,959,349 over cash provided by operations in 1994 of
$2,380,216, of which $1,975,628 was due to increases in accounts payable
compared to a decrease in accounts payable of $151,008 at December 31, 1995,
with the remainder of the increase due to the increase in the net loss. The
Company installed, over and above the phones acquired through the two
acquisitions in 1995, 542 phones compared to 532 in 1994.
On September 12, 1995, the Company borrowed $1,200,000 (which was recorded net
of the value of warrants issued of $349,000) from third party investors
pursuant to a 19 month credit agreement and made interest payments at 12 1/2
percent. The proceeds were used for operating expenses and to make certain
employee severance payments. This debt was repaid on March 15, 1996.
Management believes, but can not assure, that cash flow from operations, the
proceeds from the financing discussed above and other financial alternatives
will be sufficient to allow the Company to sustain its operations and meet its
obligations over the next twelve months.
RESULTS OF OPERATIONS
At March 15, 1996, the Company had 14,622 installed phones. At December 31,
1995, the Company had 9,723 installed pay phones compared to 4,744 at December
31, 1994. At December 31, 1995, there were approximately 4,957 pay telephones
(including Company owned and presubscribed) and hotel and hospital room phones
connected to its operator service center (6,113 for the comparable period).
REVENUE
Total revenue from all product lines was $18,717,983 and $15,866,087 for the
years ended December 31, 1995 and 1994, respectively, representing an increase
of $2,851,896, or 18%, in fiscal 1995 over 1994. Revenue by type is described
below.
page 13 of 30 pages
<PAGE> 14
Coin calls
- ----------
Revenues from coin calls increased 44% to $12,130,189 in 1995 from $8,421,237
in 1994. This increase is attributable primarily to an increase in the number
of installed pay telephones. The total installed pay phones count increased by
4,979 pay phones, or 105%, with the majority of the increase occurring late in
the third quarter and in the fourth quarter of 1995 and attributable to the
acquisition of World and Public. Additionally, revenues improved from the
continuation of the 1994 program which offered customers a three minute long
distance call for $0.75 ("$0.75 Long Distance Call Program") anywhere in the
continental United States.
Operator Services
- -----------------
The 29% decrease in revenue from the Company's operator service center to
$3,776,501 in 1995 from $5,319,138 in 1994 was primarily the result of an
decrease in the number of phones to which the Company provides operator
services through presubcription arrangements and aggressive dial-around
advertising of AT&T, Sprint and MCI. The Company has decided to outsource its
operator service center and anticipates that all traffic will be moved to the
subcontractor by March 31, 1996. Operator services will be provided by a
subcontractor that is better equipped to handle the increased volume expected
from the recent acquisitions. The Company's operator service center fixed
assets are considered to be antiquated and uneconomical to update. Therefore,
the Company wrote-off the assets in 1995 and recorded a non-cash charge of
$298,626.
Commissions
- -----------
Commission revenue consists of intraLATA compensation received from Florida
local exchange carriers ("LECs"), dial-around compensation, operator service
commissions from other providers carrying intraLATA traffic from Company-owned
pay telephones and coin and operator service commissions from sub-contractors
("Sub-contractor Phones").
Commission revenue increased to $2,681,172 in 1995 from $1,856,482 in 1994, an
increase of $824,690 or 44%. This increase was primarily the result of the
acquisition of World and Public in the fourth quarter of 1995.
Included in commission revenue is dial-around compensation which increased to
$685,032 in 1995 from $316,763 in 1994, an increase of $368,269 or 116%, which
is attributable to the Company's increased pay telephone base. Dial-around
compensation was ordered by the FCC in 1992 to compensate private pay telephone
owners for others using their phones and networks without direct (coin)
payment. (see Regulation section above).
COSTS AND EXPENSES
Line and transmission charges increased to 29% ($5,475,699) of total revenues
in 1995 as compared to 28% ($4,456,509) of total revenues in 1994 as a result,
in part, from increased coin calls resulting from the $0.75 Long Distance Call
Program as well as increases in certain local telephone company line charges.
Management expects that the increased volume from the $0.75 Long Distance Call
Program will cause the line and transmission charges, as a percent of revenue,
to remain steady or increase slightly in the future. However, this program
reduces
page 14 of 30 pages
<PAGE> 15
billing, collection and operator service costs.
Location commissions decreased to $3,467,626 or 18.5% of total revenues in 1995
compared to $3,391,190 or 21.4% of total revenues in 1994 as a result of lower
location commissions as a percentage of revenues from phones acquired in the
acquisitions of World and Public.
Other operating expenses increased to $4,452,032 or 23.8% of total revenues for
1995 from $3,238,252 or 20.4% of total revenues in 1994. The increase was the
result of higher personnel costs, rent, utilities and service related expenses
attributable to the acquisition of World and Public, the increase in the
Company's pay telephone base, and the additional personnel to accommodate the
increased business. Management anticipates economies of scale resulting from
the acquisitions completed in the fourth quarter of 1995 and in 1996 will be
realized in 1996, resulting in the stabilization of operating expenses as a
percentage of total revenues.
Depreciation and amortization increased to $4,383,049 in 1995 from $2,236,269
in 1994. This increase was primarily due to the Company's acquisition of World
and Public in September and October of 1995 and expansion of its pay telephone
base which included purchases of additional computer equipment, service
vehicles and software which were made to accommodate the Company's growth.
Selling, general and administrative expenses increased in dollar volume while
decreasing as a percentage of revenue. These expenses were $3,200,742 or 17.1%
of total revenues in 1995 as compared to $2,831,775 or 17.8% of total revenues
in 1994. There were dollar increases in advertising, travel and entertainment,
wages and payroll related expenses and general office expenses as a result of
hiring additional personnel to conduct the Company's expanded selling and
marketing program and customer services, however these expenses did not grow as
quickly as revenues. Selling, general and administrative expenses should only
marginally increase in the near term because the Company has an established
infrastructure in place, but costs should continue to decrease as a percentage
of total revenues as total revenues increase.
Billing and collection costs decreased to $858,230 or 4.6% of total revenues
for 1995 compared to $1,026,420 or 6.5% of total revenues in 1994 primarily due
to the introduction of new system software and procedures which will help
manage costs and control expenses. Upon completion of the outsourcing of the
operator service center ( projected to be completed by the end of the first
quarter in 1996) the majority of billing and collection expenses will
disappear.
Contractual settlements and restructuring charges were $2,169,503 or 11.6% of
total revenues for 1995. There were no contractual settlements and
restructuring charges for 1994. Contractual settlements and restructuring
charges consist primarily of costs associated with the settlement of
contractual obligations to certain former officers of the Company and related
legal fees, the write-off of selected assets in connection with the outsourcing
of the operator service center, and consulting and legal fees incurred for
changes to the operations of the Company.
Interest expense increased in 1995 to $836,911 from $388,215 in 1994 due to
financing obtained for acquisitions, additional service vehicles and switch
operating equipment. In addition, the Company entered into financing
agreements with certain manufacturers throughout the year for the purchase of
phone equipment to accommodate the expansion of its pay telephone base.
page 15 of 30 pages
<PAGE> 16
IMPACT OF SEASONALITY
The seasonality of the Company's revenues from vended pay telephones, reselling
operator assisted long distance services, and national and regional account
management parallels that of the location from which the calls are placed.
Since a large concentration of the Company's telephones are in shopping malls,
the greatest portion of the Company's revenue is earned in the fourth quarter
due to the increased holiday traffic. Phones in northern states, located
outdoors, experience reduced revenues in the months of January and February.
IMPACT OF INFLATION
Inflation has not had a significant impact on the Company. It is possible that
during inflationary periods, the basic line charges may increase while public
utilities commissions or the Federal Communications Commission may not allow
increases in charges to customers.
ITEM 7. FINANCIAL STATEMENTS
The consolidated financial statements of the Company are set forth in Item 13
of this Report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no resignation or dismissal of the registrant's accountants
during the two most recent fiscal years.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The description of the directors of the Registrant is incorporated herein by
reference to the section of the definitive Proxy Statement for the 1996 Annual
Meeting of Shareholders (the "Proxy Statement"), entitled "Election of
Directors", which Proxy Statement is expected to be filed in April, 1996.
page 16 of 30 pages
<PAGE> 17
The following table sets forth the names and ages of the members of the
Company's Board of Directors and its executive officers, and the positions with
the Company held by each.
<TABLE>
<CAPTION>
Name Age Position
---- ----- --------
<S> <C> <C>
Peter G. Graf 58 Chairman,
Chief Executive Officer
and Director
Stuart Hollander 66 Vice Chairman
Director
Daniel J. Moos 45 Executive Vice President,
Chief Financial Officer,
Treasurer, Director
George H. Henry 42 Director
Joseph Abrams 60 Director
Aron Katzman 58 Director
Steve Richman 52 Director
</TABLE>
PETER G. GRAF has been a Director, Chairman, and Chief Executive Officer of the
Company since September 1995. Mr. Graf is an attorney and Certified Public
Accountant.
STUART HOLLANDER has been a Director and Vice Chairman since September 1995.
Mr. Hollander was founder, principal owner and Chairman of the Board of World
until it was merged into the Company in 1995. Prior to that he was Executive
Vice President of Hollander & Company, Inc., one of the largest distributors of
consumer electronics in the U.S., representing Zenith Radio Corporation; the
founder and an officer of Lesley Acceptance Corporation; Chairman and a Member
of the Board of Jaeger of Canada, Inc.; and Board member of Pioneer Bank and
Trust Company.
DANIEL J. MOOS has served as Senior Vice President, Chief Financial Officer and
Treasurer since June 1994 and Director since June 1995. Prior to joining the
Company, Mr. Moos has served in various financial and operating positions with
B.F. Goodrich, Argo-Tech, LDI Corporation and Business Health Network. Mr.
Moos is a member of the Financial Executives Institute.
GEORGE H. HENRY has been a Director since April 1993. Mr. Henry has been the
managing director of G. Howard Associates, Inc., a private investment firm,
since 1986. Mr. Henry is also on the Board of Directors of Battery One-Stop,
Inc., Polar Molecular Corporation and Ventex Resources Corporation.
JOSEPH ABRAMS has been a Director since September 1995. Mr. Abrams is also a
director of Merisel, Inc. a public company that distributes micro computer
hardware and software, and Spectrum Signal Processing, Inc., a public company
that specializes in digital signal solutions. Previously, Mr. Abrams was
founder and President of AGS Computers.
page 17 of 30 pages
<PAGE> 18
ARON KATZMAN has been a Director since September 1995. Mr. Katzman is
President of New Legends, Inc., a country club\residential community in the St.
Louis area, and Chairman and Chief Executive Officer of Decorating Den of
Missouri, a company engaged in the selling of decorating franchises in
Missouri. Previously, Mr. Katzman was founder and former Director of Medicine
Shoppe, Inc., a franchisor of pharmacies, and Chairman and Chief Executive
Officer of Roman Company, a manufacturer and distributor of fashion costume
jewelry, from 1984 until it was sold in 1994.
STEVE RICHMAN has been a Director since September 1995. Mr. Richman is owner,
Chairman and President of Fabric Resources International. Previously, Mr.
Richman was founder and an officer of Cable Systems USA; an officer at Cellular
Systems USA and USA Mobile Communications, Inc. II.
ITEM 10. EXECUTIVE COMPENSATION
Incorporated by reference from the section of the definitive Proxy Statement
for the 1996 Annual Meeting of Shareholders entitled "Executive Compensation",
which Proxy Statement is expected to be filed in April, 1996.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the section of the definitive Proxy Statement
for the 1996 Annual Meeting of Shareholders entitled "Security Ownership of
Certain Beneficial Owners and Management", which Proxy Statement is expected to
be filed in April, 1996.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the section of the definitive Proxy Statement
for the 1996 Annual Meeting of Shareholders entitled "Executive
Compensation-Certain Transactions", which Proxy Statement is expected to be
filed in April, 1996.
page 18 of 30 pages
<PAGE> 19
PART IV
<TABLE>
<CAPTION>
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(A) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT
<S> <C> <C>
1. Financial Statements
--------------------
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheets as of December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . F-2
Consolidated Statements of Operations for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Notes to Financial Statements for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
2. Exhibits
--------
3.1 Articles of Incorporation (1)
3.2 Amendment to Articles of Incorporation dated August 30, 1989 (2)
3.3 Amended and Restated Code of Regulations (7)
3.5 Amendment to Articles of Incorporation dated January 3, 1992 (7)
3.6 Amendment to Articles of Incorporation dated January 20, 1992 (7)
3.7 Amendment to Articles of Incorporation dated April 9, 1992 (8)
3.8 Amendment to Articles of Incorporation dated June 18, 1993 (10)
3.9 Amendment to Articles of Incorporation dated June 30, 1993 (10)
3.10 Amendment to Articles of Incorporation dated September 22, 1995
3.11 Amendment to Articles of Incorporation dated December 15, 1995
3.12 Amendment to Articles of Incorporation dated February 28,1996
4.1 Specimen of Common Stock Certificate (3)
4.2 Form of 10% Non-Voting Preferred Stock
</TABLE>
page 19 of 30 pages
<PAGE> 20
<TABLE>
<S> <C>
4.3 Form of 14% Convertible Preferred Stock
10.1 Stock Option Agreement between William Tymoszczuk and PhoneTel Technologies, Inc., dated March 1, 1987 (3)
10.4 Stock Incentive Plan for Key Employees, dated May 5, 1987 (1)
10.30 Stock Option Agreement between PhoneTel Technologies, Inc. and Richard E. George (4)
10.31 Amended and Restated Stock Option Agreement between PhoneTel Technologies, Inc. and Jerry H. Burger
dated July 1, 1993 (10)
10.32 Stock Option Agreement dated July 1, 1993 between PhoneTel Technologies, Inc. and Bernard Mandel (10)
10.36 Billing and Collection Services Agreement between Zero Plus Dialing, Inc. and PhoneTel Technologies, Inc.
dated March 5, 1991 (6)
10.40 Advanced Payment Agreement between PhoneTel Technologies, Inc. and Zero Plus Dialing, Inc.
dated March 5, 1991 (6)
10.44 Form of Stock Option Agreement between PhoneTel Technologies, Inc. and DeBartolo, Inc. (5)
10.45 Extension of Stock Option Agreement between PhoneTel Technologies, Inc. and
The Edward J. DeBartolo Corporation (10)
10.55 Separation Agreement dated September 15, 1995 between PhoneTel Technologies, Inc. and Jerry Burger,
together with amendments thereto
10.56 Separation Agreement dated September 15, 1995 between PhoneTel Technologies, Inc. and Bernard Mandel,
together with amendments thereto
10.58 Lease Agreement between PhoneTel Technologies, Inc. and Bankers Leasing Association, Inc.
dated February 12, 1992 (7)
10.60 Registration Rights Agreement dated April 10, 1992 among PhoneTel Technologies, Inc., George H. Henry,
Carl Kirchhoff and Charles Stuart (7)
10.64 Registration Rights Agreement among PhoneTel Technologies, Inc., J & C Resources, Inc.
and Allen Moskowitz (7)
10.68 Master Agreement between PhoneTel Technologies, Inc. and The Edward J. DeBartolo Corporation
dated March 24, 1992 (7)
10.69 Second Restated and Amended National Management Agreement between PhoneTel Technologies, Inc.
and Fun-N-Games Associates dated March 24, 1992 (7)
10.70 Form of Stock Option Agreement and Registration Rights Agreement between PhoneTel Technologies, Inc.
and The Edward J. DeBartolo Corporation (7)
10.71 Stock Option Agreement and Registration Rights Agreement between PhoneTel Technologies, Inc.
and William D. Moses, Jr. dated May 11, 1992 (7)
</TABLE>
page 20 of 30 pages
<PAGE> 21
<TABLE>
<S> <C>
10.71.1 Assignment Agreement between William D. Moses, Jr. and Edward A. Moulton transferring the right to
receive options to acquire 5,000 shares of Common Stock of PhoneTel Technologies, Inc. (11)
10.72 Stock Option Agreement and Registration Rights Agreement between PhoneTel Technologies, Inc.
and George H. Henry dated March 24, 1992 (7)
10.74 Letter Agreement between PhoneTel Technologies, Inc. and The Edward J. DeBartolo Corporation
dated May 6, 1992 (7)
10.75 Amendment No. 1 to Amended and Restated Loan Agreement and Registration Rights Agreement dated
October 23, 1992 by and among PhoneTel Technologies, Inc., J & C Resources, Inc. and Allen Moskowitz (8)
10.77 Lease between PhoneTel Technologies, Inc. and Trembal Construction Co. dba Statler Office Tower
dated April 23, 1992 (8)
10.78 Master Agreement between The Cafaro Company and PhoneTel Technologies, Inc. dated December 23, 1992 (8)
10.79 Stock Option and Restricted Stock Agreement between The Cafaro Company and PhoneTel Technologies, Inc.
dated December 23, 1992 (8)
10.80 Form of Registration Rights Agreement between PhoneTel Technologies, Inc. and The Cafaro Company (8)
10.87 Service Agreement dated July 1, 1992 between Litel Telecommunications Corporation dba LCI International
and PhoneTel Technologies, Inc. (8)
10.88 Amendment No. 2 to Service Agreement dated February 26, 1993 between Litel Telecommunications Corporation
dba LCI International and PhoneTel Technologies, Inc. (8)
10.94 Amended and Restated Purchase Agreement dated March 25, 1994 between PhoneTel Technologies, Inc., Alpha
Pay Phones-IV, L.P., and American Telecommunications Management Corporation (9)
10.94.1 Post-Closing Amendment to Amended and Restated Purchase Agreement dated August 25, 1994 between PhoneTel
Technologies, Inc., Alpha Payphones-IV, L.P., and American Telecommunications Management Corporation (11)
10.95 Purchase Price Promissory Note ($593,119.97) and related Purchase Price Note Security Agreement
dated March 25, 1994 between PhoneTel Technologies, Inc. and Alpha Pay Phones-IV, L.P. (9)
10.95.1 Amendment No. 1 to Purchase Price Note Security Agreement dated August 25, 1994 between PhoneTel
Technologies, Inc. and Alpha Pay Phones-IV, L.P. (11)
10.95.2 Escrow Promissory Note ($300,000.00) dated August 25, 1994 between PhoneTel Technologies, Inc.
and Alpha Pay Phones-IV, L.P. (11)
10.95.3 Contingency Promissory Note ($7,500.00) dated August 25, 1994 between PhoneTel Technologies, Inc.
and Alpha Pay Phones-IV, L.P. (11)
10.96 Assignment and Acceptance Agreement dated August 25, 1994 between PhoneTel Technologies, Inc.,
Alpha Pay Phones-IV, L.P., American Telecommunications Management Corporation and Donovan Leisure
Newton & Irvine (11)
</TABLE>
page 21 of 30 pages
<PAGE> 22
<TABLE>
<S> <C>
10.96.1 Consent Agreement dated October 14, 1994 between PhoneTel Technologies, Inc.,
Alpha Pay Phones-IV, L.P., American Telecommunications Management Corporation,
Donovan Leisure Newton & Irvine and U. S. Long Distance, Inc. (11)
10.97 Assignment and Assumption Agreement dated March 25, 1994 between Alpha Pay Phones-IV. L.P., American
Telecommunications Management Corporation, PhoneTel Technologies, Inc. and U.S. Long Distance, Inc. (9)
10.98 Renewal Promissory Note ($325,750.00) and related Amended and Restated Security Agreement dated
March 25, 1994 between Alpha Pay Phones- IV, L.P., American Telecommunications Management Corporation
and U.S. Long Distance, Inc. (9)
10.99 Renewal Promissory Note ($1,775,788.00) and related Amended and Restated Security Agreement dated
March 25, 1994 between Alpha Pay Phones-IV, L.P. and U.S. Long Distance, Inc. (9)
10.99.1 Letter Agreement among PhoneTel Technologies, Inc., Alpha Pay Phones-IV, L.P. and U.S. Long Distance, Inc.
dated September 29, 1994 (11)
10.100 Promissory Note ($62,500.00) to U.S. Long Distance, Inc. executed on behalf of Alpha Pay Phones-IV, L.P. (9)
10.101 Operator Subscriber Service Agreement dated March 25, 1994 between U.S. Long Distance, Inc. and Alpha
Pay Phones-IV, L.P. (9)
10.102 Non-competition Agreement among PhoneTel Technologies, Inc., Alpha Pay Phones-IV, L.P., American
Telecommunications Management Corporation, Stephen C. Fowler and Ronald T. Huggard dated January 5, 1994 (10)
10.103 Offshore Security Subscription Agreements entered into during March 1994 for approximately 500,000 shares
of PhoneTel Technologies, Inc. Common Stock, placed to non-U. S. persons in an offshore transaction under
Regulation S (10)
10.104 Stock Option Agreement for WEA Investments, Inc. relative to 50,000 shares of Common Stock under option
dated on or about November 30, 1993 (10)
10.105 Stock Option Agreement with Allenstown Investments Limited dated on or about January 10, 1994 relative to
grant of an option to purchase 126,000 shares of PhoneTel Technologies, Inc. Common Stock (10)
10.106 Stock Option Agreement with Douglas Abrams with respect to 45,000 shares of Common Stock of PhoneTel
Technologies, Inc. dated on or about January 10, 1994 (10)
10.106.1 Amendment to Stock Option Agreement dated January 10, 1994 with Douglas Abrams with respect to 45,000
shares of Common Stock of PhoneTel Technologies, Inc. (11)
10.107 Stock Option Agreement with William Moses, Jr. relative to 75,000 shares of Common Stock of PhoneTel
Technologies, Inc. dated on or about January 29, 1993 (10)
10.108 Agreement dated January 5, 1994 between PhoneTel Technologies, Inc. and the Estate of William Moses
relative to loan in the amount of one million dollars and providing for warrants to purchase 100,000
shares and contingent right to acquire warrants to purchase 400,000 shares of PhoneTel Technologies, Inc.
Common Stock (10)
</TABLE>
page 22 of 30 pages
<PAGE> 23
<TABLE>
<S> <C>
10.108.1 Agreement dated September 13, 1994 between PhoneTel Technologies, Inc. and the Estate of William Moses
relative to restructuring the repayment schedule of certain monies owed by PhoneTel Technologies, Inc.
and providing for warrants to purchase 45,000 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.109 Loan Agreement dated December 29, 1993 between PhoneTel Technologies, Inc. and certain lenders identified
therein with respect to borrowing by PhoneTel Technologies, Inc. of $400,000 and the granting of warrants
to purchase, in the aggregate, a total of 62,745 shares of Common Stock by PhoneTel Technologies, Inc. (10)
10.109.1 Letter Agreement dated February 23, 1995 between PhoneTel Technologies, Inc. and certain lenders identified
therein with respect to the extension of the maturity dates of certain promissory notes and the granting of
additional warrants to purchase Common Stock of PhoneTel Technologies, Inc. (11)
10.112 Service Agreement dated January 20, 1994 between Rochester Communications, Inc. and PhoneTel Technologies,
Inc. (10)
10.113 Offshore Security Subscription Agreements entered into during May 1994 for approximately 316,000 shares of
PhoneTel Technologies, Inc. Common Stock, placed to non-U.S. persons in offshore transactions under
Regulation S (11)
10.114 Stock Option Agreement dated March 1, 1995 between PhoneTel Technologies, Inc. and Howard Meister relative
to a grant of an option to purchase 10,000 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.115 Stock Option Agreement dated March 3, 1994 between PhoneTel Technologies, Inc. and George H. Henry relative
to a grant of an option to purchase 39,000 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.116 Stock Option Agreements dated in January 1994 between PhoneTel Technologies, Inc. and George H. Henry
granting options to purchase, in the aggregate, a total of 106,551 shares of PhoneTel Technologies, Inc.
Common Stock (11)
10.117 Stock Option Agreement with George H. Henry dated in August 1993 relative to a grant of an option to
purchase 150,000 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.118 Partial Assignment of Stock Option Agreement between Richard E. George and Gary Berk dated on or about
April 23, 1994 and related Stock Option Agreement with Gary Berk a relative to 65,000 shares of Common
Stock under option dated March 7, 1995 (11)
10.119 Stock Option Agreement with Vincent Mann relative to 5,000 shares of Common Stock under option dated
November 15, 1994 (11)
10.120 Stock Option Agreement with Donald Vella with respect to 20,000 shares of Common Stock of PhoneTel
Technologies, Inc. dated on or about November 15, 1994 (11)
</TABLE>
page 23 of 30 pages
<PAGE> 24
<TABLE>
<S> <C>
10.121 Amendments to Warrant Agreements between PhoneTel Technologies, Inc. and Richard Thatcher dated March 1995,
and related Warrant Agreements thereto, issued pursuant to a Letter Agreement dated February 23, 1995,
relative to the grant of warrants, in the aggregate, to purchase a total of 49,412 shares of PhoneTel
Technologies, Inc. Common Stock (11)
10.122 Warrant Agreements with Richard Thatcher dated February, March and April 1995, issued pursuant to a Letter
Agreement dated February 23, 1995, relative to the grant of warrants, in the aggregate, to purchase a
total of 7,500 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.123 Amendments to Warrant Agreements between PhoneTel Technologies, Inc. and Gerald Waldshutz dated March 1995,
and related Warrant Agreements thereto, issued pursuant to a Letter Agreement dated February 23, 1995,
relative to the grant of warrants, in the aggregate, to purchase a total of 41,177 shares of PhoneTel
Technologies, Inc. Common Stock (11)
10.124 Warrant Agreements with Gerald Waldshutz dated February, March and April 1995, issued pursuant to a Letter
Agreement dated February 23, 1995, relative to the grant of warrants, in the aggregate, to purchase a
total of 6,250 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.125 Amendments to Warrant Agreements between PhoneTel Technologies, Inc. and Steve Richman dated March 1995,
and related Warrant Agreements thereto, issued pursuant to a Letter Agreement dated February 23, 1995,
relative to the grant of warrants, in the aggregate, to purchase a total of 41,177 shares of PhoneTel
Technologies, Inc. Common Stock (11)
10.126 Warrant Agreements with Steve Richman dated February, March and April 1995, issued pursuant to a Letter
Agreement dated February 23, 1995, relative to the grant of warrants, in the aggregate, to purchase a
total of 6,250 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.127 Amendments to Warrant Agreements between PhoneTel Technologies, Inc. and Janice Fuelhart dated March 1995,
and related Warrant Agreements thereto, issued pursuant to a Letter Agreement dated February 23, 1995,
relative to the grant of warrants, in the aggregate, to purchase a total of 49,412 shares of PhoneTel
Technologies, Inc. Common Stock (11)
10.128 Warrant Agreements with Janice Fuelhart dated February, March and April 1995, issued pursuant to a Letter
Agreement dated February 23, 1995, relative to the grant of warrants, in the aggregate, to purchase a
total of 1,250 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.129 Amendments to Warrant Agreements between PhoneTel Technologies, Inc. and Peter Graf dated in March 1995,
and related Warrant Agreements thereto, issued pursuant to a Letter Agreement dated February 23, 1995,
relative to the grant of warrants, in the aggregate, to purchase a total of 148,235 shares of PhoneTel
Technologies, Inc. Common Stock (11)
10.130 Warrant Agreements with Peter Graf dated February, March and April 1995, issued pursuant to a Letter
Agreement dated February 23, 1995, relative to the grant of warrants, in the aggregate, to purchase a
total of 28,750 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.131 Stock Option Agreement dated May 24, 1994 between PhoneTel Technologies, Inc. and the Estate of
William D. Moses, and subsequent assignment thereof dated February 2, 1995, relative to the grant of
an option to purchase 50,000 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.132 Stock Option Agreement dated September 13, 1994 between PhoneTel Technologies, Inc. and the Estate of
William D. Moses, and subsequent assignment thereof dated February 2, 1995, relative to the grant of an
option to purchase 45,000 shares of PhoneTel Technologies, Inc. Common Stock (11)
</TABLE>
page 24 of 30 pages
<PAGE> 25
<TABLE>
<S> <C>
10.133 Warrant Agreement dated March 31, 1994 between PhoneTel Technologies, Inc. and the Estate of William D.
Moses, and subsequent assignment thereof dated February 2, 1995, relative to the grant of warrants to
purchase 200,000 shares of PhoneTel Technologies, Inc. Common Stock (11)
10.134 Agreement and Plan of Merger dated September 22, 1995, together with Exhibits attached thereto, by and
among PhoneTel Technologies, Inc. PhoneTel II, Inc., and World Communication, Inc. (12)
10.135 Amendment to Agreement and Plan of Merger dated September 22, 1995 by and among PhoneTel Technologies, Inc.,
PhoneTel II, Inc., and World Communications, Inc. (12)
10.136 Agreement and Plan of Merger dated October 16, 1995, together with Exhibits attached thereto, by and among
PhoneTel Technologies, Inc., PhoneTel II, Inc., and Public Telephone Corporation. (13)
10.137 Agreement and Plan of Merger dated November 22, 1995, between PhoneTel Technologies, Inc. and International
Pay Phones, Inc., South Carolina corporation, and all amendments thereto. (14)
10.138 Agreement and Plan of Merger dated November 22, 1995, between PhoneTel Technologies, Inc. and International
Pay Phones, Inc., Tennessee corporation, and all amendments thereto. (14)
10.139 Share Purchase Agreement dated as of November 16, 1995, between PhoneTel Technologies, Inc. and Paramount
Communications Systems, Inc., and all amendments thereto. (14)
10.140 Credit Agreement dated as of March 15, 1996 among PhoneTel Technologies, Inc., Various Lenders and
Internationale Nederlanden (U.S.) Capital Corporation. (14)
10.141 Security Agreement dated as of March 15, 1996 among PhoneTel Technologies, Inc., Public Telephone
Corporation, World Communications, Inc., Northern Florida Telephone Corporation and Paramount
Communications Systems, Inc. and Internationale Nederlanden (U.S.) Capital Corporation as Agent for
itself and certain other lenders. (14)
10.142 Warrant Purchase Agreement dated as of March 15, 1996 between PhoneTel Technologies, Inc. and
Internationale Nederlanden (U.S.) Capital Corporation and Cerberus Partners, L.P. (14)
10.143 Registration Rights Agreement dated as of March 15, 1996 between PhoneTel Technologies, Inc. and
Internationale Nederlanden (U.S.) Capital Corporation and Cerberus Partners, L.P. (14)
10.144 Warrant Certificate dated as of March 15, 1996 granting Internationale Nederlanden (U.S.) Capital
Corporation the right to purchase 102,412 shares of Series A Special Convertible Preferred Stock of
PhoneTel Technologies, Inc.
10.145 Warrant Certificate dated as of March 15, 1996 granting Cerberus Partners, L.P. the right to purchase
102,412 shares of Series A Special Convertible Preferred Stock of PhoneTel Technologies, Inc.
10.146 Form of Warrant issued on March 15, 1996 to persons listed on Schedule A to this exhibit.
</TABLE>
page 25 of 30 pages
<PAGE> 26
<TABLE>
<S> <C>
10.147 Operator Service Subscriber Agreement dated as of February 29, 1996 by and between Intellicall Operator
Services, Inc. and PhoneTel Technologies, Inc.
10.148 Intellistar License Agreement dated as of February 29, 1996 by and between Intellicall, Inc. and PhoneTel
Technologies, Inc.
10.149 Relay Services Agreement dated as of February 29, 1996 by and between Intellicall, Inc. and PhoneTel
Technologies, Inc.
10.150 Voting and Proxy Agreement dated as of September 22, 1995 by and among World Communications, Inc. and
certain shareholders of PhoneTel Technologies, Inc. together with an Amendment thereto.
10.151 Voting and Proxy Agreement dated as of October 16, 1995 by and among PhoneTel Technologies, Inc. and the
former shareholders of Public Telephone Corporation.
10.152 Voting Agreement dated as of March 15, 1996 by and among PhoneTel Technologies, Inc. and Jeff Huffman,
Alton L. Huffman, Nickey Maxey and Hugh Collins.
10.153 Voting Agreement dated as of March 15, 1996 by and among PhoneTel Technologies, Inc. and Nickey Maxey and
Hugh Collins.
10.154 Voting Agreement dated as of March 15, 1996 by and among PhoneTel Technologies, Inc. and the former
shareholders of Paramount Communications Systems, Inc.
10.155 Voting and Proxy Agreement dated as of February 21, 1996 by and among PhoneTel Technologies, Inc. and the
former shareholders of World Communications, Inc.
10.156 Employment Agreement dated May 1, 1995 between PhoneTel Technologies, Inc. and Daniel J. Moos
10.157 Stock Option Agreement dated April 1, 1995 between PhoneTel Technologies, Inc. and Daniel J. Moos
21 Subsidiaries of PhoneTel Technologies, Inc.
27 Financial Data Schedule
(1) Incorporated by reference from the Company's Registration Statement on Form S-18 (Registration No. 33-16962C),
filed with the Securities and Exchange Commission on September 1, 1987.
(2) Incorporated by reference from Amendment No. 1 to the Company's Registration Statement on Form S-1, Registration
No. 33-30428, filed September 27, 1989.
(3) Incorporated by reference from Amendment No. 1 to the Company's Registration Statement on Form S-18 (Registration
No. 33-16962C), filed with the Securities and Exchange Commission on October 30, 1987.
(4) Incorporated by reference from Amendment No. 2 to the Company's Registration Statement on Form S-1, Registration
No. 33-30428, filed October 27, 1989.
(5) Incorporated by reference from the Company's Form 10-K for the year ended December 31, 1989.
</TABLE>
page 26 of 30 pages
<PAGE> 27
<TABLE>
<S> <C>
(6) Incorporated by reference from the Company's Form 10-K for the year ended December 31, 1990.
(7) Incorporated by reference from the Company's Form 10-K for the year ended December 31, 1991.
(8) Incorporated by reference from the Company's Form 10-KSB for the year ended December 31, 1992.
(9) Incorporated by reference from the Company's Form 8-K dated March 25, 1994.
(10) Incorporated by reference from the Company s Form 10-KSB for the year ended December 31, 1993.
(11) Incorporated by reference from the Company's Form 10-KSB for the year ended December 31, 1994.
(12) Incorporated by reference from the Company's Form 8-K dated September 22, 1995.
(13) Incorporated by reference from the Company's Form 8-K dated October 16, 1995.
(14) Incorporated by reference from the Company's Form 8-K dated March 15, 1996.
</TABLE>
(B) REPORT ON FORM 8-K
The following reports on Form 8-K were filed by the Company during the
fourth quarter of 1995.
Form 8-K dated September 22, 1995:
(a) Financial Statements of Business Acquired:
1. World Communications, Inc.
Consolidated Financial Statements with
Supplemental Material Years ended December
31, 1994 and 1993
2. World Communications, Inc.
Consolidated Financial Statements and
Schedules
Years ended December 31, 1993 and 1992
(c) Other exhibits:
1. Agreement and Plan of Merger
2. Amendment to Agreement and Plan of Merger
page 27 of 30 pages
<PAGE> 28
Form 8-K/A amending Form 8-K dated September 22, 1995:
(b) Pro Forma Financial Information:
1. World Communications, Inc. and PhoneTel
Technologies, Inc. Unaudited Pro Forma
Combined Condensed Balance Sheet at June 30,
1995.
2. World Communications, Inc. and PhoneTel
Technologies, Inc. Unaudited Pro Forma
Combined Condensed Income Statement for the
Year Ended December 31, 1994 and Six Months
Ended June 30, 1995.
Form 8-K/A-1 amending Form 8-K dated September 22, 1995::
(a) Financial Statements of Business Acquired:
1. World Communications, Inc. - Unaudited
Consolidated Balance Sheet at June 30, 1995.
2. World Communications, Inc. - Unaudited
Consolidated Statements of Income for the Six
Months ended June 30, 1995 and 1994 and the
Three Months ended June 30, 1995 and 1994.
3. World communications, Inc. - Unaudited
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1995 and 1994.
4. World Communications, Inc. Unaudited Notes
to the Financial Statements for the period
ended June 30, 1995.
(b) Pro Forma Financial Formation:
1. World Communications, Inc. and PhoneTel
Technologies, Inc. Unaudited Pro Forma
Combined Condensed Balance Sheet at June 30,
1995.
2. World Communications, Inc. and PhoneTel
Technologies, Inc. Unaudited Pro Forma
Combined Condensed Income Statement for the
Year Ended December 31, 1994 and Six Months
Ended June 30, 1995.
page 28 of 30 pages
<PAGE> 29
Form 8-K dated October 16, 1995:
(a) Financial Statements of Business Acquired:
1. Public Telephone Corporation Financial Statements
Years Ended June 30, 1995 and 1994
2. Public Telephone Corporation Financial Statements
Years Ended June 30, 1994 and 1993
3. Public Telephone Corporation Financial Statements
Year Ended June 30, 1993
(c) Other Exhibits:
1. Agreement and Plan of Merger
Form 8-K/A-1 amending Form 8-K dated October 16, 1995:
(a) Financial Statements of Business Acquired:
1. Public Telephone Corporation - Amended
Financial Statements Years Ended June 30,
1995 and 1994. (On December 26, 1995, Geo.
S. Olive & Co., LLC, Public Telephone's
auditors reissued the audited financial
statements on Public Telephone Corporation
for the Years Ended June 30, 1995 and 1994,
due to an addition error on the Statement of
Income.)
2. Public Telephone Corporation - Unaudited
Balance Sheets at September 30, 1995.
3. Public Telephone Corporation - Unaudited
Consolidated Statements of Income for the
Three Months ended September 30, 1995 and
1994.
4. Public Telephone Corporation - Unaudited
Consolidated Statements of Cash Flows for the
Three Months Ended September 30, 1995 and
1994.
5. Public Telephone Corporation - Unaudited
Notes to the Financial Statements for the
period ended September 30, 1995.
(b) Pro Forma Financial Information:
1. Public Telephone Corporation and PhoneTel
Technologies, Inc. Unaudited Pro Forma
Combined Condensed Balance Sheet at September
30, 1995.
2. Public Telephone Corporation and PhoneTel
Technologies, Inc. Unaudited Pro Forma
Combined Condensed Income Statements for the
Year Ended December 31, 1994, and Six Months
Ended September 30, 1995.
(C) EXHIBITS
The response to this portion of Item 13 is submitted as a separate
section of this report.
page 29 of 30 pages
<PAGE> 30
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
PHONETEL TECHNOLOGIES, INC.
April 12, 1996 By: /s/ Peter G. Graf
------------------------------
Peter G. Graf
Chairman of the Board and Chief
Executive Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ Peter G. Graf Chairman of the Board, April 12, 1996
- ----------------- Chief Executive Officer,
Peter G. Graf and Director
/s/ Stuart Hollander Director April 12, 1996
- -------------------- Vice Chairman
Stuart Hollander
/s/ Daniel J. Moos Executive Vice President April 12, 1996
- ------------------ Chief Financial Officer,
Daniel J. Moos and Treasurer
/s/ Joseph Abrams Director April 12, 1996
- -----------------
Joseph Abrams
/s/ George Henry Director April 12, 1996
- ----------------
George Henry
Director April 12, 1996
- ----------------
Aron Katzman
/s/ Steve Richman Director April 12, 1996
- -----------------
Steve Richman
</TABLE>
page 30 of 30 pages
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
March 29, 1996
To the Board of Directors
and Shareholders of
PhoneTel Technologies, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 13(a)(1) on page 19 present fairly, in all material
respects, the financial position of PhoneTel Technologies, Inc. and its
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their cash flows for the years then ended, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Cleveland, Ohio
F - 1
<PAGE> 32
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31
-----------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 713,462 $ 478,756
Accounts receivable, net of allowance for doubtful
accounts of $40,000 and $44,000, respectively 901,508 562,147
Other current assets 185,634 164,331
----------- -----------
Total current assets 1,800,604 1,205,234
Property and equipment, net 14,099,111 5,294,839
Intangible assets, net 11,592,157 3,429,121
Other assets 1,425,384 228,707
----------- -----------
$28,917,256 $10,157,901
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,010,412 $ 1,814,760
Current portion of obligation under capital leases 288,972 94,343
Accounts payable 2,772,306 2,514,110
Accrued expenses 1,610,100 814,656
Obligations relating to contractual settlements
and restructuring charges 962,338 --
----------- -----------
Total current liabilities 6,644,128 5,237,869
Long-term debt 9,318,501 2,063,896
Obligations under capital leases 3,243,965 208,269
Commitments and contingencies -- --
Total shareholders' equity 9,710,662 2,647,867
----------- -----------
$28,917,256 $10,157,901
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 33
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1995 1994
------------ ------------
<S> <C> <C>
REVENUES:
Coin calls $ 12,130,189 $ 8,421,237
Operator services 3,776,501 5,319,138
Commissions 2,681,172 1,856,482
Other 130,121 269,230
------------ ------------
18,717,983 15,866,087
------------ ------------
COSTS AND EXPENSES:
Line and transmission charges 5,475,699 4,456,509
Location commissions 3,467,626 3,391,190
Other operating expenses 4,452,032 3,238,252
Depreciation and amortization 4,383,049 2,236,269
Selling, general and administrative 3,200,742 2,831,775
Billing and collection 858,230 1,026,420
Contractual settlements and restructuring charges 2,169,503 --
------------ ------------
24,006,881 17,180,415
------------ ------------
Loss from operations (5,288,898) (1,314,328)
Interest expense (836,911) (388,215)
Interest income 16,112 7,421
------------ ------------
NET LOSS ( 6,109,697) ( 1,695,122)
Less: Preferred stock dividend requirement (309,668) (291,980)
------------ ------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS ($6,419,365) ($ 1,987,102)
============ ============
Net loss per common share ($3.29) ($1.35)
============ ============
Weighted average number of shares 1,950,561 1,470,188
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 34
<TABLE>
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
7% Cumulative 8% Cumulative 10% Cumulative 10% Cumulative
Convertible Redeemable Redeemable Redeemable Nonvoting Redeemable
Preferred Stock Preferred Stock Preferred Stock Preferred Stock
--------------------- -------------------- ------------------- -----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
------- -------- ------ -------- ------ ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1994 2,500 $200,000 12,200 $981,084 1,496 $1 - -
Net loss for year - - - - - - - -
Issuance of
additional Common
Stock - - - - - - - -
Private sales of
Common Stock - - - - - - - -
Exercise of warrants
and options - - - - - - - -
Dividends on 7%
and 8% Preferred
Stock - - - - - - - -
Financing Costs - - - - - - - -
----- -------- ------ -------- ----- -- ------- ----------
Balance at
December 31, 1994 2,500 200,000 12,200 981,084 1,496 1 0 0
Net loss for year - - - - - - - -
Issuance of
Common Stock
for services - - - - - - - -
Private sales of
Common Stock - - - - - - - -
Exercise of warrants
and options - - - - - - - -
Dividends on 7%
and 8% Preferred
Stock - - - - - - - -
Financing Costs - - - - - - - -
Acquisition of World
Communications - - - - - - 530,534 $5,305,340
Conversion of debt
to equity - - - - - - - -
Acquisition of Public
Telephone Corp. - - - - - - - -
Warrants issued
with debt
Acquisition escrow
deposits - - - - - - - -
----- -------- ------ -------- ----- -- ------- ----------
Balance at
December 31, 1995 2,500 $200,000 12,200 $981,084 1,496 $1 530,534 $5,305,340
===== ======== ====== ======== ===== == ======= ==========
<CAPTION>
Common Stock Additional Total
---------------------- Paid-in Accumulated Shareholders'
Shares Amount Capital Deficit Equity
--------- ------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1994 1,284,449 $12,845 $6,552,473 ($5,556,807) $2,189,596
Net loss for year - - - (1,695,122) (1,695,122)
Issuance of
additional Common
Stock 8,389 84 276,414 - 276,498
Private sales of
Common Stock 136,111 1,361 1,473,638 - 1,474,999
Exercise of warrants
and options 87,931 879 552,581 - 553,460
Dividends on 7%
and 8% Preferred
Stock - - - (51,875) (51,875)
Financing Costs 5,278 53 (99,742) - (99,689)
--------- ------- ----------- ------------ ----------
Balance at
December 31, 1994 1,522,158 15,222 8,755,364 (7,303,804) 2,647,867
Net loss for year - - - (6,109,697) (6,109,697)
Issuance of
Common Stock
for services 91,383 914 528,532 - 529,446
Private sales of
Common Stock 472,056 4,720 2,010,067 - 2,014,787
Exercise of warrants
and options 8,333 83 34,917 - 35,000
Dividends on 7%
and 8% Preferred
Stock - - - (40,375) (40,375)
Financing Costs - - (83,212) - (83,212)
Acquisition of World
Communications 402,500 4,025 2,712,852 - 8,022,217
Conversion of debt
to equity 30,231 303 137,375 - 137,678
Acquisition of Public
Telephone Corp. 304,879 3,049 2,054,902 - 2,057,951
Warrants issued
with debt 349,000 349,000
Acquisition escrow
deposits 23,810 238 149,762 - 150,000
--------- ------- ----------- ------------ ----------
Balance at
December 31, 1995 2,855,350 $28,554 $16,649,559 ($13,453,876) $9,710,662
========= ======= =========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 35
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Net loss ($6,109,697) ($1,695,122)
Adjustments to reconcile net loss to net
cash flow from operating activities:
Depreciation and amortization 4,383,049 2,236,269
Stock and stock awards issued 529,449 76,498
Accretion of debt 55,103 --
Loss on disposal of assets 298,626 --
Changes in assets and liabilities:
Accounts receivable (64,873) 32,355
Other current assets (47,121) (116,591)
Accounts payable (151,008) 1,975,628
Accrued expenses (434,999) (128,821)
Obligations relating to contractual
settlements and restructuring charges 962,338 --
----------- -----------
(579,133) 2,380,216
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of Alpha Pay Phones-IV, L.P. -- (2,334,215)
Acquisition of World Communications, Inc. (696,006) --
Acquisition of Public Telephone Corporation 24,191 --
Cash acquisition deposits (950,000) --
Purchases of intangible assets (427,409) (363,853)
Purchases of other assets (67,559) (215,382)
Purchases of property and equipment (237,228) (300,852)
----------- -----------
(2,354,011) (3,214,302)
----------- -----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from debt issuances 3,132,500 1,400,000
Principal payments on borrowings (1,890,850) (2,202,608)
Proceeds from issuance of preferred and
common stock and other 2,014,787 1,674,999
Dividends paid (40,375) (21,875)
Debt financing costs -- (75,000)
Equity financing costs (83,212) (99,689)
Proceeds from warrant and option exercises 35,000 553,460
----------- -----------
3,167,850 1,229,287
----------- -----------
Increase in cash 234,706 395,201
Cash at beginning of period 478,756 83,555
----------- -----------
Cash at end of period $ 713,462 $ 478,756
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 36
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1995 1994
---------- ----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE:
Interest paid during the year $ 673,906 $ 385,311
========== ==========
NON-CASH TRANSACTIONS:
Common stock (402,500 shares) and
preferred stock (530,534 shares) issued for
acquisition of World Communications, Inc. $8,022,217 --
========== ==========
Common stock (304,879 shares) issued for
acquisition of Public Telephone Corporation $2,057,951 --
========== ==========
Common stock issued for services (91,383
shares in 1995 and 8,389 shares in 1994) $ 529,446 $ 76,498
========== ==========
Common stock issued in payment of debt and
interest (30,231 shares in 1995) $ 137,678 --
========== ==========
Common stock issued for acquisition deposit
(23,809 shares in 1995) $ 150,000 --
========== ==========
Common stock (5,278 shares) issued
for financing costs in 1994 -- $ 99,689
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 37
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
PhoneTel Technologies, Inc. and subsidiaries (the "Company") operates in
the telecommunications industry specializing in the business segment that
encompasses the installation of private pay telephones on a revenue
sharing basis, offering operator assisted long distance services, and
national and regional account management. The Company was incorporated
on December 24, 1984, and began its private pay telephone operations in
August 1985. In April 1988, the Company commenced reselling operator
assisted long distance services.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. Intercompany
transactions and balances have been eliminated in consolidation.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. The Company capitalizes all
labor and overhead costs related to installing telephones and depreciates
those costs over the life of the telephone or the length of the location
contract, whichever is shorter. Depreciation for financial reporting and
tax purposes is computed using the straight-line method and accelerated
methods, respectively, over the estimated useful lives of the assets
commencing when the equipment is installed or placed in service.
INTANGIBLE ASSETS
Intangible assets include location contracts, non-compete agreements,
costs associated with obtaining operating certification in various states
and capitalized sales commissions. Intangible assets are amortized over
the life of the respective location contract, non-compete and sales
commission agreements, and five years for state operating certifications.
F - 7
<PAGE> 38
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS
The Company periodically evaluates potential impairment of long-lived
assets. A loss relating to an impairment of assets occurs when the
aggregate of the estimated undiscounted future cash inflows, (including
any salvage values, less estimated cash outflows) to be generated by an
asset is less than the asset's carrying value. Impairment is measured
based on the difference between the present value of the discounted
expected future cash flows and the asset's carrying value. No impairment
was recorded in 1995 or 1994.
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" which establishes criterion for when impairment
should be evaluated, how an asset is determined to be impaired and the
method of calculating the impairment loss. The methods required by SFAS
No. 121 are consistent with the methods currently being used by the
Company to review assets for impairment. Accordingly, the adoption of
the Statement, which is required for the Company in 1996, is not expected
to have a significant impact on the Company.
REVENUE RECOGNITION
Revenues from coin calls, reselling operator assisted long distance
services, and national and regional account management are recognized in
the period in which the customer places the related call.
EARNINGS PER SHARE
Earnings per share amounts are computed based on the weighted average
number of shares actually outstanding plus shares that would be
outstanding assuming exercise of dilutive stock options and warrants.
The number of shares that would be issued from the exercise of stock
options and warrants would be reduced by the number of shares that could
have been purchased from the proceeds at the average market price of the
Company's stock.
Fully diluted earnings per share amounts would be determined in the same
manner as primary earnings per share except that the period-end stock
price was used and the number of shares was increased assuming conversion
of the 7% Cumulative Convertible Redeemable Preferred. (The 7%
Cumulative Convertible Redeemable Preferred was redeemed on March 15,
1996.) Due to the Company's net loss, the impact of the assumed
exercise of the stock options and warrants and the assumed conversion of
the 7% Cumulative Convertible Redeemable Preferred was anti-dilutive and
therefore were not included in the determination of the weighted average
shares outstanding.
F - 8
<PAGE> 39
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The weighted average number of common shares outstanding has been
adjusted to reflect the one for six (1:6) reverse stock split which was
effective December 26, 1995.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents for purposes of
the statement of cash flows.
INCOME TAXES
The Company utilizes the asset and liability method to account for income
taxes whereby deferred tax assets and liabilities are recognized to
reflect the future tax consequences attributable to temporary differences
between the financial reporting basis of the existing assets and
liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to be recovered
and settled. The effect of a change in tax rates on deferred tax assets
and liabilities is recognized in the period in which the change is
enacted.
CONTRACTUAL SETTLEMENTS AND RESTRUCTURING CHARGES
Contractual settlements and restructuring charges consist primarily of
costs associated with the settlement of contractual obligations to
certain former officers of the Company and related legal fees, and the
write-off of selected assets in connection with the outsourcing of the
operator service center, and consulting and legal fees incurred for
changes to the operations of the Company.
RECLASSIFICATIONS
Certain amounts relating to 1994 have been reclassified to conform to the
current year presentation. The reclassifications have had no impact on
total assets, shareholders' equity or net loss as previously reported.
2. FINANCIAL CONDITION
In a transaction consummated on March 15, 1996, the Company borrowed
$30,530,954 (out of a total credit facility commitment of $37,250,000)
from Internationale Nederlanden (U.S.) Capital Corporation and one other
lender (collectively know as "ING") to meet its anticipated working
capital obligations, consolidate debt, redeem preferred stock, and
complete the acquisitions of two pay phone companies, IPP and Paramount.
The Company has available under the credit facility $6,700,000 to fund
future acquisitions and for general working capital purposes. (See Note
3 and Note 15.)
F - 9
<PAGE> 40
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
2. FINANCIAL CONDITION (CONTINUED)
Management believes, but cannot assure, that cash flow from operations,
the proceeds from the financing discussed above and other financial
alternatives will be sufficient to allow the Company to sustain its
operations, meet its current obligations and maintain some modest sales
growth.
3. ACQUISITIONS AND MERGERS
On October 16, 1995, the Company consummated its acquisition of the
outstanding common stock of Public Telephone Corporation (an Indiana
corporation) ("Public") in a transaction accounted for as a purchase.
The Company acquired current assets of $54,742, approximately 1,200
installed telephones, assumed approximately $2,800,000 in debt and
outstanding liabilities of Public and issued 224,879 unregistered shares
of the Company's Common Stock to the shareholders of Public. In
connection with the acquisition, the Company entered into five year
non-compete agreements with two of Public's former owners which require
both cash payments and the issuance, in the aggregate, of 80,000 shares
of the Company's Common Stock.
On September 22, 1995, the Company consummated its merger with World
Communications, Inc. (a Missouri corporation) ("World") in a transaction
accounted for as a purchase. The Company acquired current assets of
$256,571, 3,237 installed telephones, assumed approximately $6,900,000 in
debt and outstanding liabilities of World and issued 402,500 unregistered
shares of the Company's Common Stock and 530,534 shares of the Company's
10% Non-Voting Redeemable Preferred Stock. In connection with the
acquisition, the Company entered into two year non-compete and employment
agreements with three of World's former officers. These non-compete and
employment agreements require, in the aggregate, payment of $625,000 over
a two year period.
On March 25, 1994, the Company acquired substantially all of the assets
of Alpha Pay Phones-IV L.P. ("Alpha"). The acquired assets included
2,155 installed telephones for a cash purchase price of $2,334,215, a
note payable to sellers of $1,100,620 and assumption by the Company of
outstanding Alpha liabilities of $2,164,038.
Set forth below is the Company's unaudited pro forma condensed statement
of operations data as though the Public and World acquisitions had
occurred at the beginning of 1995 and 1994 and as though the Alpha
acquisition had occurred at the beginning of 1994.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Total revenues $ 26,976,221 $ 27,138,550
Net loss ( 10,516,464) ( 4,771,759)
Net loss applicable to common
shareholders ( 11,356,666) ( 5,594,273)
Net loss per common share ( $5.82) ( $2.57)
</TABLE>
F - 10
<PAGE> 41
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
The unaudited pro forma results above are not necessarily indicative of
either actual results of operations that would have occurred had the
acquisitions been made at the beginning of 1995 or 1994, or of future
results. The pro forma statement of operations data includes adjustments
related to amortization of intangible assets, interest expense on
borrowings used to finance the acquisition and the weighted average
number of common shares outstanding after giving effect to the
acquisitions.
ACQUISITIONS PENDING AT DECEMBER 31, 1995 AND COMPLETED ON MARCH 15, 1996
On March 15, 1996, the Company completed the acquisition of the
outstanding common stock of International Pay Phones, Inc. (a South
Carolina company) and International Pay Phones, Inc. (a Tennessee
company) (collectively "IPP"), companies affiliated through common
ownership and management. The Company acquired 2,101 installed phones
for a purchase price of $3,496,487 in cash, 555,589 unregistered shares
of the Company's Common Stock, 5,453 shares of 14% Preferred Stock
(immediately convertible into 54,530 shares of Common Stock), and
warrants to purchase 117,785 shares of the Company's Common Stock at a
nominal exercise price per share. Additionally, the Company assumed
approximately $1,757,000 in liabilities, of which $1,551,796 was repaid
by the Company on March 15, 1996. The cash purchase price included three
five year non-compete agreements, with an aggregate value of $60,000,
with three of IPP's former officers. The acquisition will be recorded as
a purchase and the difference between the fair value of the tangible
assets acquired and the total purchase price will be recorded as an
increase to intangibles and amortized over the life of the acquired
location contracts which is estimated to be 36 to 60 months.
On March 15, 1996, the Company completed a Share Purchase Agreement with
Paramount Communications Systems, Inc. (a Florida corporation)
("Paramount"). Under the terms of the Agreement, the Company acquired
2,528 installed phones for a cash purchase price of $9,618,553, 8,333
shares of 14% Preferred Stock (immediately convertible into 83,330 shares
of Common Stock), warrants to purchase 179,996 shares of the Company's
Common Stock at a nominal exercise price per share, and the Company
assumed outstanding liabilities of approximately $733,000, of which
$693,446 was repaid on March 15, 1996. The purchase price included a
five year consulting and non-compete agreement, valued at $50,000, with
one of Paramount's former officers. The acquisition will be recorded as a
purchase and the difference between the fair value of the tangible assets
acquired and the total purchase price will be recorded as an increase to
intangibles and amortized over the life of the acquired location
contracts which is estimated to be 36 to 60 months.
F - 11
<PAGE> 42
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
4. ACCOUNTS RECEIVABLE
The Company has billing, collection and advance payment agreements with
Zero Plus Dialing, Inc. ("ZPDI") which provide for, among other things,
the sale of certain eligible accounts to ZPDI. These receivables result
from the Company reselling operator assisted long distance services.
Included in accounts receivable at December 31, 1995 and 1994 is
approximately $78,007 and $160,496, respectively, due from ZPDI.
Approximately $3,800,000 and $5,300,000 of receivables were sold pursuant
to these agreements during 1995 and 1994, respectively, of which
approximately $594,076 and $676,755 have not been collected by ZPDI at
December 31, 1995 and 1994, respectively.
5. PROPERTY AND EQUIPMENT
As of December 31, property and equipment consisted of the following:
<TABLE>
<CAPTION>
Estimated
Useful Lives December 31,
(in years) 1995 1994
---------- ---- ----
<S> <C> <C> <C>
Telephone boards, enclosures and cases 3-7 $ 16,386,987 $ 6,155,690
Operator service equipment 5 - 1,065,389
Furniture, fixtures and other equipment 3-5 989,300 1,329,155
Leasehold improvements 2-5 231,466 413,177
--------------- --------------
17,607,753 8,963,411
Less - accumulated depreciation ( 3,508,642) ( 3,668,572)
--------------- --------------
$ 14,099,111 $ 5,294,839
=============== ==============
</TABLE>
Depreciation expense, including amortization of assets under capital
leases, was $1,846,453 and $1,179,137 for the years ended December 31,
1995 and 1994, respectively.
6. INTANGIBLE ASSETS
As of December 31, intangible assets consisted of the following:
<TABLE>
<CAPTION>
Amortization
Period 1995 1994
-------------- ------------- ----------
<S> <C> <C> <C>
Costs incurred in the acquisition
of installed phones (See Note 3) 36-60 months $ 12,362,884 $ 3,026,387
Non-compete agreements 24-60 months 1,513,765 400,000
State operating certifications 60 months 466,796 260,113
Capitalized sales commissions 96-120 months 1,040,242 997,574
------------ -----------
15,383,687 4,684,074
Less: accumulated amortization ( 3,791,530) ( 1,254,953)
------------ -----------
$ 11,592,157 $ 3,429,121
============ ===========
</TABLE>
Amortization of intangible assets amounted to $2,536,596 and $1,057,132
for the years ended December 31, 1995 and 1994, respectively.
F - 12
<PAGE> 43
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- ------------------------------------------------------------------------------
7. LONG-TERM DEBT
As of December 31, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Note payable to two third party investors repaid on
March 15, 1996. The principal due at the
contractual maturity of April 1997 was $1,200,000. $ 906,105 -
Notes payable to bank repaid on March 15, 1996. 2,340,000 -
Notes payable due on demand to five former World
stockholders repaid on March 15, 1996. 625,000 -
Notes payable to former stockholders of Public
due on April 16, 1996 with interest at 9% 293,226 -
on March 15, 1996 $211,285 was repaid.
Non-compete notes payable to two former officers of
Public repaid on March 15, 1996. 203,480 -
Two notes payable to a service provider repaid
on March 15, 1996. 1,401,872 $ 1,852,628
Term notes payable to a vendor in monthly installments
ranging from $31,107 to $47,330 including interest
at rates varying from 10% to 13.75%. The vendor
has a security interest in the underlying phones. On
March 15, 1996, the Company repaid $225,000,
refinanced the remaining balance owed at 15% interest
and the vendor released its security interest in the
goods sold. 1,066,428 694,611
Promissory notes payable to Alpha repaid on
March 15, 1996. 500,756 751,848
Promissory notes payable to a group of five investors
repaid in 1995. - 300,000
Promissory note payable to a vendor in monthly
installments of $318 through $535 at an
interest rate of 8.75%. 120,617 -
Promissory note payable in monthly installments of
$12,500 through January 1996 at an interest rate
of 8%. 124,614 147,721
</TABLE>
F - 13
<PAGE> 44
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
7. LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Notes payable to directors and shareholders at an
imputed interest rate of prime plus 5%, repaid
on March 15, 1996. 1,732,500 -
Notes payable to two investors repaid on
March 15, 1996. 200,000 -
Note payable to a vendor repaid on
March 15, 1996. 201,101 -
Note payable to a consultant. On March 15, 1996,
the consultant accepted 12,500 shares of the
Company's Common Stock and $50,000 in full
settlement of the debt. 125,000 -
Non-compete obligation to a former owner of World
payable in bi-weekly installments of $6,000 at an
imputed interest at 9%. 288,844 -
Various notes payable to vendors in monthly
installments ranging from $283 to $3,538 with
interest rates ranging from 6.9% to 10.4% 199,370 131,848
------------ ------------
10,328,913 3,878,656
Less current maturities ( 1,010,412) ( 1,814,760)
------------ -----------
$ 9,318,501 $ 2,063,896
============ ============
</TABLE>
Following are maturities of long-term debt for each of the next five
years based on the terms of the ING credit facility (See Note 15):
<TABLE>
<CAPTION>
Amount
------
<S> <C>
1996 $ 1,010,412
1997 640,913
1998 1,001,576
1999 7,674,596
2000 1,416
--------------
$ 10,328,913
=============
</TABLE>
On March 15, 1996, $9,214,468 of outstanding debt was repaid.
F - 14
<PAGE> 45
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
8. LEASES
OPERATING LEASES
The Company leases its corporate offices and other locations, office
equipment and vehicles under noncancellable operating leases expiring at
various times through 1999.
Future minimum noncancellable payments under operating leases are as
follows:
<TABLE>
<S> <C>
1996 $329,352
1997 303,658
1998 96,721
1999 54,473
2000 0
</TABLE>
Rent expense under all operating leases was $363,929 and $334,984 for the
years ended December 31, 1995 and 1994, respectively.
CAPITAL LEASES
During 1995, as part of the acquisition of World and Public, the Company
assumed capital leases between various lessors and World and Public.
World and Public leased their installed phones. The allocation of the
purchase price increased the historical book value of the phones to their
current fair value. On March 15, 1996, the Company paid off these leases
with the proceeds received in the refinancing of its debt.
During 1994, the Company entered into lease financing agreements for the
acquisition of computer equipment. Each agreement has a term of 36
months with interest ranging from 8.6% to 9.7% per year.
Assets recorded under capital leases at December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Telephone boards, enclosures and cases $ 9,429,049 $ 111,349
Operator service equipment 0 405,570
Office equipment 170,058 110,442
----------- -----------
9,599,107 627,361
Less accumulated amortization (616,778) (246,198)
----------- -----------
$ 8,982,329 $ 381,163
=========== ===========
</TABLE>
F - 15
<PAGE> 46
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
8. LEASES (CONTINUED)
On March 15, 1996, the Company repaid $3,243,965 of the outstanding
obligations under capital leases. The following are maturities of
long-term debt (which replaced obligations under capital leases) based on
the terms of the ING credit facility (See Note 15):
<TABLE>
<S> <C>
1996 $ 288,972
1997 112,545
1998 357,371
1999 2,774,049
2000 -
-----------
$ 3,532,937
===========
</TABLE>
9. INCOME TAXES
No provisions for income tax were required and no income taxes were paid
for the years ended December 31, 1995 or 1994 because of operating losses
generated by the Company. Deferred tax assets and (liabilities) at
December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Federal net operating loss carryforward $ 5,342,374 $ 1,863,867
Depreciation and amortization 1,017,406 273,287
Bad debts 13,600 17,160
Other - 5,538
------------ ------------
Gross deferred tax assets 6,373,380 2,159,852
Accruals - (117,000)
Deferred sales commissions (125,066) (130,217)
Valuation allowance on deferred tax assets (6,248,314) (1,912,635)
------------- ------------
Net deferred tax assets $ 0 $ 0
============= ============
</TABLE>
A valuation allowance has been provided against the net deferred tax
assets since management cannot predict, based on the weight of available
evidence, that it is more likely than not that such assets will be
ultimately realized. The net operating loss carryforwards, if not
utilized, will expire between the years 2002-2010. Internal Revenue Code
Section 382 provides for the limitation on the use of net operating loss
carryforwards in years subsequent to significant changes in ownership.
As a result of the Company's Initial Public Offering in 1988 and certain
other transactions, including acquisitions, changes in ownership have
occurred resulting in significant limitations on the use of net operating
loss carryforwards. The extent of limitations as a result of significant
changes in ownership has not been determined by the Company.
F - 16
<PAGE> 47
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
10. SHAREHOLDERS' EQUITY
As of December 31, shareholders' equity consisted of the following:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
10% Cumulative Nonvoting Redeemable Preferred Stock
($10 stated value - 550,000 shares authorized;
530,534 shares issued and outstanding at
December 31, 1995) $ 5,305,340 -
10% Cumulative Redeemable Preferred Stock
($1,000 stated value - 3,880 shares authorized;
1,496 shares issued and outstanding at
December 31, 1995 and 1994, redeemed
on March 15, 1996) 1 $ 1
8% Cumulative Redeemable Preferred Stock
($100 stated value - 16,000 shares authorized;
12,200 shares issued and outstanding at
December 31, 1995 and 1994, redeemed
on March 15, 1996) 981,084 981,084
7% Cumulative Convertible Redeemable Preferred Stock
($100 stated value - 2,500 shares authorized, issued
and outstanding at December 31, 1995 and 1994,
redeemed on March 15, 1996) 200,000 200,000
Common Stock
($0.01 par value - 22,500,000 shares authorized;
2,855,350 and 1,522,158 shares issued and
outstanding at December 31, 1995 and 1994) 28,554 15,222
Additional paid-in capital 16,649,559 8,755,364
Accumulated deficit (13,453,876) (7,303,804)
----------- -----------
$ 9,710,662 $ 2,647,867
=========== ===========
</TABLE>
PREFERRED STOCK
The Company's 10% Cumulative Non-Voting Redeemable Preferred Stock ("10%
Non-Voting Preferred") has a liquidation preference of $10 per share.
Under the terms of the 10% Non-Voting Preferred, which was issued in
connection with the acquisition of World Communications, Inc. by the
Company, from December 1996 through November 1997 the Company can be
required by each holder of the 10% Non-Voting Preferred to repurchase
their shares for $30 per share. At the time of the World acquisition,
the Company entered into a Voting and Proxy Agreement ("the Agreement")
with certain common stockholders of the Company ("Holders") representing,
in the aggregate, over 50% of the then outstanding Common Stock of the
Company. The Agreement has also been signed by the holders of
F - 17
<PAGE> 48
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
10. SHAREHOLDERS' EQUITY (CONTINUED)
the Nominal Value Warrants and Series A Preferred such that common
shareholders representing over 50% of the Common Stock have signed the
Agreement. Under the terms of the Agreement, the Holders agreed to
call a special meeting of the shareholders by June 1996 at which time
the Holders will propose that each share of the 10% Non-Voting
Preferred be made convertible into 1.67 shares of the Company's Common
Stock (a total of 885,992 shares). Such number of shares had a fair
value at the date of acquisition approximately equal to the stated
value of the 10% Non-Voting Preferred. Under the terms of the
Agreement, the Holders have agreed to vote in favor of the proposal.
Once the 10% Non-Voting Preferred is convertible, the Company cannot
be required to redeem the 10% Non-Voting Preferred. No dividends were
paid on the 10% Non-Voting Preferred in 1995 and no dividends are
payable or accrue for nine months from date of issuance or if the
stock is converted to Common Stock. In addition, certain holders of
the 10% Non-Voting Preferred and the Company entered into a separate
Voting and Proxy Agreement which provides that such holders shall vote
the shares of 10% Non-Voting Preferred held by them to approve the
foregoing grant of conversion rights.
The Company's 10% Cumulative Redeemable Preferred Stock ("10%
Cumulative Preferred") was issued to a significant customer in 1992
(see Note 12). No dividends were paid on the 10% Cumulative Preferred
in 1995 or 1994 and all outstanding shares of the 10% Cumulative
Preferred were redeemed on March 15, 1996.
All outstanding shares of the Company's 8% Cumulative Redeemable
Preferred Stock ("8% Preferred") were redeemed on March 15, 1996.
Dividends paid on the 8% Preferred were $36,000 and $30,000 in 1995
and 1994, respectively, and are reflected in the accumulated deficit.
All outstanding shares of the Company's 7% Cumulative Convertible
Redeemable Preferred Stock ("7% Preferred") were redeemed on March 15,
1996. Dividends paid on the 7% Preferred were $4,375 and $21,875 in
1995 and 1994, respectively, and are reflected in the accumulated
deficit.
PREFERRED DIVIDENDS
On December 31, 1995 and 1994, the Company had dividends in arrears
payable to preferred shareholders in the aggregate amount of $826,548
and $546,055, respectively. On March 15, 1996, the 10% Cumulative
Preferred, 8% Preferred and the 7% Preferred Stock and dividends in
arrears were either paid or converted to a new class of preferred
stock (See Note 15).
F - 18
<PAGE> 49
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
10. SHAREHOLDERS' EQUITY (CONTINUED)
SALES AND ISSUANCE OF UNREGISTERED COMMON STOCK
Sales and issuances of the Company's unregistered Common Stock during
1995 were as follows:
<TABLE>
<CAPTION>
Number of Average Price
Shares Issued Per Share
------------- ---------
<S> <C> <C>
Private sales to officers and directors 286,643 $ 4.77
Private sales to creditors of the Company 133,332 4.50
Private sales to affiliates of the Company 38,888 4.63
Issued in connection with acquisitions 731,189 6.74
Issued to third parties for services 69,895 6.01
Issued to directors for services 21,488 5.09
Issued to directors upon conversion
of debt and accrued interest 26,065 4.51
Issued to third party creditors upon conversion
of debt and accrued interest 4,166 4.80
Issued for exercising stock options 8,333 4.20
Other issuances 13,193 5.20
--------------
1,333,192
=============
</TABLE>
Sales to directors, creditors and affiliates of the Company were made at
prices per share below the quoted market values (based on prices
calculated by the Company's investment advisor) of the Company's Common
Stock on the dates of the transactions. No expense was recognized by the
Company as the Company believes that the discount associated with these
sales reflects the impact on quoted market value of issuing unregistered
shares.
F - 19
<PAGE> 50
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
-------------------------------------------------------------------------------
10. SHAREHOLDERS' EQUITY (CONTINUED)
STOCK WARRANT ACTIVITY
Stock warrant activity during 1995 and 1994 was as follows:
<TABLE>
<CAPTION>
Number
of Shares Exercise Price
---------- --------------
<S> <C> <C>
Balance, December 31, 1993 59,033 $ 6.00 - $ 9.90
Granted 88,236 7.50 - 15.75
Exercised ( 35,000) 6.00 - 8.70
Cancelled -
---------------
Balance, December 31, 1994 112,269 7.50 - 15.75
Granted:
To the Company's investment advisor 166,666 6.00
To officers of the Company 47,583 5.70 - 6.00
To lenders 277,884 5.70 - 6.00
---------------
Total Granted 492,133 5.70 - 6.00
Exercised -
Cancelled (24,051) 9.90
---------------
Balance, December 31, 1995 580,351 $ 5.70 - $ 15.75
===============
</TABLE>
The estimated fair value of the warrants on the date of the grant for the
warrants issued to the investment advisor has been included in the
determination of World's purchase price. The fair value of warrants
issued to lenders has been recorded as an adjustment to interest expense.
The difference between the intrinsic value and the exercise price of the
warrants issued to officers of the Company was not material. All
warrants outstanding at each period end are exercisable.
STOCK OPTION ACTIVITY
Options are granted by the Company at the discretion of the Board of
Directors to key employees, officers and directors, and generally are
exercisable immediately upon issuance, have terms of three to five years
and are issued with exercise prices at or sightly below quoted market
value of the Company's Common Stock on the date of grant. The amount of
compensation expense recorded by the Company during 1995 and 1994
relating to stock option activity was not material.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock
Based Compensation." The Statement, which is effective for the Company
beginning in 1996, encourages companies to record stock options issued to
both employees and nonemployees at the fair value on the date of grant.
As an alternative to fair value recording, the Statement permits
companies to continue to use the methods outlined in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees"
F - 20
<PAGE> 51
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- -------------------------------------------------------------------------------
10. SHAREHOLDERS' EQUITY (CONTINUED)
but requires that options issued to non-employees be recorded at the fair
value on the date of grant and requires pro forma disclosure of the
impact on the company as if the suggested method had been used. The
Company has not yet determined how it will adopt the Statement.
Information relating to stock option activity during 1995 and 1994 was as
follows:
<TABLE>
<CAPTION>
Number
of Shares Option Price
---------- ------------
<S> <C> <C>
Balance, December 31, 1993 416,304 $ 3.00 - $ 15.78
Granted 97,758 4.50 - 19.50
Exercised ( 52,930) 4.50 - 6.00
Cancelled ( 25,000) 5.22 - 9.00
-----------
Balance, December 31, 1994 436,132 3.00 - 19.50
Granted 168,373 6.00 - 6.00
Exercised ( 8,333) 3.00 - 6.00
Cancelled ( 124,427) 6.00 - 18.78
-----------
Balance, December 31, 1995 471,745 3.00 - 19.50
===========
Exercisable, December 31, 1995 435,243 3.00 - 19.50
===========
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
EMPLOYMENT AND SEVERANCE AGREEMENTS
On March 15, 1996, the Company settled the amounts owed under the
September 15, 1995 Separation Agreements with two of its former officers.
Under the terms of the Separation Agreements, the Company was obligated
to pay the former officers the remainder of their employment agreements
and the Company agreed to accelerate the vesting of options for 194,027
shares of the Company's Common Stock at $6.00 per share.
As part of the merger with World, the Company executed employment
agreements with three former employees of World. The former Chairman of
World will remain as an advisor to the Company for 24 months and receive
$125,000 in year one and $135,000 in year two plus certain benefits.
The former President of World has become an officer of the Company and
will receive $110,000 for the first year of his contract and $120,000 in
the second year, plus other customary benefits. The former Vice
President and Secretary of World has become an officer of the Company and
will receive a base salary of $65,000 for the first year of her contract
and $70,000 for the second year, plus other customary benefits.
F - 21
<PAGE> 52
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
-----------------------------------------------------------------------------
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
On May 1, 1995, the Company entered into a three year employment
agreement with two one year renewal options, with an officer of the
Company, whereby he will receive compensation of $95,000, $105,000 and
$120,000, during the terms of the agreement and $130,000, and $140,000
during the option periods of employment, plus other customary benefits.
This agreement provides for early contract termination and a "change in
control" provision which requires severance pay equal to 150% of the
normal salary which would have been payable over the next three years.
CONTINGENCIES
The Company, in the course of its normal operations, is subject to
regulatory matters, disputes, claims and lawsuits. In management's
opinion, any such outstanding matters, of which the Company has
knowledge, have been reflected in the financial statements and are
covered by insurance or would have no material adverse effect on the
Company's financial position, results of operations or cash flows.
12. MAJOR CUSTOMER
The Edward J. DeBartolo Corporation and its affiliates (collectively
"DeBartolo"), accounted for 15% and 18% of the Company's total revenues
for the years ended December 31, 1995 and 1994, respectively. The 10%
Cumulative Preferred, which was issued in connection with the DeBartolo
management agreements, was recorded at $1 based on the Company's
determination that the benefits associated with the agreements should be
recorded in the statement of operations as earned. On March 15, 1996,
all of the outstanding shares of the 10% Cumulative Preferred were
redeemed by the Company.
13. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Effective January 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and effective
January 1, 1994, the Company adopted SFAS No. 112, "Employers' Accounting
for Postemployment Benefits" (collectively "the Statements"). The
Statements establish accounting standards for employers who offer
postretirement or postemployment benefits and require that the estimated
cost of these benefits be accrued over the service lives of the covered
employers. The Company does not offer postretirement or postemployment
benefits to its employees and, therefore, the adoption of the Statements
did not have a material impact on the Company's financial statements.
F - 22
<PAGE> 53
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- ------------------------------------------------------------------------------
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating fair value disclosures for financial instruments:
CASH AND CASH EQUIVALENTS. The carrying amount reported in the balance
sheet approximates fair value.
LONG-TERM DEBT. The estimated fair value of long-term debt is determined
using interest rates that could be available to the Company for similar
instruments with similar terms.
Estimated fair values of the Company's financial instruments at December
31, 1995 are as follows:
<TABLE>
<CAPTION>
Carrying Fair
Amount Value
--------------- ------------
<S> <C> <C>
Cash and cash equivalents $ 713,462 $ 713,462
Long-term debt 10,328,913 10,803,472
Obligations under capital leases 3,532,937 3,741,869
</TABLE>
15. SUBSEQUENT EVENTS
CHANGES IN STOCKHOLDER'S EQUITY, DEBT REFINANCING AND COMPLETION OF
ACQUISITIONS
On February 23, 1996, the Company created three new classes of preferred
stock: (i) Series A Special Convertible Preferred Stock, $0.20 par
value, $0.20 Stated Value, 250,000 authorized shares, with each share
immediately convertible into 20 shares of Common Stock, and non-voting,
("Series A Preferred"); (ii) Series B Special Convertible Preferred
Stock, $0.20 par value, $120 Stated Value, 250,000 authorized shares,
with each share immediately convertible into 20 shares of Common Stock,
and non-voting ("Series B Preferred"); and (iii) 14% Convertible
Cumulative Redeemable Preferred Stock, without par value, $60 Stated
Value, non-voting, 200,000 authorized shares, and with each share
immediately convertible into 10 shares of Common Stock ("14% Preferred").
Each share of the 14% Preferred is entitled to receive a quarterly
dividend of 0.035 shares of 14% Preferred.
In a transaction consummated on March 15, 1996, the Company borrowed
$30,530,954 (out of a total credit facility commitment of $37,250,000)
from Internationale Nederlanden (U.S.) Capital Corporation and one other
lender (collectively know as "ING"). The Company has available under the
credit facility $6,700,000 to fund future acquisitions and for general
working capital purposes. The Company used the funds to complete the
Paramount and IPP acquisitions, to repay all outstanding long-term debt
and capital lease obligations which had a secured interest in the
Company's installed phones, to redeem the 10% Cumulative Preferred, 7%
Preferred and 8% Preferred and to pay related transaction fees. The ING
credit facility requires monthly interest payments at prime plus 5% and
contains various
F - 23
<PAGE> 54
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------
15. SUBSEQUENT EVENTS (CONTINUED)
covenants restricting the Company's ability to pay dividends or incur
additional debt, among other conditions, and also contains financial
covenants requiring minimum net worth, working capital and earnings
before interest, depreciation and amortization among other covenants. The
credit facility also contains a subjective acceleration clause which
states that in the event of a material adverse change in the business, as
determined by ING, ING can call the debt at its discretion. ING has
waived their right to exercise this subjective acceleration clause
through April 1, 1997. Principal payments commence September 1997 and
continue quarterly through June 1999 at which time the remaining
principal balance is due. The amount of principal payments is contingent
upon numerous factors, including the borrowing base and cash flow of the
Company. Based on amounts borrowed at March 15, 1996, the estimated
principal payment in September 1997 would be $534,000, increasing to
$884,000 quarterly for 1998. All of the Company's installed phones are
pledged as collateral to the ING credit facility.
The majority of the ING credit facility (currently $29,000,000) can be
converted into Series B Preferred at the ratio of 833 shares for each
$100,000 in outstanding debt and interest. Additionally, ING received
warrants to purchase 204,824 shares of Series A Preferred at an exercise
price of $0.20 per share. Each share of Series A Preferred and Series B
Preferred is convertible into 20 shares of Common Stock. The estimated
fair value of the warrants on the date of grant will be recorded as
interest expense over the term of the ING credit facility. The Company
has estimated the annual non-cash interest expense to be in excess of
$3,000,000.
On March 15, 1996, concurrent with the ING transaction, the Company
redeemed the 10% Cumulative Preferred, the 8% Preferred, and the 7%
Preferred. The redemption price was $1,117,371 and 34,434 shares of 14%
Preferred. In the aggregate, $6,475,011 of the Company's outstanding
obligations, including portions of the purchase price for the pending
acquisitions, was liquidated by issuing 107,918 shares of 14% Preferred.
The approximately $2,000,000 excess of the redemption price of the
preferred issues redeemed over their aggregate carrying value will be
recorded as a reduction of earnings available to common shareholders
during the first quarter of 1996.
On March 15, 1996, warrants to purchase 2,018,946 shares of Common Stock
at a nominal exercise price per share ("Nominal Value Warrants") were
issued in conjunction with the IPP and Paramount acquisitions, redemption
of the 10% Cumulative Preferred, 8% Preferred, and the 7% Preferred, and
conversion of certain debt of the Company to the 14% Preferred. The
warrants expire on March 13, 2001.
F - 24
<PAGE> 55
PHONETEL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
- ------------------------------------------------------------------------------
15. SUBSEQUENT EVENTS (CONTINUED)
As of March 15, 1996, the Company has reserved 14,366,022 shares of
Common Stock for issuance under the following scenarios: (1) conversion
of $29,000,000 of ING outstanding debt into 241,667 shares of Series B
Preferred Stock which is then immediately convertible into 4,833,333
shares of Common Stock; (2) exercise of warrants to purchase 204,824
shares of Series A Preferred Stock at $0.20 per share, immediately
convertible into 4,096,480 shares of Common Stock; (3) conversion of
107,918 shares of 14% Preferred into 1,079,179 shares of Common Stock;
(4) conversion, upon Shareholder approval, of 530,534 shares of 10%
Non-Voting Preferred into 885,992 shares of Common Stock; (5) exercise
of 2,018,942 Nominal Value Warrants; (6) exercise of 980,351 warrants at
prices ranging from $5.70 to $15.75 per share; and (7) exercise of
471,745 stock options at prices ranging from $3.00 to $19.50 per
share.
F - 25
<PAGE> 1
EXHIBIT 3.10
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
PHONETEL TECHNOLOGIES, INC.
The undersigned, Daniel J. Moos, Senior Vice President, and Tammy
Martin, Assistant Secretary of PhoneTel Technologies, Inc., an Ohio corporation
(the "Company"), do certify that pursuant to the provisions of Ohio Revised
Code Section 1701.70, the Board of Directors of the Company did adopt, at a
duly called meeting of the Board of Directors held on September 21, 1995 at
which a quorum was present, the following resolution of amendment to the
Company's Articles of Incorporation:
RESOLVED, that pursuant to the authority granted in Article FOURTH (b)
of the Company's Articles of Incorporation, the proposed form of
amendment to Article FOURTH (j) of the Articles of Incorporation of
the Company amending the express terms of the 10% Non-Voting Preferred
Stock, containing the terms and provisions set forth on Exhibit A
attached hereto and presented at this meeting, is hereby unanimously
approved, and the Senior Vice President and Assistant Secretary, are
authorized and directed to execute and file with the Secretary of
State of Ohio the amendment and any Certificate of Amendment necessary
or required in connection therewith.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
22 day of September, 1995.
By: /s/ Daniel J. Moos
------------------------------
Daniel J. Moos,
Senior Vice President
By: /s/ Tammy Martin
------------------------------
Tammy Martin,
Assistant Secretary
<PAGE> 2
EXHIBIT A
TO
CERTIFICATE OF AMENDMENT
OF
PHONETEL TECHNOLOGIES, INC.
Article FOURTH of the Articles of Incorporation of the Company shall
be amended by adding thereto the following subparagraph (j):
(j) Out of the Company's existing authorized but unissued shares of
Preferred Stock (as described above in subparagraph (b) of this
Article FOURTH), five hundred and fifty thousand (550,000) shares of a
new series of 10% Preferred Stock, Without Par Value, $10 Stated
Value, Cumulative, hereinafter designated as the "10% Non-Voting
Preferred Stock", which shall have the following designations, powers,
preferences and rights, and shall be subject to the following
qualifications, limitations and restrictions:
1. DESIGNATION OF STOCK . The new 10% Preferred Stock, Without Par
Value, $10 Stated Value, Cumulative, shall bear the designation "10%
Non-Voting Preferred Stock".
2. NUMBER OF SHARES. The maximum number of shares of 10% Non-Voting
Preferred Stock shall be 550,000.
3. DIVIDENDS. Holders of record of shares of 10% Non-Voting Preferred
Stock shall be entitled to receive, when and as declared by the Board
of Directors out of funds legally available for the payment of
dividends, cumulative dividends at the annual rate of $1.00 per share,
and no more, payable in cash in equal quarterly payments. Such
dividends shall be payable on the last business day of each March,
June, September and December (hereinafter referred to as a "Dividend
Payment Date") commencing in the first of such months occurring nine
(9) months subsequent to the effective date of the merger (the
"Merger") of World Communications, Inc. with and into PhoneTel II,
Inc. (the "Merger Date") to persons who are holders of record on the
immediately preceding March 15, June 15, September 15, or December 15,
as the case may be (a "Record Date"). Such dividends with respect to
any share of 10% Non-Voting Preferred Stock shall accrue (whether or
not declared) from the date of issue thereof.
1
<PAGE> 3
So long as any of the 10% Non-Voting Preferred Stock is outstanding,
the Company will not declare or pay or set apart for payment any
dividends (other than a dividend in Common Stock or in any other class
of stock ranking junior to the 10% Non-Voting Preferred Stock both as
to dividends and upon liquidation) or make any other distribution on
any class of Company stock ranking junior to the 10% Non-Voting
Preferred Stock either as to dividends or upon liquidation and will
not redeem, purchase or otherwise acquire for value, or set apart
money for any sinking or other analogous fund for the redemption or
purchase of, any shares of any such junior class unless all dividends
on the 10% Non-Voting Preferred Stock for all Dividend Payment Dates
prior to or concurrent with the payment with respect to any such
dividend, distribution, redemption, purchase or acquisition as to such
junior class (in any such case, a "Junior Payment"), and, if the
Junior Payment does not occur on a Dividend Payment Date for the 10%
Non-Voting Preferred Stock, for the next succeeding Dividend Payment
Date, shall have been paid. The foregoing notwithstanding, the
holders of fifty percent (50%) or more of the outstanding
10% Non-Voting Preferred Stock many approve any redemption or purchase
of any of the securities listed above. Further, the Company may
purchase its Common Stock for purposes of fulfilling payment of
employee benefits or for which the Company has agreements effective
prior to the issuance of the 10% Non-Voting Preferred Stock.
4. LIQUIDATION. The shares of 10% Non-Voting Preferred Stock shall be
preferred over the shares of Common Stock and any other series of
Preferred Stock other than the 10% Preferred Stock, $1,000.00 Stated
Value, Cumulative and Redeemable ("10% Preferred Stock"), the 8%
Preferred Stock, $10.00 Stated Value, Cumulative and Redeemable ("8%
Preferred Stock"), and the 7% Convertible Preferred Stock, $10.00
Stated Value, Cumulative and Redeemable ("7% Preferred Stock"), as to
assets so that in the event of any liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary, the holders of
the 10% Non-Voting Preferred Stock shall be entitled to receive out of
the assets of the Company available for distribution to its
stockholders, whether from capital, surplus or earnings, before any
distribution is made to holders of shares of Common Stock or any other
series of Preferred Stock, but only after distribution is made to the
holders of the 12% Preferred Stock, the 10% Preferred Stock, the 8%
Preferred Stock and the 7% Preferred Stock, an amount equal to $10.00
per share plus all dividends (whether or not earned or declared)
accrued and unpaid on the shares of 10% Non-Voting Preferred Stock to
the date payment is made. If, upon any liquidation, dissolution or
winding up of the Company, the assets of the Company, or proceeds
thereof, distributable among the holders of 10% Non-Voting Preferred
Stock are insufficient to pay in full the preferential amount
aforesaid, then such
2
<PAGE> 4
assets, or proceeds thereof, shall be distributable among such holders
ratably in accordance with the respective amount which would be
payable on such shares if all amounts payable thereon were payable in
full.
For the purposes of this paragraph 4 neither the voluntary sale,
lease, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all the
property or assets of the Company, not the consolidation or merger of
the Company with one or more other companies, shall be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary,
unless such voluntary sales, lease, conveyance, exchange or transfer
shall be in connection with a plan of liquidation, dissolution or
winding up of the Company.
5. PUT RIGHTS. Any holder of 10% Non-Voting Preferred Stock which is
not convertible into common shares by its express terms may, at any
time subsequent to the date which of 15 months after the Merger Date
but prior to the date which is 26 months after the Merger Date, put
all, but not less than all, of his, her or its shares of 10%
Non-Voting Preferred Stock to the Company by giving written notice of
the exercise of such put right to the Company and delivery of the
shares of 10% Non-Voting Preferred Stock held by such holder to the
Company (the "Put Notice"). Within ten (10) days of the Company's
receipt of the Put Notice, the Company shall purchase all shares of
10% Non-Voting Preferred Stock so delivered to the Company at a price
of $30.00 per share.
6. VOTING. Except as provided by law, the holders of shares of 10%
Non-Voting Preferred Stock shall have no voting rights whatsoever.
3
<PAGE> 1
EXHIBIT 3.11
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS
TO THE ARTICLES OF INCORPORATION
OF
PHONETEL TECHNOLOGIES, INC.
The undersigned, Daniel J. Moos, Senior Vice President, and
Tammy Martin, Secretary of PhoneTel Technologies, Inc., an Ohio corporation
(the "Company"), do hereby certify that the shareholders of the Company did
adopt by the affirmative vote of the holders of shares entitled to exercise 59%
of the voting power of the Company, at a duly called meeting of the
shareholders held on June 30, 1995 at which a quorum was present, the following
resolution of amendment to the Company's Articles of Incorporation:
RESOLVED, that the proposed form of amendment to the Articles of
Incorporation of the Company by the addition of new Article FOURTH (k)
providing for the combination of the common stock of the Company,
containing the terms and provisions set forth on Exhibit A attached
hereto and presented at this meeting, is hereby approved, and the
Senior Vice President and the Secretary are authorized and directed to
execute and file with the Secretary of State of Ohio the amendment and
any Certificate of Amendment necessary or required in connection
therewith.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
15th day of December, 1995.
By: /s/ Daniel J. Moos
-------------------------------
Daniel J. Moos,
Senior Vice President
By: /s/ Tammy Martin
------------------------------
Tammy Martin,
Secretary
<PAGE> 2
EXHIBIT A
TO
CERTIFICATE OF AMENDMENT
OF
PHONETEL TECHNOLOGIES, INC.
Article FOURTH of the Articles of Incorporation of the Company shall
be amended by adding thereto the following subparagraph (k):
(k) COMBINATION OF COMMON STOCK. Effective as of the close of business on
the date a certificate of amendment adding this subparagraph (k) to
the Corporation's Amended Articles of Incorporation is filed with the
Secretary of the State of Ohio (the "Effective Time"), each six shares
of Common Stock outstanding immediately before the Effective Time
("Old Common Shares") shall be changed into one share of Common Stock
(a "New Common Share"). The changing of Old Common Shares into New
Common Shares shall be referred to as the "Share Combinations". The
number of shares of Common Stock authorized to be issued by the
Corporation shall not be affected by the Share Combination. Each
share of Common Stock at the Effective Time shall have a par value of
$.01 per share. In lieu of fractional New Common Shares, each holder
of an Old Common Share who otherwise would be entitled to receive a
fractional New Common Share will be entitled to receive cash in an
amount equal to the market value of each Old Common Share that would
have been converted into a fraction of a new Common Share but for this
sentence, upon surrender of the Certificate for such Old Common Share.
For this purpose, the market value of each Old Common Share shall be
the unweighted average of the closing price of a share of Common Stock
for each of the ten business days ending at the Effective Time.
Promptly after the Effective Time, notice shall be given to the
holders of record of Common Stock at the Effective Time to surrender
their certificates for Common Stock for cancellation and issuance of
new certificates and/or the payment of cash in lieu of fractional
shares, as the case may be pursuant to the Share Combination. The
appropriate officers of the Corporation are hereby empowered to adopt
rules and regulations concerning the surrender and payment for
fractional shares resulting from the Share Combination
<PAGE> 1
EXHIBIT 3.12
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
PHONETEL TECHNOLOGIES, INC.
The undersigned, Peter G. Graf, Chairman of the Board, and Tammy
Martin, Secretary, of PhoneTel Technologies, Inc., an Ohio corporation (the
"Company"), do certify that pursuant to the provisions of Ohio Revised Code
Section 1701.70, the Board of Directors of the Company did adopt, at a duly
called meeting of the Board of Directors held on February 23, 1996 at which a
quorum was present, the following resolution of amendment to the Company's
Articles of Incorporation:
RESOLVED, that pursuant to the authority granted in Article
FOURTH (b) of the Company's Articles of Incorporation, the
proposed form of amendment to the Articles of Incorporation of
the Company providing for the fixing of the express terms and
the issuance of three new classes of preferred stock,
designated respectively as the "Series A Special Convertible
Preferred Stock" and the "14% Convertible Preferred Stock",
containing the terms and provisions set forth on Exhibit A
attached hereto and presented at this meeting, is hereby
unanimously approved, and the Chairman of the Board and
Secretary are authorized and directed to execute and file with
the Secretary of State of Ohio the amendment and any
Certificate of Amendment necessary or required in connection
therewith.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
28th day of February, 1996.
By: /s/ Peter G. Graf
__________________________
Peter G. Graf,
Chairman of the Board
By: /s/ Tammy Martin
__________________________
Tammy Martin,
Secretary
<PAGE> 2
EXHIBIT A
---------
TO
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
PHONETEL TECHNOLOGIES, INC.
Article FOURTH of the Articles of Incorporation of the Company shall
be amended by adding thereto the following subparagraphs (l), (m) and (n):
(l) Out of the Company's existing authorized but unissued shares
of Preferred Stock (as described above in subparagraph (b) of this
Article FOURTH), two hundred and fifty thousand (250,000) shares of a
new series of Convertible Preferred Stock, $0.20 par value, $0.20
stated value, hereinafter designated as the "Series A Special
Preferred Stock", which shall have the following designations, powers,
preferences and rights, and shall be subject to the following
qualifications, limitations and restrictions:
(i) DESIGNATION OF STOCK. The new series of Convertible Preferred
Stock, $0.20 par value, $0.20 stated value, shall bear the
designation "Series A Special Preferred Stock".
(ii) NUMBER OF SHARES. The maximum number of shares of Series A
Special Preferred Stock shall be 250,000.
(iii) DIVIDENDS. If the Company pays a dividend or makes a
distribution to the holders of its Common Stock of any
securities (other than capital stock for which an adjustment
in the Conversion Rate (as defined in subparagraph (l) (iv))
is made pursuant to subparagraph (l) (vii)) or property
(including cash or securities of other companies) of the
Company, or any rights, options or warrants to subscribe for
or purchase securities (other than Common Stock of the
Company) or property (including securities of other companies)
of the Company, then, simultaneously with the payment of such
dividend or the making of such distribution, and as a
condition precedent to its right to do so, it will pay or
distribute to the holders of record of Series A Special
Preferred Stock an
1
<PAGE> 3
amount of property (including, without limitation, cash)
and/or securities (including, without limitation, securities
of other companies) of the Company as would have been received
by such holders had they exercised their conversion rights and
converted such shares of Series A Special Preferred Stock into
Common Stock immediately prior to the record date (or other
applicable date) used for determining stockholders of the
Company entitled to receive such dividend or distribution.
Anything in subparagraph (l) (vii) to the contrary
notwithstanding, no adjustment to the Conversion Rate Shall be
made for any distribution of Convertible Securities (as
defined in subparagraph (l) (vii) (C)) or rights, options or
warrants to purchase such Convertible Securities of the
Company to holders of Series A Special Preferred Stock
pursuant to the provisions of this subparagraph (l) (iii).
(iv) CONVERSION. Each share of Series A Special Preferred Stock
shall be convertible, at the option of the holder, at any time
and from time to time into twenty (20) shares of Common Stock,
$.01 par value, of the Company ("Common Stock"); PROVIDED,
HOWEVER, that the number of whole and fractional shares (the
"Conversion Rate") of Common Stock issuable upon conversion of
each share of Series A Special Preferred Stock shall be
adjusted as provided in subparagraph (l) (vii); PROVIDED,
FURTHER, HOWEVER, that shares of Series A Special Preferred
Stock may be converted into shares of Common Stock only after
the holder of such shares of Series A Special Preferred Stock
shall have certified to the Company that it is not a "bank
holding company" or a "subsidiary" of a "bank holding company'
within the meaning of Section 4 of the Bank Holding Company
Act of 1954, as amended, and Regulation Y promulgated
thereunder, or one of the following shall have occurred: (1)
the BONA FIDE sale to any purchaser (including, without
limitation, an underwriter) of such shares of Series A Special
Preferred Stock (x) pursuant to a registration statement
declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"),
covering the offer and sale of the Company's common stock in a
BONA FIDE public offering, or (y) pursuant to Rules 144 and
144A promulgated under the Act, or in a
2
<PAGE> 4
public distribution pursuant to Regulation A of the General
Rules and Regulations under the Act; (2) the BONA FIDE sale
to any purchaser of such shares of Series A Special Preferred
Stock in a transaction not involving a sale of the Company's
common stock to the public, provided that such purchaser does
not immediately after such transaction hold shares of Common
Stock (including any shares converting to Common Stock in
accordance herewith) equaling two percent (2%) or more of the
then-outstanding shares of Common Stock; or (3) the receipt
by the Company of (y) a staff opinion, ruling or other written
advice from the Board of Governors of the Federal Reserve
System, or from the appropriate Federal Reserve Bank, or (z)
an opinion of counsel experienced in bank regulatory matters,
in each case to the effect that such shares of Series A
Special Preferred Stock may be converted into shares of Common
Stock without violation of Section 4 of the Bank Holding
Company Act of 1954, as amended, and Regulation Y promulgated
thereunder. Each conversion of shares of Series A Special
Preferred stock into shares of Common Stock permitted by this
subparagraph (l) (iv) shall be effected by the surrender of
the certificate or certificates representing the shares to be
converted at the principal office of the Company (or such
other office or agency of the Company as the Company may
designate by notice in writing to the holder or holders of the
Series A Special Preferred Stock) at any time during normal
business hours, together with a written notice by the holder
of such Series A Special Preferred Stock stating that such
holder desires to convert the shares, or a stated number of
the shares, of Series A Special Preferred Stock represented by
such certificate or certificates into Common Stock and that
such conversion is permitted in accordance with this
subparagraph (l) (iv). Upon receipt of such statement, the
Company shall be obligated to issue such Common Stock promptly
and without further inquiry. Such conversion shall be deemed
to have been effected as of the close of business on the date
on which such certificate or certificates have been
surrendered and such notice has been received, and at such
time the rights of the holder of the converted Series A
Special Preferred Stock shall cease and the person or persons
in whose name or names the certificate
3
<PAGE> 5
or certificates for shares of Common Stock are to be issued
upon such conversion shall be deemed to have become the holder
or holders of record of the shares of Common Stock represented
thereby. Promptly after such surrender and the receipt of
such written notice, the Company shall promptly issue and
deliver in accordance with the surrendering holder's
instructions (i) the certificate or certificates for the
Common Stock issuable upon such conversion and (ii) a
certificate representing any Series A Special Preferred Stock
which was represented by the certificate or certificates
delivered to the Company in connection with such conversion
but which was not converted. Notwithstanding anything to the
contrary set forth in this subparagraph (l) (iv). in the event
that a holder of the Company's Warrants to purchase Series A
Special Preferred Stock (the "Warrants") desires to exercise
such holder's Warrants, in whole or in part, and immediately
thereafter convert in whole or in part the shares of Series A
Special Preferred Stock issuable upon such exercise, such
shares of Series A Special Preferred Stock shall be deemed
converted in accordance with a written notice by the holder of
such Warrants stating that such holder desires such Series A
Special Preferred Stock issuable upon exercise of such
Warrants to be converted immediately upon issuance, without
any requirement that the Company issue a certificate or
certificates to represent such Series A Special Preferred
Stock or any requirement that such holder surrender any such
certificate of certificates. The issuance of certificates for
Common Stock shall be made without charge to the holders of
such shares for any stamp, transfer or issuance tax in respect
thereof or other cost incurred by the Company in connection
with such conversion and the related issuance of Common Stock.
The Company shall not close its books against the transfer of
Common Stock or of Common Stock issued or issuable upon
conversion of Series A Special Preferred Stock in any manner
which would interfere with the timely conversion of Series A
Special Preferred Stock.
(v) LIQUIDATION. The shares of Series A Special Preferred Stock
shall be preferred over the shares of Common Stock and any
other series of Preferred Stock other than the Company's
4
<PAGE> 6
10% Preferred Stock, without par value, $10 Stated Value,
Cumulative (the "10% Preferred Stock") (which shall be
preferred in liquidation over the Series A Special Preferred
Stock) and other than the Company's Series B Special
Convertible Preferred Stock, $0.20 par value (the "Series B
Special Preferred Stock") (which shall be PARI PASSU in
liquidation with the Series A Special Preferred Stock), as to
assets so that in the event of any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary,
the holders of the Series A Special Preferred Stock shall be
entitled to receive on a ratable and PARI PASSU basis with the
holders of the Series B Special Preferred Stock, out of the
assets of the Company available for distribution to its
stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common
Stock or any other series of Preferred Stock, but only after
distribution is made to the holders of the 10% Preferred
Stock, an amount equal to $0.20 per share plus all dividends
and distributions accrued and unpaid on the shares of Series A
Special Preferred Stock to the date payment is made. If, upon
any liquidation, dissolution or winding-up of the Company, the
assets of the Company, or proceeds thereof, distributable
among the holders of Series A Special Preferred Stock and the
Series B Special Preferred Stock are insufficient to pay in
full the preferential amount aforesaid, then such assets, or
proceeds thereof, shall be distributed among such holders
ratably in accordance with the respective amount which would
be payable on such shares if all amounts payable thereon were
payable in full. For purposes hereof, neither the voluntary
sale, lease, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Company,
nor the consolidation or merger of the Company with one or
more other companies, shall be deemed to be a liquidation,
dissolution or winding-up, voluntary or involuntary, unless
such voluntary sale, lease, conveyance, exchange or transfer
shall be in connection with a plan of liquidation, dissolution
or winding-up of the Company.
5
<PAGE> 7
(vi) VOTING. Except as provided by law, the holders of the Series
A Special Preferred Stock shall have no voting rights
whatsoever.
(vii) ADJUSTMENT OF NUMBER OF SHARES ISSUABLE. The Conversion Rate
is subject to adjustment from time to time upon the occurrence
of any of the events enumerated in this subparagraph (l)
(vii). Such adjustments shall be made in respect of any such
events occurring from and after the date on which any Warrants
are first issued (the "Closing Date") and shall be applicable
to all authorized shares of Series A Special Preferred Stock
whether or not any such shares are issued and outstanding.
(A) Adjustment for Change in Capital Stock of the Company
-----------------------------------------------------
If the Company (i) pays a dividend or makes a distribution on any
class of its Common Stock in shares of any class of its Common Stock, (ii)
subdivides its outstanding shares of any class of Common Stock into a greater
number of shares, (iii) combines its outstanding shares of any class of Common
Stock into a smaller number of shares, (iv) makes a distribution on any class
of its Common Stock in shares of its capital stock other than Common Stock, or
(v) issues by reclassification of any class of its Common Stock any shares of
its capital stock, then the Conversion Rate in effect immediately prior to
such action shall be proportionately adjusted so that any holder of any Series
A Special Preferred Stock thereafter exercised may receive the aggregate number
and kind of shares of capital stock which it would have owned immediately
following such action if such Series A Special Preferred Stock had been issued
and outstanding (if not then issued and outstanding) and converted immediately
prior to such action. The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
If after an adjustment a holder of Series A Special Preferred Stock
may receive shares of two or more classes of capital stock of the Company, the
Board of Directors of the Company shall determine in the good faith exercise of
its reasonable business judgment the allocation of the adjusted Conversion Rate
between the classes of capital stock. After such allocation, the exercise
privilege and the Conversion Rate of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those in this
subparagraph (l) (vii).
6
<PAGE> 8
(B) Adjustment for Common Stock Issues
----------------------------------
If the Company issues shares of Common Stock for a consideration per
share less than the Fair Market Value per Share on the date the Company fixes
the offering price of such additional shares, the Conversion Rate shall be
adjusted in accordance with the following formula:
E ' = E x A
---------
P
---
O + M
where:
E ' = the adjusted Conversion Rate.
E = the then current Conversion Rate.
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the
issuance of such additional shares.
M = the Fair Market Value per Share on the date
the Company fixes the offering price of such
additional shares.
A = the number of shares of Common Stock
outstanding immediately after the issuance of
such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance. The
provisions of this subparagraph (l) (vii) (B) do not apply to (i) transactions
described in subparagraph (l) (vii) (A) or (ii) transactions for which an
adjustment has been made pursuant to the provisions of subparagraphs (l) (vii)
(C) or (l) (vii) (D).
7
<PAGE> 9
(C) Adjustment for Convertible Securities Issues
--------------------------------------------
If the Company issues any evidences of indebtedness, shares of stock
or other securities which are directly or indirectly convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for shares of Common Stock, either immediately or upon the occurrence
of a specified date or a specified event ("CONVERTIBLE SECURITIES"), other than
Series A Special Preferred Stock and Series B Special Preferred Stock for which
an adjustment has been made pursuant to the provisions of subparagraph (l)
(vii) (D), whether or not the right to convert or exchange thereunder is
immediately exercisable or is conditioned upon the passage of time, the
occurrence or non- occurrence of some other event, or both, for a consideration
per share of Common Stock initially deliverable upon conversion or exchange of
such Convertible Securities less than the Fair Market Value per Share on the
date of issuance of such Convertible Securities, the Conversion Rate shall be
adjusted in accordance with this formula:
E ' = E x O + D
---------
P
---
O + M
where:
E ' = the adjusted Conversion Rate.
E = the then current Conversion Rate.
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such Convertible Securities.
P = the aggregate consideration received for the
issuance of such Convertible Securities.
M = the Fair Market Value per Share on the date
of issuance of such Convertible Securities.
D = the maximum number of shares of Common Stock
deliverable upon exercise, conversion or in
exchange of such Convertible Securities at
the Minimum Price (as defined below).
8
<PAGE> 10
In this subparagraph (l) (vii) (C), the term "MINIMUM PRICE" means the lowest
price at which the Convertible Securities can be converted into or exchanged
for Common Stock, regardless of whether that is the initial rate or is
conditioned upon the passage of time, the occurrence or non-occurrence of some
other event, or both. The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such Convertible Securities has not been issued when such Convertible
Securities are no longer outstanding, then the Conversion Rate with respect to
the shares of Series A Special Preferred Stock that have not been converted
shall promptly be readjusted to the Conversion Rate which would then be in
effect had the adjustment upon the issuance of such Convertible Securities been
made on the basis of the actual number of shares of Common Stock issued upon
conversion or exchange of such Convertible Securities.
(D) Adjustment for Right, Option and Warrant Issues
-----------------------------------------------
If the Company issues any rights, options or warrants to subscribe for
or purchase or otherwise acquire Common Stock or Convertible Securities,
whether or not the right to exercise such rights, options or warrants or to
convert or exchange such Convertible Securities is immediately exercisable or
is conditioned upon the passage of time, the occurrence of non-occurrence of
some other event, or both (the "OPTION SECURITIES"), for a consideration per
share of Common Stock initially deliverable upon exercise of such Option
Securities or conversion or exchange of such Convertible Securities less than
the Fair Market Value per Share on the date of issuance of such Option
Securities, the Conversion Rate Shall be Adjusted in accordance with this
formula:
E ' = E x O + D
--------
P
---
O + M
where:
E ' = the adjusted Conversion Rate.
E = the then current Conversion Rate.
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such Option Securities.
9
<PAGE> 11
P = the aggregate consideration received for the
issuance of such Option Securities.
M = the Fair Market Value per Share on the date
of issuance of such Option Securities.
D = the maximum number of shares of Common Stock
deliverable upon exercise, conversion or in
exchange of such Option Securities at the
Minimum Price (as defined below).
In this subparagraph (l) (vii) (D), the term "MINIMUM PRICE" means the
lowest price at which the Option Securities may be exercised (directly or
through the conversion or exchange of Convertible Securities which may be
acquired upon exercise of the Option Securities) to purchase or otherwise
acquire Common Stock, regardless of whether that is the initial price or is
conditioned upon the passage of time, the occurrence or non-occurrence of some
other event, or both. The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
issuance.
If all of the Common Stock an/or Convertible Securities deliverable
upon exercise of such Option Securities or upon conversion or exchange of such
Option Securities has not been issued when such Option Securities are no longer
outstanding, then the Conversion Rate with respect to the shares of Series A
Special Preferred Stock that have not been converted shall promptly be
readjusted to the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such Option Securities been made on the basis
of the actual number of shares of Common Stock issued upon such exercise,
conversion or exchange of such Option Securities.
(E) Consideration Received
----------------------
For purposes of any computation respecting consideration received
pursuant to any provision of the subparagraph (l) (vii), the following shall
apply:
1. In the case of the issuance of shares of Common Stock for cash
the consideration received shall be the amount of cash received by the Company
therefor, without deduction therefrom of any reasonable expenses incurred by
the Company in
10
<PAGE> 12
connection therewith or any reasonable underwriters' discounts, fees and
commissions paid or allowed by the Company in connection therewith.
2. In the case of the issuance of shares of Common Stock for a
consideration consisting in whole or in part of other than cash, the
consideration other than cash shall be initially determined by the Board of
Directors of the Company in good faith, with notice of such determination to be
promptly given to the holders of the Series A Special Preferred Stock and the
holders of the Warrants.
a. If such issuance (i) is solely in connection with an
acquisition for stock of a corporation 80% of the revenues of which
are derived from the operation of Telephones, and (ii) (A) such
acquisition, together with any related acquisitions, involves less
than 250 Telephones and (B) such acquisition, together with any
acquisitions during any twelve month period, involves less than 1,000
Telephones, such determination by the Board of Directors of the
Company in good faith shall be binding.
b. If such issuance is in connection with an acquisition
or acquisitions satisfying the requirements of clause (i) of the
immediately preceding paragraph a., but in excess of the amounts
described in clauses (ii) (A) or (B) of the immediately preceding
paragraph a., such good faith determination by the Board of Directors
of the Company shall be binding only if the Company shall have
received from an investment banking firm reasonably satisfactory to
the Required Holders a written opinion to the effect that such
acquisition is fair to the Company and its shareholders from a
financial point of view.
c. In all other cases, if within 30 days after the date
such written notice is given, the Company and the Required Holders (as
defined in subparagraph (l) (vii) (M)) agree upon the fair market
value, then the fair market value for purposes of this paragraph (2)
shall be as so agreed. If the Required Holders and the Company do not
agree upon such fair market value within such 30 day period, then the
Required Holders and the Company shall appoint a recognized investment
banking firm of national reputation, reasonably acceptable to the
Required Holders and the Company. If the Company and the Required
Holders cannot agree on the appointment of a mutually acceptable
investment banking firm, or if the firm so appointed declines or fails
to serve, then the Required Holders and the Company shall each choose
One such investment banking firm and the respective firms so chosen
shall appoint another recognized investment banking firm of national
reputation. The investment banking firm so selected shall appraise
the fair market value for the purposes of this paragraph 2; and such
investment
11
<PAGE> 13
banking firm shall make such appraisal (which shall be in the form of
a written report signed by such investment banking firm) and, for the
purposes of determining the fair market value pursuant to this
paragraph 2, such appraised fair market value determined as herein
provided shall be final and conclusive and binding on the Company and
all holders of Series A Special Preferred Stock and all holders of
Warrants. All costs of appraisal shall be borne by the Company.
As used herein, the term "Telephone" shall mean a
microprocessor-based non-cellular telephone through which a user may initiate a
call payable only by coins or by credit card, collect or third number billing
procedures and which has been installed for operation.
3. In the case of the issuance of Convertible Securities or
securities issuable upon the exercise of Option Securities, the aggregate
consideration received therefor shall be deemed to be the consideration
received by the Company for the issuance of such Convertible Securities, plus
the consideration, if any, received by the Company for the issuance of such
Option Securities, plus the additional minimum consideration, if any, to be
received by the Company upon the conversion, exchange or exercise thereof (the
consideration in each case to be determined in the same manner as provided in
paragraphs 1 and 2 of this subparagraph (1) (vii) (E)).
(F) Special Adjustment
------------------
If the purchase price provided for in any Option Securities, the
additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock shall change, the Conversion
Rate or number of shares issuable upon conversion of the Series A Special
Preferred Stock in effect at the time of such event shall forthwith be
readjusted. The Conversion Rate or number of shares issuable upon conversion
of the Series A Special Preferred Stock shall be adjusted to those amounts
which would have been in effect at such time had such Option Securities or
Convertible Securities outstanding at such time initially been granted, issued
or sold and the Conversion Rate or number of shares issuable upon conversion of
the Series A Convertible Preferred Stock Initially adjusted as provided in this
subparagraph (l) (vii), whichever was applicable, except that the minimum
amount of additional consideration payable and the total maximum number of
shares issuable shall be determined after giving effect to such event (and any
prior event or events).
12
<PAGE> 14
(G) When No Adjustment Required
---------------------------
No adjustment need be made for a change in the par value or absence of
par value of any Common Stock. Notwithstanding any other provisions of this
Agreement, the provisions of this subparagraph (l) (vii) shall not apply to,
and no adjustment in the Conversion Rate need be made as a result of, the
issuance of shares of Common Stock, Convertible Securities or Option Securities
in any bona fide, underwritten public offering for which the lead underwriter
is a recognized investment banking form of national reputation that is not an
affiliate of the Company. Furthermore, no adjustment shall be made in the
Conversion Rate in respect of the issuance or sale of shares of Common Stock
pursuant to (i) the conversion or exercise of Convertible Securities (including
the Series A Special Preferred Stock and the Series B Special Preferred Stock)
and Option Securities outstanding on the Closing Date or (ii) the conversion of
the shares of 10% Non-Voting Preferred Stock at the rate of 1.6667 shares of
Common Stock for each share of such Preferred Stock.
(H) Determination of Fair Market Value per Share - Notice of Adjustment
-------------------------------------------------------------------
Subject to the provisions of the immediately following paragraph, the
Fair Market Value per Share of Common Stock shall be deemed to be an amount
equal to the average of the Quoted Prices (as defined below) for Common Stock
for the thirty (30) consecutive trading days commencing forty-five (45) trading
days before the date of determination or, if no such Quoted Price is available,
the Fair Market Value per Share initially shall be determined by the Board of
Directors of the Company. "Quoted Price" of Common Stock for each day means
the last reported sales price of Common Stock on such day as reported by NASDAQ
or, if Common Stock is listed on a national securities exchange, the last
reported sales price of Common Stock on such exchange (which shall be for
consolidated trading if applicable to such exchange) on such day, or if not so
reported or listed, the average of the last reported bid and asked prices of
Common Stock on such day, in each case as appropriately adjusted for any stock
splits or reverse stock splits occurring after the date of this Certificate of
Amendment.
No later than the date of issuance of any Common Stock, Convertible
Securities or Option Securities, the Company shall give the holders of Series A
Special Preferred Stock and the holders of Warrants written notice of the Fair
Market Value per Share of such securities as determined in accordance with the
immediately preceding paragraph. If within twenty (20) days after the date
such notice is given, the Required Holders agree that the Fair Market Value per
Share adequately reflects the value of a share of Common Stock, then the Fair
Market Value per Share shall be as so determined. If, within such 20-day
period, the Company and the Required Holders do not agree that such Fair
13
<PAGE> 15
Market Value per Share adequately reflects the value of a share of Common
Stock, then the Required Holders and the Company shall appoint a recognized
investment banking firm of national reputation, reasonably acceptable to the
Required Holders and the Company. If the Company and the Required Holders
cannot agree on the appointment of a mutually acceptable investment banking
firm, or if the firm so appointed declines or fails to serve, then the Required
Holders and the Company shall each choose one such investment banking firm and
the respective firms so chosen shall appoint another recognized investment
banking firm of national reputation. The investment banking firm so selected
shall appraise the value of the Company for the purposes of determining the
Fair Market Value per Share, and such investment banking firm shall make such
appraisal (which shall be in the form of a written report signed by such
investment banking firm) and, for the purposes of determining the Fair Market
Value per Share, such appraised value of the Company determined as herein
provided shall be final and conclusive and binding on the company and all
holders of Series A Special Preferred Stock and all holders of Warrants. All
costs of appraisals shall be borne by the Company.
Whenever the Conversion Rate is adjusted or the Company takes any
action that would require any adjustment in the Conversion Rate or the number
and type of securities or other property constituting shares issuable upon
conversion of the Series A Special Preferred Stock, the Company shall provide
written notice thereof to each holder of Series A Special Preferred Stock and
to each holder of Warrants.
(I) Adjustment of Conversion Rate Upon Certain Circumstances
--------------------------------------------------------
In the event that the Company issues any Option Securities or
Convertible Securities to Peter G. Graf, the Conversion Rate shall be adjusted
in accordance with this formula:
E ' = E x O + D
-------
O
where:
E ' = the adjusted Conversion Rate.
E = the then current Conversion Rate.
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such Option Securities or Convertible
Securities.
14
<PAGE> 16
D = the maximum number of shares of Common Stock
deliverable upon exercise, conversion or in
exchange of such Option Securities or
Convertible Securities at the Minimum Price.
In this subparagraph (l) (vii) (I), the term "MINIMUM PRICE" means the
lowest price at which the Option securities may be exercised (directly or
through the conversion or exchange of Convertible Securities which may be
acquired upon exercise of the Option Securities) to purchase or otherwise
acquire Common Stock or the Convertible Securities can be converted into or
exchanged for Common Stock, regardless of whether that is the initial price or
is conditioned upon the passage of time, the occurrence or non-occurrence of
some other event, or both. The adjustment shall be made successively whenever
any such issuance is made, and shall become effective immediately after such
issuance.
If all of the Common Stock and/or Convertible Securities deliverable
upon exercise of such Option Securities or upon conversion or exchange of such
Option Securities has not been issued when such Option Securities are no longer
outstanding, then the Conversion Rate with respect to the shares of Series A
Special Preferred Stock that have not been converted shall promptly be
readjusted to the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such Option Securities been made on the basis
of the actual number of shares of Common Stock issued upon such exercise,
conversion or exchange of such Option Securities.
(J) When Issuance or Payment May Be Deferred
----------------------------------------
In any case in which this subparagraph (1) (vii) shall require that an
adjustment in the Conversion Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Series A Special Preferred Stock
converted after such record date shares of Common Stock issuable upon such
conversion over and above the shares of Common Stock issuable upon such
conversion on the basis of the Conversion Rate prior to such adjustment and
(ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to subparagraph (1) (vii) (K); PROVIDED, HOWEVER, that the Company
shall deliver to such holder a bill or other appropriate instrument evidencing
such holder's right to receive such additional shares of Common Stock and cash
upon the occurrence of the event requiring such adjustment.
15
<PAGE> 17
(K) Fractional Interests
--------------------
The Company shall not be required to issue fractional shares of Common
Stock on the conversion of Series A Special Preferred Stock. If more than one
share certificate shall be presented for conversion in full at the same time by
the same holder, the number of full shares of Common Stock which shall be
issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares issuable on conversion of the Series A Special
Preferred Stock evidenced by all share certificates so presented. If any
fraction of the shares of Common Stock would, except for the provisions of this
subparagraph (1) (vii) (K), be issuable on conversion of any shares of Series A
Special Preferred Stock (or specified portion thereof), the Company shall pay
an amount in cash equal to the Fair Market Value per Share on the day
immediately preceding the date the share certificate evidencing such Series A
Special Preferred Stock is presented for conversion, multiplied by such
fraction.
(L) Par Value of Common Stock
-------------------------
Before taking any action which would cause an adjustment in the
Conversion Rate pursuant to this subparagraph (1) (vii) such that the aggregate
par value of the number of shares of Common Stock (including fraction shares)
into which a share of Series A Special Preferred Stock is convertible is
greater than the par value of a share of Series A Special Preferred Stock, the
Company will take any corporate action necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
on the basis of the Conversion Rate as so adjusted.
(M) Required Holders
----------------
Whenever reference is made in this subsection (1) (vii) to "Required
Holders" such reference means the registered holders of at least 66-2/3% of the
outstanding Series A Special Preferred Stock (treating all Warrants as fully
exercised for shares of Series A Special Preferred Stock to which the
registered holders of Warrants would be entitled upon exercise of such
Warrants).
(m) Out of the Company's existing authorized but
unissued shares of Preferred Stock (as described above in
subparagraph (b) of this Article FOURTH), two hundred and
fifty thousand (250,000) shares of a new series of Convertible
Preferred Stock, $0.20 par value, $120 stated value,
hereinafter designated as the "Series B Special Preferred
Stock", which shall have the following designations, powers,
preferences and rights, and shall be subject to the following
qualifications, limitations and restrictions:
16
<PAGE> 18
(i) DESIGNATION OF STOCK. The new series of Convertible Preferred
Stock, $0.20 par value, $120 stated value, shall bear the
designation "Series B Special Preferred Stock".
(ii) NUMBER OF SHARES. The maximum number of share of Series B
Special Preferred Stock shall be 250,000.
(iii) DIVIDENDS. If the Company pays a dividend or makes a
distribution to the holders of its Common Stock of any
securities (other than capital stock for which an adjustment
in the Conversion Rate as defined in subparagraph (m) (iv) )
is made pursuant to subparagraph (m) (vii) or property
(including cash or securities of other companies) of the
Company, or any rights, options, or warrants to subscribe for
or purchase securities (other than Common Stock of the
Company) or property (including securities of other companies)
of the Company, then simultaneously with the payment of such
dividend or the making of such distribution, and as a
condition precedent to its right to do so, it will pay or
distribute to the holders of record of Series B Special
Preferred Stock an amount of property (including, without
limitation, cash) and/or securities (including, without
limitation, securities of other companies) of the Company as
would have been received by such holders had they exercised
their conversion rights and converted such shares of Series B
Special Preferred Stock into Common Stock immediately prior to
the record date (or other applicable date) used for
determining stockholders of the Company entitled to receive
such dividend or distribution. Anything in subparagraph (m)
(vii) to the contrary notwithstanding, no adjustment to the
Conversion Rate shall be made for any distribution of
Convertible Securities (as defined) in subparagraph (m) (vii)
(C) ) or rights, options or warrants to purchase such
Convertible Securities of the Company to holders of Series B
Special Preferred Stock pursuant to the provisions of this sub
paragraph (m) (iii).
(iv) CONVERSION. Each share of Series B Special Preferred Stock
shall be convertible, at the option of the holder, at any time
and from time to time into twenty (20) shares of Common Stock,
$0.01 par value, of the Company ("Company Stock");
17
<PAGE> 19
PROVIDED, HOWEVER, that the number of whole and fractional
shares (the "Conversion Rate") of Common Stock issuable upon
conversion of each share of Series B Special Preferred Stock
shall be adjusted as provided in subparagraph (m) (vii);
PROVIDED, FURTHER, HOWEVER, that shares of Series B Special
Preferred Stock may be converted into shares of Common Stock
only after the holder of such shares of Series B Special
Preferred Stock shall have certified to the Company that it is
not a "bank holding company" or a "subsidiary" of a "bank
holding company" within the meaning of Section 4 of the Bank
Holding Company Act of 1954, as amended, and Regulation Y
promulgated thereunder, or one of the following shall have
occurred: (1) the BONA FIDE sales to any purchaser
(including, without limitation, an underwriter) of such shares
of Series B Special Preferred Stock (x) pursuant to a
registration statement declared effective by the Securities
and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), covering the offer and sale of the
Company's common stock in a BONA FIDE public offering, or (y)
pursuant to Rules 144 and 144A promulgated under the Act, or
in a public distribution pursuant to Regulation A of the
General Rules and Regulations under the Act; (2) the BONA FIDE
sale to any purchase of such shares or Series B Special
Preferred Stock in a transaction not involving a sale of the
Company's common stock to the public, provided that such
purchaser does not immediately after such transaction hold
shares of Common Stock (including any shares converting to
Common Stock in accordance herewith) equaling two percent (2%)
or more of the then outstanding shares of Common Stock; or (3)
the receipt by the Company of (y) a staff opinion, ruling or
other written advice from the Board of Governors of the
Federal Reserve System, or from the appropriate Federal
Reserve Bank, or (z) an opinion of counsel experienced in bank
regulatory matters, in each case to the effect that such
shares of Series B Special Preferred Stock may be converted
into shares of Common Stock without violation of Section 4 of
the Bank Holding Company Act of 1954, as amended, and
Regulation Y promulgated thereunder. Each conversion of
shares of Series B Special Preferred Stock into shares of
Common Stock permitted by this subparagraph (m) (iv) shall
18
<PAGE> 20
be effected by the surrender of the certificate or
certificates representing the shares to be converted at the
principal office of the Company (or such other office or
agency of the Company as the Company may designate by notice
in writing to the holder or holders of the Series B Special
Preferred Stock) at any time during normal business hours,
together with a written notice by the holder of such Series B
Special Preferred Stock stating that such holder desires to
convert the shares, or a stated number o f the shares, of
Series B Special Preferred Stock represented by such
certificate or certificates into Common Stock and that such
conversion is permitted in accordance with this subparagraph
(m) (iv). Upon receipt of such statement, the Company shall
be obligated to issue such Common Stock promptly and without
further inquiry. Such conversion shall be deemed to have been
effected as of the close of business on the date on which such
certificate or certificates have been surrendered and such
notice has been received, and at such time the rights of the
holder of the converted Series B Special Preferred Stock shall
cease and the person or persons in whose name or names the
certificate or certificates for shales of Common Stock are to
be issued upon such conversion shall be deemed to have become
the holder or holders of record of the shares of Common Stock
represented thereby. Promptly after such surrender and the
receipt of such written notice, the Company shall promptly
issue and deliver in accordance with the surrendering holder's
instructions (i) the certificate or certificates for the
Common Stock issuable upon such conversion and (ii) a
certificate representing any Series B Special Preferred Stock
which was represented by the certificate or certificates
delivered to the Company in connection with such conversion
but which was not converted. Notwithstanding anything to the
contrary set forth in this subparagraph (m) (iv), in the event
that a holder of the Company's Notes which are convertible
into shares of Series B Special Preferred Stock (the "Notes")
desires to convert such holder's Notes, in whole or in part,
and immediately thereafter convert in whole or in part the
shares of Series B Special Preferred Stock issuable upon such
conversion, such shares of Series B Special Preferred Stock
shall be deemed converted in accordance with a written notice
by the
19
<PAGE> 21
holder of such Notes stating that such holder desires such
Series B Special Preferred Stock issuable upon conversion of
such Notes to be converted immediately upon issuance, without
any requirement that the Company issue a certificate or
certificates to represent such Series B Special Preferred
Stock or any requirement that such holder surrender any such
certificate of certificates. The issuance of certificates for
Common Stock upon conversion of Series B Special Preferred
Stock shall be made without charge to the holders of such
shares for any stamp, transfer or issuance tax in respect
thereof or issuable upon conversion of Series B Special
Preferred Stock in any manner which would interfere with the
timely conversion of Series B Special Preferred Stock.
(v) LIQUIDATION. The shares of Series B Special Preferred Stock
shall be preferred over the shares of Common Stock and any
other series of Preferred Stock other than the Company's 10%
Preferred Stock, without par value, $10 Stated Value,
Cumulative (the "10% Preferred Stock") (which shall be
preferred in liquidation over the Series B Special Preferred
Stock) and other than the Company's Series A Special
Convertible Preferred Stock, $0.20 par value (the "Series A
Special Preferred Stock") (which shall be PARI PASSU in
liquidation with the Series B Special Preferred Stock), as to
assets so that in the event of any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary,
the holders of the Series B Special Preferred Stock shall be
entitled to receive on a ratable and PARI PASSU basis with the
holders of the Series A Special Preferred Stock, out of the
assets of the Company available for distribution to its
stockholders of the Series A Special Preferred Stock, out of
the assets of the Company available for distribution to its
stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common
Stock or any other series of Preferred Stock, but only after
distribution if made to the holders of the 10% Preferred
Stock, an amount equal to $120.00 per share plus all dividends
and distributions accrued and unpaid on the shares of Series B
Special Preferred Stock to the date payment is made. If, upon
any liquidation, dissolution or winding-up of the Company, the
20
<PAGE> 22
assets of the Company, or proceeds thereof, distributable
among the holders of Series B Special Preferred Stock and the
Series A Special Preferred Stock are insufficient to pay in
full the preferential amount aforesaid, then such assets, or
proceeds thereof, shall be distributed among such holders
ratably in accordance with the respective amount which would
be payable on such shares if all amounts payable thereon were
payable in full. For purposes hereof, neither the voluntary
sale, lease, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Company,
nor the consolidation or merger of the Company with one or
more other companies, shall be deemed to be a liquidation,
dissolution or winding-up, lease, conveyance, exchange or
transfer shall be in connection with a plan of liquidation,
dissolution or winding-up of the Company.
(vi) VOTING. Except as provided by law, the holders of the Series
B Special Preferred Stock shall have no voting rights
whatsoever/
(vii) ADJUSTMENT OF NUMBER OF SHARES ISSUABLE. The Conversion Rate
is subject to adjustment from time to time upon the occurrence
of any of the events enumerated in this subparagraph (m)
(vii). Such adjustments shall be made in respect of any such
events occurring from and after the date of which any Notes
are first issued (the "Closing Date") and shall be applicable
to all authorized shares of Series B Special Preferred Stock
whether or not any such shares are issued and outstanding
(A) Adjustment for Change in Capital Stock of the Company
-----------------------------------------------------
If the Company (i) pays a dividend or makes a distribution on any
class of its Common Stock in share of any class of its common Stock, (ii)
subdivides its outstanding shares of any class of Common Stock into a greater
number of shares, (iii) combines its outstanding shares of any class of Common
Stock into a smaller number of shares, (iv) makes a distribution on any class
of its Common Stock in shares of its capital stock other than Common Stock, or
(v) issues by reclassification of any class of its Common Stock any shares of
its capital stock, then the Conversion Rate in effect immediately prior to
21
<PAGE> 23
such action shall be proportionately adjusted so that any holder of any Series
B Special Preferred Stock hereafter exercised may receive the aggregate number
and kind of shares of capital stock which is would have owned immediately
following such action if such Series B Special Preferred Stock had been issued
and outstanding (if not then issued and outstanding) and converted immediately
prior to such action. The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
If after an adjustment a holder of Series B Special Preferred Stock
may receive shares of two or more classes of capital stock of the Company, the
Board of Directors of the Company shall determine in the good faith exercise of
its reasonable business judgment the allocation of the adjusted Conversion Rate
between that classes of capital stock. After such allocation, the exercise
privilege and the Conversion Rate of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those in this
subparagraph (m) (vii).
(B) Adjustment for Common Stock Issues
----------------------------------
If the Company issues shares of Common Stock for a consideration per
share less than the Fair Market Value per share on the date the Company fixes
the offering price of such additional shares, the Conversion Rate shall be
adjusted in accordance with the following formula:
E' = E x A
------
P
---
O + M
where:
E' = the adjusted Conversion Rate
E = the then current Conversion Rate
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the
issuance of such additional shares.
M = the Fair Market Value per Share on the date
the Company fixes the offering price of such
additional shares.
22
<PAGE> 24
A = the number of shares of Common Stock
outstanding immediately after the issuance of
such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance. The
provisions of this subparagraph (m) (vii) (B) do not apply to ( i )
transactions described in subparagraph (m) (vii) (A) or (ii) transactions for
which an adjustment has been made pursuant to the provision of subparagraphs
(m) (vii) (C) or (m) (vii) (D).
(C) Adjustment for Convertible Securities Issues
--------------------------------------------
If the Company issues any evidences of indebtedness, shares of stock
or other securities which are directly or indirectly convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for shares of Common Stock, either immediately or upon the occurrence
of a specified date or a specified event ("CONVERTIBLE SECURITIES"), other than
Series A Special Preferred Stock and Series B Special Preferred Stock for which
an adjustment has been made pursuant to the provisions of subparagraph (m)
(vii) (D), whether or not the right to convert or exchange thereunder is
immediately exercisable or is conditioned upon the passage of time, the
occurrence or non-occurrence of some other event, or both, for a consideration
per share of Common Stock initially deliverable upon conversion or exchange of
such Convertible Securities less than the Fair Market Value per Share on the
date of issuance of such Convertible Securities, the Conversion Rate shall be
adjusted in accordance with this formula:
O + D
------
E' = E x P
---
O + M
where:
E' = the adjusted Conversion Rate
E = the then current Conversion Rate
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such Convertible Securities.
P = the aggregate consideration received for the
issuance of such Convertible Securities.
M = the Fair Market Value per Share on the date
of issuance of such Convertible Securities.
23
<PAGE> 25
D = the maximum number of shares of Common Stock
deliverable upon exercise, conversion or in
exchange of such Convertible Securities at
the Minimum Price (as defined below).
In this subparagraph (m) (vii) (C), the term "MINIMUM PRICE" means the
lowest price at which the Convertible Securities can be converted into or
exchanged for Common Stock, regardless of whether that is the initial rate or
is conditioned upon the passage of time, the occurrence or non-occurrence of
some other event, or both. The adjustment shall be made successively whenever
any such issuance is made, and shall become effective immediately after such
issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such Convertible Securities has not been issued when such Convertible
Securities are no longer outstanding, then the Conversion Rate with respect to
the shares of Series B Special Preferred Stock that have not been converted
shall promptly be readjusted to the Conversion Rate which would then be in
effect had the adjustment upon the issuance of such Convertible Securities been
made on the basis of the actual number of shares of Common Stock issued upon
conversion or exchange of such Convertible Securities.
(D) Adjustment for Right, Option and Warrant Issues
-----------------------------------------------
If the Company issues any rights, options or warrants to subscribe for
or purchase or otherwise acquire Common Stock or Convertible Securities,
whether or not the right to exercise such Convertible Securities is immediately
exercisable or is conditioned upon the passage of time, the occurrence or
non-occurrence of some other event, or both (the "OPTION SECURITIES"), for a
consideration per share of Common Stock initially deliverable upon exercise of
such Option Securities or conversion or exchange of such Convertible Securities
less than the Fair Market Value per Share on the date of issuance of such
Option Securities, the Conversion Rate shall be adjusted in accordance with
this formula:
O + D
------
E' = E x P
---
O + M
where:
E' = the adjusted Conversion
E = the then current Conversion Rate
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<PAGE> 26
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such Option Securities.
P = the aggregate consideration received for the
issuance of such Option Securities.
M = the Fair Market Value per Share on the date
of issuance of such Option Securities.
D = the maximum number of shares of Common Stock
deliverable upon exercise, conversion or in
exchange of such Option Securities at the
Minimum Price (as defined below).
In this subparagraph (m) (vii) (D), the term "MINIMUM PRICE" means the
lowest price at which the Option Securities may be exercised (directly or
through the conversion or exchange of Convertible Securities which may be
acquired upon exercise of the Option Securities) to purchase or otherwise
acquire Common Stock, regardless of whether that is the initial price or is
conditioned upon the passage of time, the occurrence or non-occurrence of some
other event, or both. The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
issuance.
If all of the common Stock and/or Convertible Securities deliverable
upon exercise of such Option Securities or upon conversion or exchange of such
Option Securities has not been issued when such Option Securities are no longer
outstanding, then the Conversion Rate with respect to the shares of Series B
Special Preferred Stock that have not been converted shall promptly be
readjusted to the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such Option Securities been made on the basis
of the actual number of shares of Common Stock issued upon such exercise,
conversion or exchange of such Option Securities.
(E) Consideration Received
----------------------
For purposes of any computation respecting consideration received
pursuant to any provision of the subparagraph (m) (vii), the following shall
apply:
1. In the case of the issuance of shares of Common Stock for
cash, the consideration received shall be the amount of cash received by the
Company therefor, without deduction therefrom of any reasonable expenses
incurred by the Company in
25
<PAGE> 27
connection therewith or any reasonable underwriters' discounts, fees and
commissions paid or allowed by the Company in connection therewith.
2. In the case of the issuance of shares of Common Stock for a
consideration consisting in whole or in part of other than cash, the
consideration other than cash shall be initially determined by the Board of
Directors of the Company in good faith, with notice of such determination to be
promptly given to the holders of the Series B Special Preferred Stock and the
holders of the Notes.
a. If such issuance (i) is solely in connection with an
acquisition for stock of a corporation 80% of the assets of which are
used in the operation of Telephones (as defined below) and 80% of the
revenues of which are derived from the operation of Telephones, and
(ii) (A) such acquisition, together with any related acquisitions,
involves less than 250 Telephones and (B) such acquisition, together
with any acquisitions during any twelve-month period, involves less
than 1,000 Telephones, such determination by the Board of Directors of
the Company in good faith shall be binding.
b. If such issuance is in connection with an acquisition
or acquisitions meeting the requirements of clause (i) of the
immediately preceding paragraph a., but in excess of the amounts
described in clause (ii) (A) or (B) of the immediately preceding
paragraph a., such good faith determination by the Board of Directors
of the Company shall be binding only if the Company shall have
received from an investment banking firm reasonably satisfactory to
the Required Holders a written opinion to the effect that such
acquisition is fair to the Company and its shareholders from a
financial point of view.
c. In all other cases, if within 30 days after the date
such written notice is given, the Company and the Required Holders (as
defined in subparagraph (m) (vii) (M)) agree upon the fair market
value, then the fair market value for purposes of this paragraph (2)
shall be as so agreed. If the Required Holders and the Company do not
agree upon such fair market value within such 30 day period, then the
Required Holders and the Company shall appoint a recognized investment
banking firm of national reputation, reasonably acceptable to the
Required Holders and the Company. If the Company and the Required
Holders cannot agree on the appointment of a mutually acceptable
investment banking firm, or if the firm so appointed declines or fails
to serve, then the Required Holders and the Company shall each choose
one such investment banking firm and the respective firms so chosen
shall appoint another recognized investment banking firm of national
reputation. The investment banking firm so selected shall appraise
the
26
<PAGE> 28
fair market value for the purposes of this paragraph 2, and such
investment banking firm shall make such appraisal (which shall be in
the form of a written report signed by such investment banking firm)
and, for the purposes of determining the fair market value pursuant to
this paragraph 2, such appraised fair market value determined as
herein provided shall be final and conclusive and binding on the
Company and all holders of Series B Special Preferred Stock and all
holders of Notes. All costs of appraisal shall be borne by the
Company.
As used herein, the term "Telephone" shall mean a microprocessor-based
non-cellular telephone through which a user may initiate a call payable only by
coins or by credit card, collect or third number billing procedures and which
has been installed for operation.
3. In the case of the issuance of Convertible Securities or
securities issuable upon the exercise of Option Securities, the aggregate
consideration received therefor shall be deemed to be the consideration
received by the Company for the issuance of such Convertible Securities, plus
the consideration, if any, received by the Company for the issuance of such
Option Securities, plus the additional minimum consideration, if any, to be
received by the Company upon the conversion, exchange or exercise thereof (the
consideration in each case to be determined in the same subparagraph (m) (vii)
(E)).
(F) Special Adjustment
------------------
If the purchase price provided for in any Option Securities, the
additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock shall change, the Conversion
Rate or number of shares issuable upon conversion of the Series B Special
Preferred Stock in effect at the time of such event shall forthwith be
readjusted. The Conversion Rate or number of shares issuable upon conversion
of the Series B Special Preferred Stock shall be adjusted to those amounts
which would have been in effect at such time had such Option Securities or
Convertible Securities outstanding at such time initially been granted, issued
or sold and the Conversion Rate or number of shares issuable upon conversion of
the Series B Convertible Preferred Stock initially adjusted as provided in this
subparagraph (m) (vii), whichever was applicable, except that the minimum
amount of additional consideration payable and the total maximum number of
shares issuable shall be determined after giving effect to such event (and any
prior event or events).
27
<PAGE> 29
(G) When No Adjustment Required
---------------------------
No adjustment need be made for a change in the par value or absence of
par value of any Common Stock. Notwithstanding any other provisions of this
Agreement, the provisions of this subparagraph (m) (vii) shall not apply to,
and no adjustment in the Conversion Rate need be made as a result of, the
issuance of shares of Common Stock, Convertible Securities or Option Securities
in any bona fide, underwritten public offering for which the lead underwriter
is a recognized investment banking firm of national reputation that is not an
affiliate of the Company. Furthermore, no adjustment shall be made in the
Conversion Rate in respect of the issuance or sale of shares of Common Stock
pursuant to (i) the conversion or exercise of Convertible Securities (including
the Series A Special Preferred Stock and the Series B Special Preferred Stock)
and Option Securities outstanding on the Closing Date or (ii) the conversion of
the shares of 10% Non-Voting Preferred Stock at the rate of 1.6667 shares of
Common Stock for each share of such Preferred Stock.
(H) Determination of Fair Market Value per Share - Notice of Adjustment
-------------------------------------------------------------------
Subject to the provisions of the immediately following paragraph, the
Fair Market Value per Share of Common Stock shall be deemed to be an amount
equal to the average of the Quoted Prices (as defined below) for Common Stock
for the thirty (30) consecutive trading days commencing forty-five (45) trading
days before the date of determination or, if no such Quoted Price is available,
the Fair Market Value per Share initially shall be determined by the Board of
directors of the Company. "Quoted Price" of Common Stock for each day means
the last reported by NASDAQ or, if Common Stock is listed on a national
securities exchange, the last reported sales price of Common Stock on such
exchange (which shall be for consolidated trading if applicable to such
exchange) on such day, or if not so reported or listed, the average of the last
reported bid and asked prices of Common Stock on such day, or if not so
reported or listed, the average of the last reported bid and asked prices of
Common Stock on such day, in each case as stock splits occurring after the date
of this Certificate of Amendment.
No later than the date of issuance of any Common Stock, Convertible
Securities or Option Securities, the Company shall give the holders of Series B
Special Preferred Stock and the holders of Notes written notice of the Fair
Market Value per Share of such securities as determined in accordance with the
immediately preceding paragraph. If within twenty (20) days after the date
such notice is given, the Required Holders agree that the Fair Market Value per
Share adequately reflects the value of a share of Common Stock, then the Fair
Market Value per Share shall be as son determined. If, within such 20-day
period, the Company and the Required Holders do not agree that such Fair
28
<PAGE> 30
Market Value per Share adequately reflects the value of a share of Common
Stock, then the Required Holders and the Company shall appoint a recognized
investment banking firm of national reputation, reasonably acceptable to the
Required Holders and the Company. If the Company and the Required Holders
cannot agree on the appointment of a mutually acceptable investment banking
firm, or if the firm so appointed declines or fails to serve, then the Required
Holders and the Company shall each choose one such investment banking firm and
the respective firms so chosen shall appoint another recognized investment
banking firm of national reputation. The investment banking firm so selected
shall appraise the value of the Company for the purposes of determining the
Fair Market Value per Share, and such investment banking firm shall make such
appraisal (which shall be in the form of a written report signed by such
investment banking firm) and, for the purposes of determining the Fair Market
Value per Share, such appraised value of the Company determined as herein
provided shall be final and conclusive and binding on the Company and all
holders of Series B Special Preferred Stock and all holders of Notes. All
costs of appraisals shall be borne by the Company.
Whenever the Conversion Rate is adjusted or the Company takes any
action that would require any adjustment in the Conversion Rate or the number
and type of securities or other property constituting shares issuable upon
conversion of the Series B Special Preferred Stock, the Company shall provide
written notice thereof to each holder of Series B Special Preferred Stock and
to each holder of Notes.
(I) Adjustment of Conversion Rate Upon Certain Circumstances
--------------------------------------------------------
In the event that the Company issues any Option Securities or
Convertible Securities to Peter G. Graf, the Conversion Rate shall be adjusted
in accordance with this formula:
E ' = E x O + D
-------
O
where:
E ' = the adjusted Conversion Rate.
E = the then current Conversion Rate.
O = the number of shares of Common Stock
outstanding immediately prior to the issuance
of such Option Securities or Convertible
Securities.
29
<PAGE> 31
D = the maximum number of shares of Common Stock
deliverable upon exercise, conversion or in
exchange of such Option Securities or
Convertible Securities at the Minimum Price.
In this subparagraph (m) (vii) (I), the term "MINIMUM PRICE" means the
lowest price at which the Option Securities may be exercised (directly or
through the conversion or exchange of Convertible Securities which may be
acquired upon exercise of the Option Securities) to purchase or other wise
acquire Common Stock or the Convertible Securities can be converted into or
exchanged for Common Stock, regardless of whether that is the initial price or
is conditioned upon the passage of time, the occurrence or non-occurrence of
some other event, or both. The adjustment shall be made successively whenever
any such issuance is made, and shall become effective immediately after such
issuance.
If all of the Common Stock and/or Convertible Securities deliverable
upon exercise of such Option Securities or upon conversion or exchange of such
Option Securities has not been issued when such Option Securities are no longer
outstanding, then the Conversion Rate with respect to the shares of Series B
Special Preferred Stock that have not been converted shall promptly be
readjusted to the conversion Rate which would then be in effect had the
adjustment upon the issuance of such Option Securities been made on the basis
of the actual number of shares of Common Stock issued upon such exercise,
conversion or exchange of such Option Securities.
(J) When Issuance or Payment May Be Deferred
----------------------------------------
In any case in which this subparagraph (m) (vii) shall require that an
adjustment in the Conversion Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Series B Special Preferred Stock
converted after such record date shares of Common Stock issuable upon such
conversion over and above the shares of Common Stock issuable upon such
conversion on the basis of the Conversion Rate prior to such adjustment and
(ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to subparagraph (m) (vii) (K); PROVIDED, HOWEVER, that the Company
shall deliver to such holder a bill or other appropriate instrument evidencing
such holder's right to receive such additional shares of Common Stock and cash
upon the occurrence of the event requiring such adjustment.
30
<PAGE> 32
(K) Fractional Interests
--------------------
The Company shall not be required to issue fractional shares of Common
Stock on the Conversion of Series B Special Preferred Stock. If more than one
share certificate shall be presented for conversion in full at the same time by
the same holder, the number of full shares of Common Stock which shall be
issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares issuable on conversion of the Series B Special
Preferred Stock evidenced by all share certificates so presented. If any
fraction of the shares of Common Stock would, except for the provisions of this
subparagraph (m) (vii) (K), be issuable on conversion of any shares of Series B
Special Preferred Stock (Or specified portion thereof), the Company shall pay
an amount in cash equal to the Fair Market Value per Share on the day
immediately preceding the date the share certificate evidencing such Series B
Special Preferred Stock is presented for conversion, multiplied by such
fraction.
(L) Par Value of Common Stock
-------------------------
Before taking any action which would cause an adjustment in the
Conversion Rate pursuant to this subparagraph (m) (vii) such that the aggregate
par value of the number of shares of Common Stock (including fractional shares)
into which a share of Series B Special Preferred Stock is convertible is
Greater than the par value of a share of Series B Special Preferred Stock, the
Company will take any corporate action necessary in order that the Company may
validly and legally issue fully paid and nonassessable share of Common Stock on
the basis of the Conversion Rate as so adjusted.
(M) Required Holders
----------------
Whenever reference is made in this subsection (m) (vii) to "Required
Holders" such reference means the registered holders of at least 66-2/3% of the
outstanding Series B Special Preferred Stock (treating all Notes as fully
exercised for shares of Series B Special Preferred Stock to which the
registered holders of Notes would be entitled upon conversion of such Notes).
31
<PAGE> 33
(n) Out of the Company's existing authorized but unissued
shares of Preferred Stock (as described above in subparagraph (b) of
this Article FOURTH), Two Hundred Thousand (200,000) shares of a new
series of 14% Convertible Preferred Stock, Without Par Value, $60
Stated Value, Cumulative and Redeemable, hereinafter designated as the
"14% convertible Preferred Stock", which shall have the following
designations, powers, preferences and rights, and shall be subject to
the following qualifications, limitations and restrictions:
1. DESIGNATION OF STOCK. The new 14% Convertible Preferred
Stock, Without Par Value, $60 Stated Value, Cumulative and Redeemable, shall
bear the designation "14% Convertible Preferred Stock".
2. NUMBER OF SHARES. The maximum number of shares of 14%
Convertible Preferred Stock shall be 200,000.
3. DIVIDENDS Holders of record of shares of 14% Convertible
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors, dividends, payable in shares of 14% Convertible Preferred Stock,
at the quarterly rate of 0.035 share of 14% Convertible Preferred Stock per
share of 14% Convertible Preferred Stock with respect to such shares
outstanding as of the immediately preceding Record Date (as hereinafter
defined). Such dividends shall be payable on the first business day of
April, July, October and January (hereinafter referred to as a "Dividend
Payment Date") commencing April 1, 1996 to persons who are holders of record on
the fifteenth (15th ) day of the month immediately preceding such Dividend
Payment Date (a "Record Date"). Such dividends with respect to any share of
14% Convertible Preferred Stock shall accrue (whether or not declared) from the
date of issue thereof. Fractional shares of 14% Convertible Preferred Stock
may be issued in connection with a payment of a dividend, and any such
fractional shares shall be rounded down to the nearest one-hundredth (1/100) of
a share.
So long as any of the 14% Convertible Preferred Stock is
outstanding, the Company will not declare or pay or set apart for payment any
dividends (other than a dividend in Common Stock or in any other class of stock
ranking junior to the 14% Convertible Preferred Stock both as to dividends and
upon liquidation) or make any other distribution on any class of Company stock
ranking junior to the 14% Convertible Preferred Stock either as to dividends or
upon liquidation and will not redeem, purchase or otherwise acquire for value,
or set apart money for any sinking or other analogous fund for the redemption
or purchase of, any shares of any such junior class unless all dividends on the
14% Convertible Preferred Stock for all Dividend Payment Dates Prior to or
Concurrent with the Payment with respect to any such dividend, distribution,
32
<PAGE> 34
redemption, purchase or acquisition as to such junior class (in any such case,
a "Junior Payment"), and, if the Junior Payment does not occur on a Dividend
Payment Date for the 14% Convertible Preferred Stock, for the next succeeding
Dividend Payment Date, shall have been paid. The foregoing notwithstanding,
the holders of fifty percent (50%) or more of the outstanding 14% Convertible
Preferred Stock may approve any redemption or purchase of any of the securities
listed above. Further, the Company may purchase its Common Stock for purposes
of fulfilling payment of employee benefits or for which the Company has
agreements effective prior to the issuance of the 14% Convertible Preferred
Stock.
4. LIQUIDATION. The shares of 14% Convertible Preferred Stock
shall be preferred over the shares of Common Stock and any other series of
Preferred Stock other than the 10% Non-Voting Preferred Stock, without par
value, $10 Stated Value, Cumulative (the "10% Non-Voting Preferred Stock"), the
Series A Special Preferred Stock, and the Series B Special Preferred Stock, as
to assets of the Company available for distribution to its stockholders, so
that in the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of the 14% Convertible Preferred
Stock shall be entitled to receive out of the assets of the Company available
for distribution to its stockholders, whether from capital, surplus or
earnings, before any distribution is made to holders of shares of Common Stock
or any other series of Preferred Stock, but only after distribution is made to
the holders of the 10% Non-Voting Preferred Stock, the Series A Special
Preferred Stock, and the Series B Special Preferred Stock, an amount equal to
$60 per share of 14% Convertible Preferred Stock outstanding as of the date
payment is made. If, upon any liquidation, dissolution or winding up of the
Company, the assets of the Company, or proceeds thereof, distributable among
the holders of 14% Convertible Preferred Stock are insufficient to pay in full
the preferential amount aforesaid, then such assets, or proceeds thereof, shall
be distributable among such holders ratably in accordance with the respective
amount which would be payable on such shares if all amounts payable thereon
where payable in full.
For the purposes of this paragraph 4, neither the voluntary sale,
lease, conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Company, nor the consolidation or merger of the Company with one or more
other companies, shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, unless such voluntary sales, lease, conveyance,
exchange or transfer shall be in connection with a plan of liquidation,
dissolution or winding up of the Company.
5. CONVERSION. The shares (including fractional portions
thereof) of 14% Convertible Preferred Stock shall be convertible into Common
Stock, $.01 par value, of
33
<PAGE> 35
the Company ("Common Stock"), subject to adjustment as provided in paragraph 6,
as follows: each share of 14% Convertible Preferred Stock is convertible into
ten (10) shares of Common Stock, plus each share of 14% Convertible Preferred
Stock comprising accrued and unpaid dividends with respect to such converted
share concurrently shall be converted into ten (10) shares of Common Stock;
provided, however, that the number of shares of Common Stock issuable upon
conversion of each share of 14% Convertible Preferred Stock may be adjusted as
provided in paragraph 6, and provided further that fractional shares of 14%
Convertible Preferred Stock may be converted into the number of whole shares of
Common Stock derived by multiplying the amount of fractional shares of 14%
Convertible Preferred Stock by 10 and rounding down to the nearest whole share
of Common Stock. Holders of 14% Convertible Preferred Stock may convert each
share of 14% Convertible Preferred Stock at any time or from time to time after
the date of issuance of such shares and prior to the Redemption Date (as
hereinafter defined). Each share of 14% Convertible Preferred Stock shall be
deemed to have been converted ("Conversion Date") when the Company shall have
received a written notice of conversion from the holder thereof specifying the
number of shares of 14% Convertible Preferred Stock being converted and
accompanied by the share certificate or certificates representing such shares
being converted thereby, duly endorsed to reflect the conversion thereof;
whereupon the Company shall issue ten (10) shares of its Common Stock
("Conversion Shares") for each share of 14% Convertible Preferred Stock
delivered for conversion, plus ten (10) shares of Common Stock for each share
of 14% Convertible Preferred Stock comprising accrued and unpaid dividends, if
any, on the shares of 14% Convertible Preferred Stock delivered for conversion,
plus the shares of Common Stock into which fractional shares of 14% Convertible
Preferred Stock are convertible as provided in paragraph 6 hereof. The Company
shall deliver to the holder named therein a certificate or certificates
representing the Conversion Shares within fifteen (15) days of the Conversion
Date. Unless all of the 14% Convertible Preferred Stock evidenced by the
surrendered certificate shall have been converted, the Company shall within
fifteen (15) days of the Conversion Date deliver to the holder named therein a
new certificate, substantially identical to that surrendered, representing the
14% Convertible Preferred Stock formerly represented by the surrendered
certificate which shall not have been converted or redeemed.
6. CONVERSION ADJUSTMENTS. If at any time or from time to time
the Company shall by stock dividend, subdivision, combination, or
reclassification of shares or otherwise, change as a whole the outstanding
shares of Common Stock into a different number or class of shares, the number
of shares issuable upon conversion of shares of 14% Convertible Preferred
Stock, immediately prior to the date upon which such change shall become
effective, shall be proportionately adjusted. Irrespective of any adjustment
or change in the number of shares of Common Stock actually issuable upon
conversion
34
<PAGE> 36
hereof, the certificate theretofore and thereafter issued with respect to any
shares of 14% Convertible Preferred Stock may continue to express the number of
shares issuable with respect to the 14% Convertible Preferred Stock when
initially issued. In the case of the issuance of additional shares of Common
Stock as a dividend, the aggregate number of shares of Common Stock issued in
payment of such dividend shall be deemed to have been issued at the close of
business on the record date fixed for the determination of shareholders
entitled to such dividend and shall be deemed to have been issued without
consideration; provided, however, that if the Company, after fixing such record
date, shall legally abandon its plan to so issue Common Stock as a dividend, no
adjustment shall be required by reason of the fixing of such record date.
If at any time while shares of the 14% Convertible Preferred Stock are
outstanding the Company effects any consolidation or merger with any other
corporation or entity, the holders of the 14% Convertible Preferred Stock shall
thereafter be entitled upon such conversion to acquire, with respect to each
share of Common Stock issuable hereunder immediately prior to the date upon
which such consolidation or merger shall become effective, the securities or
property to which a holder of one share of Common Stock would have been
entitled upon such consolidation or merger, or without further consideration
other than the delivery of the certificate or certificates representing the 14%
Convertible Preferred Stock upon such consolidation or merger.
7. REDEMPTION. The Company may redeem at any time, and from time
to time, upon delivery of written notice of such redemption to the holder
thereof, shares of 14% Convertible Preferred Stock and accrued and unpaid
dividends thereon at a redemption price of $60 per share for each share
redeemed, with a proportionate amount for each fractional share (the
"Redemption Price"). The holder of each share of 14% Convertible Preferred
Stock shall have the right to convert the 14% Convertible Preferred Stock into
Common Stock in accordance with the provisions of paragraph 5 hereof within
twenty (20) days of receipt of the notice of such redemption. The twenty-first
day after receipt of such notice of redemption shall be the "Optional
Redemption Date."
On June 30, 2000 (the"Mandatory Redemption Date"), the Company
shall redeem all shares of 14% Convertible Preferred Stock then outstanding and
all accrued and unpaid dividends thereon, at the Redemption Price.
Upon the earlier of the Optional Redemption Date or the
Mandatory Redemption Date (a "Redemption Date") (provided that payment thereof
is made available by the Company on the Redemption Date) holders of the 14%
Convertible Preferred Stock to be redeemed on such date shall cease to be
stockholders with respect to such shares and thereafter such shares shall no
longer be transferable on the books
35
<PAGE> 37
of the Company and holders of the 14% Convertible Preferred Stock shall have no
interest in or claim against the Company with respect to such shares except the
right to receive payment of the Redemption Price. The Board of Directors shall
cause the transfer books of the Company to be closed as to shares to be
redeemed. Any redemption of the 14% Convertible Preferred Stock shall be
accomplished with funds legally available for such purpose.
8. VOTING. Except as provided by law, the holders of shares of
14% Convertible Preferred Stock shall have not voting rights whatsoever.
36
<PAGE> 1
EXHIBIT 4.2
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (THE "1933 ACT") AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO SEC RULE 144 OR THERE
IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING SUCH
SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT.
PHONETEL TECHNOLOGIES, INC.
---------------------------
10% PREFERRED STOCK, WITHOUT PAR VALUE,
$10 STATED VALUE, CUMULATIVE AND REDEEMABLE
AUTHORIZED 550,000 SHARES CERTIFICATE NO. _________
__________________ SHARES
THIS CERTIFIES THAT _____________________________ is the owner of
__________ fully paid and non-assessable shares of the 10% Non-Voting Preferred
Stock, without par value, $10 stated value, cumulative (the "10% Non-Voting
Preferred Stock") of PHONETEL TECHNOLOGIES, INC., an Ohio corporation (the
"Company"), transferable only upon the books of this Company by the holder
hereof in person or by duly authorized attorney upon surrender of this
certificate duly endorsed.
The 10% Non-Voting Preferred Stock shall have the following
designations, powers, preferences and rights, and shall be subject to the
following qualifications, limitations and restrictions:
1. DESIGNATION OF STOCK. The new 10% Preferred Stock, Without Par Value,
$10 Stated Value, Cumulative, shall bear the designation "10%
Non-Voting Preferred Stock".
2. NUMBER OF SHARES. The maximum number of shares of 10% Non-Voting
Preferred Stock shall be 550,000.
3. DIVIDENDS. Holders of record of shares of 10% Non-Voting Preferred
Stock shall be entitled to receive, when and as declared by the Board
of Directors out of funds legally available for the payment of
dividends, cumulative dividends at the annual
<PAGE> 2
rate of $1.00 per share, and no more, payable in cash in equal quarterly
payments. Such dividends shall be payable on the last business day of
each March, June, September and December (hereinafter referred to as a
"Dividend Payment Date") commencing in the first of such months
occurring nine (9) months subsequent to the effective date of the merger
(the "Merger") of World Communications, Inc. with and into PhoneTel II,
Inc. (the "Merger Date") to persons who are holders of record on the
immediately preceding March 15, June 15, September 15, or December 15,
as the case may be (a "Record Date"). Such dividends with respect to any
share of 10% Non-Voting Preferred Stock shall accrue (whether or not
declared) from the date of issue thereof.
So long as any of the 10% Non-Voting Preferred Stock is outstanding, the
Company will not declare or pay or set apart for payment any dividends
(other than a dividend in Common Stock or in any other class of stock
ranking junior to the 10% Non-Voting Preferred Stock both as to
dividends and upon liquidation) or make any other distribution on any
class of Company stock ranking junior to the 10% Non-Voting Preferred
Stock either as to dividends or upon liquidation and will not redeem,
purchase or otherwise acquire for value, or set apart money for any
sinking or other analogous fund for the redemption or purchase of, any
shares of any such junior class unless all dividends on the 10%
Non-Voting Preferred Stock for all Dividend Payment Dates prior to or
concurrent with the payment with respect to any such dividend,
distribution, redemption, purchase or acquisition as to such junior
class (in any such case, a "Junior Payment"), and, if the Junior Payment
does not occur on a Dividend Payment Date for the 10% Non-Voting
Preferred Stock, for the next succeeding Dividend Payment Date, shall
have been paid. The foregoing notwithstanding, the holders of fifty
percent (50%) or more of the outstanding 10% Non-Voting Preferred Stock
may approve any redemption or purchase of any of the securities listed
above. Further, the Company may purchase its Common Stock for purposes
of fulfilling payment of employee benefits or for which the Company has
agreements effective prior to the issuance of the 10% Non-Voting
Preferred Stock.
4. LIQUIDATION. The shares of 10% Non-Voting Preferred Stock shall be
preferred over the shares of Common Stock and any other series of
Preferred Stock other than the 12% Convertible Preferred Stock, $100.00
Stated Value, Cumulative and Redeemable ("12% Preferred Stock"), the 10%
Preferred Stock, $1,000.00 Stated Value, Cumulative and Redeemable ("10%
Preferred Stock"), the 8% Preferred Stock, $100.00 Stated Value,
Cumulative and Redeemable ("8% Preferred Stock"), and the 7% Convertible
Preferred Stock, $100.00 Stated Value, Cumulative and Redeemable ("7%
Preferred Stock"), as to assets so that in the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the 10% Non-Voting Preferred Stock shall be
entitled to receive out of the assets of the Company available for
distribution to its stockholders, whether from capital, surplus or
earnings, before any distribution is
-2-
<PAGE> 3
made to holders of shares of Common Stock or any other series of
Preferred Stock, but only after distribution is made to the holders of
the 12% Preferred Stock, the 10% Preferred Stock, the 8% Preferred Stock
and the 7% Preferred Stock, an amount equal to $100.00 per share plus
all dividends (whether or not earned or declared) accrued and unpaid on
the shares of 10% Non-Voting Preferred Stock to the date payment is
made. If, upon any liquidation, dissolution or winding up of the
Company, the assets of the Company, or proceeds thereof, distributable
among the holders of 10% Non-Voting Preferred Stock are insufficient to
pay in full the preferential amount aforesaid, then such assets, or
proceeds thereof, shall be distributable among such holders ratably in
accordance with the respective amount which would be payable on such
shares if all amounts payable thereon were payable in full.
For the purposes of this paragraph 4 neither the voluntary sale, lease,
conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or
assets of the Company, nor the consolidation or merger of the Company
with one or more other companies, shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, unless such
voluntary sales, lease, conveyance, exchange or transfer shall be in
connection with a plan of liquidation, dissolution or winding up of the
Company.
5. PUT RIGHTS. Any holder of 10% Non-Voting Preferred Stock which is not
convertible into common shares by its express terms may, at any time
subsequent to the date which is 15 months after the Merger Date, but
prior to the date which is 26 months after the Merger Date, put all, but
not less than all, of his, her or its shares of 10% Non-Voting Preferred
Stock to the Company by giving written notice of the exercise of such
put right to the Company and delivery of the shares of 10% Non-Voting
Preferred Stock held by such holder to the Company (the "Put Notice").
Within ten (10) days of the Company's receipt of the Put Notice, the
Company shall purchase all shares of 10% Non-Voting Preferred Stock so
delivered to the Company at a price of $30.00 per share.
6. VOTING. Except as provided by law, the holders of shares of 10%
Non-Voting Preferred Stock shall have no voting rights whatsoever.
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by its duly authorized officers as of the ______ day of September, 1995.
PHONETEL TECHNOLOGIES, INC.
By_________________________________
Its________________________________
-3-
<PAGE> 4
ATTEST:
____________________________________________
Title______________________________________
For value received ________________________________________hereby sell,
assign and transfer unto
Please insert social security or other
identifying number of assignee
________________________________________________________________________________
________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
________________________________________________________________________________
the Shares represented by the within Certificate, together with all right,
title and interest therein and do hereby irrevocably constitute and appoint
________________________________________________________________________________
________________________________________________________________________________
attorney, to transfer said Shares on the books of the Company, with full power
of substitution in the premises.
Dated: ____________________________, 19_______
Signature:______________________________________________________
NOTE: The above signature must correspond with the name
written upon the face of this Certificate in every particular
without alteration or enlargement or any change whatever.
Signature Guaranteed:
-4-
<PAGE> 1
EXHIBIT 4.3
SEE LEGEND ON REVERSE
CERTIFICATE NO. _____ SHARES _____
{ STANDARD }
{ WINGS SPREAD, EAGLE LOGO }
PREFERRED STOCK
THIS CERTIFIES THAT _____________________________________________ is the owner
of _______________________________________________________________ fully paid
and non-assessable Shares of the Capital Stock of the above named Corporation
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ____ day of ____________ A. D. 19 _____
_________________________ _________________________
SECRETARY/TREASURER CHAIRMAN/PRESIDENT
<PAGE> 2
The shares evidenced by this certificate have been acquired for
investment and have not been registered under The Securities Act of 1933, as
amended (The "ACT"), and may not be offered, sold or otherwise transferred,
pledged or hypothecated to any entity other than the issuer unless and until
registered under the Act and any applicable state securities laws or unless, in
the opinion of counsel satisfactory to the issuer, in form and substance
satisfactory to the issuer, such offer, sale, transfer, pledge or hypothecation
is exempt from registration or is otherwise in compliance with the act and such
laws.
The Corporation will mail to the shareholder a copy of the express terms
of the 14% Convertible Preferred Stock within five (5) days after the receipt of
written request therefor.
<PAGE> 1
EXHIBIT 10.55
SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") is made and entered into
this 15th day of September, 1995, by and between PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation (the "Company"), and JERRY BURGER, an individual residing
at 27020 Cedar Rd. Apt. 304, Beachwood, Ohio 44122 (the "Executive").
WHEREAS, a certain Employment Agreement dated May 1, 1995, has been
made and entered into between the Company and the Executive; and
WHEREAS, the Company has requested that the Executive resign as
director, officer and employee with the Company and the Executive agrees to so
resign effective as of the date of this Agreement; and
WHEREAS, this Agreement is executed in connection with the Executive's
said resignations and is an incident thereto;
NOW THEREFORE, in consideration of the mutual promises contained
herein, the adequacy and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the Company and the Executive agree as
follows:
1.00 DEFINITIONS. The parties agree to defined terms as follows:
1.01 EMPLOYMENT AGREEMENT. As used in this Agreement, the term "Employment
Agreement" refers to the agreement between the Executive and the Company
entered into as of the first day of May, 1995.
<PAGE> 2
1.02 SEPARATION DATE. As used in this Agreement the term "Separation Date"
is SEPTEMBER 15, 1995.
1.03 PERIOD OF ASSOCIATION As used in this Agreement, the term "Period of
Association" or "Executive's Association" refers to the Executive's entire
period of employment under the Employment Agreement or its predecessors and
periods of employment for which no written agreement was in force and
continuing until the execution of this agreement.
1.04 AFFILIATE. As used in this Agreement, the term "Affiliate" refers to
any other business conducted by the Company with respect to which the Company
derived twenty five percent (25%) or more of its revenues during the
Executive's Association.
1.05 CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"Confidential Information" shall mean and include, to the extent applicable,
(i) the procedures, equipment, layout, distribution, methods, or engineering or
technical information used in the Company's operation; (ii) the agreements,
arrangements, plans, financial data, or policies, and marketing, sales, service
cost or other commercial information of the Company's business; (iii) the
descriptions, specifications, numbers, names, characteristics, costs, prices,
performance, suitability, and other information relating to the Products of the
Company; (iv) the names, addresses, contact persons, and purchasing histories,
preferences, prices, or frequency, and credit standing, and other information
relating to the Company's Customers; (v) the names, addresses, and sales
representatives, histories, preferences, prices, or frequency, and credit
standing, and other information relating to the Company's present suppliers;
(vi) the names and
2
<PAGE> 3
addresses of, amounts of compensation paid to, and the performance of the
Company's employees, officers and agents; and (vi) all inventions and
discoveries and all other trade secrets and information proprietary to the
Company which are used in the Company's business and which give the Company an
opportunity to obtain an advantage over competitors who did not know them.
Notwithstanding the foregoing, the term "Confidential Information" shall not
include any information which is or becomes available to the public other than
as a result of a disclosure by the Executive.
1.06 CUSTOMER. As used in this Agreement, the term "Customer" shall mean
any person or entity that has ordered or purchased a material amount of Product
from the Company at any time during the past one (1) year or any person or
entity which is a party with the Company to a national account management
contract. A "material amount" as used herein includes products associated with
not less than twenty (20) pay telephones.
1.07 PRODUCTS. As used in this Agreement, the term "Products" shall mean
pay telephones or operator services.
1.08 OPTION AGREEMENTS. As used in this Agreement, the term "Option
Agreement" refers to the Amended and Restated Stock Option Agreement entered
into between the Company and the Executive as of May 1, 1995.
2.00 INTERPRETATIVE RULES. Whether or not capitalized, the following shall
be the method of interpreting the language of this Agreement.
2.01 TIME. Unless stated expressly otherwise, as used in this Agreement
the time of performance measured in days or months shall refer to whole
calendar days or months, but time measured in years refers to a period of
twelve (12) consecutive months without
3
<PAGE> 4
regard to the calendar year of which they are a part. Time measured in months
after an occurrence shall be the period calculated beginning on the first of
the month nearest to the occurrence and shall have added to or subtracted from
it the period remaining in the month of the occurrence. Rounding, if necessary,
shall be back in even numbered months and forward in odd numbered months of the
calendar year.
2.02 HEADINGS. The headings contained for any provision hereof are for
purposes of reference and shall not modify, amend or affect the terms the
Agreement.
2.03 AND/OR. As used in this Agreement, the terms "and," "or" and
"and/or" and their negatives are not to be construed to exclude the conjunctive
connotation by the disjunctive nor the disjunctive connotation by the
conjunctive.
2.04 INCLUSION. As used in this Agreement, the term "including" or its
variants are not a term of limitation but of illustration.
2.05 PRONOUNS. As used in this Agreement, the male and female pronouns and
the singular and plural pronouns are interchangeable without change of meaning.
2.06 DIRECTLY OR INDIRECTLY. As used in this Agreement, "directly or
indirectly" means on the Executive's own account or as a shareholder, partner,
joint venturer, principal, employee or representative or agent of or consultant
to any persons, firm, association, partnership, venture, corporation, family
member or other entity.
3.00 UNDERTAKINGS BY THE COMPANY. As and for part of its consideration,
the Company shall undertake the following:
4
<PAGE> 5
3.01 SEVERANCE PAYMENTS. Effective upon the occurrence of dates shown
below, the Company shall pay to the Executive, and the Executive shall
receive, the following sums:
(i) Upon the execution by the Executive of this Agreement
and the general release of claims against the
Company, attached hereto as EXHIBIT B, the
"Executive's General Release" ONE HUNDRED FIFTY
THOUSAND DOLLARS ($150,000.00).
(ii) Upon the Effective Date of the Executive's General
Release (as such date is defined in paragraph 2(b) of
the Executive's General Release), FIFTY-FIVE THOUSAND
DOLLARS ($55,000).
(iii) Upon the earlier of January 31, 1996, or the closing
of a sale of the Company to another company in the
pay telephone industry having not less than
twenty-five hundred (2,500) units, or the completion
of a recapitalization, in one transaction or a series
of transactions, or other financing transaction in
which additional equity or debt financing is infused
into the Company in a gross amount equal to or
exceeding Four Million Dollars ($4,000,000), the sum
of FOUR HUNDRED FORTY-FIVE THOUSAND DOLLARS
($445,000.00).
(iv) Upon the execution by the Executive of this
Agreement, the Company shall deliver to the Executive
a Cognovit Promissory Note, substantially in the form
attached hereto as EXHIBIT E (the "Note"), evidencing
the Company's obligation to pay to the Executive the
amount of FOUR HUNDRED FORTY-FIVE THOUSAND DOLLARS
($445,000.00) as provided for in Section 3.01 (iii)
above.
(v) The Company further agrees to provide written notice
to any such entity acquiring the Company or
participating in the recapitalization of the Company,
no later than ten (10) days prior to the closing of
such sale or recapitalization and with a copy to the
Executive, setting forth the Company's irrevocable
instruction and agreement that the entire principal
amount of the Note and all interest accrued thereon
be paid to the Executive as of the closing of such
acquisition or recapitalization.
3.02 MEDICAL INSURANCE BENEFITS. The Company shall continue to provide the
Executive with hospitalization/health care, and dental insurance benefits,
family coverage, for a
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twenty-three (23) month period commencing on September 1, 1995 and continuing
for a period ending JULY 31, 1997. It is the intention of the Company that,
absent a legal requirement upon it, the extension of these insurance benefits
shall not reduce the period in which the Executive may purchase continuation
coverage under COBRA Title X. If, for any reason whatsoever, the Company does
not continue to provide the Executive with the extension of such insurance
benefits, unless otherwise agreed in writing on or after January 31, 1996, the
Company agrees to provide the Executive payment of a monthly amount in lieu of
such insurance benefits in an amount equal to the monthly cost to the Company
to secure such insurance benefits at the greater of the cost as of Separation
Date or the date of termination of such insurance benefits.
3.03 EMPLOYMENT AND OTHER EXPENSES. The Company agrees to reimburse the
Executive for any and all reasonable expenses incurred by the Executive prior
to the Separation Date and otherwise accounted for in accord with policies and
procedures established by the Company. Thereafter, except as otherwise
provided for herein, or unless otherwise agreed in writing hereafter, no
expense shall be reimbursable to the Executive under the terms of this
Agreement absent prior written approval by the Company.
3.04 AUTOMOBILE. The Executive agrees to maintain the present lease
arrangement for his Company Automobile under the lease between the lessor and
the Company, and unless otherwise agreed in writing on or after January 31,
1996, the Company agrees that commencing after September 1, 1995, It shall pay
to such lessor the succeeding twenty-four (24) monthly lease payments until the
date that is twenty-four (24) months from
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September 1, 1995. Any charges at the end of the twenty-four (24) month period
for excess wear and tear or excess mileage shall be the expense of the
Executive. For purposes hereof the Company Automobile is the Mercedes Model
300SL used by the Executive prior to the Separation Date. The Company shall
cease insurance coverage thereof as of September 30, 1995 and shall then enter
such sublease as will provide the Executive with an insurable interest therein.
3.05 STOCK OPTIONS. The Company hereby confirms its grant to the Executive of
New Options to purchase three hundred seventy-five thousand (375,000) of the
New Options under the Option Agreement as further amended herein. The Company
further confirms the prior grant to the Executive of three hundred eighty-nine
thousand one hundred seventy-one (389,171) Original Options and Prior Options
under the Option Agreement, all of which three hundred eighty-nine thousand one
hundred seventy-one (389,171) Original Options and Prior Options are vested as
of the date hereof, and confirms that such Original Options and Prior Options,
when aggregated with the New Options, provide to the Executive a total of seven
hundred sixty-four thousand one hundred seventy-one (764,171) options
(collectively, the "Options"). The parties agree that, notwithstanding
anything to the contrary in this Agreement or the Option Agreement, the
Executive's exercise price for the Options is One Dollar ($1.00). The Option
Agreement shall be amended in accord with the following and to the effect of
this provision:
3.051 The title of the Option Agreement wherever it appears shall be the:
"Amended and Restated Stock Option Agreement, as amended September 15,
1995."
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3.052. As to the recitals:
A. The following recital shall be inserted after the third and before
the original fourth recital:
WHEREAS, the Company and Optionee have entered into a Separation
Agreement fully terminating and replacing said Employment Agreement as
of midnight preceding September 15, 1995."
B. The term "Employment Agreement" shall have substituted for it the
term "Separation Agreement" in the last recital and thereafter wherever such
term appears including without limitation Sections 1, 5, 7(b), and 16 of the
Option Agreement.
3.053 The last sentence of Section 1 of the Option Agreement, GRANT OF
OPTIONS: VESTING SCHEDULE, shall be deleted and replaced with the following:
The New Options shall vest as follows: seventy-five thousand (75,000)
on May 1, 1995 and three hundred thousand (300,000) on September 15,
1995 as otherwise specified in the Separation Agreement, the
provisions of which are hereby incorporated herein by this reference.
3.054 Section 2 of the Option Agreement, TIMING OF EXERCISE, shall be deleted
and rewritten as follows;
The Optionee may exercise those Options which have vested (the "Vested
Options") at any time, in whole or in part, on or after the Separation
Date (as defined in the Separation Agreement) but before August 31,
1997.
3.055 Section 5 of the Option Agreement, EXPIRATION OF UNEXERCISED OPTIONS,
shall be amended to read as follows:
Notwithstanding any provision of this Option Agreement or the
Separation Agreement to the contrary, all vested Options expire as of
midnight preceding August 31, 1997 if not exercised, or forfeited
earlier.
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3.056 Section 12 of the Option Agreement, NOTICES, shall be amended to
substitute the name and title "Tammy Martin, Esq. General Counsel" for the name
and title of "Jerry M. Burger, Chief Executive Officer."
3.06 PERSONAL PROPERTY. The Company shall grant the Executive possession
and title to the office furniture and permit removal of all his personal
effects if any as listed on the Receipt for Executive's Personal Property
attached as EXHIBIT D. Unless otherwise agreed in writing hereafter, such
removal of effects shall be by close of business September 25, 1995 and at the
Executive's sole expense.
3.07 COMPANY LEASEHOLD. If at any time Company makes a bona fide offer to
lease or sublease, or receives a bona fide offer acceptable to Company to lease
or sublease all, part or any interest in the Premises (an "Offer"), Company
shall give to Executive written notice of such offer (the "Notice"), which
Notice shall contain a copy of the Offer, the rental price and terms of the
Offer. Executive shall have the first right and option (the "Right of First
Refusal") to lease or sublease the Premises upon the same terms, conditions and
rental price of the Offer for a period of fifteen (15) days following receipt
of the Notice. Executive shall exercise the Right of First Refusal by giving
written notice thereof to Company within said fifteen (15) day period.
Exercise of the Right of First Refusal shall obligate Executive to lease or
sublease the Premises or such part of or interest in the Premises specified in
the Offer. In the event that Executive shall fail or refuse to exercise the
Right of First Refusal within the said fifteen (15) day period, then Company
shall be free to lease or sublease the Premises (or such portion or interest
specified in the Offer), but only upon the terms and conditions and for the
rental price stated in the Offer. If the Premises (or such portion or interest
specified in the Offer) shall
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<PAGE> 10
not be leased or subleased upon the terms and conditions or for the rental
price stated in the Offer, then the Premises shall once again be subject to the
Right of First Refusal in the manner set forth above. The Premises is defined
as 650 Statler Office Tower, 1127 Euclid Avenue, Cleveland, Ohio 44115.
4.00 UNDERTAKINGS BY THE EXECUTIVE
As and for part of its consideration the Executive shall undertake the
following, including the making of acknowledgements to the Company shown below
on which it may rely:
4.01 RESIGNATION. The Executive acknowledges he has resigned as director,
officer and employee to the Corporation effective SEPTEMBER 15, 1995, in
writing with evidence thereof attached as EXHIBIT A. Unless additional time is
granted in writing by the Company, and subject to the Executive's right to
remove personal property pursuant to Section 3.06 above, the Executive shall
vacate the premises of the Company by no later than 48 hours after signature
hereto subject to the Company's right of supervision, control and access to the
premises outside of business hours which will not be exercised unreasonably.
Subject only to the provisions of Exhibit A, by this Agreement the Executive
acknowledges he has voluntarily resigned from his employment with the Company
by mutual agreement.
4.02 SALARY. Except as otherwise expressly provided for herein, the
Executive agrees as of September 1, 1995 to cease from taking or requesting any
further compensation from the Company including, but not limited to, any claim
for back wages, vacation pay, personal or sick days, deferred compensation, the
Executive Incentive Plan payments or bonuses however based or calculated, with
the sole exception of the unpaid balance of
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the 1994 bonus under the Executive Incentive Plan payable, unless otherwise
agreed in writing hereafter, in the ordinary course.
4.03 OTHER BENEFITS AND INSURANCE. The Executive acknowledges receipt of
notice hereby that he may have rights to convert the Company's group disability
and life insurance policies to individual policies under their terms and at his
sole expense. The Executive acknowledges his participation in employee benefit
plans and arrangements is terminated as of midnight before September 1, 1995
and that he shall have the rights and privileges as any other terminated
participant.
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4.04 RETURN OF PROPERTY. Upon execution of this Agreement, the Executive
shall immediately deliver to the Company all company credit cards with VISA,
Master Card, American Express and Shell Oil, and all keys and security passes,
all tangible materials in his possession wheresoever they may be located
including documents or records of information not otherwise in the Company's
possession such as those concerning any part of the Company's activities or
concerning any part of the Executive's activities on behalf of the Company and
the Executive's own notes except that the Executive may retain copies of such
tangible things, documents, records or notes.
4.05 PROTECTION OF RIGHTS. The Executive shall assist the Company at its
request in the prosecution or defense of any action or proceeding relating to
or arising from any cause or matter whatsoever including matters pending in a
court of law or any agency or department of local, state or federal government
related to the Executive's Association with the Company, including, without
limitation, giving testimony and depositions, reviewing documents, and
consulting with the Company and its legal or financial counsel at such times
and locations as may reasonably be requested by the Company. The Executive
shall be available to assist the Company with such matters as requested and
directed by the Company for a period of ninety (90) days after the Separation
Date for a maximum of ten (10) hours per workweek (on a noncumulative and
nonaccrued basis). All such consulting services provided by the Executive shall
be at the Executive's sole expense with the exception of reasonable allowance
for travel, meals and lodging as agreed in advance in writing by the Company.
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4.06 CONFIDENTIALITY AND NONCOMPETE AGREEMENT.
4.061 The Executive, in exchange for the undertakings of this Agreement,
agrees that, within the geographical area of any county in any state wherein
the Company, as of the Separation Date, owns and operates in excess of two
hundred (200) pay telephones (the "Territory") and until midnight on December
31, 1996:
A. the Executive will neither, directly or indirectly, solicit
or contact any Customers in the Territory presently served by the
Company for the purposes of engaging with such Customer in any
business or activity which is in competition with any Product of the
Company nor shall the Executive, directly or indirectly, become
engaged in any business or activity in the Territory which is in
competition with any Product of the Company nor shall the Executive
otherwise divert or attempt to divert any material portion of the
existing business of the Company or any Affiliate in the Territory
except that the Executive shall be permitted to engage in, among other
noncompetitive activities, the following. In the event the Company
sells, vacates or abandons its pay telephone business in Las Vegas,
Nevada, prior to January 31, 1997, Executive, if he should give
evidence of funding satisfactory to the Company at the time, shall
have the first right to purchase said business. This right will exist
for fifteen (15) days after written offer is received. This exception
does not apply to any other means of disposition of the Las Vegas pay
telephone business by the Company including by exchange.
B. The Executive will not, either directly or indirectly,
solicit, induce, recruit or cause any person in the employ of the
Company to terminate his/her employment for the purpose of joining,
associating or becoming employed with any business or activity which
is in competition with any Product of the Company or any Affiliate;
and
C. The Executive will not, either directly or indirectly,
except as required in the conduct of the Company's business, in the
conduct of complying with the terms of this Agreement, or otherwise as
authorized in writing by the Company, use, publish, disclose,
appropriate or communicate any Confidential Information which the
Executive, in any way, has acquired or may acquire during, or by
reason of, the Executive's Association with the Company for the
purpose of engaging in any business or activity within the Territory
which is in competition with any Product of the Company.
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4.062 The Executive recognizes and acknowledges that the Company's
Confidential Information is unique and valuable and that loss of control
thereof to any person other than the Company may cause irreparable harm that is
not remediable by money damages. The Executive understands that all the
Executive's promises under Section 4.061 above are material to the Company's
performance and that any material breach by the Executive shall constitute
irreparable harm to the Company.
4.063 The Executive understands that, in the event of a violation of the
provisions of Section 4.061 by the Executive, the Company shall have the full
right to seek injunctive relief in addition to any other existing remedies
available under this Agreement or by operation of law, without the requirement
of posting bond.
4.064 Notwithstanding the foregoing, the Company agrees that, in the event
that the Company fails to pay any sum of money due the Executive within fifteen
(15) days after the Company has received written notice from the Executive
specifically setting forth the Company's non payment, in addition to any other
existing remedies available under this Agreement or by operation of law,
Section 4.061 shall cease and shall no longer be of any force or effect.
5.00 UNDERTAKINGS BY THE EXECUTIVE AND THE COMPANY:
As and for part of the consideration hereunder, both the Company and
the Executive agree as follows:
5.01 TERMINATION OF AGREEMENTS. With the sole exception of the Option
Agreement and this Agreement, effective upon execution of this Agreement, the
Employment Agreement and any and all other agreements between the Company and
the Executive, whether in
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writing or otherwise, shall be fully terminated by this Agreement, such that
the Employment Agreement and such other agreements shall have no further force
or effect. This Agreement shall fully supersede the Employment Agreement and
substitutes for the recitation of all the terms and conditions of the
relationship of the Executive and the Company commencing on the Separation
Date. Except as otherwise set forth in this Agreement or the Option Agreement,
the parties warrant that all claims, rights, duties or privileges that either
party could have otherwise demanded of the other party pursuant to the
Employment Agreement or such other agreements are understood to be fully
discharged hereby.
5.02 PUBLICATION OF AGREEMENT. The parties agree that the exclusive method
by which information regarding the Executive's separation from employment with
the Company and the terms of this Agreement shall be published is by a mutually
acceptable press release.
5.03 RELEASES. The parties shall exchange general releases of claims,
damages, losses and disputes as shown in attached EXHIBIT B by the Executive
and EXHIBIT C by the Company. The release by the Company EXHIBIT C shall be
delivered to the Executive upon the effective date of Paragraph 2(b) of the
Executive's release, EXHIBIT B.
5.04 PURCHASES BY THE EXECUTIVE. Until midnight December 31, 1996 and
provided the Executive has not engaged in competitive activities as governed by
Section 4.06 ET SEQ. hereof, the Company and Executive acknowledge that the
Executive may contract for goods or services from the Company from time to time
after the Separation Date. To that extent and provided that no such contract
causes the Company to breach any agreements with a Customer, the Company agrees
that any telephones sold to the
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Executive will be invoiced at cost plus $5.00 and any and all other goods sold
or services rendered to the Executive will be invoiced at cost plus 5% except
that the Executive agrees to pay for all such goods and services in advance and
otherwise in accordance with the invoice. The Company agrees that the season
tickets for the Cleveland Browns used from time to time by the Company and the
Executive, shall be become and remain the property of the Executive, provided,
however, the Company and the Executive agree that the Company shall be entitled
to a credit for the cost of such season tickets previously paid for the 1995-96
season, net of tickets used by the Company, which credit shall be deducted from
any amounts owing to the Executive under the Note.
6.00 MISCELLANEOUS PROVISIONS The Executive and Company further agree as
follows:
6.01 INDEMNITIES. OFFSETS. The Company and Executive agree as follows:
6.011 Should the Company become liable in any way to third parties with
respect to claims, demands or losses which such party has or made against the
Executive other than in his capacity as a former director and/or officer of the
Company, any amounts paid in satisfaction shall be offset against the Note and
any Company Undertakings still due including unexercised stock options upon
exercise thereof. To the extent that any offset is made pursuant to this
Section 6.011, the Company shall provide to the Executive written notice
fifteen (15) days in advance of the amount to be offset and a description
thereof. Notwithstanding the foregoing, it is understood that for the period
of four (4) years after the Separation Date, the Company shall defend and
indemnify the Executive for any claims, demands, or losses due to liability of
the Executive as a director and/or
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<PAGE> 17
officer of the Company but only to the extent and on the same basis as the
Company may defend and indemnify other directors and officers during that
period to the full extent permitted under the Company's Articles of
Incorporation or Code of Regulations and will undertake and pursue such defense
in good faith and full cooperation with the Executive.
6.012. In addition to any other existing remedies available under this
Agreement or by operation of law, the Company's payment of the principal amount
of the Note and all interest accrued thereon and any Company Undertakings still
due including unexercised stock options upon the exercise thereof are subject
to the condition that the Executive not have materially breached his
obligations under this Agreement, which material breach is not cured by the
Executive within fifteen (15) days after the Executive has received written
notice from the Company specifically setting forth such material breach
provided that said fifteen (15) day period shall be extended so long as the
Executive is proceeding in good faith to cure such material breach to the
satisfaction of the Company.
6.02 SEVERABILITY. Should one or more of the provisions of this Agreement
or its attachments, in whole or in part, be held to be invalid or unenforceable
for any reason by a court of competent jurisdiction, such invalidity or
unenforceability shall not affect any other part or provision. Should any
provision as to a period of time or a geographic area for performance of any
undertaking be found to be unreasonable by a court of competent jurisdiction,
the Company shall be entitled to enforce such provision for such time or in
such area as may be determined to be reasonable.
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6.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be enforceable as an original.
6.04 NOTICES. Notices, demands and all communications provided for in
this Agreement shall be in writing and shall be deemed to have duly been given
when personally delivered by the Executive or by messenger service or mailed by
U.S. certified mail, return receipt requested, postage prepaid, addressed as
follows:
To the Executive: Jerry Burger
27020 Cedar Rd. Apt. 304
Beachwood, Ohio 44122
To the Company: PhoneTel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, Ohio 44115
Attention: Tammy Martin, Esq.
A change of address for Notices may be made unilaterally by a party but shall
be made in conformity with this provision.
6.05 AMENDMENT AND WAIVER. This Agreement may be changed, modified or
waived only by a writing signed by the parties hereto affected by such change,
modification or waiver. Failure to enforce any provisions of this Agreement
shall not constitute a waiver. A waiver hereunder or failure to enforce any
provision shall not constitute a continuing waiver.
6.06 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of only the parties hereto and their respective
successors and assigns. The Executive may not assign his rights under this
Agreement to any other person or entity without the prior written consent of
the Company except that this Agreement and all rights
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of the Executive hereunder shall be enforceable by the Executive's personal
representative, executor, administrator, guardian, conservator, heirs, devisee
and legatees. Unless otherwise provided, any amounts due the Executive
hereunder at the time of his death shall be paid under the terms of this
Agreement to his estate.
6.07 GOVERNING LAW AND FORUM. This Agreement shall be construed and
enforced in accordance with the laws of the State of Ohio applicable to
contracts executed or performed therein. All actions arising from or relating
to this Agreement shall be commenced in a federal or state court of competent
jurisdiction located within Cuyahoga County, Ohio, and the Company and
Executive hereby consent to the exercise of jurisdiction by and venue in any
such court.
6.08 COMPLETE AGREEMENT. This Agreement constitutes the entire Agreement
among the parties and supersedes any prior written or oral promise, negotiation
or agreement. There are no oral or written collateral agreements and no oral
or written conditions, precedent or subsequent, other than as set forth in this
Agreement, which in any way modify, limit or affect the enforceability hereof.
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IN WITNESS WHEREOF, Company has caused this Agreement to be executed
by its duly authorized officer and the Executive has executed this Agreement,
each as of the date first above written.
EXECUTIVE
/s/ Jerry H. Burger
________________________________________
Jerry H. Burger
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel J. Moos
_____________________________________
Officer
Its: Senior VP & CFO
____________________________________
Officer Title
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EXHIBIT A
EXECUTIVE'S RESIGNATION
September 15, 1995
To whom it may concern:
I hereby voluntarily resign my position as director, officer and
employee of PhoneTel Technologies Inc. effective as of midnight before
September 15, 1995 in order to pursue other opportunities. I understand that
my Employment Agreement is hereby amended to change my title and duties to
those of a consultant pending my execution of the Separation Agreement between
myself and the Company by close of business September 25, 1995.
/s/ Jerry Burger
________________________________________
Jerry Burger
Acknowledged and Accepted
PhoneTel Technologies, Inc.
By: /s/ Daniel Moos
________________________________
Its EVP
_________________________________
Date September 15, 1995
_______________________________
<PAGE> 22
EXHIBIT B
FULL RELEASE BY THE EXECUTIVE
THIS FULL RELEASE BY THE EXECUTIVE is made and entered into by and between
JERRY BURGER ("Executive") and PHONETEL TECHNOLOGIES, INC. ("Company") this
15TH day of September, 1995.
WITNESSETH THAT:
WHEREAS, the parties desire to make arrangements for the orderly and
complete termination of their existing relationships;
WHEREAS, the Company has agreed to pay certain monies to Executive and
to provide certain undertakings for his benefit in return for Executive
releasing any claims he may have against the Company; and
WHEREAS, the parties desire to set forth that arrangement in writing.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the adequacy and sufficiency of which is hereby acknowledged,
the parties agree as to the term of the Full Release as follows:
1. Executive for the sole consideration given by PHONETEL
TECHNOLOGIES, INC. and identified below at Paragraph 2 does hereby, with the
intention of binding Executive and his heirs, executors, administrators, and
assigns, (A) expressly release and discharge the said PHONETEL TECHNOLOGIES,
INC. and successors or assigns, and its agents, officers, employees,
shareholders, representatives and attorneys and any subsidiary and/or related
businesses (collectively herein referred to as "PHONETEL"), as stated in
paragraph 3, and (B) waives any right or interest in reinstatement to
employment by PHONETEL.
2. For consideration of the foregoing promises, actions and
forebearances by Executive, and for the Executive's waivers mentioned below,
PHONETEL shall:
(a) pay Executive the sum overall of $150,000.00 (ONE HUNDRED
FIFTY THOUSAND DOLLARS), upon the date of the execution hereof, and
<PAGE> 23
(b) provide as consideration for Executive signing this Agreement
and Release, a Special Severance Consideration in the form of
$55,000 (FIFTY-FIVE THOUSAND DOLLARS).
Such Special Severance Consideration shall be due and payable as
of the effective date of this Paragraph 2(b). The Executive
understands that this Special Severance Consideration is of
benefit and value which the Executive would NOT be otherwise
entitled to receive from the Company upon the termination of his
employment. This Paragraph 2(b) constitutes a full and complete
release between the parties for all employment claims which
Executive may have against the Company including those arising
under the AGE DISCRIMINATION IN EMPLOYMENT ACT as of the date that
the Executive signs this Full Release since as stated, the Full
Release is all inclusive. The Executive has been advised that he
should consult with an attorney to review this document before
signing it. The Executive has until ________________________
________________________ (at least 21 days after the date this
Agreement was first given to the Executive) to sign this Release
and receive the above-mentioned Special Severance Consideration
and has seven (7) days after signing this Agreement to revoke it.
The seventh day after signature by the Executive is the effective
date for this Paragraph 2(b).
EXECUTIVE HEREBY ACKNOWLEDGES THAT HE HAS READ AND UNDERSTANDS THE
TERMS OF THIS PARAGRAPH 2(b) AND ELECTS TO ACCEPT THE SPECIAL
SEVERANCE CONSIDERATION STATED HEREUNDER AS A FULL AND COMPLETE
SETTLEMENT FOR ANY CLAIMS THAT HE MAY HAVE AGAINST THE COMPANY
INCLUDING THOSE ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT. HE FURTHER ACKNOWLEDGES THAT HE HAS UP TO SEVEN (7) DAYS
AFTER THE EXECUTION OF THIS FULL RELEASE TO REVOKE THIS PORTION OF
THE RELEASE AND THAT THE SPECIAL SEVERANCE CONSIDERATION WILL NOT
BE PROVIDED TO HIM UNTIL THIS PARAGRAPH 2(b) BECOMES EFFECTIVE
AFTER THAT SEVEN (7) DAY PERIOD HAS PASSED.
(c) Enter into the Separation Agreement with the Company dated
September 15, 1995.
3. This Full Release is both individually and jointly effective
as to PHONETEL from all claims, expenses and/or damages under any Federal,
State, or local laws, statutes, legislation and/or constitution for all claims
or demands whatsoever in law or equity that Executive may have for both
economic and non-economic damages including compensatory, punitive, incidental,
and consequential damages of every type including without limitations those in
the nature of pain, suffering, embarrassment, humiliation, emotional distress,
damage to personal and professional reputation, loss, expense, back
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<PAGE> 24
pay, front pay, deferred compensation, lost fringe benefits and special damages
such as medical expense incurred by Executive in any event arising by any
occurrence prior to the date of the Executive's signature hereto. Without
limiting the generality of the foregoing, this Full Release pertains to (i) any
actions sounding in tort, contract, defamation or privacy of any kind, and/or
(ii) any cause of action arising under Federal, State or local laws prohibiting
any forms of discrimination, and/or (iii) any claims growing out of an
employer's obligation, if any, to provide or offer any form of compensation,
expenditure reimbursements or fringe benefits including claims under the
Employment Agreement of May 1, 1995 its predecessors or any written agreement,
plan, policy or employee benefit plan or any unwritten agreement of employment,
and/or (iv) any claims of interference with contract or business relation or
advantage, and (v) any claim for indemnity against the Company with respect to
claims, demands, losses, law suits, and expense made against the Executive by a
third party including without limitation by any creditor, the Internal Revenue
Service, a family member, spouse or ex-spouse for any cost, payment,
accounting, expense, cause or thing whatsoever and/or (vi) all of the charges,
claims, demands and causes of action asserted or which could have been asserted
and/or appealed by Executive in each event which arose by any occurrence prior
to the date of the Executive's signature hereto. The Executive waives all of
these rights with the sole exclusive exceptions of (i) rights for compensation
or medical benefits (if any) under the Worker Compensation Act of Ohio, (ii)
claims under any employee retirement plan as defined under the Employment
Retirement Income Security Act that have not arisen to this date and (iii) any
claim against the Company that may arise out of a personal injury sustained by
the Executive on or about October 21, 1994.
4. The Executive hereby instructs PHONETEL to make income tax or
FICA tax withholdings and make payments of FICA taxes and to in every other way
treat the amounts paid hereunder as wages, and further, the Executive
understands that the PHONETEL agrees that it will not issue a Form 1099
thereon.
5. It is understood that the above agreements by PHONETEL and
Executive are not to be construed as an admission by PHONETEL that it was
liable or responsible for personal injury, property loss, defamation,
discrimination, breach of contract, unfair employment practice, or interference
with business relation, or of any of the allegations noted above or any right
or obligation PHONETEL may have as an employer but that PHONETEL enters this
Full Release to buy its peace and fix its costs.
6. The Executive promises that he will exercise reasonable
efforts to maintain this Full Release in confidence so that neither any copy
nor the contents of this Full Release shall be disclosed by him to any person
or entity other than his attorneys and tax accountants and except that it may
be disclosed as required by law for its enforcement or to comply with any
government rule, regulation or mandate including disclosures, if necessary,
pursuant to the laws and regulations of the Securities and Exchange Commission.
Executive understands this promise is material to PHONETEL's performance and
that any breach by Executive shall constitute irreparable harm to
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<PAGE> 25
PHONETEL such that PHONETEL may seek immediate injunctive relief against the
Executive in addition to any remedies it may have at law.
7. This is the full agreement between PHONETEL and the Executive
relating to the subject matter hereof and the terms are contractual and not
recital and are controlled by the laws of the State of Ohio. Any provision
hereof found to be invalid or unenforceable by a court of competent
jurisdiction shall not affect the validity or enforceability of the remainder.
8. The Executive further states that he has read and fully
understands the foregoing Full Release and knows the contents hereof and states
that he did sign the same as his own free act and deed.
9. The effective date is the date of signature hereto except that the
effective date of Paragraph 2(b) is the seventh day thereafter.
IN WITNESS WHEREOF, I have hereunto set my hand before two witnesses
on the date shown below.
/s/ Patricia Rye /s/ Jerry Burger
_______________________________ ________________________________
WITNESS
/s/ G. Martin September 15, 1995
_______________________________ ________________________________
WITNESS DATE
ACKNOWLEDGED AND AGREED:
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel Moos
_______________________
Officer
Its: EVP
______________________
Officer Title
4
<PAGE> 26
EXHIBIT C
FULL RELEASE BY THE COMPANY
THIS FULL RELEASE BY THE COMPANY is made and entered into by and between JERRY
BURGER ("Executive") and PHONETEL TECHNOLOGIES, INC. ("Company") this _____ day
of September, 1995.
WITNESSETH THAT:
WHEREAS, the parties desire to make arrangements for the orderly and
complete termination of their existing employment relationship, and
WHEREAS, the Executive has agreed to provide certain undertakings for
the benefit of the Company in return for Company releasing any claims it may
have against the Executive,
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the adequacy and sufficiency of which is hereby acknowledged,
the parties agree as to the term of the Full Release as follows:
1. The Company with the intention of binding itself and its
successors or assigns, and its agents, officers, employees, shareholders,
representatives and attorneys and any subsidiary and/or related businesses
(collectively herein referred to as "PHONETEL") for the sole consideration
given by the Executive and identified below at Paragraph 2 do hereby, (A)
expressly release and discharge the said Executive and his heirs, executors,
administrators, and assigns , as stated in paragraph 3, and (B) waive any right
or interest in continued employment of the Executive.
2. For consideration of the foregoing promises, actions and
forebearances by Company, and for the Company's waivers mentioned below, the
Executive has or shall,on or before signature hereto unless otherwise stated:
(a) Resign his position of director, officer and employee of the
Company;
(b) Agree to the termination of his Employment Agreement of May 1,
1995 upon terms acceptable to the Company;
(c) Enter into and deliver to the Company a Full Release of claims;
(d) Enter into the Separation Agreement with the Company dated
September 15, 1995.
5
<PAGE> 27
3. This Full Release is effective as to the Executive from all
claims, expenses and/or damages under any Federal, State, or local laws,
statutes, legislation and/or constitution for all claims or demands whatsoever
in law or equity Company may have for both economic and non-economic
compensatory damages including without limitation any lost past or future
profits, special damages or expense, or damage in the nature of damage to
reputation incurred or suffered by Company. Without limiting the generality of
the foregoing, this release pertains to (i) any actions sounding in tort,
contract, defamation or fraud of any kind, and/or (ii) any claims under the
Employment Agreement of May 1, 1995 its predecessors or any written agreement,
plan, policy or employee benefit plan or any unwritten agreement of employment,
and/or (iii) any claims of breach of fiduciary duty, malpractice, and
misfeasance, nonfeasance or malfeasance in office, and/or (iv) any claims
growing out of any obligation, if any, of a director, officer or employee
and/or (v) any claims of interference with contract or business relation or
advantage, and/or (vi) all of the charges, claims, demands and causes of action
asserted or which could have been asserted and/or appealed by the Company which
arose by any occurrence prior to the date of the Company's signature hereto.
The Company waives all of these rights with the sole exclusive exceptions of
any claims that constitute or relate to breach of fiduciary duty under the
Employment Retirement Income Security Act.
4. It is understood that the above agreements by the Executive
and the Company are not to be construed as an admission by the Executive that
he was liable or responsible for any of the allegations noted above but that
the Executive enters this Full Release to buy his peace and fix his costs.
5. The Company promises that it will maintain this Full Release
in confidence so that neither any copy nor the contents of this agreement shall
not be disclosed by him to any third person or entity other than its attorneys
and accountants and as may be mutually agreed with the Executive except that it
may be disclosed as required by law for its enforcement or to comply with any
government rule, regulation or mandate including disclosures, if necessary, the
laws and regulations of the Securities and Exchange Commission. The Company
understands this promise is material to the Executive's performance and that
any breach by the Company shall constitute irreparable harm to the Executive
such that the Executive may seek immediate injunctive relief against the the
Company in addition to any remedies it may have at law.
6. This is the full agreement between the Company and the
Executive and the terms are contractual and not recital and are controlled by
the laws of the State of Ohio. Any provision hereof found to be invalid or
unenforceable by a court of competent jurisdiction shall not affect the
validity or enforceability of the remainder.
7. The effective date is the date of signature hereto.
6
<PAGE> 28
IN WITNESS WHEREOF, Company has caused this Agreement to be executed
by its duly authorized officer, each as of the date first above written.
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel Moos
_________________________________________
Officer
Its: EVP
_________________________________________
Officer Title
ACKNOWLEDGED AND AGREED: /s/ Jerry Burger
_____________________________________________,Executive
7
<PAGE> 29
EXHIBIT D
RECEIPT FOR EXECUTIVE'S PERSONAL PROPERTY
I, JERRY BURGER acknowledge receipt of the following which
constitutes all such personal property of mine and personal property released
to me by PhoneTel Technologies Inc. this _____ day of September 1995.
I. OFFICE FURNITURE and accessories granted to me by the Company:
1. Desk
2. Desk chair
3. 2 Pull up chairs
4. Credenza
5. One (1) Computer
6. Small HP printer
II. MY PERSONAL EFFECTS of various description.
<PAGE> 30
AMENDMENT TO EXHIBIT 10.55
AMENDMENT TO THE SEPARATION AGREEMENT
-------------------------------------
This AMENDMENT TO THE SEPARATION AGREEMENT (the "Amendment") is made
and entered into as of the 31 day of JANUARY, 1996, by and between PHONETEL
TECHNOLOGIES, INC., an Ohio corporation (the "Company"), and JERRY BURGER, an
individual residing at 27020 Cedar Rd. Apt. 304, Beachwood, Ohio 44122 (the
"Executive").
W I T N E S S E T H:
WHEREAS, a certain Separation Agreement, dated as of September 15,
1995 (the "Separation Agreement"), has been made and entered into by and
between the Company and the Executive; and
WHEREAS, by Section 6.05 thereof the Separation Agreement provides for
amendment by written instrument; and
WHEREAS, the Company intends to enter into a transaction or
transactions that conform with the description contained in Section 3.01 (iii)
of the Separation Agreement except that the closing date has or will be delayed
beyond the date provided therein to wit:January 31, 1996; and
WHEREAS, since the execution of the Separation Agreement there has
been a reverse split of the common stock of the Company; and
WHEREAS, the Executive and the Company now wish to enter into a
modification and amendment of the Separation Agreement so that both parties may
be in compliance with its terms and conditions;
NOW THEREFORE, in consideration of the mutual promises contained
herein, the adequacy and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the Company and the Executive agree to
the following additions, deletions, and modifications of the Separation
Agreement:
<PAGE> 31
1. Section 3.01 (iii) of the Separation Agreement shall be
deleted in its entirety and replaced by the following:
(iii) After January 31, 1996 but upon the earlier of
February 29, 1996, or the closing of a sale of the
Company to another company in the pay telephone
industry having not less than twenty-five hundred
(2,500) units, or the completion of a
recapitalization, in one transaction or a series of
transactions, or other financing transaction in which
additional equity or debt financing is infused into
the Company in a gross amount equal to or exceeding
Four Million Dollars ($4,000,000), the sum of FOUR
HUNDRED FORTY-FIVE THOUSAND DOLLARS ($445,000.00).
The Executive and the Company agree that the timing
of exercise contained in the Option Agreement shall
be extended from August 31, 1997 to August 1, 2000
with all other terms and conditions relating to the
options, including the number, price and registration
rights, shall be as set forth in the Option
Agreement.
2. Section 3.01 (iv) of the Separation Agreement shall be deleted
in its entirety and replaced by the following:
(iv) Upon the execution by the Executive of this
Agreement, the Company shall deliver to the Executive
a Cognovit Promissory Note, substantially in the form
attached hereto as EXHIBIT E (the "Note"), evidencing
the Company's obligation to pay to the Executive the
amount of FOUR HUNDRED FORTY-FIVE THOUSAND DOLLARS
($445,000.00) as provided for in Section 3.01 (iii)
above. The payment date of the Note is hereby
extended to February 29, 1996 with interest from
January 31, 1996. The Executive agrees to forbear to
sue on or enforce the Note until midnight, February
29, 1996 or midnight of the day upon which the
obligation to pay becomes due, whichever occurs
first.
3. Section 4.061 of the Separation Agreement shall have added to
it a new lettered subpart as follows without change to the remainder:
2
<PAGE> 32
D. The provisions of Paragraph 4.061A above to the
contrary notwithstanding, the Executive, on and after
February 1, 1996 may, directly or indirectly, become
engaged in any business or activity which is in
competition with any Product of the Company within
the geographical boundaries of Cuyahoga County, Ohio.
4. The Company and the Executive hereby agree that all other
terms and conditions as set forth in the Separation Agreement that are not
inconsistent with this Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, Company has caused this Amendment to be executed
by its duly authorized officer and the Executive has executed this Agreement,
each as of the date first above written.
EXECUTIVE
/s/ Jerry Burger
_____________________________________
Jerry Burger
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel Moos
__________________________________
Officer
Its: EVP
_________________________________
Officer Title
3
<PAGE> 1
EXHIBIT 10.56
SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") is made and entered into
this 15th day of September, 1995, by and between PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation (the "Company"), and BERNARD MANDEL, an individual residing
at 8233 Whispering Pines Dr., Russell, Ohio 44072 (the "Executive").
WHEREAS, a certain Employment Agreement dated May 1, 1995, has been
made and entered into between the Company and the Executive; and
WHEREAS, the Company has requested that the Executive resign as
director, officer and employee with the Company and the Executive agrees to so
resign effective as of the date of this Agreement; and
WHEREAS, this Agreement is executed in connection with the Executive's
said resignations and is an incident thereto;
NOW THEREFORE, in consideration of the mutual promises contained
herein, the adequacy and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the Company and the Executive agree as
follows:
1.00 DEFINITIONS. The parties agree to defined terms as follows:
1.01 EMPLOYMENT AGREEMENT. As used in this Agreement, the term "Employment
Agreement" refers to the agreement between the Executive and the Company
entered into as of the first day of May, 1995.
1.02 SEPARATION DATE. As used in this Agreement the term "Separation Date"
is SEPTEMBER 15, 1995.
<PAGE> 2
1.03 PERIOD OF ASSOCIATION As used in this Agreement, the term "Period of
Association" or "Executive's Association" refers to the Executive's entire
period of employment under the Employment Agreement or its predecessors and
periods of employment for which no written agreement was in force and
continuing until the execution of this agreement.
1.04 AFFILIATE. As used in this Agreement, the term "Affiliate" refers to
any other business conducted by the Company with respect to which the Company
derived twenty five percent (25%) or more of its revenues during the
Executive's Association.
1.05 CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"Confidential Information" shall mean and include, to the extent applicable,
(i) the procedures, equipment, layout, distribution, methods, or engineering or
technical information used in the Company's operation; (ii) the agreements,
arrangements, plans, financial data, or policies, and marketing, sales, service
cost or other commercial information of the Company's business; (iii) the
descriptions, specifications, numbers, names, characteristics, costs, prices,
performance, suitability, and other information relating to the Products of the
Company; (iv) the names, addresses, contact persons, and purchasing histories,
preferences, prices, or frequency, and credit standing, and other information
relating to the Company's Customers; (v) the names, addresses, and sales
representatives, histories, preferences, prices, or frequency, and credit
standing, and other information relating to the Company's present suppliers;
(vi) the names and addresses of, amounts of compensation paid to, and the
performance of the Company's employees, officers and agents; and (vi) all
inventions and discoveries and all other trade secrets and information
proprietary to the Company which are used in the Company's business and which
give the Company an opportunity to obtain an advantage over
<PAGE> 3
competitors who did not know them. Notwithstanding the foregoing, the term
"Confidential Information" shall not include any information which is or
becomes available to the public other than as a result of a disclosure by the
Executive.
1.06 CUSTOMER. As used in this Agreement, the term "Customer" shall mean
any person or entity that has ordered or purchased a material amount of Product
from the Company at any time during the past one (1) year or any person or
entity which is a party with the Company to a national account management
contract. A "material amount" as used herein includes products associated with
not less than twenty (20) pay telephones.
1.07 PRODUCTS. As used in this Agreement, the term "Products" shall mean
pay telephones or operator services.
1.08 OPTION AGREEMENTS. As used in this Agreement, the term "Option
Agreement" refers to the Amended and Restated Stock Option Agreement entered
into between the Company and the Executive as of May 1, 1995.
2.00 INTERPRETATIVE RULES. Whether or not capitalized, the following shall
be the method of interpreting the language of this Agreement.
2.01 TIME. Unless stated expressly otherwise, as used in this Agreement
the time of performance measured in days or months shall refer to whole
calendar days or months, but time measured in years refers to a period of
twelve (12) consecutive months without regard to the calendar year of which
they are a part. Time measured in months after an occurrence shall be the
period calculated beginning on the first of the month nearest to the occurrence
and shall have added to or subtracted from it the period remaining in the
3
<PAGE> 4
month of the occurrence. Rounding, if necessary, shall be back in even numbered
months and forward in odd numbered months of the calendar year.
2.02 HEADINGS. The headings contained for any provision hereof are for
purposes of reference and shall not modify, amend or affect the terms the
Agreement.
2.03 AND/OR. As used in this Agreement, the terms "and," "or" and
"and/or" and their negatives are not to be construed to exclude the conjunctive
connotation by the disjunctive nor the disjunctive connotation by the
conjunctive.
2.04 INCLUSION. As used in this Agreement, the term "including" or its
variants are not a term of limitation but of illustration.
2.05 PRONOUNS. As used in this Agreement, the male and female pronouns and
the singular and plural pronouns are interchangeable without change of meaning.
2.06 DIRECTLY OR INDIRECTLY. As used in this Agreement, "directly or
indirectly" means on the Executive's own account or as a shareholder, partner,
joint venturer, principal, employee or representative or agent of or consultant
to any persons, firm, association, partnership, venture, corporation, family
member or other entity.
3.00 UNDERTAKINGS BY THE COMPANY. As and for part of its consideration,
the Company shall undertake the following:
3.01 SEVERANCE PAYMENTS. Effective upon the occurrence of dates shown
below, the Company shall pay to the Executive, and the Executive shall
receive, the following sums:
(i) Upon the execution by the Executive of this Agreement
and the general release of claims against the
Company, attached hereto as EXHIBIT B, the
"Executive's General Release" ONE HUNDRED ONE
THOUSAND FIVE HUNDRED DOLLARS ($101,500.00).
4
<PAGE> 5
(ii) Upon the Effective Date of the Executive's General
Release (as such date is defined in paragraph 2(b) of
the Executive's General Release), FORTY-FIVE THOUSAND
DOLLARS ($45,000).
(iii) Upon the earlier of January 31, 1996, or the closing
of a sale of the Company to another company in the
pay telephone industry having not less than
twenty-five hundred (2,500) units, or the completion
of a recapitalization, in one transaction or a series
of transactions, or other financing transaction in
which additional equity or debt financing is infused
into the Company in a gross amount equal to or
exceeding Four Million Dollars ($4,000,000), the sum
of THREE HUNDRED EIGHT THOUSAND FIVE HUNDRED DOLLARS
($308,500.00).
(iv) Upon the execution by the Executive of this
Agreement, the Company shall deliver to the Executive
a Cognovit Promissory Note, substantially in the form
attached hereto as EXHIBIT E (the "Note"), evidencing
the Company's obligation to pay to the Executive the
amount of THREE HUNDRED EIGHT THOUSAND FIVE HUNDRED
DOLLARS ($308,500.00) as provided for in Section 3.01
(iii) above.
(v) The Company further agrees to provide written notice
to any such entity acquiring the Company or
participating in the recapitalization of the Company,
no later than ten (10) days prior to the closing of
such sale or recapitalization and with a copy to the
Executive, setting forth the Company's irrevocable
instruction and agreement that the entire principal
amount of the Note and all interest accrued thereon
be paid to the Executive as of the closing of such
acquisition or recapitalization.
3.02 MEDICAL INSURANCE BENEFITS. The Company shall continue to provide
the Executive with hospitalization/health care, and dental insurance benefits,
family coverage, for a twenty-three (23) month period commencing on the
September 1, 1995 and continuing for a period ending JULY 31, 1997. It is the
intention of the Company that, absent a legal requirement upon it, the
extension of these insurance benefits shall not reduce the period in which the
Executive may purchase continuation coverage under COBRA Title X. If, for any
reason whatsoever, the Company does not continue to provide the Executive with
5
<PAGE> 6
the extension of such insurance benefits, unless otherwise agreed in writing on
or after January 31, 1996, the Company agrees to provide the Executive payment
of a monthly amount in lieu of such insurance benefits in an amount equal to
the monthly cost to the Company to secure such insurance benefits at the
greater of the cost as of Separation Date or the date of termination of such
insurance benefits.
3.03 EMPLOYMENT AND OTHER EXPENSES. The Company agrees to reimburse the
Executive for any and all reasonable expenses incurred by the Executive prior
to the Separation Date and otherwise accounted for in accord with policies and
procedures established by the Company. Thereafter, except as otherwise
provided for herein, or unless otherwise agreed in writing hereafter, no
expense shall be reimbursable to the Executive under the terms of this
Agreement absent prior written approval by the Company.
3.04 AUTOMOBILE. The Executive agrees to maintain the present lease
arrangement for his Company Automobile under the lease between the lessor and
the Company, and unless otherwise agreed in writing on or after January 31,
1996, the Company agrees, that commencing after September 1, 1995, it shall pay
to such lessor the succeeding twenty-four (24) monthly lease payments until the
date that is twenty-four (24) months from the Separation Date. Any charges at
the end of the twenty-four (24) month period for excess wear and tear or excess
mileage shall be the expense of the Executive. For purposes hereof the Company
Automobile is the Mercedes Model 320E used by the Executive prior to the
Separation Date. The Company shall cease insurance coverage
6
<PAGE> 7
thereof as of September 30, 1995 and shall then enter such sublease as will
provide the Executive with an insurable interest therein.
3.05 STOCK OPTIONS. The Company hereby confirms its grant to the
Executive of New Options to purchase two hundred twenty-five thousand (225,000)
of the New Options under the Option Agreement as further amended herein. The
Company further confirms the prior grant to the Executive of one hundred
seventy-five thousand (175,000) Original Options and Prior Options under the
Option Agreement, all of which one hundred seventy-five thousand (175,000)
Original Options and Prior Options are vested as of the date hereof, and
confirms that such Original Options and Prior Options, when aggregated with the
New Options, provide to the Executive a total of four hundred thousand
(400,000) options (collectively, the "Options"). The parties agree that,
notwithstanding anything to the contrary in this Agreement or the Option
Agreement, the Executive's exercise price for the Options is Fifty Cents ($.50)
for one hundred fifty-thousand (150,000) Options and One Dollar ($1.00) for the
remaining two hundred fifty thousand (250,000) options. The Option Agreement
shall be amended in accord with the following and to the effect of this
provision:
3.051 The title of the Option Agreement wherever it appears shall be the:
"Amended and Restated Stock Option Agreement, as amended September 15,
1995."
3.052. As to the recitals:
A. The following recital shall be inserted after the third and before
the original fourth recital:
7
<PAGE> 8
WHEREAS, the Company and Optionee have entered into a Separation
Agreement fully terminating and replacing said Employment Agreement as
of midnight preceding September 15, 1995."
B. The term "Employment Agreement" shall have substituted for it the
term "Separation Agreement" in the last recital and thereafter wherever such
term appears including without limitation Sections 1, 5, 7(b), and 16 of the
Option Agreement.
3.053 The last sentence of Section 1 of the Option Agreement, GRANT OF
OPTIONS: VESTING SCHEDULE, shall be deleted and replaced with the following:
The New Options shall vest as follows: twenty-five thousand (25,000)
on May 1, 1995 and two hundred thousand (200,000) on September 15,
1995 as otherwise specified in the Separation Agreement, the
provisions of which are hereby incorporated herein by this reference.
3.054 Section 2 of the Option Agreement, TIMING OF EXERCISE, shall be deleted
and rewritten as follows;
The Optionee may exercise those Options which have vested (the "Vested
Options") at any time, in whole or in part, on or after the Separation
Date (as defined in the Separation Agreement) but before August 1,
2000.
3.055 Section 5 of the Option Agreement, EXPIRATION OF UNEXERCISED OPTIONS,
shall be amended to read as follows:
Notwithstanding any provision of this Option Agreement or the
Separation Agreement to the contrary, all vested Options expire as of
midnight preceding August 1, 2000 if not exercised, or forfeited
earlier.
3.056 Section 12 of the Option Agreement, NOTICES, shall be amended to
substitute the name and title "Tammy Martin, Esq. General Counsel" for the name
and title of "Jerry M. Burger, Chief Executive Officer."
8
<PAGE> 9
3.06 PERSONAL PROPERTY. The Company shall permit the Executive to remove,
from the premises the office furniture purchased by him, all his personal
effects, any files maintained by the Executive on behalf of clients of his law
practice, and legal services, to wit law books, treatises, supplements and
publications, all as are listed on the Receipt for the Executive's Personal
Property attached as EXHIBIT D. Unless otherwise agreed in writing hereafter,
such removal of effects shall be by close of business September 25, 1995 and at
the Executive's sole expense. Upon execution of this Agreement or as soon as
practicable thereafter, the Executive shall, with the Company's cooperation,
convert the subscriptions for the legal services by substitution of the
Executive for the Company effective SEPTEMBER 1, 1995. It is understood the
Company shall not be responsible for subscription payments for the legal
services thereafter and any consequences of nonpayment thereafter are to be
borne exclusively by the Executive.
4.00 UNDERTAKINGS BY THE EXECUTIVE
As and for part of its consideration the Executive shall undertake the
following, including the making of acknowledgements to the Company shown below
on which it may rely:
4.01 RESIGNATION. The Executive acknowledges he has resigned as director,
officer and employee to the Corporation effective SEPTEMBER 15, 1995, in
writing with evidence thereof attached as EXHIBIT A. Unless additional time is
granted in writing by the Company, and subject to the Executive's right to
remove personal property pursuant to Section 3.06 above, the Executive shall
vacate the premises of the Company by no later than 48 hours after signature
hereto subject to the Company's right of supervision, control and access to the
premises outside of business hours which will not be exercised
9
<PAGE> 10
unreasonably. By this Agreement the Executive acknowledges he has voluntarily
resigned from his employment with the Company by mutual agreement.
4.02 SALARY. Except as otherwise expressly provided for herein, the
Executive agrees as of September 1, 1995 to cease from taking or requesting any
further compensation from the Company including, but not limited to, any claim
for back wages, vacation pay, personal or sick days, deferred compensation, the
Executive Incentive Plan payments or bonuses however based or calculated, with
the sole exception of the unpaid balance of the 1994 bonus under the Executive
Incentive Plan payable, unless otherwise agreed in writing hereafter, in the
ordinary course.
4.03 OTHER BENEFITS AND INSURANCE. The Executive acknowledges receipt of
notice hereby that he may have rights to convert the Company's group disability
and life insurance policies to individual policies under their terms and at his
sole expense. The Executive acknowledges his participation in employee benefit
plans and arrangements is terminated as of midnight before September 1, 1995
and that he shall have the rights and privileges as any other terminated
participant.
4.04 RETURN OF PROPERTY. Upon execution of this Agreement, the Executive
shall immediately deliver to the Company all company credit cards with VISA,
Master Card, American Express and Shell Oil, and all keys and security passes,
all tangible materials in his possession wheresoever they may be located
including documents or records of information not otherwise in the Company's
possession such as those concerning any part of the Company's activities or
concerning any part of the Executive's activities on
10
<PAGE> 11
behalf of the Company and the Executive's own notes except that the Executive
may retain copies of such tangible things, documents, records or notes.
4.05 PROTECTION OF RIGHTS. The Executive shall assist the Company at its
request in the prosecution or defense of any action or proceeding relating to
or arising from any cause or matter whatsoever including matters pending in a
court of law or any agency or department of local, state or federal government
related to the Executive's Association with the Company, including, without
limitation, giving testimony and depositions, reviewing documents, and
consulting with the Company and its legal or financial counsel at such times
and locations as may reasonably be requested by the Company. The Executive
shall be available to assist the Company with such matters as requested and
directed by the Company for a period of ninety (90) days after the Separation
Date for a maximum of ten (10) hours per workweek (on a noncumulative and
nonaccrued basis). All such consulting services provided by the Executive shall
be at the Executive's sole expense with the exception of reasonable allowance
for travel, meals and lodging as agreed in advance in writing by the Company.
4.06 CONFIDENTIALITY AND NONCOMPETE AGREEMENT.
4.061 The Executive, in exchange for the undertakings of this Agreement,
agrees that, within the geographical area of any county in any state wherein
the Company, as of the Separation Date, owns and operates in excess of two
hundred (200) pay telephones (the "Territory") and until midnight on December
31, 1996:
A. the Executive will neither, directly or indirectly, solicit
or contact any Customers in the Territory presently served by the
Company for the purposes of engaging with such Customer in any
business or activity which is in competition
11
<PAGE> 12
with any Product of the Company nor shall the Executive, directly or
indirectly, become engaged in any business or activity in the
Territory which is in competition with any Product of the Company nor
shall the Executive otherwise divert or attempt to divert any material
portion of the existing business of the Company or any Affiliate in
the Territory except that the Executive shall be permitted to engage
in, among other noncompetitive activities, the remarketing of 1-Plus
calling to any companies or entities other than a Customers located
within the Territory;
B. The Executive will not, either directly or indirectly,
solicit, induce, recruit or cause any person in the employ of the
Company to terminate his/her employment for the purpose of joining,
associating or becoming employed with any business or activity which
is in competition with any Product of the Company or any Affiliate;
and
C. The Executive will not, either directly or indirectly,
except as required in the conduct of the Company's business, in the
conduct of complying with the terms of this Agreement, or otherwise as
authorized in writing by the Company, use, publish, disclose,
appropriate or communicate any Confidential Information which the
Executive, in any way, has acquired or may acquire during, or by
reason of, the Executive's Association with the Company for the
purpose of engaging in any business or activity within the Territory
which is in competition with any Product of the Company.
4.062 The Executive recognizes and acknowledges that the Company's
Confidential Information is unique and valuable and that loss of control
thereof to any person other than the Company may cause irreparable harm that is
not remediable by money damages. The Executive understands that all the
Executive's promises under Section 4.061 above are material to the Company's
performance and that any material breach by the Executive shall constitute
irreparable harm to the Company.
4.063 The Executive understands that, in the event of a violation of the
provisions of Section 4.061 by the Executive, the Company shall have the full
right to seek injunctive relief in addition to any other existing remedies
available under this Agreement or by operation of law, without the requirement
of posting bond.
12
<PAGE> 13
4.064 Notwithstanding the foregoing, the Company agrees that, in the event
that the Company fails to pay any sum of money due the Executive within fifteen
(15) days after the Company has received written notice from the Executive
specifically setting forth the Company's non payment, in addition to any other
existing remedies available under this Agreement or by operation of law,
Section 4.061 shall cease and shall no longer be of any force or effect.
5.00 UNDERTAKINGS BY THE EXECUTIVE AND THE COMPANY:
As and for part of the consideration hereunder, both the Company and
the Executive agree as follows:
5.01 TERMINATION OF AGREEMENTS. With the sole exception of the Option
Agreement and this Agreement, effective upon the execution of this Agreement,
the Employment Agreement and any and all other agreements between the Company
and the Executive, whether in writing or otherwise, shall be fully terminated
by this Agreement, such that the Employment Agreement and such other agreements
shall have no further force or effect. This Agreement shall fully supersede
the Employment Agreement and substitutes for the recitation of all the terms
and conditions of the relationship of the Executive and the Company commencing
on the Separation Date. Except as otherwise set forth in this Agreement or the
Option Agreement, the parties warrant that all claims, rights, duties or
privileges that either party could have otherwise demanded of the other party
pursuant to the Employment Agreement or such other agreements are understood to
be fully discharged hereby.
13
<PAGE> 14
5.02 PUBLICATION OF AGREEMENT. The parties agree that the exclusive method
by which information regarding the Executive's separation from employment with
the Company and the terms of this Agreement shall be published is by a mutually
acceptable press release.
5.03 RELEASES. The parties shall exchange general releases of claims,
damages, losses and disputes as shown in attached EXHIBIT B by the Executive
and EXHIBIT C by the Company. The release by the Company EXHIBIT C shall be
delivered to the Executive upon the effective date of Paragraph 2(b) of the
Executive's release, EXHIBIT B.
6.00 MISCELLANEOUS PROVISIONS The Executive and Company further agree as
follows:
6.01 INDEMNITIES, OFFSETS. The Company and Executive agree as follows:
6.011 Should the Company become liable in any way to third parties with
respect to claims, demands or losses which such party has or made against the
Executive other than in his capacity as a former director and/or officer of the
Company, any amounts paid in satisfaction shall be offset against the Note and
any Company Undertakings still due including unexercised stock options upon
exercise thereof. To the extent that any offset is made pursuant to this
Section 6.011, the Company shall provide to the Executive written notice
fifteen (15) days in advance of the amount to be offset with a description
thereof. Notwithstanding the foregoing, it is understood that for the period
of four (4) years after the Separation Date, the Company shall defend and
indemnify the Executive for any claims, demands, or losses due to liability of
the Executive as a director and/or officer of the Company but only to the
extent and on the same basis as the Company may defend and indemnify other
directors and officers during that period to the full extent permitted under
the Company's Articles of Incorporation or Code of Regulations and will
14
<PAGE> 15
undertake and pursue such defense in good faith and full cooperation with the
Executive.
6.012. In addition to any other existing remedies available under this
Agreement or by operation of law, the Company's payment of the principal
amount of the Note and all interest accrued thereon and any Company
Undertakings still due including unexercised stock options upon the exercise
thereof are subject to the condition that the Executive not have materially
breached his obligations under this Agreement, which material breach is not
cured by the Executive within fifteen (15) days after the Executive has
received written notice from the Company specifically setting forth such
material breach provided that said fifteen (15) day period shall be extended so
long as the Executive is proceeding in good faith to cure such material breach
to the satisfaction of the Company.
6.02 SEVERABILITY. Should one or more of the provisions of this Agreement
or its attachments, in whole or in part, be held to be invalid or unenforceable
for any reason by a court of competent jurisdiction, such invalidity or
unenforceability shall not affect any other part or provision. Should any
provision as to a period of time or a geographic area for performance of any
undertaking be found to be unreasonable by a court of competent jurisdiction,
the Company shall be entitled to enforce such provision for such time or in
such area as may be determined to be reasonable.
6.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be enforceable as an original.
6.04 NOTICES. Notices, demands and all communications provided for in
this Agreement shall be in writing and shall be deemed to have duly been given
when personally
15
<PAGE> 16
delivered by the Executive or by messenger service or mailed by U.S. certified
mail, return receipt requested, postage prepaid, addressed as follows:
To the Executive: Bernard Mandel
8233 Whispering Pines Dr.
Russell, Ohio 44072
To the Company: PhoneTel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, Ohio 44115
Attention: Tammy Martin, Esq.
A change of address for Notices may be made unilaterally by a party but shall
be made in conformity with this provision.
6.05 AMENDMENT AND WAIVER. This Agreement may be changed, modified or
waived only by a writing signed by the parties hereto affected by such change,
modification or waiver. Failure to enforce any provisions of this Agreement
shall not constitute a waiver. A waiver hereunder or failure to enforce any
provision shall not constitute a continuing waiver.
6.06 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of only the parties hereto and their respective
successors and assigns. The Executive may not assign his rights under this
Agreement to any other person or entity without the prior written consent of
the Company except that this Agreement and all rights of the Executive
hereunder shall be enforceable by the Executive's personal representative,
executor, administrator, guardian, conservator, heirs, devisee and legatees.
Unless otherwise provided, any amounts due the Executive hereunder at the time
of his death shall be paid under the terms of this Agreement to his estate.
16
<PAGE> 17
6.07 GOVERNING LAW AND FORUM. This Agreement shall be construed and
enforced in accordance with the laws of the State of Ohio applicable to
contracts executed or performed therein. All actions arising from or relating
to this Agreement shall be commenced in a federal or state court of competent
jurisdiction located within Cuyahoga County, Ohio, and the Company and
Executive hereby consent to the exercise of jurisdiction by and venue in any
such court.
6.08 COMPLETE AGREEMENT. This Agreement constitutes the entire Agreement
among the parties and supersedes any prior written or oral promise, negotiation
or agreement. There are no oral or written collateral agreements and no oral
or written conditions, precedent or subsequent, other than as set forth in this
Agreement, which in any way modify, limit or affect the enforceability hereof.
IN WITNESS WHEREOF, Company has caused this Agreement to be executed
by its duly authorized officer and the Executive has executed this Agreement,
each as of the date first above written.
EXECUTIVE
/s/ Bernard Mandel
____________________________________________________
Bernard Mandel
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel Moos
_________________________________________________
Officer
Its: SVP & CFO
________________________________________________
Officer Title
17
<PAGE> 18
EXHIBIT A
EXECUTIVE'S RESIGNATION
September 15, 1995
To whom it may concern:
I hereby voluntarily resign my position as director, officer and
employee of PhoneTel Technologies Inc. effective as of midnight before
September 15, 1995 in order to pursue other opportunities.
/s/ Bernard Mandel
__________________________
Bernard Mandel
<PAGE> 19
EXHIBIT B
FULL RELEASE BY THE EXECUTIVE
THIS FULL RELEASE BY THE EXECUTIVE is made and entered into by and between
BERNARD MANDEL ("Executive") and PHONETEL TECHNOLOGIES, INC. ("Company") this
15TH day of September, 1995.
WITNESSETH THAT:
WHEREAS, the parties desire to make arrangements for the orderly and
complete termination of their existing relationships;
WHEREAS, the Company has agreed to pay certain monies to Executive and
to provide certain undertakings for his benefit in return for Executive
releasing any claims he may have against the Company; and
WHEREAS, the parties desire to set forth that arrangement in writing.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the adequacy and sufficiency of which is hereby acknowledged,
the parties agree as to the term of the Full Release as follows:
1. Executive for the sole consideration given by PHONETEL
TECHNOLOGIES, INC. and identified below at Paragraph 2 does hereby, with the
intention of binding Executive and his heirs, executors, administrators, and
assigns, (A) expressly release and discharge the said PHONETEL TECHNOLOGIES,
INC. and successors or assigns, and its agents, officers, employees,
shareholders, representatives and attorneys and any subsidiary and/or related
businesses (collectively herein referred to as "PHONETEL"), as stated in
paragraph 3, and (B) waives any right or interest in reinstatement to
employment by PHONETEL.
2. For consideration of the foregoing promises, actions and
forebearances by Executive, and for the Executive's waivers mentioned below,
PHONETEL shall:
(a) pay Executive the sum overall of $101,500.00 (ONE HUNDRED ONE
THOUSAND FIVE HUNDRED DOLLARS), upon the date of the execution
hereof, and
(b) provide as consideration for Executive signing this Agreement
and Release, a Special Severance Consideration in the form of
$45,000 (FORTY-FIVE THOUSAND DOLLARS).
<PAGE> 20
Such Special Severance Consideration shall be due and payable as of
the effective date of this Paragraph 2(b). The Executive
understands that this Special Severance Consideration is of benefit
and value which the Executive would NOT be otherwise entitled to
receive from the Company upon the termination of his employment.
This Paragraph 2(b) constitutes a full and complete release between
the parties for all employment claims which Executive may have
against the Company including those arising under the AGE
DISCRIMINATION IN EMPLOYMENT ACT as of the date that the Executive
signs this Full Release since as stated, the Full Release is all
inclusive. The Executive has been advised that he should consult
with an attorney to review this document before signing it. The
Executive has until _________________________ (at least 21 days
after the date this Agreement was first given to the Executive) to
sign this Release and receive the above-mentioned Special Severance
Consideration and has seven (7) days after signing this Agreement
to revoke it. The seventh day after signature by the Executive is
the effective date for this Paragraph 2(b).
EXECUTIVE HEREBY ACKNOWLEDGES THAT HE HAS READ AND UNDERSTANDS THE
TERMS OF THIS PARAGRAPH 2(B) AND ELECTS TO ACCEPT THE SPECIAL
SEVERANCE CONSIDERATION STATED HEREUNDER AS A FULL AND COMPLETE
SETTLEMENT FOR ANY CLAIMS THAT HE MAY HAVE AGAINST THE COMPANY
INCLUDING THOSE ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT. HE FURTHER ACKNOWLEDGES THAT HE HAS UP TO SEVEN (7) DAYS
AFTER THE EXECUTION OF THIS FULL RELEASE TO REVOKE THIS PORTION OF
THE RELEASE AND THAT THE SPECIAL SEVERANCE CONSIDERATION WILL NOT
BE PROVIDED TO HIM UNTIL THIS PARAGRAPH 2(B) BECOMES EFFECTIVE
AFTER THAT SEVEN (7) DAY PERIOD HAS PASSED.
(c) Enter into the Separation Agreement dated September 15,
1995.
3. This Full Release is both individually and jointly effective as to
PHONETEL from all claims, expenses and/or damages under any Federal, State, or
local laws, statutes, legislation and/or constitution for all claims or demands
whatsoever in law or equity that Executive may have for both economic and
non-economic damages including compensatory, punitive, incidental, and
consequential damages of every type including without limitations those in the
nature of pain, suffering, embarrassment, humiliation, emotional distress,
damage to personal and professional reputation, loss, expense, back pay, front
pay, deferred compensation, lost fringe benefits and special damages such as
medical expense incurred by Executive in any event arising by any occurrence
prior to the date of the Executive's signature hereto. Without limiting the
generality of the foregoing, this Full Release pertains to (i) any actions
sounding in tort, contract, defamation or privacy of any kind, and/or (ii) any
cause of action arising under Federal,
2
<PAGE> 21
State or local laws prohibiting any forms of discrimination, and/or (iii) any
claims growing out of an employer's obligation, if any, to provide or offer any
form of compensation, expenditure reimbursements or fringe benefits including
claims under the Employment Agreement of May 1, 1995 its predecessors or any
written agreement, plan, policy or employee benefit plan or any unwritten
agreement of employment, and/or (iv) any claims of interference with contract
or business relation or advantage, and (v) any claim for indemnity against the
Company with respect to claims, demands, losses, law suits, and expense made
against the Executive by a third party including without limitation by any
creditor, the Internal Revenue Service, a family member, spouse or ex-spouse
for any cost, payment, accounting, expense, cause or thing whatsoever and/or
(vi) all of the charges, claims, demands and causes of action asserted or which
could have been asserted and/or appealed by Executive in each event which arose
by any occurrence prior to the date of the Executive's signature hereto. The
Executive waives all of these rights with the sole exclusive exceptions of (i)
rights for compensation or medical benefits (if any) under the Worker
Compensation Act of Ohio, (ii) claims under any employee retirement plan as
defined under the Employment Retirement Income Security Act that have not
arisen to this date.
4. The Executive hereby instructs PHONETEL to make income tax or
FICA tax withholdings and make payments of FICA taxes and to in every other way
treat the amounts paid hereunder as wages, and further, the Executive
understands that the PHONETEL agrees that it will not issue a Form 1099
thereon.
5. It is understood that the above agreements by PHONETEL and
Executive are not to be construed as an admission by PHONETEL that it was
liable or responsible for personal injury, property loss, defamation,
discrimination, breach of contract, unfair employment practice, or interference
with business relation, or of any of the allegations noted above or any right
or obligation PHONETEL may have as an employer but that PHONETEL enters this
Full Release to buy its peace and fix its costs.
6. The Executive promises that he will exercise reasonable
efforts to maintain this Full Release in confidence so that neither any copy
nor the contents of this Full Release shall be disclosed by him to any person
or entity other than his attorneys and tax accountants and except that it may
be disclosed as required by law for its enforcement or to comply with any
government rule, regulation or mandate including disclosures, if necessary,
pursuant to the laws and regulations of the Securities and Exchange Commission.
Executive understands this promise is material to PHONETEL's performance and
that any breach by Executive shall constitute irreparable harm to PHONETEL such
that PHONETEL may seek immediate injunctive relief against the Executive in
addition to any remedies it may have at law.
7. This is the full agreement between PHONETEL and the Executive
relating to the subject matter hereof and the terms are contractual and not
recital and are controlled by the laws of the State of Ohio. Any provision
hereof found to be invalid or
3
<PAGE> 22
unenforceable by a court of competent jurisdiction shall not affect the
validity or enforceability of the remainder.
8. The Executive further states that he has read and fully
understands the foregoing Full Release and knows the contents hereof and states
that he did sign the same as his own free act and deed.
9. The effective date is the date of signature hereto except that the
effective date of Paragraph 2(b) is the seventh day thereafter.
IN WITNESS WHEREOF, I have hereunto set my hand before two witnesses
on the date shown below.
/s/ Patricia Rye /s/ Bernard Mandel
_______________________________ ________________________________
WITNESS
/s/ G. Martin 9-18-95
_______________________________ ________________________________
WITNESS DATE
ACKNOWLEDGED AND AGREED:
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel Moos
_____________________
Officer
Its: SVP
____________________
Officer Title
4
<PAGE> 23
EXHIBIT C
FULL RELEASE BY THE COMPANY
THIS FULL RELEASE BY THE COMPANY is made and entered into by and between
BERNARD MANDEL ("Executive") and PHONETEL TECHNOLOGIES, INC. ("Company")
this _____ day of September, 1995.
WITNESSETH THAT:
WHEREAS, the parties desire to make arrangements for the orderly and
complete termination of their existing employment relationship, and
WHEREAS, the Executive has agreed to provide certain undertakings for
the benefit of the Company in return for Company releasing any claims it may
have against the Executive,
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the adequacy and sufficiency of which is hereby acknowledged,
the parties agree as to the term of the Full Release as follows:
1. The Company with the intention of binding itself and its
successors or assigns, and its agents, officers, employees, shareholders,
representatives and attorneys and any subsidiary and/or related businesses
(collectively herein referred to as "PHONETEL") for the sole consideration
given by the Executive and identified below at Paragraph 2 do hereby, (A)
expressly release and discharge the said Executive and his heirs, executors,
administrators, and assigns, as stated in paragraph 3, and (B) waive any right
or interest in continued employment of the Executive.
2. For consideration of the foregoing promises, actions and
forebearances by Company, and for the Company's waivers mentioned below, the
Executive has or shall,on or before signature hereto unless otherwise stated:
(a) Resign his position of director, officer and employee of the
Company;
(b) Agree to the termination of his Employment Agreement of May 1,
1995 upon terms acceptable to the Company;
(c) Enter into and deliver to the Company a Full Release of claims;
(d) Enter into the Separation Agreement dated September 15, 1995.
3. This Full Release is effective as to the Executive from all
claims, expenses and/or damages under any Federal, State, or local laws,
statutes, legislation and/or constitution for all claims or demands whatsoever
in law or equity Company may have
<PAGE> 24
for both economic and non-economic compensatory damages including without
limitation any lost past or future profits, special damages or expense, or
damage in the nature of damage to reputation incurred or suffered by Company.
Without limiting the generality of the foregoing, this release pertains to (i)
any actions sounding in tort, contract, defamation or fraud of any kind, and/or
(ii) any claims under the Employment Agreement of May 1, 1995 its predecessors
or any written agreement, plan, policy or employee benefit plan or any
unwritten agreement of employment, and/or (iii) any claims of breach of
fiduciary duty, malpractice, and misfeasance, nonfeasance or malfeasance in
office, and/or (iv) any claims growing out of any obligation, if any, of a
director, officer or employee and/or (v) any claims of interference with
contract or business relation or advantage, and/or (vi) all of the charges,
claims, demands and causes of action asserted or which could have been asserted
and/or appealed by the Company which arose by any occurrence prior to the date
of the Company's signature hereto. The Company waives all of these rights
with the sole exclusive exceptions of any claims that constitute or relate to
breach of fiduciary duty under the Employment Retirement Income Security Act.
4. It is understood that the above agreements by the Executive and the
Company are not to be construed as an admission by the Executive that he was
liable or responsible for any of the allegations noted above but that the
Executive enters this Full Release to buy his peace and fix his costs.
5. The Company promises that it will maintain this Full Release
in confidence so that neither any copy nor the contents of this agreement shall
not be disclosed by him to any third person or entity other than its attorneys
and accountants and as may be mutually agreed with the Executive except that it
may be disclosed as required by law for its enforcement or to comply with any
government rule, regulation or mandate including disclosures, if necessary, the
laws and regulations of the Securities and Exchange Commission. The Company
understands this promise is material to the Executive's performance and that
any breach by the Company shall constitute irreparable harm to the Executive
such that the Executive may seek immediate injunctive relief against the the
Company in addition to any remedies it may have at law.
6. This is the full agreement between the Company and the
Executive and the terms are contractual and not recital and are controlled by
the laws of the State of Ohio. Any provision hereof found to be invalid or
unenforceable by a court of competent jurisdiction shall not affect the
validity or enforceability of the remainder.
7. The effective date is the date of signature hereto.
2
<PAGE> 25
IN WITNESS WHEREOF, Company has caused this Agreement to be executed
by its duly authorized officer, each as of the date first above written.
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel Moos
_____________________
Officer
Its: SVP
____________________
Officer Title
ACKNOWLEDGED AND AGREED: /s/ Bernard Mandel
_____________________________________,Executive
3
<PAGE> 26
EXHIBIT D
RECEIPT FOR EXECUTIVE'S PERSONAL PROPERTY
I, Bernard Mandel, acknowledge receipt of the following which
constitutes all such personal property of mine and personal property released
to me by PhoneTel Technologies Inc. this 15th day of September 1995.
I. OFFICE FURNITURE owned by me.
II. PERSONAL EFFECTS of various description.
III. LEGAL SERVICES, consisting of law books, treatises, supplements and
subscriptions.
IV. CLIENT FILES, of clients of my law practice.
<PAGE> 27
AMENDMENT TO EXHIBIT 10.56
AMENDMENT TO THE SEPARATION AGREEMENT
-------------------------------------
This AMENDMENT TO THE SEPARATION AGREEMENT (the "Amendment") is made
and entered into as of the 31 day of JANUARY, 1996, by and between PHONETEL
TECHNOLOGIES, INC., an Ohio corporation (the "Company"), and BERNARD MANDEL, an
individual residing at 8233 Whispering Pines Dr., Russell, Ohio 44072 (the
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, a certain Separation Agreement, dated as of September 15,
1995 (the "Separation Agreement"), has been made and entered into by and
between the Company and the Executive; and
WHEREAS, by Section 6.05 thereof the Separation Agreement provides for
amendment by written instrument; and
WHEREAS, the Company intends to enter into a transaction or
transactions that conform with the description contained in Section 3.01 (iii)
of the Separation Agreement except that the closing date has or will be delayed
beyond the date provided therein to wit:January 31, 1996; and
WHEREAS, since the execution of the Separation Agreement there has
been a reverse split of the common stock of the Company; and
WHEREAS, the Executive and the Company now wish to enter into a
modification and amendment of the Separation Agreement so that both parties may
be in compliance with its terms and conditions;
NOW THEREFORE, in consideration of the mutual promises contained
herein, the adequacy and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the Company and the Executive agree to
the following additions, deletions, and modifications of the Separation
Agreement:
<PAGE> 28
1. Section 1.07 of the Separation Agreement shall be deleted in
its entirety and replaced by the following:
1.07 PRODUCTS. As used in this agreement until February 1,
1996, the term "Products" shall mean pay telephones or
operator services. On and after February 1, 1996 "Products"
shall refer only to pay telephones.
2. Section 3.01 (iii) of the Separation Agreement shall be
deleted in its entirety and replaced by the following:
(iii) After January 31, 1996 but upon the earlier of
February 29, 1996, or the closing of a sale of the
Company to another company in the pay telephone
industry having not less than twenty-five hundred
(2,500) units, or the completion of a
recapitalization, in one transaction or a series of
transactions, or other financing transaction in which
additional equity or debt financing is infused into
the Company in a gross amount equal to or exceeding
Four Million Dollars ($4,000,000), the sum of THREE
HUNDRED EIGHT THOUSAND FIVE HUNDRED DOLLARS
($308,500.00). In the event payment is due under this
subsection but not made on or before February 29,
1996, or such other date as may hereafter be mutually
agreed, the Company shall grant to the Executive
additional stock options for the purchase of five
thousand (5000) shares of the common stock of the
Company (herein "Additional Options"), post reverse
split, for which the exercise price shall be the
closing market price for the common stock of the
Company on February 29, 1996. All other terms and
conditions relating to the Additional Options,
including the exercise period and registration
rights, shall be as set forth in the Option
Agreement.
3. Section 3.01 (iv) of the Separation Agreement shall be deleted
in its entirety and replaced by the following:
(iv) Upon the execution by the Executive of this
Agreement, the Company shall deliver to the Executive
a Cognovit Promissory Note, substantially in the form
attached hereto as EXHIBIT E (the "Note"), evidencing
the Company's obligation to pay to the Executive the
amount of THREE HUNDRED EIGHT THOUSAND FIVE HUNDRED
DOLLARS ($308,500.00) as provided for in Section 3.01
(iii) above. The
2
<PAGE> 29
payment date of the Note is hereby extended to
February 29, 1996 with interest from January 31,
1996. The Executive agrees to forbear to sue on or
enforce the Note until midnight, February 29, 1996 or
midnight of the day upon which the obligation to pay
becomes due, whichever occurs first.
4. The Company and the Executive hereby agree that all other
terms and conditions as set forth in the Separation Agreement that are not
inconsistent with this Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, Company has caused this Amendment to be executed
by its duly authorized officer and the Executive has executed this Agreement,
each as of the date first above written.
EXECUTIVE
/s/ Bernard Mandel
____________________________________________________________
Bernard Mandel
PHONETEL TECHNOLOGIES,INC.
By: /s/ Daniel Moos
_________________________________________________________
Officer
Its: SVP
________________________________________________________
Officer Title
3
<PAGE> 1
EXHIBIT 10.144
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER)
AS TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF MARCH 15, 1996, BETWEEN PHONETEL
TECHNOLOGIES, INC. (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION ("ING") AND CERBERUS PARTNERS, L.P. ("CERBERUS") AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MARCH 15, 1996, AMONG THE COMPANY,
ING AND CERBERUS, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
No. 1 102,412 Warrants
Warrant Certificate
PHONETEL TECHNOLOGIES, INC.
This Warrant Certificate certifies that INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, or registered assigns, is the registered holder of the
number of Warrants (the "WARRANTS") set forth above to purchase shares of
Series A Special Convertible Preferred Stock, par value $.20 per share (the
"Series A Special Preferred Stock"), of PHONETEL TECHNOLOGIES, INC., an Ohio
corporation (the "COMPANY"). Each Warrant entitles the holder upon exercise to
receive from the Company one fully paid and nonassessable share of Series A
Special Preferred Stock (a "WARRANT SHARE") at the initial exercise price (the
"EXERCISE PRICE") of $0.20, payable in lawful money of the United States of
America, upon surrender of this Warrant Certificate and payment of the Exercise
Price, if applicable, at the office of the Company designated for such purpose,
subject to the conditions set forth herein and in the Warrant Agreement
referenced below. The Exercise Price and number and type of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, as set forth in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Purchase Agreement dated as of March 15, 1996 (the "WARRANT
AGREEMENT"), duly executed and delivered by the Company, ING and Cerberus,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
obligations
<PAGE> 2
and duties hereunder of the Company and the holders of the Warrants (the words
"holders" or "holder" meaning the registered holders or registered holder). A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may exercise such
Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election
to purchase attached hereto (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price in cash at
the office of the Company designated for such purpose. In the event that any
exercise of Warrants evidenced hereby shall be for less than the total number
of Warrants evidenced hereby, there shall be issued by the Company to the
holder hereof or his or its registered assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price set forth on the face hereof may, subject to certain conditions,
be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides
that the number of shares of Warrant Shares issuable upon the exercise of each
Warrant shall be adjusted. No fractional shares of Warrant Shares will be
issued upon the exercise of any Warrant, but the Company will pay the cash
value thereof determined as provided in the Warrant Agreement.
The holder hereof possesses certain rights to require the Company to purchase
the Warrants (the "PUT RIGHTS"), and the holder hereof has been granted certain
rights to participate in a sale of the Common Stock of the Company by certain
shareholders of the Company (and certain of their successors and assigns) all
at the times specified in, and pursuant to the terms and conditions set forth
in, the Warrant Agreement.
The Holders of the Warrants are entitled to certain registration rights as set
forth in a Registration Rights Agreement dated as of March 15, 1996, among the
Company, ING and Cerberus (the "REGISTRATION RIGHTS AGREEMENT"). By acceptance
of this Warrant Certificate, the Holder hereof agrees that upon exercise of any
or all of the Warrants evidenced hereby, such Holder will be bound by the
Registration Rights Agreement. A copy of the Registration Rights Agreement may
be obtained by the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
2
<PAGE> 3
The Company may deem and treat the registered holder(s) thereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing made hereon) for the purpose of any exercise hereof, of any
distribu tion to the holder(s) hereof and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company (other than the right to receive dividends and
distributions as set forth in SECTION 18 of the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its duly authorized officer and has caused its corporate seal to be
affixed hereunto or imprinted hereon.
Dated: March 15, 1996
PHONETEL TECHNOLOGIES, INC.
By:___________________________________________
Name: Peter Graf
Title: Chairman of the Board
[CORPORATE SEAL]
3
<PAGE> 4
FORM OF ELECTION TO PURCHASE
[To Be Executed Upon Exercise of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ____________ shares
of Series A Special Convertible Preferred Stock, par value $.20 per share (the
"SERIES A SPECIAL PREFERRED STOCK"), of PHONETEL TECHNOLOGIES, INC. (the
"Company") and herewith tenders payment for such shares to the order of the
Company in the amount of $___________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of the undersigned or his/its nominee hereinafter set forth, and further
that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth. If said number of shares is less than all of the shares of Series A
Special Preferred Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or his/its nominee hereinafter set
forth, and further that such Warrant Certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
CERTIFICATE TO BE REGISTERED AS FOLLOWS:
---------------------------------------
Name:
Address:
CERTIFICATE TO BE DELIVERED AS FOLLOWS:
--------------------------------------
Name:
Address:
Date:____________________ ____________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the fact of the Warrant Certificate,
unless Form of Assignment has been
executed)
4
<PAGE> 5
FORM OF ASSIGNMENT
[To be executed upon Transfer of Warrant]
FOR VALUE RECEIVED, the undersigned registered holder of the
enclosed Warrant Certificate hereby sells, assigns and transfers unto
________________________________________ the right represented by such Warrant
Certificate to purchase _____________ shares of Series A Special Convertible
Preferred Stock, par value $.20 per share, of PHONETEL TECHNOLOGIES, INC. to
which such Warrant Certificate relates, and appoints _____________________
Attorney to make such transfer on the books of PHONETEL TECHNOLOGIES, INC.
maintained for such purpose, with full power of substitution in the premises.
Date:___________________ ______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
5
<PAGE> 1
EXHIBIT 10.145
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER)
AS TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF MARCH 15, 1996, BETWEEN PHONETEL
TECHNOLOGIES, INC. (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION ("ING") AND CERBERUS PARTNERS, L.P. ("CERBERUS") AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MARCH 15, 1996, AMONG THE COMPANY,
ING AND CERBERUS, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
No. 2 102,412 Warrants
Warrant Certificate
PHONETEL TECHNOLOGIES, INC.
This Warrant Certificate certifies that CERBERUS PARTNERS, L.P., or registered
assigns, is the registered holder of the number of Warrants (the "WARRANTS")
set forth above to purchase shares of Series A Special Convertible Preferred
Stock, par value $.20 per share (the "SERIES A SPECIAL PREFERRED STOCK"), of
PHONETEL TECHNOLOGIES, INC., an Ohio corporation (the "COMPANY"). Each Warrant
entitles the holder upon exercise to receive from the Company one fully paid
and nonassessable share of Series A Special Preferred Stock (a "WARRANT SHARE")
at the initial exercise price (the "EXERCISE PRICE") of $0.20, payable in
lawful money of the United States of America, upon surrender of this Warrant
Certificate and payment of the Exercise Price, if applicable, at the office of
the Company designated for such purpose, subject to the conditions set forth
herein and in the Warrant Agreement referenced below. The Exercise Price and
number and type of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events, as set forth in
the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Purchase Agreement dated as of March 15, 1996 (the "WARRANT
AGREEMENT"), duly executed and delivered by the Company, ING and Cerberus,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
obligations
<PAGE> 2
and duties hereunder of the Company and the holders of the Warrants (the words
"holders" or "holder" meaning the registered holders or registered holder). A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may exercise such
Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election
to purchase attached hereto (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price in cash at
the office of the Company designated for such purpose. In the event that any
exercise of Warrants evidenced hereby shall be for less than the total number
of Warrants evidenced hereby, there shall be issued by the Company to the
holder hereof or his or its registered assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price set forth on the face hereof may, subject to certain conditions,
be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides
that the number of shares of Warrant Shares issuable upon the exercise of each
Warrant shall be adjusted. No fractional shares of Warrant Shares will be
issued upon the exercise of any Warrant, but the Company will pay the cash
value thereof determined as provided in the Warrant Agreement.
The holder hereof possesses certain rights to require the Company to purchase
the Warrants (the "PUT RIGHTS"), and the holder hereof has been granted certain
rights to participate in a sale of the Common Stock of the Company by certain
shareholders of the Company (and certain of their successors and assigns) all
at the times specified in, and pursuant to the terms and conditions set forth
in, the Warrant Agreement.
The Holders of the Warrants are entitled to certain registration rights as set
forth in a Registration Rights Agreement dated as of March 15, 1996, among the
Company, ING and Cerberus (the "REGISTRATION RIGHTS AGREEMENT"). By acceptance
of this Warrant Certificate, the Holder hereof agrees that upon exercise of any
or all of the Warrants evidenced hereby, such Holder will be bound by the
Registration Rights Agreement. A copy of the Registration Rights Agreement may
be obtained by the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
2
<PAGE> 3
The Company may deem and treat the registered holder(s) thereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing made hereon) for the purpose of any exercise hereof, of any
distribu tion to the holder(s) hereof and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company (other than the right to receive dividends and
distributions as set forth in SECTION 18 of the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its duly authorized officer and has caused its corporate seal to be
affixed hereunto or imprinted hereon.
Dated: March 15, 1996
PHONETEL TECHNOLOGIES, INC.
By: /s/ Peter Graf
___________________________________________
Name: Peter Graf
Title: Chairman of the Board
[CORPORATE SEAL]
3
<PAGE> 4
FORM OF ELECTION TO PURCHASE
[To Be Executed Upon Exercise of Warrant]
The undersigned holder hereby represents that he or it is the registered holder
of this Warrant Certificate, and hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ____________ shares
of Series A Special Convertible Preferred Stock, par value $.20 per share (the
"SERIES A SPECIAL PREFERRED STOCK"), of PHONETEL TECHNOLOGIES, INC. (the
"Company") and herewith tenders payment for such shares to the order of the
Company in the amount of $___________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of the undersigned or his/its nominee hereinafter set forth, and further
that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth. If said number of shares is less than all of the shares of Series A
Special Preferred Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or his/its nominee hereinafter set
forth, and further that such Warrant Certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
CERTIFICATE TO BE REGISTERED AS FOLLOWS:
---------------------------------------
Name:
Address:
CERTIFICATE TO BE DELIVERED AS FOLLOWS:
--------------------------------------
Name:
Address:
Date:____________________ _____________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the fact of the Warrant Certificate,
unless Form of Assignment has been
executed)
4
<PAGE> 5
FORM OF ASSIGNMENT
[To be executed upon Transfer of Warrant]
FOR VALUE RECEIVED, the undersigned registered holder of the
enclosed Warrant Certificate hereby sells, assigns and transfers unto
________________________________________ the right represented by such Warrant
Certificate to purchase _____________ shares of Series A Special Convertible
Preferred Stock, par value $.20 per share, of PHONETEL TECHNOLOGIES, INC. to
which such Warrant Certificate relates, and appoints _____________________
Attorney to make such transfer on the books of PHONETEL TECHNOLOGIES, INC.
maintained for such purpose, with full power of substitution in the premises.
Date:______________________ _____________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
_____________________________________
(Street Address)
_____________________________________
(City) (State) (Zip Code)
5
<PAGE> 1
EXHIBIT 10.146
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE COMMON STOCK OF
PHONETEL TECHNOLOGIES, INC.
March 15, 1996
THIS CERTIFIES that, for value received, and subject to all of the provisions
upon the terms and conditions hereinafter set forth,
___________________________ (the "Holder"), is entitled to subscribe for and
purchase _____ shares of Common Stock (the "Shares") of PHONETEL TECHNOLOGIES,
INC., an Ohio corporation, with its principal office at 650 Statler Office
Tower, 1127 Euclid Avenue, Cleveland, Ohio 44115 (the "Company").
SECTION 1. EXERCISE OF WARRANTS. The rights represented by this Warrant may
be exercised in whole or in part at any time during the period commencing at
the date of issuance of this Warrant (the "Issuance Date") and ending at the
earlier of (i) March 13, 2001 (ii) the date of closing of the sale of all or
substantially all of the assets or the outstanding capital stock of the
Company, or the merger of the Company if the current shareholders of the
Company shall own less than fifty percent (50%) of the outstanding voting
securities of the surviving corporation immediately following such merger (the
"Exercise Period"), by delivery of the following to the Company at its address
set forth above (or at such other address as it may designate by notice in
writing to the Holder):
(a) An executed Notice of Exercise in the form attached hereto;
<PAGE> 2
(b) Payment of the exercise price of $.01 per share (the "Exercise Price")
in cash or by check; and
(c) This Warrant.
In the event of exercise of the rights represented by this Warrant, a
certificate or certificates for the Shares issuable pursuant to such exercise
(the "Exercise Shares") registered in the name of the Holder or persons
affiliated with the Holder, if the Holder so designates, shall be issued and
delivered to the Holder within a reasonable time after such exercise but in any
event within thirty (30) days.
The person in whose name any certificate or certificates for Exercise Shares
are to be issued upon exercise of this Warrant shall be deemed to have become
the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the
date of delivery of such certificate or certificates, except that, if the date
of such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
SECTION 2. COVENANTS OF THE COMPANY.
2.1 COVENANTS AS TO EXERCISE SHARES. The Company agrees that all Exercise
Shares that may be issued upon exercise of the rights represented by this
Warrant will, upon issuance, be validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issuance thereof (other than (i) those created by the Lender, if any, and (ii)
taxes in respect of any transfer occurring contemporaneously with such issue);
provided, however, that the Exercise Shares shall not be registered and shall
be subject to restrictions on transfer under the state or federal securities
laws as required at the time of issuance thereof. The Company
2
<PAGE> 3
further agrees that the Company will at all times beginning on the Issuance
Date and thereafter during the Exercise Period, have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its stock to
provide for the exercise of the rights represented by this Warrant. If at any
time during the Exercise Period the number of authorized but unissued shares of
the stock shall not be sufficient to permit exercise of this Warrant, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of stock to such
number of shares as shall be sufficient for such purposes.
2.2 NOTICES OF RECORD DATE. In the event of any taking by the Company of
record of the holders or any class of securities for the purpose of determining
the holders of Common Stock who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in previous
quarters) or other distribution, the Company shall mail to the Holder, at least
ten (10) days prior to the date specified herein, a notice specifying the date
on which any such record is to be taken for the purpose of such dividend or
distribution.
SECTION 3. ADJUSTMENT PROVISIONS.
3.1 ADJUSTMENT OF NUMBER OF EXERCISE SHARES. The number of Exercise
shares shall be subject to adjustment from time to time as follows:
(a) If, at any time during the Exercise Period, the number of
outstanding shares of stock of the Company of the class and series covered by
this Warrant is increased by a subdivision or split-up of such outstanding
shares, then, concurrently with the effectiveness of such subdivision or
split-up, the number of Exercise Shares shall be proportionately increased and
the Exercise Price proportionately decreased.
3
<PAGE> 4
(b) If, at any time during the Exercise Period, the number of outstanding
shares of stock of the Company of the class and series covered by this Warrant
is decreased by a combination of such outstanding shares, then, concurrently
with effectiveness of such combination, the number of Exercise Shares shall be
proportionately decreased and the Exercise Price proportionately increased.
3.2 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of any adjustment
or readjustment of the number of securities issuable upon exercise of this
Warrant in accordance with Paragraph 3.1, the Company shall compute such
adjustment, or readjustment in accordance with the terms hereof and furnish to
the Holder a written statement setting forth each adjustment or readjustment
and the facts upon which such adjustment or readjustment is based. The form of
this Warrant need not be changed because of any adjustment in the number or
securities subject to this Warrant.
3.3 FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant to
Paragraph 3.1 or otherwise. All Exercise Shares (including fractions) issuable
upon exercise of this Warrant may be aggregated for purposes of determining
whether such exercise would otherwise result in the issuance of any fractional
share. If, after aggregation, such exercise would otherwise result in the
issuance of a fractional share, the Company shall, in lieu of such issuance of
any such fractional share, pay the Holder a sum in cash equal of the product
resulting from multiplying the then current fair market valve of an Exercise
Share by such fraction.
SECTION 4. NO SHAREHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company.
SECTION 5. TRANSFER OF WARRANTS. Subject to applicable laws and to the
restriction on transfer set forth on the first page of this Warrant, this
Warrant and all
4
<PAGE> 5
rights hereunder are transferrable, by the Holder in person or by duly
authorized attorney, upon delivery of this Warrant and the form of assignment
attached hereto to any transferee designated by Holder, so long as such
transferee executes an investment letter in form and substance satisfactory to
the Company. Upon any such transfer, the transferee shall thereafter be deemed
the Holder for purposes of this Warrant.
SECTION 6. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft, or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.
SECTION 7. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by telex, telegram,
express mail or other form of rapid communications, if possible, and if not
then such notice or communication shall be mailed by first-class mail, postage
prepaid, addressed to the Holder and the Company at their addresses set forth
herein, or at such other address as one party may furnish to the other in
writing. Notice shall be deemed effective on the date dispatched if by
personal delivery, telex or telegram, two days after mailing if by express
mail, or three days after mailing if by first-class mail.
SECTION 8. ACCEPTANCE. Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the 13th day of March, 1996.
PHONETEL TECHNOLOGIES, INC.
BY:______________________________
PETER GRAF
ITS: CHAIRMAN OF THE BOARD
6
<PAGE> 7
ASSIGNMENT FORM
---------------
(To assign the foregoing Warrant, execute this form,
and supply required information. Do not use
this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_________________________________________________________________
(Please Print)
whose address is _________________________________________________
(Please Print)
Dated: ____________________________________, 19_______
______________________________________________________
Holder's Signature
______________________________________________________
Holder's Address
Signature Guaranteed:____________________________________________
Note: This signature to this Agreement Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
<PAGE> 8
NOTICE OF EXERCISE
------------------
TO: PhoneTel Technologies, Inc.
(1) The undersigned hereby elects to purchase shares of Common Stock of
PhoneTel Technologies, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the Exercise Price in full, together with all
applicable transfer taxes if any.
(2) Please issue certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
__________________________________________
(Name)
__________________________________________
(Address)
(3) The undersigned represents that the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that
the undersigned has no present intention of distributing or reselling such
shares.
__________________________ __________________________________________
(Date) (Signature)
__________________________________________
(Title)
<PAGE> 9
SCHEDULE A TO EXHIBIT 10.146
PHONETEL TECHNOLOGIES, INC.
INDIVIDUALS RECEIVING 14% PIK PREFERRED STOCK
<TABLE>
<CAPTION>
=============================================================================================
CERT. NAME NUMBER OF NUMBER
NO. SHARES OF
WARRANTS
=============================================================================================
<S> <C> <C> <C>
1 Joseph Abrams 5,833.33 125,997
- ---------------------------------------------------------------------------------------------
2 Susan Etter 393.33 8,496
- ---------------------------------------------------------------------------------------------
3 Peter Graf 25,000.00 539,989
- ---------------------------------------------------------------------------------------------
4 Aron Katzman 4,404.17 95,128
- ---------------------------------------------------------------------------------------------
5 James Martin 1,717.28 37,092
- ---------------------------------------------------------------------------------------------
6 Thomas Martin 2,740.35 59,190
- ---------------------------------------------------------------------------------------------
7 Estate of William B. Moses 2,076.90 44,860
- ---------------------------------------------------------------------------------------------
8 Steve Richman 4,166.67 89,998
- ---------------------------------------------------------------------------------------------
9 Adele G. Roman, Trustee 436.94 9,438
- ---------------------------------------------------------------------------------------------
10 Melvin F. Roman, Trustee 873.91 18,876
- ---------------------------------------------------------------------------------------------
11 Sanford Spitzer 4,404.17 95,128
- ---------------------------------------------------------------------------------------------
12 Gerhard Waldschutz 1,666.67 35,999
- ---------------------------------------------------------------------------------------------
13 J & C Resources, Inc. 13,750.00 296,994
- ---------------------------------------------------------------------------------------------
14 Bergen Mall Partnership 524.00 3,772
- ---------------------------------------------------------------------------------------------
15 DeBartolo Capital Partnership 958.00 6,896
- ---------------------------------------------------------------------------------------------
16 DeBartolo Realty Partnership, L.P. 802.00 5,773
- ---------------------------------------------------------------------------------------------
17 DeBartolo Capital Partnership 223.00 1,605
- ---------------------------------------------------------------------------------------------
18 DeBartolo Capital Partnership 802.00 5,773
- ---------------------------------------------------------------------------------------------
19 DeBartolo Realty Partnership, L.P. 78.00 561
- ---------------------------------------------------------------------------------------------
20 DeBartolo Capital Partnership 590.00 4,247
- ---------------------------------------------------------------------------------------------
21 DeBartolo Capital Partnership 746.00 5,370
- ---------------------------------------------------------------------------------------------
22 DeBartolo Capital Partnership 279.00 2,008
- ---------------------------------------------------------------------------------------------
23 DeBartolo Realty Partnership, L.P. 357.00 2,570
- ---------------------------------------------------------------------------------------------
24 Gulf View Associates 479.00 3,448
- ---------------------------------------------------------------------------------------------
25 DeBartolo Realty Partnership, L.P. 914.00 6,579
- ---------------------------------------------------------------------------------------------
26 DeBartolo Realty Partnership, L.P. 111.00 799
- ---------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE> 10
<TABLE>
<CAPTION>
=============================================================================================
CERT. NAME NUMBER OF NUMBER
NO. SHARES OF
WARRANTS
=============================================================================================
<S> <C> <C> <C>
27 Mission Viejo Associates, L.P. 902.00 6,493
- ---------------------------------------------------------------------------------------------
28 Paddock Mall Associates 512.00 3,686
- ---------------------------------------------------------------------------------------------
29 DeBartolo Capital Partnership 590.00 4,247
- ---------------------------------------------------------------------------------------------
30 Randall Park Associates 802.00 5,773
- ---------------------------------------------------------------------------------------------
31 DeBartolo Capital Partnership 290.00 2,088
- ---------------------------------------------------------------------------------------------
32 DeBartolo Realty Partnership, L.P. 267.00 1,922
- ---------------------------------------------------------------------------------------------
33 DeBartolo Capital Partnership 134.00 965
- ---------------------------------------------------------------------------------------------
34 DeBartolo Capital Partnership 557.00 4,010
- ---------------------------------------------------------------------------------------------
35 DeBartolo Capital Partnership 279.00 2,008
- ---------------------------------------------------------------------------------------------
36 DeBartolo Capital Partnership 958.00 6,896
- ---------------------------------------------------------------------------------------------
37 DeBartolo Capital Partnership 134.00 965
- ---------------------------------------------------------------------------------------------
38 DeBartolo Realty Partnership, L.P. 111.00 799
- ---------------------------------------------------------------------------------------------
39 Columbia Mall Partnership 357.00 2,570
- ---------------------------------------------------------------------------------------------
40 Northgate Mall Partnership 1070.00 7,702
- ---------------------------------------------------------------------------------------------
41 Tacoma Partnership 1170.00 8,422
- ---------------------------------------------------------------------------------------------
42 The Edward J. DeBartolo Corp. 992.00 7,141
- ---------------------------------------------------------------------------------------------
43 DeBartolo Inc. 279.00 2,008
- ---------------------------------------------------------------------------------------------
44 Boardman Food Service Corp. 11.00 79
- ---------------------------------------------------------------------------------------------
45 Carat Company, Inc. 390.00 2,807
- ---------------------------------------------------------------------------------------------
46 Brenner Securities 10,000.00 143,994
- ---------------------------------------------------------------------------------------------
47 Nickey Maxey 2,900.52 62,650
- ---------------------------------------------------------------------------------------------
48 Hugh Collins 736.72 15,913
- ---------------------------------------------------------------------------------------------
49 Jeffrey A. Huffman 907.95 19,611
- ---------------------------------------------------------------------------------------------
50 Alton L. Huffman 907.95 19,611
- ---------------------------------------------------------------------------------------------
51 Albert J. Miniaci 3,333.33 71,998
- ---------------------------------------------------------------------------------------------
52 Rose Miniaci, Trustee 1,666.67 35,999
Albert J. Miniaci Irrevocable Trust
- ---------------------------------------------------------------------------------------------
53 Rose Miniaci, Trustee 1,666.67 35,999
Dominick F. Miniaci Irrevocable Trust
- ---------------------------------------------------------------------------------------------
54 Frank Miniaci, Trustee 833.33 18,000
Frank Miniaci Revocable Living Trust
- ---------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 11
<TABLE>
<CAPTION>
=============================================================================================
CERT. NAME NUMBER OF NUMBER
NO. SHARES OF
WARRANTS
=============================================================================================
<S> <C> <C> <C>
55 Dominick F. Miniaci, Trustee 833.33 18,000
Dominick F. Miniaci Trust
- ---------------------------------------------------------------------------------------------
TOTALS 107,918.19 2,018,946
- ---------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 1
EXHIBIT 10.147
INTELLICALL OPERATOR SERVICES, INC.
-----------------------------------
OPERATOR SERVICE SUBSCRIBER AGREEMENT
-------------------------------------
This OPERATOR SERVICE SUBSCRIBER AGREEMENT (the "Agreement") is made
this 29th day of February, 1996 by and between Intellicall Operator Services,
Inc., a Delaware corporation (IOS), having its principal place of business at
2155 Chenault, Suite 410, Carrollton, Texas 75006, and PhoneTel Technologies,
Inc., an Ohio corporation (SUBSCRIBER), having its principal place of business
at 650 Statler Office Tower, 1127 Euclid Avenue, Cleveland, OH 44115.
TERMS
Subject to the terms and conditions set forth in this Agreement, IOS
shall provide to SUBSCRIBER access to the system for the purpose of allowing
SUBSCRIBER'S customers ("Customers") to place operator assisted calls
("Traffic") from pay telephones owned or leased by SUBSCRIBER. Operator
assisted calls placed by SUBSCRIBER or any Customer shall be charged at the
rates mutually agreed upon between IOS and SUBSCRIBER. The Traffic shall be
delivered to the system in a format to be designated by IOS.
1. BILLING PROCEDURES.
Customers shall have the option to submit Operator Service (OSP)
Traffic to IOS using any of the following billing procedures:
(a) Customer may bill the Traffic through approved telephone
company calling cards with which IOS or its agents have a
billing and collection agreement;
(b) Customer may request collect billing (domestic only);
(c) Customer may request third-party billing; or
(d) Customer may bill the Traffic to approved credit cards (AMEX,
Visa, MC etc.) with which IOS or its agents have billing and
collection agreements. Credit card calls from any specific
location are subject to prior approval by IOS before
SUBSCRIBER can program that location to deliver credit card
traffic to IOS.
2. TERM OF AGREEMENT.
(a) The term of this Agreement shall commence on the date set
forth above and shall continue in full force and effect for a
period of thirty (30) months beginning March 1, 1996 (the
"Original Term") unless otherwise terminated pursuant to this
Agreement.
<PAGE> 2
(b) Unless either party shall notify the other party in writing of
its intent not to renew this Agreement at least thirty (30)
days prior to the expiration of the Original Term, this
Agreement shall automatically renew on a month to month basis
(terminable by either party upon 30 days written notice) under
the same terms and conditions as set forth herein.
(c) Except as the result of an uncured breach of this Agreement
pursuant to Section 12 of this Agreement, early termination of
this Agreement by SUBSCRIBER will result in the retention by
IOS of all outstanding commissions otherwise due to SUBSCRIBER
from IOS. In the event the retention of commissions as
contemplated above is not adequate to repay all amounts
contemplated in Section 3, SUBSCRIBER agrees to make an
immediate payment, regardless of any other amounts which may
be due to IOS, of such unpaid balance. For purposes of this
Section 2(c) early termination is defined as a reduction of
fifty (50) percent or more of the Traffic during any two week
period as compared to the previous two week period or the
failure tocomply with the provisions of Section 3. IOS'
remedies are not limited to retention of those monies being
held at the time this Agreement is early terminated and IOS
reserves the right to seek additional remedies in line with
other losses which may have occurred due to the early
termination.
3. TRAFFIC REQUIREMENTS.
SUBSCRIBER agrees to cause all Available Calls, as herein defined,
generated during the term of this Agreement by all pay telephones
owned, leased or maintained by SUBSCRIBER ("SUBSCRIBER S Phones") to
be routed to IOS. Notwithstanding anything in this Agreement to the
contrary, SUBSCRIBER agrees that during the month of March, 1996 that
it will submit calls represented by SUBSCRIBER S Traffic and
SUBSCRIBER S use of Intelli*Star (collectively referred to as "Calls")
of at least 150,000 Calls. SUBSCRIBER further agrees that during the
month of April, 1996 and in all subsequent months during the term of
this Agreement SUBSCRIBER will submit Calls monthly with a total Call
value in excess of $1,500,000. Additionally, SUBSCRIBER agrees to
submit at least 114,000 interstate Calls per month beginning in April,
1996. Available Calls shall be defined as all non-coin operator
assisted calls generated from SUBSCRIBER S Phones except the
following:
(a) Calls in which the patron of the phone dials an access code or
number in order to reach a carrier other than IOS;
( b) All calls generated through SUBSCRIBER S use of Intellicall,
Inc. s store and forward technology ("Intelli*Star");
(c) Calls in which state regulations require such calls to be
routed to the local exchange carrier;
<PAGE> 3
(d) Calls from SUBSCRIBER S Phones in which the agreement between
the premise owner and SUBSCRIBER require such calls to be
routed to one of the three major telecommunications carriers,
AT&T, MCI or Sprint; or
(e) any other calls as mutually agreed upon in writing between the
parties as listed on Exhibit B which may be modified from time
to time by written consent of IOS;
(f) All calls pursuant to SUBSCRIBER S Traffic and calls generated
through SUBSCRIBER S use of Intelli*Star in excess of 500,000
calls per month for the first twelve (12) calendar months and
400,000 calls per month for the remaining term of the
Agreement.
4. COMPENSATION.
(a) Except as outlined in Section 4(b), IOS shall pay SUBSCRIBER a
commission on Traffic as indicated below for each call billed
pursuant to Section 1. The total commission will be
calculated by taking the gross call revenue derived from the
Traffic during each calendar month and subtracting from it the
following costs for the applicable levels of Traffic:
<TABLE>
<CAPTION>
Calls per Month
---------------
99,999 100,000 - 200,000
or less 199,999 or more
------- ------- -------
<S> <C> <C> <C>
$0.8600 $0.8200 $0.7800 for each completed billable
live operator call
$0.2800 $0.2550 $0.2285 for each completed billable
automated operator call
$0.1450 $0.1425 $0.1395 per minute for each completed
billable domestic minute
$0.9000 $0.8500 $0.8000 per minute for each completed
billable international minute
15.00% 14.75% 14.5% of gross call revenue for Bill-
ing/Collection/Bad Debt
</TABLE>
Gross call revenue is defined as the sum of the operator
surcharge, all per minute charges, and any applicable location
surcharges.
(b) Interlata Intrastate Florida Traffic ("Florida Traffic") will
be commissioned at 27% of Net Revenue plus a $0.25 per call
location surcharge as allowed by the Florida Public Service
Commission as of the execution date of this Agreement. The
commission and the location surcharge are subject to a bad
debt reserve of 6%. Net Revenue is defined as the sum of the
operator surcharge and the per minute charges applicable to
the Florida Traffic.
3
<PAGE> 4
(c) Monthly statements will be mailed and commission payments
shall be wire transferred to SUBSCRIBER, based on SUBSCRIBER S
wiring instructions, by IOS on the 30th day of each month for
the previous calendar month s Traffic setting forth the
amounts payable to SUBSCRIBER pursuant to Section 4(a) for the
Traffic billed pursuant to Section 1 for the previous calendar
month.
(d) Notwithstanding anything in this Agreement to the contrary,
IOS shall have the right to off-set any sum payable to
SUBSCRIBER against any sum payable by SUBSCRIBER to IOS or
Intellicall, Inc. pursuant to this Agreement or otherwise upon
15 days written notice to SUBSCRIBER unless previously
authorized or agreed to in writing by SUBSCRIBER.
(e) IOS reserves the sole right to not bill or collect location
surcharges or premise imposed fees (PIFS) based on regulatory
conditions. IOS will notify the SUBSCRIBER in writing that
any SUBSCRIBER surcharge will be eliminated or reduced. IOS
will use its best judgment to allow SUBSCRIBER to maximize
income while not engaging in unreasonable pricing compared to
major competitors or industry practice.
(f) In the event SUBSCRIBER utilizes IOS tariffs, IOS reserves the
sole right to reduce the commission plan if a regulatory
authority establishes rate caps that require IOS to reduce its
rates charged to the public.
5. COMMISSION BONUS.
Upon execution of this Agreement, the Intelli*Star License Agreement
and the Relay Services Agreement all dated concurrently with this
Agreement and the successful completion of Subscriber s financing as
more fully described on Exhibit C and the acquisitions of Paramount
Communications International, of South Carolina and International of
Tennessee so that SUBSCRIBER owns and operates in excess of 14,000
pay telephones, Intellicall will make a one-time Commission Bonus
payment of $1,200,000 via wire transfer per SUBSCRIBER S wiring
instructions.
6. INSTALLATION.
(a) Prior to providing SUBSCRIBER with access to the system,
SUBSCRIBER shall deliver to IOS a completed Property
Maintenance Form identical to the form attached hereto as
Exhibit A (or any variation or amendment thereof authorized in
writing by IOS) for each pay telephone or call processing
system for which access is to be provided. Data may also be
provided in database or ASCII format as long as all pertinent
information contained in Exhibit A is also contained in the
data medium.
(b) SUBSCRIBER shall bear all costs incurred in providing
equipment programming for access to the system required to
deliver call Traffic to the system.
4
<PAGE> 5
(c) IOS shall use its best efforts to connect a pay telephone to
the system within five (5) days following receipt by IOS of a
Property Maintenance Form completed with information regarding
the pay telephone to be connected; provided, however, that IOS
shall not cause or allow the connection of a pay telephone to
the system prior to the receipt by IOS of a completed Property
Maintenance Form or equivalent as addressed in Section 5(a).
(d) SUBSCRIBER agrees, that upon written request and provision
from IOS, to affix any signage, or other notification to
customers, as may be required by any regulatory body.
7. WARRANTIES OF SUBSCRIBER.
(a) SUBSCRIBER warrants that the undersigned has the full
authority to execute this Agreement and bind SUBSCRIBER to the
terms and provisions hereof.
(b) SUBSCRIBER shall operate or cause to be operated pay
telephones or call processing systems managed, leased or owned
by SUBSCRIBER in compliance with any applicable law or
governmental rule or regulation at the sole expense of
SUBSCRIBER.
(c) SUBSCRIBER shall, at its sole expense, at all times maintain
pay telephones owned or leased by SUBSCRIBER in good operating
order, repair, condition and appearance.
(d) SUBSCRIBER warrants that it will only deliver call Traffic to
the system that is allowed by the appropriate regulatory
bodies to be completed by IOS. SUBSCRIBER agrees that it will
abide by all applicable state and federal rules and
regulations. SUBSCRIBER agrees to post all notices required
by state or federal regulatory bodies. SUBSCRIBER also agrees
that it will not block access to other long distance carriers
and will make access available via all 800, 950, and/or 10XXX
numbers as applicable. SUBSCRIBER realizes that failure to
adhere to any or all of the above covenants and agreements can
result in the withholding of commission payments and can lead
to suspension of service if the situation is not rectified and
cured within one (1) week of written notice from IOS or an
applicable regulatory body.
(e) SUBSCRIBER warrants that it will not add location surcharges
or premise imposed fees (PIFS) over and above those allowed by
applicable regulatory bodies. IOS limits the application of
surcharges or PIFS as follows:
Intrastate U.S. traffic As allowed by the regulations of
the state
Interstate U.S. traffic Not more than $2.50 per call or
$3.00 under PhoneTel tariffs
Canadian traffic - No surcharges allowed for calls billed in
Canada
Caribbean traffic (809) - Not more than $2.50 per call
5
<PAGE> 6
International traffic (011) - Not more than $2.50 per call
Surcharge limits are subject to change due to changes in the
regulatory and/or competitive business environment
8. WARRANTIES OF IOS.
IOS agrees to provide Network Services, as herein defined, to
SUBSCRIBERS customers. The Network Services provided include: (i)
live operator assisted and automated operator assisted calls utilizing
0+/0-/00-/01 dialing where those calls are charged to major commercial
credit cards, to billable calling cards, as collect calls, or as
third-party billings and (ii) where those billable calls are placed as
station-to-station, person-to-person, automated credit card, or
automated calling card by type (collectively the "Network Services").
IOS agrees to use its best efforts to provide Network Services in
accordance with reasonably accepted industry standards and to provide
a high degree of operator skills in the provision of those Network
Services including but not limited to, reasonable work time, courtesy
of operators and accuracy of information provided by IOS operators.
IOS agrees that all Network Services shall be provided in accordance
with all applicable laws, requirements and standards established by
federal, state and local laws. IOS agrees that the quality of the
Network Services in terms of response time, calls accepted, calls
completed, average work time and routing priority for calls originated
by SUBSCRIBERS customers shall be substantially the same as industry
averages of parties providing operator assisted services. IOS agrees
that a default condition will exist if after notification by
SUBSCRIBER Total Network Outages, as herein defined, occur for more
than 24 hours in any given month or over 72 hours in any given year.
Total Network Outage is defined as the inability of IOS to deliver any
level of Network Services to SUBSCRIBER for reasons other than an act
of God or the common enemy or the result of war, riot, civil
commotion, sovereign conduct, or the act or conduct of any person or
persons not party or privy hereto.
9. PROPRIETARY INFORMATION.
Except as required by law or governmental authority, both parties to
this Agreement agree that all knowledge acquired, directly and
indirectly, by either party during the term of this Agreement or any
renewal period, concerning the business affairs and operations of
either party, is deemed confidential and proprietary to each party and
will be held in trust and confidence by each party, its successors and
assigns, and each party shall have an absolute duty to maintain in
confidence such knowledge and information and prevent disclosures to
others. Both parties further agree to take reasonable steps necessary
to ensure that all of its agents, servants, and/or employees, who have
access to such knowledge and information, shall observe and perform
the provisions of this Section. Each party agrees that any threatened
violation of any provisions of this Section shall cause immediate and
irreparable harm to one another and, in such event, an injunction
restraining either party from such violation may be entered against
it, in addition to any other relief available to each party.
6
<PAGE> 7
10. INDEMNIFICATION AND RELEASE.
(a) IOS shall not be liable or responsible for, and shall be saved
and held harmless by SUBSCRIBER from and against, any and all
expenses (including reasonable attorney's fees), claims and
damages of every kind whatsoever, including, but not limited
to, damages for injury to or death of any person or persons
and for damage to or loss of any property, arising out of or
attributed, directly or indirectly, to the operations of
SUBSCRIBER or performance of SUBSCRIBER under this Agreement.
(b) IOS shall not be liable or responsible for, and SUBSCRIBER
releases and holds IOS harmless from, liability for
consequential damages alleged to result from or allegedly
caused by the failure of IOS' system or operators. IN NO
EVENT SHALL IOS BE LIABLE TO SUBSCRIBER FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE LOSS OR DAMAGE
OF ANY KIND, INCLUDING LOST PROFITS WHETHER OR NOT IOS HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE, BY
REASON OF ANY ACT OR OMISSION IN ITS PERFORMANCE UNDER THIS
AGREEMENT.
11. DEFAULT OF SUBSCRIBER.
SUBSCRIBER shall be in default under this Agreement upon the
occurrence of any one or more of the following events:
(a) Except as contemplated in Section 3, SUBSCRIBER breaches any
obligation or warranty under this Agreement, and such breach
continues for a period of fifteen (15) days after written
notice from IOS;
(b) SUBSCRIBER makes a general assignment for the benefit of
creditors, suspends business, or commits any act amounting to
business failure;
(c) If SUBSCRIBER terminates this Agreement other than pursuant to
Section 2 prior to the expiration of the Original Term or
renewal term, if any; or
(d) Bankruptcy, reorganization, liquidation, or receivership
proceedings are instituted by or against SUBSCRIBER and
SUBSCRIBER consents thereto or fails to cause such proceedings
to be discharged within thirty (30) days.
Upon default as described in this Section 11, IOS may
terminate this Agreement and pursue any damages available to
IOS as contemplated herein or by law.
Furthermore, in the event IOS shall terminate this Agreement pursuant
to Section 2(c) or 3of this Agreement, SUBSCRIBER acknowledges and
agrees that Intellicall, Inc., an affiliate of IOS, shall have the
right to immediately terminate all of its contractual arrangements
with SUBSCRIBER.
7
<PAGE> 8
12. DEFAULT BY IOS.
IOS shall be in default under this Agreement upon the occurrence of
any of the following events:
(a) Failure to provide SUBSCRIBER with access to the system for a
period of twenty-four (24) consecutive hours following receipt
of written notice from SUBSCRIBER of its inability to obtain
access to the system, subject to an act of God or the common
enemy or the result of war, riot, civil commotion, sovereign
conduct, or the act or conduct of any person or persons not
party or privy hereto;
(b) IOS breaches any obligation under this Agreement and such
breach continues following receipt by IOS of written notice
thereof for one (1) business days pursuant to Section 4 or
fifteen (15) days pursuant to any other Section of this
Agreement, unless IOS has taken reasonable steps within such
period to correct such breach;
(c) IOS makes a general assignment for the benefit of creditors,
suspends business, or commits any act amounting to business
failure; or
(d) Bankruptcy, reorganization, liquidation, or receivership
proceedings are instituted by or against IOS and IOS consents
thereto or fails to cause such proceedings to be discharged
within thirty (30) days.
Upon default as described in this Section 12, SUBSCRIBER may terminate
this Agreement and pursue any damages available to SUBSCRIBER as
contemplated herein or by law.
13. MISCELLANEOUS.
(a) All rights and remedies under this Agreement are cumulative,
not exclusive, and shall be in addition to all rights and
remedies available to either party at law or in equity.
Failure to exercise any right or remedy shall not be construed
as waiver thereof or as excusing the other party from future
performance in accordance with the terms of this Agreement.
(b) In the event that the performance by IOS of any of its
obligations or undertakings hereunder shall be interrupted or
delayed by any occurrence and not occasioned by the conduct of
IOS, whether such occurrence be an act of God or the common
enemy or the result of war, riot, civil commotion, sovereign
conduct, or the act or conduct of any person or persons not
party or privy hereto, then IOS shall be excused from such
performance for such a period of time as is reasonably
necessary after such occurrence to remedy the effects thereof.
8
<PAGE> 9
(c) If any legal action is brought by either of the parties
hereto, it is expressly agreed that the party in whose favor
final judgment shall be entered shall be entitled to recover
from the other party reasonable attorneys' fees in addition to
any other relief which may be awarded.
(d) The obligations and undertakings of each of the parties to
this Agreement shall be performable in Dallas County, Texas
and it is therefore agreed that any cause of action or suit
based upon this Agreement must be brought in Dallas County,
Texas.
(e) This Agreement may be modified in a writing signed by both
parties.
(f) If any clause or provision of this Agreement is illegal,
invalid or unenforceable under present or future laws
effective during the term of this Agreement, then, in that
event, it is the intention of the parties hereto that the
remainder of this Agreement shall not be affected thereby. It
is also the intention of the parties to this Agreement that in
lieu of each clause or provision of this Agreement that is
illegal, invalid or unenforceable, there shall be added as a
part of this Agreement a clause or provision as similar in
terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and
enforceable.
(g) This Agreement shall be governed by and construed in
accordance with the law of the State of Texas.
(h) Either party to this Agreement may assign its rights and
delegate its obligations hereunder, except that either party
may not assign its rights or delegate its obligations
hereunder (whether voluntarily, involuntarily, or by operation
of law) without the prior written consent of the other party,
which consent shall not be unreasonably withheld.
Notwithstanding anything in this Section 13(h) to the
contrary, either party may assign its rights and obligations
under this Agreement to its senior secured lender or the
senior secured lender of its parent company and Intellicall
may assign its rights and obligations under this Agreement to
a subsidiary or related party without the prior written
approval of SUBSCRIBER.
(i) This Agreement shall be binding upon and inure to the benefit
of the successors and assigns, if permitted, of the respective
parties hereto.
(j) Any notices required or authorized by this Agreement shall be
in writing and may be effective by registered or certified
mail return receipt requested. Notice to IOS shall be
sufficient if made and addressed to the following parties:
9
<PAGE> 10
<TABLE>
<S> <C> <C>
IOS: and to SUBSCRIBER:
INTELLICALL, Inc., PhoneTel Technologies, Inc.
2155 Chenault, Suite 410 650 Statler Office Tower
Carrollton, TX 75006 1127 Euclid Avenue
Attn: William O. Hunt Cleveland, OH 44115
President Attn: Tammy Martin
Fax: (214) 416-9454 General Counsel
Fax: (216) 623-2579
Michael Barnes
Chief Financial Officer
Fax: (214) 416-9454
Patrick V. Stark
General Counsel
Fax: (214) 416-9454 and
(214) 777-4299
</TABLE>
Any such notice shall be effective on the earlier of notice
sent by facsimile with confirmation held by notifying party of
delivery of such facsimile or three days following the deposit
thereof with the United States Postal Service. Each party may
change the address for notice to it by giving notice of such
change in accordance with the provisions of this Section.
(k) It is expressly understood and agreed that SUBSCRIBER is not
an agent, employee, nor legal representative of IOS and,
unless specifically authorized in writing to do so, may not
incur any obligations on behalf of or in the name of IOS.
<TABLE>
<S> <C>
INTELLICALL OPERATOR SERVICES, INC. PHONETEL TECHNOLOGIES, INC.
BY: /s/ William O. Hunt BY: /s/ Peter G. Graf
_______________________________ _______________________________
William O. Hunt Peter G. Graf
President Chairman of the Board and
Chief Executive Officer
DATE: February 29, 1996 DATE: March 12, 1996
______________________________ _____________________________
</TABLE>
10
<PAGE> 1
EXHIBIT 10.148
INTELLI*STAR LICENSE AGREEMENT
------------------------------
(EZ*STAR VERSION)
This Intelli*Star LICENSE AGREEMENT (the "Agreement"), dated as
of February 29, 1996, is entered into by and between Intellicall, Inc., a
Delaware corporation ("Intellicall"), and PhoneTel Technologies, Inc., an Ohio
corporation (the "Licensee").
This Agreement is entered into between Intellicall and Licensee for
the purpose of setting forth the terms and conditions upon which Intellicall
will license to Licensee the right to utilize Intellicall's proprietary
technology, Intelli*Star.
The technology licensed hereunder (the "Technology") consists of
integrated electronic circuit boards and related software which are utilized in
pay telephones in order to store and retrieve call and billing information for
certain non-coin telephone calls not requiring live operator assistance. The
Technology and all expertise, know-how, and trade secrets associated with the
Technology and the system for pay telephones in which the Technology is
utilized is referred to collectively as (the "System").
In consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
I. SERVICES & TERM OF AGREEMENT
1.1 BOARDS. Pursuant to this Agreement, Licensee shall be
considered to have been granted a License for all Intellicall proprietary
Intelli*Star integrated electronic circuit boards and related software
(collectively, the "Boards") currently in its possession and received in
transfer from other Intellicall licensees according to the transfer letter
agreements attached hereto as EXHIBITS A AND B and made a part hereof.
Additionally, Licensee may continue to acquire Boards from other Intellicall
licensees and purchase Boards directly from Intellicall throughout the term of
this Agreement. The Boards are to be utilized in pay telephones owned or
leased by Licensee (one Board per telephone). The Boards will allow Licensee's
customers to place certain non-coin telephone calls without live operator
assistance (the "Traffic") from pay telephones owned or leased by Licensee and
which contain the Boards.
1.2 RATES. The Traffic shall be charged at Licensee's rates then
in effect. The rates charged for the Traffic shall be the responsibility of
Licensee. Such rates shall at all times shall comply with all applicable laws
and regulations. If such rates are not in compliance with all applicable laws
and regulations, Licensee shall adjust such rates so as to be in compliance.
Licensee shall be solely responsible for any fines, costs and penalties arising
in connection with such rates and the services provided by Licensee. In
addition, Licensee shall be solely responsible for any and all refunds due the
public with regard to such rates and the services provided by Licensee. If
requested by Intellicall, all rate information shall be supplied by Licensee
and shall be subject to review by Intellicall.
<PAGE> 2
Notwithstanding the foregoing, if Licensee's average call revenue fails to
average at least $4.25 on all Traffic, for any consecutive three (3) month
period during the term of this Agreement, Intellicall shall have the right to
reduce the commission structure shown in Section 3.2 of this Agreement as
follows:
The reduction of the commission structure shall be based on the average rate of
Licensee s Traffic for any consecutive three (3) month period and shall be in
effect for the following month.
<TABLE>
<CAPTION>
Reduction of Section 3.2
Average Call Price Commission Percentages
------------------ ----------------------
<S> <C>
$4.24 - $4.00 One Percent (1.0%)
$3.99 - $3.75 One and One-Half Percent (1.5%)
$3.74 - $3.25 Three Percent (3%)
$3.24 - $2.75 Six Percent (6%)
Below $2.74 To be Negotiated
</TABLE>
1.3 VERIFICATION. Intellicall shall bear the cost of validation
to its selected validation service. Licensee agrees to use its best efforts to
validate all call and billing information generated through the use of the
Boards. Intellicall reserves the right to modify the fraud control thresholds
in its selected validation service as deemed necessary by Intellicall to
mitigate against fraudulent calling activity and block access to calls billed
to Telecom Canada.
1.4 MAINTENANCE. Intellicall shall be responsible for all service
and repair to the Boards. Without the consent of Intellicall, Licensee shall
not attempt to service or repair, or allow others to service or repair, the
Boards. Licensee shall protect the Boards from the elements and from abuse.
All service and repair to the Boards shall be at the sole cost and expense of
Intellicall, other than service and repair resulting from Licensee's failure to
comply with this Section, which service and repair shall be at Licensee's sole
expense. At its option, Intellicall may replace any defective Board in lieu of
repairing such Board.
1.5 TERM OF AGREEMENT. The term of this Agreement shall commence
upon the effective date hereof and shall continue for thirty (30) months from
March 1, 1996 The term of this Agreement will automatically renew on a month to
month basis unless either party submits in writing to the other party its
intent to not renew this Agreement within thirty (30) days of any scheduled
renewal date.
II. LICENSE
2.1 GRANT OF LICENSE. Subject to the terms, covenants, conditions
and limitations set forth in this Agreement, Intellicall hereby grants to
Licensee a personal license (the "License") to use the Technology solely in
connection with the System. Licensee shall have no right to assign, sublicense
or transfer the License, or to use the Technology for any purpose other than as
contemplated by this Agreement.
2
<PAGE> 3
2.2 TERM OF LICENSE. The term of the License shall commence on
the date of this Agreement and shall expire thirty (30) months after the date
of this Agreement, unless otherwise terminated pursuant to this Agreement.
2.3 INTELLICALL PROPERTY. The Boards, the Technology, the System,
and all matters in connection therewith and revenues and proceeds produced
therefrom are the property of Intellicall and shall not be affected by the
License granted by this Agreement. Licensee shall take all actions requested
by Intellicall to preserve the Boards as the property of Intellicall, including
but not limited to (i) placing a label (in a form approved in writing by
Intellicall) on the Boards, stating that the Boards are the exclusive property
of Intellicall; (ii) filing with the appropriate authorities financing
statements identifying Intellicall's interest in the Boards; and (iii) such
other actions as are reasonably requested by Intellicall to prevent the Boards
from becoming the property of Licensee's creditors.
2.4 RETURN OF BOARDS. At the end of the term of the License or
upon the earlier termination of the License, Licensee shall promptly return to
Intellicall the Intelli*Star Boards and all records and other documentation
relating to the Technology. The return of such material shall not release
Licensee from its obligations to maintain confidentiality under this Agreement.
III. BILLING AND REMITTANCES
3.1 POLLING. At least on a weekly basis during the term of the
License, Licensee shall, through the use of INET, poll all of the telephones
owned or leased by Licensee in which the Technology is being utilized and, at
least on a weekly basis, Licensee shall produce and deliver to Intellicall all
call and billing information with respect to the Traffic from such telephones
during such week. Licensee shall deliver to Intellicall all call and billing
information as soon as practical after each such poll. Prior to the receipt of
the call and billing information, the risk of loss of such call and billing
information (including the loss of such call and billing information while in
transit to Intellicall) shall be entirely the risk of Licensee.
3.2 LICENSEE COMMISSIONS. After the receipt of the call and
billing information as described above, Intellicall shall process and edit the
call and billing information. Such editing will segregate the messages
submitted to Intellicall into four (4) categories: 1) Rejected Messages; 2)
Nonbillable Messages (Rejected Messages and Nonbillable Messages include all
messages not accepted for billing and will be returned to the Licensee within 4
days after the process and edit date); 3) Accepted Non-Validated Messages; and
4) Accepted Validated Messages. On no later than the 30th day of each month
during the term of this Agreement, Intellicall shall pay to Licensee a cash
amount on all Accepted Validated Messages received for processing in the
previous calendar month ("Commission Percentage") according to the following
schedule:
3
<PAGE> 4
<TABLE>
<CAPTION>
Commission Percentage
---------------------
Monthly Revenue From Accepted Local IntraLATA InterLATA
- ----------------------------- ----- --------- ---------
Validated Messages
- ------------------
<S> <C> <C> <C>
Up to $250,00 68.0% 71.0% 74.0%
$250,000 - $500,000 68.5% 71.5% 74.5%
Over $500,000 70.5% 73.5% 76.5%
</TABLE>
Intellicall shall pay to Licensee a cash amount equal to fifty percent (50%) of
the gross revenue represented by the Accepted Non-Validated Messages.
Intellicall will have no obligation to pay any amount relating to Rejected
Messages or Nonbillable Messages.
3.3 STATEMENTS AND REPORTS. Monthly statements shall be furnished
to Licensee by Intellicall setting forth the call and billing information with
respect to the Traffic and the amount payable to Licensee pursuant to Section
3.2 of this Agreement for the previous calendar month s Traffic. Each monthly
statement shall be accompanied by payment on the 30th day following the end of
the previous month of the amounts shown to be payable to Licensee pursuant to
such monthly statement. Such payments shall be made via wire transfer as
instructed by Licensee. Weekly, Intellicall shall provide Licensee reports
showing the results of the processing and editing of Licensee's call and
billing information.
3.4 EXCLUSIVE BILLING ARRANGEMENT. Licensee understands and
agrees that, subject to written amendment, by execution of this Agreement,
Intellicall is appointed as the exclusive party for processing the call and
billing information relating to the Traffic, and no other party (including
Licensee) shall be allowed to process such information, bill the Traffic, or
otherwise utilize any such call and billing information without execution of an
amendment to this Agreement. Intellicall and Licensee acknowledge and agree
that, subject to certain minimum billing requirements of Intellicall, the
parties will work together to bill Traffic in the Ameritech region, pursuant
to this Agreement and the Operator Service Subscriber Agreement dated
concurrently with this Agreement, under that certain IPTA settlement agreement
under terms and conditions beneficial to both parties. Licensee is required
to utilize all Boards in its possession, for all traffic types for which
Licensee is authorized to carry call traffic, in each month during the term of
this Agreement.
3.5 AUDIT. Licensee and its employees and agents shall be
entitled, at Licensee's expense, to examine and audit that portion (but only
that portion) of the books and records of Intellicall in order to confirm that
the amounts paid to Licensee under Section 3.2 of this Agreement are correct.
Such audit shall take place during normal business hours of Intellicall, upon
reasonable advance notice to Intellicall, and shall occur no more frequently
than annually.
3.6 INMATE SERVICES. Section 3.2 of this Agreement does not apply to
traffic generated from prison/inmate facilities. In the event Intellicall pays
Licensee any amounts hereunder for Messages generated from prison/inmate
facilities (including halfway houses and any other non-"inmate" correctional
facilities), Licensee shall reimburse Intellicall for
4
<PAGE> 5
all such amounts paid to Licensee, such amounts to be reimbursed within five
(5) days of written request from Intellicall.
IV. COVENANTS OF LICENSEE
4.1 PROMPT INSTALLATION; EXPENSES. Licensee shall install each
Board which Licensee receives pursuant to this Agreement in a pay telephone
owned or leased by Licensee promptly as is practicable after the receipt by
Licensee of such Board. All expenses of installation shall be the sole
responsibility of Licensee.
4.2 NO TRANSFER OF BOARDS. Licensee shall not without the written
consent of Intellicall sell, assign, or transfer any of the pay telephones
containing any of the Boards. Intellicall shall not unreasonably withhold its
consent for Licensee to sell, assign, or transfer any of the pay telephones
containing any of the Boards, provided that (i) such sale, assignment, or
transfer shall not in any way affect Licensee's obligations which were due and
owing hereunder, prior to such sale, assignment, or transfer; and (ii) the
purchaser, assignee, or transferee of such pay telephones agrees in writing to
be bound by the terms of a mutually agreed upon Intelli*Star License Agreement.
4.3 AUTOMATIC TERMINATION. If for any reason Licensee, without
the written consent of Intellicall (which consent shall not be unreasonably
withheld), fails to maintain ownership (or, in the case of telephones leased by
Licensee, a leasehold interest), possession and control of all of the pay
telephones utilizing the System during the term of the License, the License
shall automatically terminate. Upon such termination of the License, Licensee
shall comply with its obligations as set forth in Section 2.4 of this
Agreement.
4.4 COMPLIANCE WITH LAWS. Licensee shall cause the telephones
owned or leased by Licensee and utilizing the System to be operated in
compliance with all applicable laws, rules and regulations applicable to the
operation of pay telephones.
4.5 CONFIDENTIAL INFORMATION. Except as required by law or
governmental authority, all knowledge and information acquired, directly or
indirectly, by Licensee pursuant to this Agreement relating to or concerning
the Boards, the Technology, and the System is deemed confidential and
proprietary to Intellicall. From and after the date hereof, Licensee, its
agents, representatives and employees shall safeguard the secrecy and
confidentiality of such information, and shall not disclose any of such
information to any person or party whatsoever, other than to responsible
employees of Licensee to whom it shall be essential to disclose such
information solely for the purpose contemplated by this Agreement, and in such
cases only under conditions of strict confidentiality. Except as provided in
this Agreement, from and after the date hereof, Licensee and its
5
<PAGE> 6
agents, representatives, and employees shall not make, use, or sell any of such
information and shall not make, use or sell any products or services
containing, derived from, or in any way using, such information. Licensee
shall take all reasonable steps necessary to insure that this knowledge and
information is not disclosed or used by Licensee or by any of its agents,
representatives, or employees except as provided in this Agreement. Licensee
further agrees to take reasonable steps necessary to insure that all of its
agents, representatives, and employees who have access to such knowledge and
information shall observe and perform the provisions of this Section. Licensee
shall be responsible for any breach of this Section by the agents,
representatives, or employees of Licensee.
4.6 AGREEMENT IS CONFIDENTIAL. Except as required by law or
governmental authority, Licensee agrees that the contents of this Agreement are
proprietary and shall not be disclosed by Licensee to any third party.
4.7 CONTRACTUAL INTERFERENCE. During the term of the License,
Licensee shall take no action which would interfere with the contractual
relationship of Intellicall and its customers, suppliers, employees or others,
which would tend to disparage or diminish the reputation of Intellicall, or
which would divert business away from Intellicall.
V. INDEMNIFICATION
5.1 INDEMNIFICATION OF INTELLICALL. Licensee, for itself and its
successors and assigns, shall defend, indemnify and hold Intellicall and its
subsidiaries and their respective officers, directors, stockholders, employees,
agents, successors and assigns harmless from and against, and shall promptly
reimburse them for, any and all losses, claims, damages, settlements, costs,
and liabilities of any nature whatsoever (including reasonable attorneys' fees)
to which any of them may become subject arising out of, based upon, as a result
or, or in any way connected with, the operations of Licensee or the performance
by Licensee under this Agreement, provided, however, that this indemnification
shall not apply with respect to claims and damages of Licensee against
Intellicall arising by virtue of a breach by Intellicall of its agreements
contained herein.
5.2 INDEMNIFICATION OF LICENSEE. Intellicall, for itself and its
successors and assigns, shall defend, indemnify and hold Licensee and its
subsidiaries and their respective officers, directors, stockholders, employees,
agents, successors and assigns harmless from and against, and shall promptly
reimburse them for, any and all losses, claims, damages, settlements, costs,
and liabilities of any nature whatsoever (including reasonable attorneys' fees)
to which any of them may become subject arising out of, based upon, as a result
of, or in any way connected with, manufacturing defects in any of the Boards
utilized by Licensee hereunder or the performance by Intellicall under this
Agreement; provided, however, that this indemnification shall not apply with
respect to claims and damages of Intellicall against Licensee arising by virtue
of a breach by Licensee of its agreements contained herein.
5.3 CONSEQUENTIAL DAMAGES. Notwithstanding Section 5.2 hereof,
Intellicall shall not be liable or responsible for, and Licensee releases and
holds Intellicall harmless from, liability for consequential damages alleged to
result from or allegedly caused by the failure of the Boards, or Intellicall's
equipment related to or used in connection with the System, or the use by
Licensee of the System in any manner whatsoever.
6
<PAGE> 7
VI. DEFAULT
6.1 DEFAULT. Either party shall be in default under this
Agreement following receipt of notification of an occurrence of any of the
following events:
(i) Either party breaches any obligation hereunder and is advised
in writing of such breach by the other party, and such breach
continues for one (1) business days pursuant to the payment
provision of Section 3.3 and ten (10) days for any other
provisions of the Agreement;
(ii) Either party breaches any representation or warranty made to
the other party herein;
(iii) Either party makes a general assignment for the benefit of
creditors, suspends all or substantially all of its business
operations, or commits any act amounting to business failure;
(iv) Bankruptcy, reorganization, liquidation, receivership, or
other similar proceedings are instituted by either party; or
(v) Bankruptcy, reorganization, liquidation, receivership, or
other similar proceedings are instituted against either party
and not fully discharged within thirty (30) days.
Upon such default, the non-defaulting party may terminate this Agreement,
within ten (10) business days of such default, at the sole option of the
non-defaulting party.
VII. MISCELLANEOUS
7.1 SPECIFIC PERFORMANCE. It is expressly covenanted and agreed
that, in the event of a breach by Licensee of any of the obligations or
covenants contained in this Agreement, although the damage to Intellicall will
be substantial, money damages will not afford an adequate remedy, and
Intellicall will suffer irreparable injury. Therefore, in the event of any
such breach and in addition to any other rights or remedies which may be
provided by law or this Agreement, Intellicall shall have the right to specific
performance of such particular obligations or covenants in this Agreement by
way of temporary and/or permanent injunctive relief.
7.2 BINDING EFFECT OF THIS AGREEMENT. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the
parties hereto and their respective assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
7
<PAGE> 8
7.3 ASSIGNMENT. Either party to this Agreement may assign its
rights and delegate its obligations hereunder, except that either party may not
assign its rights or delegate its obligations hereunder (whether voluntarily,
involuntarily, or by operation of law) without the prior written consent of the
other party, which consent shall not be unreasonably withheld. Notwithstanding
anything in this Section 7.3 to the contrary, either party may assign its
rights and obligations under this Agreement to its senior secured lender or the
senior secured lender of its parent and Intellicall may assign its rights and
obligations to a subsidiary or related party without the prior written approval
of Licensee.
7.4 APPLICABLE LAW. This Agreement is made pursuant to, will be
construed under, and will be conclusively deemed for all purposes to have been
executed and delivered under the laws of the State of Texas. The appropriate
state or federal courts located in Dallas County, Texas shall have exclusive
jurisdiction over all matters arising under this Agreement and will be the
proper forums in which to adjudicate such matters.
7.5 SECTION HEADINGS. The headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of which
together will constitute one instrument.
7.7 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, the legality, validity, and enforceability of the
remaining provisions of this Agreement shall not be affected thereby, and in
lieu of such illegal, invalid, or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be legal, valid and
enforceable.
7.8 NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given on the earlier of notice sent by facsimile with confirmation held by
notifying party of delivery of such facsimile or when delivered or mailed,
first class postage prepaid:
8
<PAGE> 9
<TABLE>
<S> <C>
If to Intellicall, Inc.: If to Licensee:
INTELLICALL, Inc. PhoneTel Technologies, Inc.
2155 Chenault 650 Statler Office Tower
Suite 410 1127 Euclid Avenue
Carrollton, TX 75006 Cleveland, OH 44115
Attn: William O. Hunt - President Attn: Tammy Martin - General Counsel
Fax: (214) 416-9454 Fax: (216) 623-2579
Michael Barnes-
Chief Financial Officer
Fax: (214) 416-9454
Patrick V. Stark
General Counsel
Fax: (214) 416-9454
and (214)777-4299
</TABLE>
Such addresses may be changed from time to time by written notice to
the other party.
7.9 FORBEARANCE WAIVER. Forbearance or failure to pursue any
legal or equitable remedy or right available to a party upon default under or
breach of this Agreement shall not constitute waiver of such right, nor shall
any such forbearance, failure or actual waiver imply or constitute waiver of a
subsequent default or breach.
7.10 ATTORNEYS' FEES. The prevailing party in any legal proceeding
based upon this Agreement shall be entitled to reasonable attorneys' fees and
court costs in addition to any other recoveries allowed by law.
7.11 OFF-SET. Notwithstanding anything in this Agreement to the
contrary, Intellicall shall have the right to off-set any sums payable to
Licensee hereunder against any sums payable by Licensee to Intellicall or any
majority owned subsidiary of Intellicall pursuant to this Agreement or
otherwise upon 15 days written notice to Licensee unless previously authorized
or agreed to in writing by Licensee.
7.12 NO AGENCY. Licensee is not an agent, partner, joint venturer,
or legal representative of Intellicall and has no authority to act for or incur
any obligations on behalf of or in the name of Intellicall.
7.13 REMEDIES. All rights and remedies under this Agreement are
cumulative, not exclusive, and shall be in addition to all rights and remedies
available to either party at law or in equity.
7.14 AMENDMENTS. This Agreement may not be modified, amended,
altered, or supplemented except by a written agreement executed by the parties
hereto.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
<TABLE>
<S> <C>
INTELLICALL, INC. PHONETEL TECHNOLOGIES, INC.
BY: /s/ William O. Hunt BY: /s/ Peter G. Graf
_________________________________ ______________________________
William O. Hunt Peter G. Graf
Chairman of the Board, Chairman of the Board and
President and Chief Executive Officer
Chief Executive Officer
DATE: February 29, 1996 DATE: March 12, 1996
_______________________________ ______________________________
</TABLE>
10
<PAGE> 1
EXHIBIT 10.149
RELAY SERVICES AGREEMENT
------------------------
This RELAY SERVICES AGREEMENT (the "Agreement"), dated as of February 29, 1996,
is entered into by and between Intellicall, Inc. a Delaware corporation
("Intellicall"), having its principal place of business at 2155 Chenault, Suite
410, Carrollton, Texas 75006 and PhoneTel Technologies, Inc., an Ohio
corporation (the "Customer"), having its principal place of business at 650
Statler Office Tower, 1127 Euclid Avenue, Cleveland, OH 44115
PRELIMINARY STATEMENTS
Customer desires to purchase from Intellicall and Intellicall desires
to provide to Customer the Relay Services (as defined in Section 1.1 below).
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, the parties hereby agree as follows:
1. Definitions
-----------
1.1 RELAY SERVICES - Means 1 + direct dialed telephone services
originating from the Customer's telecommunications equipment. Such
Relay Services shall originate from the Customer's telecommunications
equipment from Relay Participating ANIs and access the Relay Services
through the use of 10XXX access method, 950-XXXX access method, 1-800
access method or some other access method approved by Intellicall.
Intellicall may from time to time request such access method to be
changed by providing at least 30 (thirty) days written notice.
1.2 RELAY PARTICIPATING ANIS - Means those ANIs which belong to the
Customer and have been identified to Intellicall as ANIs participating
in the Relay Services under the Relay Agreement. Such identification
shall be made either through a mailed correspondence of such intent, a
delivered fax, a confirmed telephone call to Intellicall, or other
such means of communication confirmed by Intellicall.
1.3 UNDERLYING CARRIER - The communications carrier which may be
providing inter-state and intra-state communications services to
Intellicall.
2. PRICING. As compensation for the performance by Intellicall of the
Relay Services, Customer shall pay to Intellicall an amount equal to
the number of minutes of intrastate Relay Services used multiplied by
the appropriate rate as shown on Exhibit A plus the number of minutes
of interstate Relay Services used multiplied by the appropriate rate
as shown on Exhibit A. Intellicall, based on pricing increases from
its' Underlying Carrier, may at its sole election modify the pricing
on Exhibit A of this Agreement, upon thirty (30) days written notice.
Customer may terminate this Agreement in the event Intellicall does
modify such pricing on Exhibit A, and if the increase is in excess of
four percent (4%) in any given year or six percent (6%) in any two
year period. In the event of termination, any amounts due to
Intellicall for Relay Services provided prior to such termination
shall become immediately due and payable.
<PAGE> 2
3. UNIT OF MEASURE. The Relay Services shall be priced to the Customer in
increments of 6 seconds with a minimum call duration of 18 seconds.
4. TIMING OF PAYMENT. Charges for the Relay Services shall be due and
payable within thirty (30) days following the end of the month
in which such Relay Services were rendered. Intellicall will utilize
its best efforts to invoice such Relay Services within fifteen (15)
days following the end of the month in which such Relay Services were
rendered. In the event charges for such Relay Services remain
outstanding for twenty-nine (29) days past the due date, Intellicall
will deduct all past due amounts plus applicable interest from
commission payments otherwise due to Customer under the terms of the
Intell*Star, Intelli*Serv, Intelli*Max, or Intellicall Operator
Services Agreements, unless the amount of such commission payments is
less than the amount of such charges for Relay Services, in which case
Intellicall will deliver to Customer an invoice reflecting the amount
of the charges for the Relay Services remaining unpaid, which the
Customer agrees to remit to Intellicall immediately upon receipt of
such invoice. In no event will the payment terms for Relay Services be
extended beyond thirty (30) days following the month in which such
Relay Services were rendered without prior written authorization by
Intellicall.
In the event Customer does not pay for such Relay Services within
fifteen (15) days from the date such charges were due and payable,
Intellicall will assess a finance charge equal to the amount of
such delinquent payment multiplied by a monthly interest factor of one
and one-half percent (1.5%) for each month or portion of a month in
which such amount remains unpaid assessed from the original date in
which such charges were due, unless such interest factor is in excess
of the amount allowable by law, in which case Intellicall will assess
the greatest interest factor allowable by law.
5. EXCLUSIVITY PROVISION AND TERM. Customer agrees to subscribe to such
Relay Services from at least fifty percent (50%) of all Customer's
phones throughout the term of this Agreement. Customer agrees that the
ramp up of Relay Services shall take no longer than two (2) months.
This Agreement shall commence on the Agreement date first set forth
above and shall continue in full force and effect for a period of
thirty (30) months (the "Initial Term") and shall be automatically
renewed on a month to month basis unless Customer or Intellicall
provides thirty (30) days prior written notice of its intention to
terminate this Agreement at the end of the Initial Term or any
subsequent term.
6. WARRANTIES. Intellicall makes no representations or warranties as to
the reliability of the Relay Services but agrees to pass through
warranties given by the Underlying Carrier to Intellicall relating to
the character and quality of such services and the remedies for breach
of said warranties unless such warranties are not assignable to
Customer, in which case Intellicall shall use commercially reasonable
efforts to ensure such warranties are enforced or fulfilled for the
benefit of Customer.
THE FOREGOING LIMITED WARRANTY IS IN LIEU OF AND EXCLUDES ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR
OTHERWISE.
7. MISCELLANEOUS
7.1 BINDING NATURE AND ASSIGNMENT. This Agreement shall be binding on
the parties hereto and their respective successors and assigns, but
Customer may not, nor shall have the power to, assign this Agreement
without prior written consent of Intellicall, which consent shall not
2
<PAGE> 3
be unreasonably withheld.
7.2 APPLICABLE LAW. This Agreement is made pursuant to, will be
construed under, and will be conclusively deemed for all purposes to
have been executed and delivered under the laws of the State of
Texas. The appropriate state or federal courts located in Dallas
County, Texas shall have exclusive jurisdiction over all matters
arising under this Agreement and will be the proper forums in which to
adjudicate such matters.
7.3 SECTION HEADINGS. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
7.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of
which together will constitute one instrument.
7.5 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws
effective during the term hereof, the legality, validity, and
enforceability of the remaining provisions of this Agreement shall not
be affected hereby, and in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part
of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be legal, valid and
enforceable.
7.6 FORCE MAJEURE. Each party shall be excused from performance
hereunder for any period, and to the extent that it is prevented from
performing any services pursuant hereto, in whole or in part, as a
result of delays caused by the other party or an act of God,
government agency, war, civil disturbance, court order, labor dispute,
third party nonperformance (including the acts or omissions of common
carriers, interexchange carriers, local exchange companies, suppliers
or subcontractors), or other cause beyond its reasonable control.
7.7 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given when delivered or mailed, first class postage prepaid,
certified receipt requested.
If to Intellicall, Inc.:
INTELLICALL, Inc.
2155 Chenault, Suite 410
Carrollton, TX 75006
Attn: Patrick V. Stark - General Counsel
If to Licensee:
PhoneTel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, OH 44115
Attn: Tammy Martin - General Counsel
Such addresses may be changed from time to time by written notice to
the other party.
7.8 TERMINATION. This Agreement may be terminated upon notice by
Intellicall in the event of
3
<PAGE> 4
a default under the terms of the Agreement or non-payment of services
provided under this Agreement.
7.9 RELATIONSHIP OF PARTIES. Intellicall, in furnishing to Customer
hereunder, is acting only as an independent contractor. Intellicall
does not undertake by this Agreement or otherwise to perform any
obligation of Customer, whether regulatory or contractual, or to
assume any responsibility for Customer's business or operations.
Intellicall has the sole right and obligation to supervise, manage,
contract, direct, procure, perform or cause to be performed, all work
to be performed by Intellicall hereunder unless otherwise provided
herein.
7.10 LIABILITY OF INTELLICALL. Intellicall shall not be liable for
loss or damage,including any amounts for indirect, consequential or
punitive damages of any party, including third parties or for lost
profits, sustained by reason of any delay or interruption in the Relay
Services, whatever the reason for such delay or interruption.
IN WITNESS THEREOF, Intellicall and Customer have each caused this Agreement to
be signed and delivered by its duly authorized officer, all as of the date
first set forth above.
INTELLICALL, INC. PHONETEL TECHNOLOGIES, INC.
BY: /s/ William O. Hunt BY: /s/ Peter G. Graf
--------------------------- -----------------------------
William O. Hunt Peter G. Graf
Chairman of the Board Chairman of the Board
President and Chief Executive Chief Executive Officer
Officer
DATE: 2/29/96 DATE: 3/12/96
-------------------------- ----------------------------
4
<PAGE> 5
EXHIBIT A
<TABLE>
<CAPTION>
RELAY PRICING
INTRASTATE RATES:
STATE FLAT RATE PEAK OFF-PEAK
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama $ 0.082 $ 0.066
Arizona $ 0.120 $ 0.095
Arkansas $ 0.106 $ 0.085
Colorado $ 0.108 $ 0.086
Connecticut $ 0.080 $ 0.064
Delaware $ 0.094 $ 0.075
Florida $ 0.0950
Georgia $ 0.0900
Idaho $ 0.119 $ 0.095
Illinois $ 0.0675
Indiana $ 0.0800
Iowa $ 0.110 $ 0.088
Kansas $ 0.126 $ 0.101
Kentucky $ 0.1000
Louisiana $ 0.082 $ 0.065
Maine $ 0.175 $ 0.141
Maryland $ 0.0750
Massachusetts $ 0.0750
Michigan $ 0.1000
Minnesota $ 0.1025
Mississippi $ 0.107 $ 0.086
Missouri $ 0.1050
Montana $ 0.105 $ 0.084
Nebraska $ 0.115 $ 0.092
Nevada $ 0.0875
New Hampshire $ 0.138 $ 0.110
New Jersey $ 0.065 $ 0.052
New Mexico $ 0.109 $ 0.087
New York $ 0.0875
North Carolina $ 0.0925
North Dakota $ 0.111 $ 0.089
Ohio $ 0.0800
Oklahoma $ 0.109 $ 0.087
Oregon $ 0.102 $ 0.082
Pennsylvania $ 0.0825
Rhode Island $ 0.114 $ 0.091
South Carolina $ 0.1000
South Dakota $ 0.111 $ 0.089
Tennessee $ 0.0975
Texas $ 0.0990
Utah $ 0.100 $ 0.080
Vermont $ 0.064 $ 0.090
Virginia $ 0.0850
Washington $ 0.1025
West Virginia $ 0.1000
Wisconsin $ 0.1025
Wyoming $ 0.100 $ 0.080
California - Intralata $ 0.0450
California - Interlata $ 0.0800
INTERSTATE - FLAT RATE $ 0.0950
</TABLE>
<PAGE> 1
EXHIBIT 10.150
VOTING AND PROXY AGREEMENT
THIS AGREEMENT is made as of this 22 day of September, 1995, by and among
World Communications, Inc. ("WCI") and the shareholders of PhoneTel
Technologies, Inc. ("PhoneTel") who have signed this Agreement and who are
identified on Schedule A attached hereto (the "Shareholders").
RECITALS:
A. WCI is a party to a certain Agreement and Plan of Merger (the "Merger
Agreement") dated of even date herewith by and among PhoneTel, PhoneTel
II, Inc. and WCI.
B. As a material inducement for WCI to enter into the Merger Agreement and
the WCI Shareholders to approve the Merger Agreement and to exchange WCI
stock for PhoneTel stock, the Shareholders have agreed to be bound by
certain restrictions in connection with the shares of common stock of
PhoneTel (i) owned by the Shareholders on the date hereof, and (ii) issued
upon conversion of the options and warrants convertible into common stock
of PhoneTel (collectively, the "Agreement Shares"), which shares are
described on Exhibit A attached hereto.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. COVENANTS WITH RESPECT TO VOTING. During the period commencing on the
date hereof and ending on the earlier to occur of (i) sixteen (16) months
from the date hereof, or (ii) the approval of the "Special Meeting
Proposals" as defined below (the "Agreement Period"), the Shareholders
shall cause the Agreement Shares owned by them to be voted for the
following actions:
1.1 Duly calling or causing PhoneTel to call a special meeting of
shareholders of PhoneTel to occur on or before March 31, 1996 (the
"Special Meeting"), to approve the proposals referred to in Section
1.2 below.
1.2 Voting in favor of the following proposals (the "Special Meeting
Proposals") as more specifically set forth in Schedule 1.2.a, b, c
hereto:
a. to increase the number of directors of PhoneTel to eight;
<PAGE> 2
b. to elect (or, if already appointed by the Board, to ratify
the appointment of) four (4) directors designated jointly by
Stuart Hollander and Aron Katzman;
c. to approve the grant of conversion rights which would attach
immediately to the PhoneTel Preferred Shares (as defined in
the Merger Agreement) so that each PhoneTel Preferred Share
may be converted into ten (10) shares of PhoneTel common
stock.
1.3 During the Agreement Period, the Shareholders shall not, directly or
indirectly:
a. Call a meeting of shareholders of PhoneTel prior to the
occurrence of the Special meeting; or
b. Vote to remove any director of PhoneTel prior to the occurrence
of the Special Meeting.
1.4 For thirty (30) days after the approval of the conversion rights
proposal set forth in Section 1.2.c. hereof, the Shareholders agree
not to take any action which would negate the effects of the
approval of the proposals set forth in subsections 1.1.a, b or c
hereof.
1.5 In the event that the Special Meeting is held and the Special
Meeting Proposals are not approved, then the Shareholders agree
that they shall exercise, in accordance with their terms, within
thirty (30) days after the Special Meeting, all options and
warrants held by them to acquire the common stock of PhoneTel,
and shall thereafter comply with the provisions of Section 1.1
and 1.2 with respect to calling and holding a new Special Meeting
as promptly as practicable, but in no event later than 180 days
after the first Special Meeting is held.
1.6 Notwithstanding anything in this Agreement to the contrary, this
Agreement shall continue in effect until such time as the
Shareholder Loans (as defined in the Merger Agreement) have been
repaid and the guarantors have been released from the guarantees
described on Exhibit B attached hereto.
2. REPRESENTATIONS AND WARRANTIES. Each of the Shareholders hereby
represents and warrants to WCI with respect to the Agreement Shares set
forth next to such Shareholder's name on Exhibit A hereto, that:
2
<PAGE> 3
a. Such Shares are owned free and clear of any encumbrances;
b. Such Shares constitute all of the issued and outstanding common stock
of PhoneTel which he, she or it owns legally; and
c. Such Shareholder has authority to restrict such Shares pursuant to
the terms of this Agreement and that entering into this Agreement
does not violate any other agreements of such Shareholder.
3. LEGEND. The Shareholders agree that, during the Agreement Period, the
obligations hereunder shall attach to the Agreement Shares and that any
transfer of the Agreement Shares shall be subject to the obligations
created hereunder. The Shareholders agree that, during the Agreement
Period, a legend referencing this Agreement shall be placed on the
certificates representing the Agreement Shares prior to the transfer of
the Agreement Shares. Said legend shall provide as follows:
"The shares represented by this certificate are subject to the
provisions of a certain Voting Agreement dated ________, 1995, by
and among World Communications, Inc. and the Shareholders referred
to therein."
The Shareholders undertake and covenant to submit to PhoneTel's Transfer
Agent the certificates representing the Agreement Shares held by them
prior to transfer for the purpose of placing the aforementioned legend on
each such certificate. The legend shall be immediately removed upon the
expiration of the Agreement Period.
4. IRREVOCABLE PROXY. In order to secure each Shareholder's obligation to
vote his or her Agreement Shares in accordance with the provisions of this
Agreement, each Shareholder hereby appoints Aron Katzman as his, her or
its true and lawful proxy and attorney-in-fact, with full power of
substitution, to vote all of his or her Agreement Shares in favor of the
Special Meeting Proposals. Aron Katzman may exercise the irrevocable
proxy granted to him hereunder at any time any Shareholder fails to comply
with the provisions of this Agreement. The proxies and powers granted by
each Shareholder pursuant to this Section 4 are coupled with an interest
and given to secure the performance of each Shareholder's obligations to
WCI under this Agreement. Such proxies and powers shall be irrevocable
until the earlier of (i) the end of the Agreement Period or (ii) August
12, 1996.
3
<PAGE> 4
5. NO ADEQUATE REMEDY. Since it is recognized by the Shareholders that
irreparable damage without an adequate judicial remedy at law could result
from any violation of the provisions of this Agreement, the Shareholders
agree that, in addition to any other remedies available to WCI or its
Shareholders, WCI and its Shareholders shall have the remedy of a
restraining order, injunction, or such other equitable relief as may be
decreed or issued by a court of competent jurisdiction to enforce the
provisions hereof.
6. MISCELLANEOUS.
6.1 ENFORCEABILITY. If any term, provision, covenant or restriction of
this Agreement or the application thereof to any person or
circumstance should be held by an administrative agency or court of
competent jurisdiction to be invalid, void, or unenforceable, then
the remainder of this Agreement and the application of such term,
provision, covenant, or restriction to other persons or
circumstances shall not be affected thereby, but rather shall be
enforced to the greatest extent permitted by law. Further, it
is the intent of the Parties that if any term, provision, covenant,
or restriction of this Agreement should be held to be invalid,
void, or unenforceable as applied to any person or circumstance,
then such term, provision, covenant, or restriction shall be
modified to the minimum extent necessary in order to render the
same enforceable, consistent with the expressed objectives of the
parties hereto for entering into this Agreement.
6.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY RIGHTS.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, assigns,
heirs, legatees, and other legal representatives. The parties
acknowledge that this Agreement is intended to and shall be
construed to give the shareholders of WCI third party beneficiary
rights including the right, either individually or collectively, to
enforce the provisions of this Agreement against the Shareholders.
6.3 HEADINGS. The headings in this Agreement have been inserted solely
for convenience of reference and do not themselves constitute a part
of this Agreement.
6.4 ENTIRE UNDERSTANDING. This Agreement and the documents referred to
herein set forth the entire understanding of the parties relating to
the subject matter of this action and any other prior or
contemporaneous oral or written
4
<PAGE> 5
agreement respecting its subject matter shall have no force or effect
whatsoever.
6.5 WAIVER. No waiver of any breach of any term hereof shall be effective
unless in writing and signed by the party against whom enforcement of
waiver is sought, and no such waiver shall be construed as a waiver of
any subsequent breach of that term or of any other term hereof.
6.6 AMENDMENT. This Agreement may not be amended, modified, or terminated
except by a writing signed by all of the other parties hereto.
6.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
6.8 GOVERNING LAW. It is the intention of the parties hereto that this
Agreement shall be subject to, governed by, and construed and enforced
in accordance with the laws of the State of Ohio. In the event of a
breach by any party of its obligations hereunder, the prevailing party
in such litigation, as determined by the court, shall be entitled to
reimbursement of its reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
first written above.
WORLD COMMUNICATIONS, INC.
By: /s/ Stuart Hollander
---------------------------------
Its: Chairman
---------------------------------
SHAREHOLDERS:
______________________________________
______________________________________
5
<PAGE> 6
SCHEDULE A
PHONETEL SHAREHOLDER SIGNATURES OF:
Elliott H. Hershkowitz, Authorized Agent for Gabriel Capital L.P. and Ariel
Fund Limited
Herman Herman, The Standard Phone Company and Zandec Ltd.
Sarah Walker
Joseph Abrams
Douglas Abrams
George Henry
William D. Moses, Jr.
WCI SHAREHOLDER SIGNATURES OF:
Andrew D. Blumenfeld
Emily A. Blumenfeld
Jane A. Blumenfeld
James M. Blumenfeld
John A. Blumenfeld, Jr.
Linda S. Gavatin
Michael S. Harvey
Linda M. Harvey
Michael S. and Linda M. Harvey
Jason Hollander
Stuart S. Hollander
Roberta Kliethermes
Regina Linn Kliethermes
c/o Roberta Ann Kliethermes
Kimberly Anne Kliethermes
c/o Roberta Ann Kliethermes
Robert Kolbrener
John E. and Patricia N. McCadden
Gary Pace
Michael N. Spitzer
Jeffrey A. Spitzer
Sheryl K. Spitzer-Resnick
Richard M. Willing
Susan Willing
6
<PAGE> 7
ACCEPTANCE OF APPOINTMENT AS PROXY AS
REFERENCED IN SECTION 4
Signatures of
Steven Richman
Gerhard Waldschutz
Peter Graf
I hereby accept the appointment as proxy referenced in Section 4 hereof.
/s/ Aron Katzman
- -------------------
Aron Katzman
7
<PAGE> 8
SCHEDULE 1.2
PROPOSED RESOLUTIONS OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF PHONETEL TECHNOLOGIES, INC.
RESOLVED, that the first sentence of the second paragraph of Article III,
Section 1, of the Corporation's Code of Regulations be deleted in its entirety
and the following inserted in lieu thereof:
"The number of directors shall be not less than four (4) persons nor
more than ____________ (____) persons."
RESOLVED FURTHER, that the number of Directors shall be increased to eight
(8) and the following persons are elected as Directors, each to serve until the
next annual meeting of Shareholders and until such Directors' successors shall
be elected and qualified:
1. _______________________
2. _______________________
3. _______________________
4. _______________________
5. _______________________
6. _______________________
7. _______________________
8. _______________________
RESOLVED FURTHER, that subparagraph (j) of the Corporation's Articles of
Incorporation is hereby amended by the addition of the following as paragraph
8:
8. CONVERSION RIGHTS. Any holder of 10% Preferred Stock Series B may, at any
time, convert all, but not less than all, of his, her or its shares of 10%
Preferred Stock Series B into fully paid and non-assessable shares of
Common Stock such that each Share of 10% Preferred Stock Series B stock is
convertible into ten (10) shares of Common Stock. In order to exercise
the conversion privilege, the holder of 10% Preferred Stock Series B stock
to be converted shall surrender certificates for such stock, duly endorsed
or assigned to the
8
<PAGE> 9
Company or in blank, accompanied by written notice to the Company that the
holder elects to convert such stock (the "Conversion Notice"). As soon as
practicable but no later than twenty (20) business days after the
Company's receipt of the Conversion Notice, the Company shall cause to be
issued to the holder certificates for such Common Stock. Such Common
Stock shall carry with it the same registration rights as were granted in
connection with the Merger.
9
<PAGE> 10
STOCKHOLDER REPRESENTATIONS AND WARRANTIES
This document is being delivered in connection with the proposed merger (the
"Merger") of World Communications, Inc. ("WCI") with and into a wholly owned
subsidiary of PhoneTel Technologies, Inc. ("PhoneTel") pursuant to the
Agreement and Plan of Merger (the "Merger Agreement") to be entered into among
PhoneTel, PhoneTel II, Inc. and WCI. The undersigned holder of shares of WCI
Common Stock (the "Stockholder") understands that, pursuant to the Merger,
his/her shares of WCI Common Stock will be converted into shares of PhoneTel
Common Stock and PhoneTel Preferred Stock (collectively "Shares").
Name: ________________________________________________________________________
Address: _____________________________________________________________________
Social Security Number: _____________________________________________________
Number of WCI Shares Held by Stockholder: ____________________________________
Number of WCI shares which would result from Stockholder's conversion into WCI
Common Stock of all convertible debentures of WCI held by Stockholder: ________
Date: ______________________________________________________________________
10
<PAGE> 1
EXHIBIT 10.151
VOTING AND PROXY AGREEMENT
THIS AGREEMENT is made as of this 16th day of October, 1995, by and
among PHONETEL TECHNOLOGIES, INC. ("PhoneTel") and the shareholders of PUBLIC
TELEPHONE CORPORATION ("PTC") who have signed this Agreement and who are
identified on Schedule A attached hereto (the "Shareholders").
RECITALS:
A. PhoneTel is a party to a certain Agreement and Plan of Merger (the
"Merger Agreement") dated of even date herewith by and among
PhoneTel, PhoneTel II, Inc. and PTC.
B. As a material inducement for PhoneTel to enter into the Merger
Agreement, the Shareholders have agreed to be bound by certain
restrictions in connection with the shares of common stock of PhoneTel
(i) owned by the Shareholders on the date hereof, and (ii) issued upon
conversion of the options and warrants convertible into common stock
of PhoneTel (collectively, the "Agreement Shares"), which shares are
described on Exhibit A attached hereto.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. COVENANTS WITH RESPECT TO VOTING. During the period commencing on the
date hereof and ending on the earlier to occur of (i) sixteen (16)
months from the date hereof, or (ii) the approval of the "Special
Meeting Proposals" as defined below (the "Agreement Period"), the
Shareholders shall cause the Agreement Shares owned by them to be
voted for the following actions:
1.1 Duly calling or causing PhoneTel to call a special meeting of
Shareholders of PhoneTel to occur on or before March 31, 1996
(the "Special Meeting"), to approve the proposals referred to
in Section 1.2 below.
1.2 Voting in favor of the following proposals (the "Special
Meeting Proposals") as more specifically set forth in Schedule
1.2 hereto:
a. To increase the number of directors of PhoneTel to
eight;
<PAGE> 2
b. To elect (or, if already appointed by the Board, to
ratify the appointment of) four (4) directors
designated jointly by Stuart Hollander and Aron
Katzman;
c. To approve the grant of conversion rights which would
attach immediately to the PhoneTel Preferred Shares
(as defined in the Merger Agreement) so that each
PhoneTel Preferred Share may be converted into ten
(10) shares of PhoneTel common stock.
1.3 During the Agreement Period, the Shareholders shall not,
directly or indirectly:
a. Call a meeting of Shareholders of PhoneTel prior to
the occurrence of the Special Meeting; or
b. Vote to remove any director of PhoneTel prior to the
occurrence of the Special Meeting.
1.4 For thirty (30) days after the approval of the conversion
rights proposal set forth in Section 1.2.c. hereof, the
Shareholders agree not to take any action which would negate
the effects of the approval of the proposals set forth in
subsections 1.2.a, b or c hereof.
1.5 In the event that the Special Meeting is held and the Special
Meeting Proposals are not approved, then the Shareholders
agree that they shall exercise, in accordance with their
terms, within thirty (30) days after the Special Meeting, all
options and warrants held by them to acquire the common stock
of PhoneTel, and shall thereafter comply with the provisions
of Section 1.1 and 1.2 with respect to calling and holding a
new Special Meeting as promptly as practicable, but in no
event later than one hundred eighty 180 days after the first
Special Meeting is held. Provided, however, that the
Shareholders will be required to exercise any options and
warrants held by them only to the extent necessary so that at
least fifty-two percent (52%) of the outstanding shares of
common stock of PhoneTel ("PhoneTel Shares") will be obligated
to vote in favor of the Special Meeting Proposals, whether
pursuant to the Agreement or other agreements, assuming for
purposes of this calculation that all PhoneTel Shares issued
in connection with the merger of World Communications, Inc., A
Missouri Corporation, with and into a wholly-owned subsidiary
of PhoneTel are so obligated. This obligation to
exercise options and warrants shall apply pro rata to the
2
<PAGE> 3
Shareholders on the basis of the number of PhoneTel Shares
issuable upon exercise of such options and warrants.
1.6 Notwithstanding anything in this Agreement to the contrary,
this Agreement shall continue in effect until such time as the
Shareholder Loans (as defined in the Merger Agreement) have
been repaid and the guarantors have been released from the
guarantees described on Exhibit B attached hereto.
2. REPRESENTATIONS AND WARRANTIES. Each of the Shareholders hereby
represents and warrants to PhoneTel with respect to the Agreement
Shares set forth next to such Shareholder's name on Exhibit "A"
hereto, that:
a. Such Shares are owned free and clear of any encumbrances;
b. Such Shares constitute all of the issued and outstanding
common stock of PhoneTel which he, she or it owns legally; and
c. Such Shareholder has authority to restrict such Shares
pursuant to the terms of this Agreement and that entering into
this Agreement does not violate any other agreements of such
Shareholder.
3. LEGEND. The Shareholders agree that, during the Agreement Period, the
obligations hereunder shall attach to the Agreement Shares and that
any transfer of the Agreement Shares shall be subject to the
obligations created hereunder. The Shareholders agree that, during
the Agreement Period, a legend referencing this Agreement shall be
placed on the certificates representing the Agreement Shares prior to
the transfer of the Agreement Shares. Said legend shall provide as
follows:
"The shares represented by this certificate are subject to the
provisions of a certain Voting Agreement dated October 16,
1995, by and among PhoneTel Technologies, Inc. and the
Shareholders referred to therein."
The Shareholders undertake and covenant to submit to PhoneTel's
Transfer Agent the certificates representing the Agreement Shares held
by them prior to transfer for the purpose of placing the
aforementioned legend on each such certificate. The legend shall be
immediately removed upon the expiration of the Agreement Period.
3
<PAGE> 4
4. IRREVOCABLE PROXY. In order to secure each Shareholder's obligation
to vote his or her Agreement Shares in accordance with the provisions
of this Agreement, each Shareholder hereby appoints Aron Katzman as
his, her or its true and lawful proxy and attorney-in-fact, with full
power of substitution, to vote all of his or her Agreement Shares in
favor of the Special Meeting Proposals. Aron Katzman may exercise the
irrevocable proxy granted to him hereunder at any time any Shareholder
fails to comply with the provisions of this Agreement. The proxies
and powers granted by each Shareholder pursuant to this Section 4 are
coupled with an interest and given to secure the performance of each
Shareholder's obligations to PhoneTel under this Agreement. Such
proxies and powers shall be irrevocable until the earlier of (i) the
end of the Agreement Period or (ii) August 12, 1996.
5. NO ADEQUATE REMEDY. Since it is recognized by the Shareholders that
irreparable damage without an adequate judicial remedy at law could
result from any violation of the provisions of this Agreement, the
Shareholders agree that, in addition to any other remedies available
to PhoneTel or its shareholders, PhoneTel and its Shareholders shall
have the remedy of a restraining order, injunction, or such other
equitable relief as may be decreed or issued by a court of competent
jurisdiction to enforce the provisions hereof.
6. MISCELLANEOUS.
6.1 ENFORCEABILITY. If any term, provision, covenant or
restriction of this Agreement or the application thereof to
any person or circumstance should be held by an administrative
agency or Court of competent jurisdiction to be invalid, void,
or unenforceable, then the remainder of this Agreement and the
application of such term, provision, covenant, or restriction
to other persons or circumstances shall not be affected
thereby, but rather shall be enforced to the greatest extent
permitted by law. Further, it is the intent of the Parties
that if any term, provision, covenant, or restriction of this
Agreement should be held to be invalid, void, or unenforceable
as applied to any person or circumstance, then such term,
provision, covenant, or restriction shall be modified to the
minimum extent necessary in order to render the same
enforceable, consistent with the expressed objectives of the
parties hereto for entering into this Agreement.
6.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY RIGHTS. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors, assigns,
heirs, legatees, and other legal representatives. The parties
acknowledge that this Agreement is intended to
4
<PAGE> 5
and shall be construed to give the holders of PhoneTel
Preferred Shares third party beneficiary rights including the
right, either individually or collectively, to enforce the
provisions of this Agreement against the Shareholders.
6.3 HEADINGS. The headings in this Agreement have been inserted
solely for convenience of reference and do not themselves
constitute a part of this Agreement.
6.4 ENTIRE UNDERSTANDING. This Agreement and the documents
referred to herein set forth the entire understanding of the
parties relating to the subject matter of this action and any
other prior or contemporaneous oral or written agreement
respecting its subject matter shall have no force or effect
whatsoever.
6.5 WAIVER. No waiver of any breach of any term hereof shall be
effective unless in writing and signed by the party against
whom enforcement of waiver is sought, and no such waiver shall
be construed as a waiver of any subsequent breach of that term
or of any other term hereof.
6.6 AMENDMENT. This Agreement may not be amended, modified, or
terminated except by a writing signed by all of the other
parties hereto.
6.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the
same instrument.
6.8 GOVERNING LAW. It is the intention of the parties hereto that
this Agreement shall be subject to, governed by, and construed
and enforced in accordance with the laws of the State of Ohio.
In the event of a breach by any party of its obligations
hereunder, the prevailing party in such litigation, as
determined by the Court, shall be entitled to reimbursement of
its reasonable attorneys' fees and costs.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first written above.
<TABLE>
<S> <C>
PHONETEL TECHNOLOGIES, INC.
By: /s/ Daniel J. Moos
----------------------------------
Its: Executive Vice President
---------------------------------
SCHEDULE "A"
SHAREHOLDERS:
/s/ Kevin R. Ackerman
------------------------------------------
(Signature)
/s/ Richard R. Bowlin
------------------------------------------
(Signature)
/s/ W. Lloyd Bridges, M.D.
------------------------------------------
(Signature)
/s/ Richard C. Evans
------------------------------------------
(Signature)
/s/ Richard W. Evans
------------------------------------------
(Signature)
/s/ Ryan M. Evans
------------------------------------------
(Signature)
/s/ Constance A. Gregory, Jr.
------------------------------------------
(Signature)
/s/ Samuel B. Gregory, Jr.
------------------------------------------
(Signature)
</TABLE>
I hereby accept the appointment as proxy referenced in Section 4 hereof.
/s/ Aron Katzman
- ----------------------
Aron Katzman Signature
6
<PAGE> 7
<TABLE>
<S> <C>
SCHEDULE "A" /s/ Gerald H. Guyer
------------------------------------
(Continued) (Signature)
/s/ William R. Klaehn
------------------------------------
(Signature)
/s/ Marvin L. Komisarow
------------------------------------
(Signature)
/s/ John E. Krueger, M. D.
------------------------------------
(Signature)
/s/ James R. Martin
------------------------------------
(Signature)
/s/ Thomas J. Martin Jr.
------------------------------------
(Signature)
/s/ Thomas J. Martin
------------------------------------
(Signature)
/s/ Thomas James Martin
------------------------------------
(Signature)
/s/ Jerald L. Morgan
------------------------------------
(Signature)
/s/ Lewis G. Morgan
------------------------------------
(Signature)
</TABLE>
I hereby accept the appointment as proxy referenced in Section 4 hereof.
/s/ Aron Katzman
- ----------------------
Aron Katzman Signature
7
<PAGE> 8
<TABLE>
<S> <C>
SCHEDULE "A" /s/ Gerald R. Nolan, M.D.
------------------------------------------
(Continued) (Signature)
/s/ Richard C. Schlott Sr.
------------------------------------------
(Signature)
/s/ David E. Schouweiler
------------------------------------------
(Signature)
/s/ Jeanne R. Schouweiler
------------------------------------------
(Signature)
/s/ Scot C. Schouweiler
------------------------------------------
</TABLE>
I hereby accept the appointment as proxy referenced in Section 4 hereof.
/s/ Aron Katzman
- ----------------------
Aron Katzman Signature
8
<PAGE> 9
SCHEDULE 1.2
PROPOSED RESOLUTIONS OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF PHONETEL TECHNOLOGIES, INC.
RESOLVED, that the first sentence of the second paragraph of Article
III, Section 1, of the Corporation's Code of Regulations be deleted in its
entirety and the following inserted in lieu thereof:
"The number of directors shall be not less
than four (4) persons nor more than
____________ (____) persons."
RESOLVED FURTHER, that the number of Directors shall be increased to
eight (8) and the following persons are elected as Directors, each to serve
until the next annual meeting of Shareholders and until such Directors'
successors shall be elected and qualified:
1. _______________________
2. _______________________
3. _______________________
4. _______________________
5. _______________________
6. _______________________
7. _______________________
8. _______________________
RESOLVED FURTHER, that subparagraph (j) of the Corporation's Articles
of Incorporation is hereby amended by the addition of the following as
paragraph 8:
8. CONVERSION RIGHTS. Any holder of 10% Preferred Stock Series B
may, at any time, convert all, but not less than all, of his,
her or its shares of 10% Preferred Stock Series B into fully
paid and non-assessable shares of Common Stock such that each
Share of 10% Preferred Stock Series B stock is convertible
into ten (10) shares of Common Stock. In order to exercise
the conversion privilege, the holder of 10% Preferred Stock
Series B stock to be converted shall surrender certificates
for such stock, duly endorsed or assigned to the
9
<PAGE> 10
Company or in blank, accompanied by written notice to the
Company that the holder elects to convert such stock (the
"Conversion Notice"). As soon as practicable but no later than
twenty (20) business days after theCompany's receipt of the
Conversion Notice, the Company shall cause to be issued to
the holder certificates for such Common Stock. Such Common
Stock shall carry with it the same registration rights as were
granted in connection with the Merger.
10
<PAGE> 1
EXHIBIT 10.152
EXHIBIT F
---------
VOTING AGREEMENT
THIS AGREEMENT is made as of this ___ day of March, 1996, by
and among PHONETEL TECHNOLOGIES, INC. ("PhoneTel") and the persons set forth on
the signature pages of the agreement (the "Shareholders").
WHEREAS, PhoneTel is a party to a certain Agreement and Plan
of Merger (the "Merger Agreement") dated as of November 22, 1995, as amended as
of January 16, 1996 and February 23, 1996, by and among PhoneTel, the
Shareholders and International Payphones, Inc. ("IPI").
WHEREAS, as a material inducement for PhoneTel to enter into
the Merger Agreement, the Shareholders have agreed to be bound by certain
restrictions in connection with the shares of common stock of PhoneTel (the
"Shares") (i) owned by the Shareholders on the date hereof as a result of the
conversion of their shares of IPI into Shares pursuant to the Merger Agreement
(ii) any Shares released to the Shareholders pursuant to the Escrow Agreement
(the "Escrow Agreement"), dated as of November 22, 1995, by and among PhoneTel,
IPI, and Bethea, Jordan and Griffin, P.A. (the "Escrow Agent"), and (iii) any
other Shares issued to any Shareholder in connection with the Merger Agreement
including Shares issued upon conversion of Phonetel's 14% Convertible Preferred
Stock, no par value and $60 stated value, and upon exercise of Phonetel's
common stock purchase warrants (collectively the "Agreement Shares"), which
Shares are described in Exhibit A hereto.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:
Section 1. COVENANTS WITH RESPECT TO VOTING. During the
period commencing on the date hereof and ending on the earlier to occur of (i)
sixteen (16) months from the date hereof, or (ii) the approval of the "Special
Proposals" as defined below (the "Agreement Period"), the Shareholders shall
cause the Agreement Shares owned by them to be voted for the following actions:
1.1 Voting in favor of the following proposals (the
"Special Proposals") as more specifically set forth in Schedule 1.1 hereto:
(a) To increase the number of directors of PhoneTel to
eight;
<PAGE> 2
(b) To elect (or, if already appointed by the Board, to
ratify the appointment of) four (4) directors designated jointly by Stuart
Hollander and Aron Katzman;
(c) To approve the grant of conversion rights which would
attach immediately to the shares of 10% Non-Voting Preferred Stock, without par
value, $10 stated value, of PhoneTel (the "PhoneTel Preferred Shares") so that
each PhoneTel Preferred Share may be converted into 1.6667 shares of PhoneTel
common stock.
1.2 During the Agreement Period, the Shareholders shall
not, directly or indirectly:
(a) Call a meeting of shareholders of PhoneTel; or
(b) Vote to remove any director of PhoneTel.
1.3 For thirty (30) days after the approval of the
conversion rights proposal set forth in Section 1.2(c) hereof, the Shareholders
agree not to take any action which would negate the effects of the approval of
the proposals set forth in subsections 1.1(a), (b) or (c) hereof.
Section 2. REPRESENTATIONS AND WARRANTIES. Each of the
Shareholders hereby represents and warrants to PhoneTel with respect to the
Agreement Shares held by such Shareholder that:
(a) Such Shares are owned free and clear of any
encumbrances;
(b) Such Shares constitute all of the issued and
outstanding common stock of PhoneTel which he owns legally; and
(c) Such Shareholder has authority to restrict such
Shares pursuant to the terms of this Agreement and that entering into this
Agreement does not violate any other agreements of such Shareholder.
Section 3. LEGEND. The Shareholders agree that, during the
Agreement Period, the obligations hereunder shall attach to the Agreement
Shares and that any transfer of the Agreement Shares shall be subject to the
obligations created hereunder. The Shareholders agree that, during the
Agreement Period, a legend referencing this Agreement shall be placed on the
certificates representing the Agreement Shares prior to the transfer of the
Agreement Shares. Said legend shall provide as follows:
2
<PAGE> 3
"The shares represented by this certificate are subject to the
provisions of a certain Voting Agreement dated February __,
1996, by and among PhoneTel Technologies, Inc. and the
Shareholders referred to therein."
The Shareholders undertake and covenant to submit to PhoneTel's Transfer Agent
the certificates representing the Agreement Shares held by them prior to
transfer for the purpose of placing the aforementioned legend on each such
certificate. The legend shall be immediately removed upon the expiration of
the Agreement Period.
Section 4. NO ADEQUATE REMEDY. Since it is recognized by the
Shareholders that irreparable damage without an adequate judicial remedy at law
could result from any violation of the provisions of this Agreement, the
Shareholders agree that, in addition to any other remedies available to
PhoneTel or its shareholders, PhoneTel and its shareholders shall have the
remedy of a restraining order, injunction, or such other equitable relief as
may be decreed or issued by a Court of competent jurisdiction to enforce the
provisions hereof.
Section 5. MISCELLANEOUS.
5.1 ENFORCEABILITY. If any term, provision, covenant or
restriction of this Agreement or the application thereof to any person or
circumstance should be held by an administrative agency or court of competent
jurisdiction to be invalid, void, or unenforceable, then the remainder of this
Agreement and the application of such term, provision, covenant, or restriction
to other persons or circumstances shall not be affected thereby, but rather
shall be enforced to the greatest extent permitted by law. Further, it is the
intent of the parties to this Agreement that if any term, provision, covenant,
or restriction of this Agreement should be held to be invalid, void, or
unenforceable as applied to any person or circumstance, then such term,
provision, covenant, or restriction shall be modified to the minimum extent
necessary in order to render the same enforceable, consistent with the
expressed objectives of the parties to this Agreement for entering into this
Agreement.
5.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY
RIGHTS. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs, legatees, and
other legal representatives. The parties acknowledge that this Agreement is
intended to and shall be construed to give the holders of PhoneTel Preferred
Shares third party beneficiary rights including the right, either individually
or collectively, to enforce the provisions of this Agreement against the
Shareholders.
5.3 HEADINGS. The headings in this Agreement have been
inserted solely for convenience of reference and do not themselves constitute a
part of this Agreement.
3
<PAGE> 4
5.4 ENTIRE UNDERSTANDING. This Agreement and the
documents referred to herein set forth the entire understanding of the parties
relating to the subject matter of this action and any other prior or
contemporaneous oral or written agreement respecting its subject matter shall
have no force or effect whatsoever.
5.5 WAIVER. No waiver of any breach of any term hereof
shall be effective unless in writing and signed by the party against whom
enforcement of waiver is sought, and no such waiver shall be construed as a
waiver of any subsequent breach of that term or of any other term hereof.
5.6 AMENDMENT. This Agreement may not be amended,
modified, or terminated except by a writing signed by all of the other parties
hereto.
5.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
5.8 GOVERNING LAW. It is the intention of the parties
hereto that this Agreement shall be subject to, governed by, and construed and
enforced in accordance with the laws of the State of Ohio. In the event of a
breach by any party of its obligations hereunder, the prevailing party in such
litigation, as determined by the court, shall be entitled to reimbursement of
its reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day first written above.
PHONETEL TECHNOLOGIES, INC.
BY: ___________________________
ITS: _____________________________
______________________________
Jeff Huffman [SHAREHOLDER]
______________________________
Alton L. Huffman [SHAREHOLDER]
______________________________
Nickey Maxey [SHAREHOLDER]
______________________________
Hugh Collins [SHAREHOLDER]
4
<PAGE> 5
SCHEDULE 1.1
PROPOSED RESOLUTIONS OF A SPECIAL OR ANNUAL MEETING
OF THE SHAREHOLDERS OF PHONETEL TECHNOLOGIES, INC.
--------------------------------------------------
RESOLVED, that subparagraph (j) of the Corporation's Articles
of Incorporation is hereby amended by the addition of the following as
paragraph 7:
7. CONVERSION RIGHTS. Any holder of 10% Non-Voting Preferred
Stock may, at any time, convert all, but not less than all, of
his, her or its shares of 10% Non-Voting Preferred Stock into
fully paid and non-assessable shares of Common Stock such that
each Share of 10% Preferred Stock is convertible into 1.6667
shares of Common Stock. In order to exercise the conversion
privilege, the holder of 10% Non-Voting Preferred Stock to be
converted shall surrender certificates for such stock, duly
endorsed or assigned to the Company or in blank, accompanied
by written notice to the Company that the holder elects to
convert such stock (the "Conversion Notice"). As soon as
practicable but no later than twenty (20) business days after
the Company's receipt of the Conversion Notice, the Company
shall cause to be issued to the holder certificates for such
Common Stock. Such Common Stock shall carry with it the same
registration rights as were granted in connection with the
merger of World Communications, Inc. with and into PhoneTel
II, Inc.
RESOLVED, that subparagraph (j) of the Corporation's Articles
of Incorporation is hereby amended by the addition of the following as
paragraph 7A:
7A. The Company may, at any time, convert all, but not less than
all, of the outstanding shares of 10% Non-Voting Preferred
Stock into fully paid and non-assessable shares of Common
Stock such that each Share of 10% Preferred Stock is
convertible into 1.6667 shares of Common Stock. In order to
exercise the conversion privilege, the Board of Directors of
the Company shall adopt a resolution, whereupon such
conversion shall be effective immediately. The Company shall
promptly solicit each holder of a certificate which previously
represented 10% Non-Voting Preferred Stock to surrender such
certificates, duly endorsed or assigned to the Company or in
blank, in exchange for certificates representing the
appropriate number of shares of Common Stock. Such Common
Stock shall carry with it thesame registration rights as were
granted in connection with the merger of World Communications,
Inc. with and into PhoneTel II, Inc.
5
<PAGE> 6
The conversion ratio of 1.6667 set forth in each of the
preceding two paragraphs shall be subject to appropriate
adjustment in the event of any stock split, reverse stock
split, recapitalization or similar event.
6
<PAGE> 1
EXHIBIT 10.153
EXHIBIT F
---------
VOTING AGREEMENT
THIS AGREEMENT is made as of this ___ day of March, 1996, by
and among PHONETEL TECHNOLOGIES, INC. ("PhoneTel") and the persons set forth on
the signature pages of the agreement (the "Shareholders").
WHEREAS, PhoneTel is a party to a certain Agreement and Plan
of Merger (the "Merger Agreement") dated as of November 22, 1995, as amended as
of January 16, 1996 and February 23, 1996, by and among PhoneTel, the
Shareholders and International Payphones, Inc. ("IPI").
WHEREAS, as a material inducement for PhoneTel to enter into
the Merger Agreement, the Shareholders have agreed to be bound by certain
restrictions in connection with the shares of common stock of PhoneTel (the
"Shares") (i) owned by the Shareholders on the date hereof as a result of the
conversion of their shares of IPI into Shares pursuant to the Merger Agreement
(ii) any Shares released to the Shareholders pursuant to the Escrow Agreement
(the "Escrow Agreement"), dated as of November 22, 1995, by and among PhoneTel,
IPI, and Bethea, Jordan and Griffin, P.A. (the "Escrow Agent"), and (iii) any
other Shares issued to any Shareholder in connection with the Merger Agreement
including Shares issued upon conversion of Phonetel's 14% Convertible Preferred
Stock, no par value and $60 stated value, and upon exercise of Phonetel's
common stock purchase warrants (collectively the "Agreement Shares"), which
Shares are described in Exhibit A hereto.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:
Section 1. COVENANTS WITH RESPECT TO VOTING. During the
period commencing on the date hereof and ending on the earlier to occur of (i)
sixteen (16) months from the date hereof, or (ii) the approval of the "Special
Proposals" as defined below (the "Agreement Period"), the Shareholders shall
cause the Agreement Shares owned by them to be voted for the following actions:
1.1 Voting in favor of the following proposals (the
"Special Proposals") as more specifically set forth in Schedule 1.1 hereto:
(a) To increase the number of directors of PhoneTel to
eight;
<PAGE> 2
(b) To elect (or, if already appointed by the Board, to
ratify the appointment of) four (4) directors designated jointly by Stuart
Hollander and Aron Katzman;
(c) To approve the grant of conversion rights which would
attach immediately to the shares of 10% Non-Voting Preferred Stock, without par
value, $10 stated value, of PhoneTel (the "PhoneTel Preferred Shares") so that
each PhoneTel Preferred Share may be converted into 1.6667 shares of PhoneTel
common stock.
1.2 During the Agreement Period, the Shareholders shall
not, directly or indirectly:
(a) Call a meeting of shareholders of PhoneTel; or
(b) Vote to remove any director of PhoneTel.
1.3 For thirty (30) days after the approval of the
conversion rights proposal set forth in Section 1.2(c) hereof, the Shareholders
agree not to take any action which would negate the effects of the approval of
the proposals set forth in subsections 1.1(a), (b) or (c) hereof.
Section 2. REPRESENTATIONS AND WARRANTIES. Each of the
Shareholders hereby represents and warrants to PhoneTel with respect to the
Agreement Shares held by such Shareholder that:
(a) Such Shares are owned free and clear of any
encumbrances;
(b) Such Shares constitute all of the issued and
outstanding common stock of PhoneTel which he owns legally; and
(c) Such Shareholder has authority to restrict such
Shares pursuant to the terms of this Agreement and that entering into this
Agreement does not violate any other agreements of such Shareholder.
Section 3. LEGEND. The Shareholders agree that, during the
Agreement Period, the obligations hereunder shall attach to the Agreement
Shares and that any transfer of the Agreement Shares shall be subject to the
obligations created hereunder. The Shareholders agree that, during the
Agreement Period, a legend referencing this Agreement shall be placed on the
certificates representing the Agreement Shares prior to the transfer of the
Agreement Shares. Said legend shall provide as follows:
2
<PAGE> 3
"The shares represented by this certificate are subject to the
provisions of a certain Voting Agreement dated February __,
1996, by and among PhoneTel Technologies, Inc. and the
Shareholders referred to therein."
The Shareholders undertake and covenant to submit to PhoneTel's Transfer Agent
the certificates representing the Agreement Shares held by them prior to
transfer for the purpose of placing the aforementioned legend on each such
certificate. The legend shall be immediately removed upon the expiration of
the Agreement Period.
Section 4. NO ADEQUATE REMEDY. Since it is recognized by the
Shareholders that irreparable damage without an adequate judicial remedy at law
could result from any violation of the provisions of this Agreement, the
Shareholders agree that, in addition to any other remedies available to
PhoneTel or its shareholders, PhoneTel and its shareholders shall have the
remedy of a restraining order, injunction, or such other equitable relief as
may be decreed or issued by a Court of competent jurisdiction to enforce the
provisions hereof.
Section 5. MISCELLANEOUS.
5.1 ENFORCEABILITY. If any term, provision, covenant or
restriction of this Agreement or the application thereof to any person or
circumstance should be held by an administrative agency or court of competent
jurisdiction to be invalid, void, or unenforceable, then the remainder of this
Agreement and the application of such term, provision, covenant, or restriction
to other persons or circumstances shall not be affected thereby, but rather
shall be enforced to the greatest extent permitted by law. Further, it is the
intent of the parties to this Agreement that if any term, provision, covenant,
or restriction of this Agreement should be held to be invalid, void, or
unenforceable as applied to any person or circumstance, then such term,
provision, covenant, or restriction shall be modified to the minimum extent
necessary in order to render the same enforceable, consistent with the
expressed objectives of the parties to this Agreement for entering into this
Agreement.
5.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY
RIGHTS. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs, legatees, and
other legal representatives. The parties acknowledge that this Agreement is
intended to and shall be construed to give the holders of PhoneTel Preferred
Shares third party beneficiary rights including the right, either individually
or collectively, to enforce the provisions of this Agreement against the
Shareholders.
5.3 HEADINGS. The headings in this Agreement have been
inserted solely for convenience of reference and do not themselves constitute a
part of this Agreement.
3
<PAGE> 4
5.4 ENTIRE UNDERSTANDING. This Agreement and the
documents referred to herein set forth the entire understanding of the parties
relating to the subject matter of this action and any other prior or
contemporaneous oral or written agreement respecting its subject matter shall
have no force or effect whatsoever.
5.5 WAIVER. No waiver of any breach of any term hereof
shall be effective unless in writing and signed by the party against whom
enforcement of waiver is sought, and no such waiver shall be construed as a
waiver of any subsequent breach of that term or of any other term hereof.
5.6 AMENDMENT. This Agreement may not be amended,
modified, or terminated except by a writing signed by all of the other parties
hereto.
5.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
5.8 GOVERNING LAW. It is the intention of the parties
hereto that this Agreement shall be subject to, governed by, and construed and
enforced in accordance with the laws of the State of Ohio. In the event of a
breach by any party of its obligations hereunder, the prevailing party in such
litigation, as determined by the court, shall be entitled to reimbursement of
its reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day first written above.
PHONETEL TECHNOLOGIES, INC.
BY: ___________________________
ITS: _____________________________
__________________________________
Nickey Maxey [SHAREHOLDER]
_________________________________
Hugh Collins [SHAREHOLDER]
4
<PAGE> 5
SCHEDULE 1.1
PROPOSED RESOLUTIONS OF A SPECIAL OR ANNUAL MEETING
OF THE SHAREHOLDERS OF PHONETEL TECHNOLOGIES, INC.
--------------------------------------------------
RESOLVED, that subparagraph (j) of the Corporation's Articles
of Incorporation is hereby amended by the addition of the following as
paragraph 7:
7. CONVERSION RIGHTS. Any holder of 10% Non-Voting Preferred
Stock may, at any time, convert all, but not less than all, of
his, her or its shares of 10% Non-Voting Preferred Stock into
fully paid and non-assessable shares of Common Stock such that
each Share of 10% Preferred Stock is convertible into 1.6667
shares of Common Stock. In order to exercise the conversion
privilege, the holder of 10% Non-Voting Preferred Stock to be
converted shall surrender certificates for such stock, duly
endorsed or assigned to the Company or in blank, accompanied
by written notice to the Company that the holder elects to
convert such stock (the "Conversion Notice"). As soon as
practicable but no later than twenty (20) business days after
the Company's receipt of the Conversion Notice, the Company
shall cause to be issued to the holder certificates for such
Common Stock. Such Common Stock shall carry with it the same
registration rights as were granted in connection with the
merger of World Communications, Inc. with and into PhoneTel
II, Inc.
RESOLVED, that subparagraph (j) of the Corporation's Articles
of Incorporation is hereby amended by the addition of the following as
paragraph 7A:
7A. The Company may, at any time, convert all, but not less than
all, of the outstanding shares of 10% Non-Voting Preferred
Stock into fully paid and non-assessable shares of Common
Stock such that each Share of 10% Preferred Stock is
convertible into 1.6667 shares of Common Stock. In order to
exercise the conversion privilege, the Board of Directors of
the Company shall adopt a resolution, whereupon such
conversion shall be effective immediately. The Company shall
promptly solicit each holder of a certificate which previously
represented 10% Non-Voting Preferred Stock to surrender such
certificates, duly endorsed or assigned to the Company or in
blank, in exchange for certificates representing the
appropriate number of shares of Common Stock. Such Common
Stock shall carry with it the same registration rights as were
granted in connection with the merger of World Communications,
Inc. with and into PhoneTel II, Inc.
5
<PAGE> 6
The conversion ratio of 1.6667 set forth in each of the
preceding two paragraphs shall be subject to appropriate
adjustment in the event of any stock split, reverse stock
split, recapitalization or similar event.
6
<PAGE> 1
EXHIBIT 10.154
EXHIBIT F
---------
VOTING AGREEMENT
THIS AGREEMENT is made as of this ___ day of March, 1996, by
and among PHONETEL TECHNOLOGIES, INC. ("PhoneTel") and the undersigned
shareholders (the "Shareholders") of Paramount Communications Systems, Inc.
("Paramount").
A. PhoneTel is a party to a certain Share Purchase
Agreement (the "Purchase Agreement") dated November 16, 1995, as amended as of
January 12, 1996, by and among PhoneTel, the Shareholders and Paramount.
B. As a material inducement for PhoneTel to enter into
the Purchase Agreement, the Shareholders have agreed to be bound by certain
restrictions in connection with the shares of common stock of PhoneTel owned by
the Shareholders as a consequence of the conversion of Phonetel's 14%
Convertible Preferred Stock, no par value and $60 stated value, and the
exercise of Phonetel's common stock purchase warrants being acquired on the
date hereof (the "Shares"), which Shares are described on Schedule A attached
hereto.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:
Section 1. COVENANTS WITH RESPECT TO VOTING. During the
period commencing on the date hereof and ending on the earlier to occur of (i)
sixteen (16) months from the date hereof, or (ii) the approval of the "Special
Proposals" as defined below (the "Agreement Period"), the Shareholders shall
cause the Shares owned by them to be voted for the following actions:
1.1 Voting in favor of the following proposals (the
"Special Proposals") as more specifically set forth in Schedule 1.1 hereto:
(a) To increase the number of directors of PhoneTel to
eight;
(b) To elect (or, if already appointed by the Board, to
ratify the appointment of) four (4) directors designated jointly by Stuart
Hollander and Aron Katzman;
<PAGE> 2
(c) To approve the grant of conversion rights which would
attach immediately to the shares of 10% Non-Voting Preferred Stock, without par
value, $10 stated value, of PhoneTel ("PhoneTel Preferred Shares") so that each
PhoneTel Preferred Share may be converted into 1.6667 shares of PhoneTel common
stock.
(d) During the Agreement Period, the Shareholders shall
not, directly or indirectly:
(e) Call a meeting of shareholders of PhoneTel; or
(f) Vote to remove any director of PhoneTel.
1.2 For thirty (30) days after the approval of the
conversion rights proposal set forth in Section 1.1(c) hereof, the Shareholders
agree not to take any action which would negate the effects of the approval of
the proposals set forth in subsections 1.1(a), (b) or (c) hereof.
Section 2. REPRESENTATIONS AND WARRANTIES. Each of the
Shareholders hereby represents and warrants to PhoneTel with respect to the
Shares held by such Shareholder that:
(a) Such Shares are owned free and clear of any
encumbrances;
(b) Such Shares constitute all of the issued and
outstanding common stock of PhoneTel which he owns legally; and
(c) Such Shareholder has authority to restrict such
Shares pursuant to the terms of this Agreement and that entering into this
Agreement does not violate any other agreements of such Shareholder.
Section 3. LEGEND. The Shareholders agree that, during the
Agreement Period, the obligations hereunder shall attach to the Shares and that
any transfer of the Shares shall be subject to the obligations created
hereunder. The Shareholders agree that, during the Agreement Period, a legend
referencing this Agreement shall be placed on the certificates representing the
Shares prior to the transfer of the Shares. Said legend shall provide as
follows:
"The shares represented by this certificate are subject to the
provisions of a certain Voting Agreement dated February __,
1996, by and among PhoneTel Technologies, Inc. and the
Shareholders referred to therein."
2
<PAGE> 3
The Shareholders undertake and covenant to submit to PhoneTel's Transfer Agent
the certificates representing the Shares held by them prior to transfer for the
purpose of placing the aforementioned legend on each such certificate. The
legend shall be immediately removed upon the expiration of the Agreement
Period.
Section 4. NO ADEQUATE REMEDY. Since it is recognized by the
Shareholders that irreparable damage without an adequate judicial remedy at law
could result from any violation of the provisions of this Agreement, the
Shareholders agree that, in addition to any other remedies available to
PhoneTel or its shareholders, PhoneTel and its shareholders shall have the
remedy of a restraining order, injunction, or such other equitable relief as
may be decreed or issued by a Court of competent jurisdiction to enforce the
provisions hereof.
Section 5. MISCELLANEOUS.
5.1 ENFORCEABILITY. If any term, provision, covenant or
restriction of this Agreement or the application thereof to any person or
circumstance should be held by an administrative agency or court of competent
jurisdiction to be invalid, void, or unenforceable, then the remainder of this
Agreement and the application of such term, provision, covenant, or restriction
to other persons or circumstances shall not be affected thereby, but rather
shall be enforced to the greatest extent permitted by law. Further, it is the
intent of the parties that if any term, provision, covenant, or restriction of
this Agreement should be held to be invalid, void, or unenforceable as applied
to any person or circumstance, then such term, provision, covenant, or
restriction shall be modified to the minimum extent necessary in order to
render the same enforceable, consistent with the expressed objectives of the
parties hereto for entering into this Agreement.
5.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY
RIGHTS. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs, legatees, and
other legal representatives. The parties acknowledge that this Agreement is
intended to and shall be construed to give the holders of PhoneTel Preferred
Shares third party beneficiary rights including the right, either individually
or collectively, to enforce the provisions of this Agreement against the
Shareholders.
5.3 HEADINGS. The headings in this Agreement have been
inserted solely for convenience of reference and do not themselves constitute a
part of this Agreement.
5.4 ENTIRE UNDERSTANDING. This Agreement and the
documents referred to herein set forth the entire understanding of the parties
relating to the subject matter of this action and any other prior or
contemporaneous oral or written agreement respecting its subject matter shall
have no force or effect whatsoever.
3
<PAGE> 4
5.5 WAIVER. No waiver of any breach of any term hereof
shall be effective unless in writing and signed by the party against whom
enforcement of waiver is sought, and no such waiver shall be construed as a
waiver of any subsequent breach of that term or of any other term hereof.
5.6 AMENDMENT. This Agreement may not be amended,
modified, or terminated except by a writing signed by all of the other parties
hereto.
5.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
5.8 GOVERNING LAW. It is the intention of the parties
hereto that this Agreement shall be subject to, governed by, and construed and
enforced in accordance with the laws of the State of Ohio. In the event of a
breach by any party of its obligations hereunder, the prevailing party in such
litigation, as determined by the court, shall be entitled to reimbursement of
its reasonable attorneys' fees and costs.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day first written above.
<TABLE>
<S> <C>
PHONETEL TECHNOLOGIES, INC.
BY: ___________________________
ITS: _____________________________
SHAREHOLDERS
Albert J. Miniaci
Rose Miniaci, Trustee Albert
J. Miniaci Irrevocable Trust
Rose Miniaci, Trustee, Dominick
F. Miniaci Irrevocable Trust
Frank Miniaci, Trustee, Frank
Miniaci Revocable Living Trust
Dominick F. Miniaci, Trustee,
the Dominick F. Miniaci Trust
By:
-------------------------------
Dominick F. Miniaci
as Sellers Representative
</TABLE>
5
<PAGE> 6
SCHEDULE 1.1
PROPOSED RESOLUTIONS OF A SPECIAL OR ANNUAL MEETING
OF THE SHAREHOLDERS OF PHONETEL TECHNOLOGIES, INC.
--------------------------------------------------
RESOLVED, that subparagraph (j) of the Corporation's Articles
of Incorporation is hereby amended by the addition of the following as
paragraph 7:
7. CONVERSION RIGHTS Any holder of 10% Non-Voting Preferred Stock
may, at any time, convert all, but not less than all, of his,
her or its shares of 10% Non-Voting Preferred Stock into fully
paid and non-assessable shares of Common Stock such that each
Share of 10% Preferred Stock is convertible into 1.6667 shares
of Common Stock. In order to exercise the conversion
privilege, the holder of 10% Non-Voting Preferred Stock to be
converted shall surrender certificates for such stock, duly
endorsed or assigned to the Company or in blank, accompanied
by written notice to the Company that the holder elects to
convert such stock (the "Conversion Notice"). As soon as
practicable but no later than twenty (20) business days after
the Company's receipt of the Conversion Notice, the Company
shall cause to be issued to the holder certificates for such
Common Stock. Such Common Stock shall carry with it the same
registration rights as were granted in connection with the
merger of World Communications, Inc. with and into PhoneTel
II, Inc.
RESOLVED, that subparagraph (j) of the Corporation's Articles
of Incorporation is hereby amended by the addition of the following as
paragraph 7A:
7A. The Company may, at any time, convert all, but not less than
all, of the outstanding shares of 10% Non-Voting Preferred
Stock into fully paid and non-assessable shares of Common
Stock such that each Share of 10% Preferred Stock is
convertible into 1.6667 shares of Common Stock. In order to
exercise the conversion privilege, the Board of Directors of
the Company shall adopt a resolution, whereupon such
conversion shall be effective immediately.
6
<PAGE> 7
The Company shall promptly solicit each holder of a
certificate which previously represented 10% Non-Voting
Preferred Stock to surrender such certificates, duly endorsed
or assigned to the Company or in blank, in exchange for
certificates representing the appropriate number of shares of
Common Stock. Such Common Stock shall carry with it the same
registration rights as were granted in connection with the
merger of World Communications, Inc. with and into PhoneTel
II, Inc.
The conversion ratio of 1.6667 set forth in each of the preceding two
paragraphs shall be subject to appropriate adjustment in the event of
any stock split, reverse stock split, recapitalization or similar
event.
7
<PAGE> 1
EXHIBIT 10.155
VOTING AND PROXY AGREEMENT
THIS AGREEMENT is made as of this 21st day of February, 1996, by and
among PHONETEL TECHNOLOGIES, INC. ("PhoneTel") and the persons listed in
Schedule A hereto (the "Shareholders").
WHEREAS, the Shareholders were previously shareholders of World
Communications, Inc., a Missouri corporation ("WCI");
WHEREAS, pursuant to an Agreement and Plan of Merger (the "WCI Merger
Agreement"), dated September 22, 1995, by and among PhoneTel, PhoneTel II, Inc.
("PhoneTel II"), a Missouri corporation and a wholly-owned subsidiary of
PhoneTel, and WCI, WCI was merged into and with PhoneTel II and Shareholders'
interest in WCI was converted into a combination of (i) shares of PhoneTel
common stock, $0.01 par value ("PhoneTel Common Stock"), and (ii) shares of
10% Preferred Stock, without par value, $10 Stated Value, Cumulative, of
PhoneTel ("PhoneTel Preferred Stock);
WHEREAS, in connection with the WCI Merger Agreement, certain holders
of PhoneTel Common Stock agreed (i) to vote to call a special meeting of
shareholders of PhoneTel for the purpose of, among other things, approving the
grant of conversion rights (the "Conversion Proposals") which would attach
immediately to the PhoneTel Preferred Stock so that each share of PhoneTel
Preferred Stock could be concerted into 1.6667 shares of PhoneTel Common Stock
and (ii) to vote in favor of the adoption of such Conversion Proposals;
WHEREAS, the holders of the PhoneTel Preferred Stock are also entitled
to vote upon the proposed adoption of the Conversion Proposals;
WHEREAS, PhoneTel is currently negotiating certain financing
arrangements with Internationale Nederladen ("ING") Capital Corporation and
Cerberus Partners, L.P. (the "Lenders");
WHEREAS, as a material inducement for the Lenders to enter into
definitive financing arrangements with PhoneTel, the Shareholders have agreed
to be bound by certain restrictions in connection with the shares of PhoneTel
Preferred Stock owned by the Shareholders on the date hereof (collectively, the
"Shares");
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
<PAGE> 2
Section 1. COVENANT WITH RESPECT TO VOTING. During the period
commencing on the date hereof and ending on the earlier to occur of (i) eleven
(11) months from the date hereof, or (ii) the approval of the Conversion
Proposals set forth in Schedule 1.1 hereto (the "Agreement Period"), the
Shareholders shall cause the Shares owned by them to be voted to approve the
grant of conversion rights, as more specifically set forth in Schedule 1.1
hereto, which would attach immediately to the shares of PhoneTel Preferred
Stock so that each share of PhoneTel Preferred Stock may be converted into
1.6667 shares of PhoneTel Common Stock.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Shareholder
hereby represents and warrants to PhoneTel with respect to the Shares held by
him/her that;
(a) Schedule A hereto accurately reflects the number of
shares of PhoneTel Preferred Stock owned by him/her.
(b) Such Shares are owned free and clear of any
encumbrances;
(c) Such Shares constitute all of the issued and
outstanding PhoneTel Preferred Stock which he/she owns legally or beneficially;
and
(d) Shareholder has authority to restrict such Shares
pursuant to the terms of this Agreement and that entering into this Agreement
does not violate any other agreements of such Shareholder or any agreement by
which such Shareholder is bound, including any trust agreement.
Section 3. LEGEND. The Shareholders agree that, during the
Agreement Period, the obligations hereunder shall attach to the Shares and that
any transfer of the Agreement Shares shall be subject to the obligations
created hereunder. The Shareholders agree that, during the Agreement Period, a
legend referencing this Agreement shall be placed on the certificates
representing the Shares. Said legend shall provide as follows:
"The shares represented by this certificate are subject to the
provisions of a certain Voting Agreement dated February 21,
1996, by and among PhoneTel Technologies, Inc. and the
Shareholders referred to therein."
The Shareholders undertake and covenant to submit to PhoneTel's Transfer Agent
the certificates representing the Shares held by them within five (5) days for
the purpose of
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<PAGE> 3
placing the aforementioned legend on each such certificate. The legend shall
be immediately removed upon the expiration of the Agreement Period.
Section 4. IRREVOCABLE PROXY. In order to secure the
Shareholders' obligation to vote their Shares in accordance with the provisions
of this Agreement, each Shareholder hereby appoints Peter G. Graf and Tammy
Martin, and each of them, as his/her true and lawful proxy and
attorney-in-fact, with full power of substitution, to vote all of their Shares
in favor of the Conversion Proposals. Each of Peter G. Graf and Tammy Martin
may exercise the irrevocable proxy granted to him or her hereunder at any time
any Shareholder fails to comply with the provisions of this Agreement. The
proxies and powers granted by each Shareholder pursuant to this Section 4 are
coupled with an interest and given to secure the performance of each
Shareholder's obligations to PhoneTel under this Agreement. Such proxies and
powers shall be irrevocable until the end of the Agreement Period.
Section 5. NO ADEQUATE REMEDY. Since it is recognized by the
Shareholders that irreparable damage without an adequate judicial remedy at law
could result from any violation of the provisions of this Agreement, the
Shareholders agree that, in addition to any other remedies available to
PhoneTel or its shareholders, PhoneTel and its shareholders shall have the
remedy of a restraining order, injunction, or such other equitable relief as
may be decreed or issued by a Court of competent jurisdiction to enforce the
provisions hereof.
Section 6. CONVERSION. Each Shareholder agrees that, within
five (5) business days following approval of the Conversion Proposals by the
holders of Preferred Stock and Common Stock, he/she shall take all steps
necessary to exercise his/her right of conversion with respect to all shares of
Preferred Stock owned by him/her.
Section 7. MISCELLANEOUS.
7.1 ENFORCEABILITY. If any term, provision, covenant or
restriction of this Agreement or the application thereof to any person or
circumstance should be held by an administrative agency or court of competent
jurisdiction to be invalid, void, or unenforceable, then the remainder of this
Agreement and the application of such term, provision, covenant, or restriction
to other persons or circumstances shall not be affected thereby, but rather
shall be enforced to the greatest extent permitted by law. Further, it is the
intent of the parties to this Agreement that if any term, provision, covenant,
or restriction of this Agreement should be held to be invalid, void, or
unenforceable as applied to any person or circumstance, then such term,
provision, covenant, or restriction shall be modified to the minimum extent
necessary in order to render the same enforceable,
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<PAGE> 4
consistent with the expressed objectives of the parties to this Agreement for
entering into this Agreement.
7.2 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARY
RIGHTS. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, assigns, heirs, legatees, and
other legal representatives.
7.3 HEADINGS. The headings in this Agreement have been
inserted solely for convenience of reference and do not themselves constitute a
part of this Agreement.
7.4 ENTIRE UNDERSTANDING. This Agreement and the
documents referred to herein set forth the entire understanding of the parties
relating to the subject matter hereof and any other prior or contemporaneous
oral or written agreement respecting its subject matter shall have no force or
effect whatsoever.
7.5 WAIVER. No waiver of any breach of any term hereof
shall be effective unless in writing and signed by the party against whom
enforcement of waiver is sought, and no such waiver shall be construed as a
waiver of any subsequent breach of that term or of any other term hereof.
7.6 AMENDMENT. This Agreement may not be amended,
modified, or terminated except by a writing signed by all of the parties.
7.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
7.8 GOVERNING LAW. It is the intention of the parties
hereto that this Agreement shall be subject to, governed by, and construed and
enforced in accordance with the laws of the State of Ohio. In the event of a
breach by any party of its obligations hereunder, the prevailing party in such
litigation, as determined by the court, shall be entitled to reimbursement of
its reasonable attorneys' fees and costs.
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<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day first written above.
<TABLE>
<S> <C>
PHONETEL TECHNOLOGIES, INC.
By: /s/ Peter Graf
_______________________________________
Peter G. Graf
Chairman of the Board
/s/ Aron Katzman
_______________________________________________
Aron Katzman
/s/ Jack D. Minner
_______________________________________________
Jack D. Minner
/s/ Stuart Hollander
_______________________________________________
Stuart Hollander, Trustee U/T dtd.
03/12/91, f/b/o/ Stuart Hollander
/s/ Sharon M. Hollander
_______________________________________________
Sharon M. Hollander, Trustee U/T
dtd. 03/12/91, f/b/o Sharon M.
Hollander
/s/ Gary Pace
_______________________________________________
Gary Pace
/s/ Sanford Spitzer
_______________________________________________
Sanford Spitzer, Trustee U/I/T dtd.
06/28/88, Sanford J. Spitzer Living
Trust
/s/ Gloria F. Spitzer
_______________________________________________
Gloria F. Spitzer, Trustee U/I/T dtd.
06/28/88, Gloria F. Spitzer Living
Trust
</TABLE>
5
<PAGE> 6
ACCEPTANCE OF APPOINTMENT AS PROXY
REFERENCED IN SECTION 4 HEREOF.
/s/ Peter G. Graf
- -----------------------------------
Peter G. Graf
Chairman of the Board
/s/ Tammy Martin
- -----------------------------------
Tammy Martin
Secretary
General Counsel
6
<PAGE> 7
SCHEDULE 1.1
PROPOSED RESOLUTIONS OF A SPECIAL OR ANNUAL MEETING
OF THE SHAREHOLDERS OF PHONETEL TECHNOLOGIES, INC.
--------------------------------------------------
RESOLVED, that subparagraph (j) of the Corporation's Articles of
Incorporation is hereby amended by the addition of the following as paragraph
7:
7. CONVERSION RIGHTS. Any holder of 10% Non-Voting Preferred Stock may,
at any time, convert all, but not less than all, of his, her or its
shares of 10% Non-Voting Preferred Stock into fully paid and
non-assessable shares of Common Stock such that each Share of 10%
Preferred Stock is convertible into 1.6667 shares of Common Stock. In
order to exercise the conversion privilege, the holder of 10%
Non-Voting Preferred Stock to be converted shall surrender
certificates for such stock, duly endorsed or assigned to the Company
or in blank, accompanied by written notice to the Company that the
holder elects to convert such stock (the "Conversion Notice"). As
soon as practicable but no later than twenty (20) business days after
the Company's receipt of the Conversion Notice, the Company shall
cause to be issued to the holder certificates for such Common Stock.
Such Common Stock shall carry with it the same registration rights as
were granted in connection with the merger of World Communications,
Inc. with and into PhoneTel II, Inc.
RESOLVED, that subparagraph (j) of the Corporation's Articles of
Incorporation is hereby amended by the addition of the following as paragraph
7A:
7A. The Company may, at any time, convert all, but not less than all, of
the outstanding shares of 10% Non-Voting Preferred Stock into fully
paid and non-assessable shares of Common Stock such that each Share of
10% Preferred Stock is convertible into 1.6667 shares of Common Stock.
In order to exercise the conversion privilege, the Board of Directors
of the Company shall adopt a resolution, whereupon such conversion
shall be effective immediately. The Company shall promptly solicit
each holder of a certificate which previously represented 10%
Non-Voting Preferred Stock to surrender such certificates, duly
endorsed or assigned to the Company or in blank, in exchange for
certificates representing the appropriate number of shares of Common
Stock. Such Common Stock shall carry with it the
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<PAGE> 8
same registration rights as were granted in connection with the merger of World
Communications, Inc. with and into PhoneTel II, Inc.
The conversion ratio of 1.6667 set forth in each of the preceding two
paragraphs shall be subject to appropriate adjustment in the event of any stock
split, reverse stock split, recapitalization or similar event.
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<PAGE> 9
<TABLE>
<CAPTION>
SCHEDULE A
NUMBER OF SHARES
STOCKHOLDERS OF PREFERRED STOCK
- ------------ ------------------
<S> <C>
Aron Katzman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,083
Jack D. Minner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,075
Stuart Hollander, Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,861
Sharon M. Hollander, Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,378
Gary Pace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,923
Sanford Spitzer, Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,590
Gloria F. Spitzer, Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,265
</TABLE>
9
<PAGE> 1
EXHIBIT 10.156
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this first day of May, 1995, at Cleveland, Ohio, by and between PHONETEL
TECHNOLOGIES, INC., an Ohio corporation ("PhoneTel" ) and DANIEL J. MOOS
("Executive").
R E C I T A L S :
A. Executive is presently employed by PhoneTel as its Senior Vice President,
Chief Financial Officer and Treasurer.
B. PhoneTel's Board of Directors (the "Board") recognizes that Executive's
contribution to the growth and success of PhoneTel has been substantial. The
Board desires to provide for the continued employment of Executive and to make
certain changes in Executive's employment arrangements with PhoneTel which the
Board has determined will reinforce and encourage the continued attention and
dedication to PhoneTel by Executive as a member of PhoneTel's management and is
in the best interest of PhoneTel and its shareholders. Executive is willing to
commit himself to continue to serve PhoneTel, on the terms and conditions
herein provided.
C. In order to effect the foregoing, PhoneTel and Executive wish to enter
into this Agreement on the terms and conditions set forth below.
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<PAGE> 2
A G R E E M E N T S :
NOW THEREFORE, in consideration of the foregoing recitals and of the promises
and respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. EMPLOYMENT. PhoneTel hereby employs Executive and Executive agrees to be
employed by PhoneTel as its Senior Vice President, Chief Financial Officer and
Treasurer for a period of three (3) years commencing on the Commencement Date
(as defined below), unless further extended or terminated as hereinafter
provided. (hereinafter referred to as the "Employment Period").
2. COMPENSATION. Executive shall receive as compensation the following:
(a) SALARY. During the Employment Period, which shall be effective May 1,
1995 (the "Commencement Date"), Executive shall receive a salary, payable not
less frequently than semi-monthly, as follows: (i) $95,000 for the first year
of the Employment Period; (ii) $105,000 for the second year of the Employment
Period; (iii) $120,000 for the third year of the Employment Period; (iv)
$130,000 for the fourth year of the Employment Period; and (v) $140,000 for the
fifth year of the Employment Period; provided, however, that said salary
obligations shall be in effect for the fourth and fifth year of the Employment
Period only in the event that the Extended Term hereof is in effect as provided
herein, or as otherwise specifically provided in Section 5(d)(ii)(B) hereof.
This salary may be increased from time to time in accordance with normal
business practices of PhoneTel and, if so increased, shall not thereafter
during the term of this Agreement be decreased. Compensation of Executive by
salary payments shall not be deemed
2
<PAGE> 3
exclusive and shall not prevent Executive from participating in any other
compensation or benefit plan of PhoneTel. The salary payments (including any
increased salary payments) hereunder shall not in any way limit or reduce any
other obligation of PhoneTel hereunder, and no other compensation, benefit or
payment hereunder shall in any way limit or reduce the obligation of PhoneTel
to pay Executive's salary hereunder.
(b) EXPENSES. During the Employment Period, Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by
Executive in performing services hereunder, including all expenses of travel
and living expenses while away from home on business or at the request and in
the service of PhoneTel, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by PhoneTel.
Furthermore, the Company shall supply Executive with a cellular car telephone,
but shall not be obligated to reimburse Executive for expenses incurred in
connection with said cellular car telephone, other than pursuant to this
Paragraph.
(c) AUTOMOBILE. During the Employment Period, Executive shall be entitled
to receive either payment of or prompt reimbursement for all automobile
expenses, including insurance, gasoline and oil, maintenance and repairs. The
Company shall lease for Executive's use, or reimburse Executive for lease
payments with respect to, a BMW Model Series 300. In addition, Executive may
elect to purchase the automobile leased for his use upon the same terms as
provided in the lease between the lessor and PhoneTel.
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<PAGE> 4
(d) INSURANCE. During the Employment Period, Executive shall be entitled
to receive acceptable hospitalization/medical insurance coverage for Executive
and his family through PhoneTel or by payment by PhoneTel of, or prompt
reimbursement for, all hospitalization/medical insurance premiums.
(e) DISABILITY INSURANCE. During the Employment Period, Executive shall
be entitled to participate in the disability plan of PhoneTel at PhoneTel's
expense, and PhoneTel shall provide to Executive supplemental disability
insurance coverage such that 85% of Executive's normal annual compensation is
covered by the combined disability policies. At Executive's option, the salary
of Executive may be grossed up and the premium for the supplemental disability
insurance will then be the responsibility of Executive.
(f) VACATIONS. Executive shall be entitled to four weeks of paid vacation
for each calendar year during the Employment Period. Executive shall also be
entitled to all paid holidays given by PhoneTel to its executives.
(g) OTHER BENEFITS. PhoneTel shall maintain in full force and effect, and
Executive shall be entitled to continue to participate in, all of its employee
benefit plans and arrangements in effect on the date hereof in which Executive
participates or plans or arrangements providing Executive with at least
equivalent benefits thereunder (including, without limitation, each pension and
retirement plan and arrangement, supplemental pension and retirement plan and
arrangement, stock option plan, life insurance and health-and-accident plan and
arrangement, medical insurance plan, disability plan, survivor income plan,
relocation plan and vacation plan). PhoneTel shall
4
<PAGE> 5
not make any changes in such plans or arrangements which would adversely affect
Executive's rights or benefits thereunder, unless such change occurs pursuant
to a program applicable to all executives of PhoneTel and does not result in a
proportionately greater reduction in the rights of or benefits to Executive as
compared with any other executive of PhoneTel. Executive shall be entitled to
participate in, or receive benefits under, any employee benefit plan or
arrangement made available by PhoneTel in the future to its executives and key
management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Nothing
paid to Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the salary payable to
the Executive pursuant to paragraph (a) of this Section. Any payments or
benefits payable to Executive hereunder in respect of any calendar year during
which Executive is employed by PhoneTel for less than the entire such year
shall, unless otherwise provided in the applicable plan or arrangement, be
prorated in accordance with the number of days in such calendar year during
which he is so employed.
(h) STOCK OPTIONS. Executive is hereby granted options (the "New
Options") to purchase 250,000 shares of the Common Stock of PhoneTel, which
Options are in addition to any vested options to purchase shares of the Common
Stock of PhoneTel previously granted to Executive, but which New Options shall
replace the unvested options previously granted. The New Options shall vest as
follows: one-fifth of said amount on the date hereof, and an additional
one-fifth of said amount on each of the next four anniversaries of the date
hereof; provided, however, that vesting of the New
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<PAGE> 6
Options on the third and fourth anniversaries hereof shall occur only in the
event that the Extended Term is in effect as provided herein, or as otherwise
specifically provided in Section 5(d)(ii)(B) hereof. Each of the New Options
shall have an exercise price which shall be computed as the average of the
closing bid prices for the Common Stock for the five (5) trading days
immediately preceding May 1, 1995, and said New Options shall expire on the
date which is two years after the termination of this Agreement. The specific
terms of the New Options shall be governed by a Stock Option Agreement ("Option
Agreement") of even date herewith between Executive and PhoneTel.
(i) EXECUTIVE INCENTIVE PLAN. The Board of PhoneTel shall approve the
final terms of the Executive Incentive Plan for 1995, which Plan has been
approved in concept by the Board. Executive shall participate in said Plan for
1995 and shall be eligible to receive, as additional compensation hereunder, an
incentive award pursuant to said Executive Incentive Plan.
3. DUTIES. During the Employment Period, the Board shall be entitled to
establish reasonable conditions of employment, job assignments, duties and
responsibilities of Executive hereunder, and to modify the foregoing from time
to time. Such duties shall include serving as Senior Vice President, Chief
Financial Officer and Treasurer, the promotion of PhoneTel and direct
involvement in its development, as well as the usual and customary duties of a
Senior Vice President, Chief Financial Officer and Treasurer.
4. TERMINATION. Executive's employment hereunder may be terminated without
any breach of this Agreement only under the following circumstances:
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<PAGE> 7
(a) DEATH. Executive's employment hereunder shall terminate upon his
death.
(b) DISABILITY. If, as a result of Executive's incapacity due to physical
or mental illness, Executive shall have been absent from his duties hereunder
on a full-time basis for the entire period of six consecutive months, and
within thirty (30) days after written notice of termination is given (which may
occur before or after the end of such six-month period) shall not have returned
to the performance of his duties hereunder on a full-time basis, PhoneTel may
terminate Executive's employment hereunder, provided that such thirty day
notice may be given no earlier than thirty (30) days before the end of said
six-month period; provided, however, that, if said notice is given and
Executive's physician provides written advice that Executive may return to work
within ninety (90) days of the delivery of said notice, and Executive in fact
returns to employment within said ninety (90) day period, then PhoneTel may not
terminate Executive's employment hereunder for reason of disability. In the
event that Executive's employment is terminated pursuant to this subparagraph,
all stock options granted to Executive which had not vested at the time of any
such termination shall immediately be vested, and Executive shall receive a
bonus for the year in which said termination occurred, prorated with respect to
the actual number of days elapsed prior to the termination of the Agreement,
provided, however, that said bonus shall be no less than the bonus amount
received by the Executive for the prior year, after proration in accordance
with the foregoing; and Executive shall receive payment for any unused vacation
time remaining for the year in
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<PAGE> 8
which said termination occurred, which shall be paid to Executive at the per
diem salary rate then in effect for Executive.
(c) CAUSE. PhoneTel may terminate Executive's employment hereunder for
Cause, as such term is hereinafter defined. For purposes of this Agreement,
PhoneTel shall have "Cause" to terminate Executive's employment hereunder upon
(i) the willful and habitual failure by Executive to attend to his duties
hereunder (other than any such failure resulting from Executive's incapacity
due to physical or mental illness), but only after demand for substantial
performance is delivered by PhoneTel in the manner specified in Section 11(b)
hereof that specifically identifies the manner in which PhoneTel believes
Executive has not substantially performed his duties and only if Executive has
not corrected the failure specified within sixty (60) days after such demand is
delivered, (ii) Executive's conviction of either any felony, any crime
involving moral turpitude, or conviction of any crime in the conduct of his
official duties which is materially adverse to the welfare of PhoneTel, (iii)
Executive's misuse of his position for his personal gain to the material
detriment of PhoneTel, but only after demand for correction of said misuse is
delivered in the manner specified in Section 11(b) hereof by PhoneTel that
specifically identifies the manner in which PhoneTel believes Executive has
misused his position for his personal gain to the material detriment of
PhoneTel, and only if Executive has not corrected the alleged misuse within
sixty (60) days after such demand is delivered, or (iv) Executive's habitual
and excessive use of alcohol or controlled substances (other than for
therapeutic reasons). For the purposes of this paragraph, no act, or failure
to act, on Executive's part shall be considered "willful" unless done, or
omitted to be done, by him
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<PAGE> 9
not in good faith and without reasonable belief that his action or omission was
in the best interest of PhoneTel. Notwithstanding the foregoing, Executive
shall not be deemed to have been terminated for Cause without (A) reasonable
notice (of no less than sixty (60) days) to Executive setting forth the reasons
for PhoneTel's intention to terminate for Cause, (B) an opportunity for
Executive, together with his counsel, to be heard before the Board, and (C)
delivery to Executive of a Notice of Termination as defined in subsection (e)
hereof from the Board finding that in the good faith opinion of the Board,
Executive was guilty of conduct set forth in clause (i), (ii), or (iii) above,
and specifying the particulars thereof in detail. Executive shall, upon
receipt of said notice under part (c), have thirty (30) days to cure said
violation, to the extent it is based on parts (i), (iii) or (iv) to the
reasonable satisfaction of PhoneTel.
(d) TERMINATION BY EXECUTIVE. Executive may terminate his employment
hereunder (i) for Good Reason, as such term is hereinafter defined, or (ii) if
his health should become impaired to an extent that makes his continued
performance of his duties hereunder hazardous to his physical or mental health
or his life, provided that Executive shall have furnished PhoneTel with a
written statement from a qualified doctor to such effect and provided, further,
that, at PhoneTel's request, Executive shall submit to an examination by a
doctor selected by PhoneTel and such doctor shall have concurred in the
conclusion of Executive's doctor. For purposes of this Agreement, "Good
Reason" shall mean (A) a change in control of PhoneTel (as defined below), (B)
a failure by PhoneTel to comply with any material provision of this Agreement
which has not been cured within ten (10) days after notice of such
noncompliance has been given by
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<PAGE> 10
Executive to PhoneTel, or (C) any purported termination of Executive's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (e) hereof (and for purposes of this Agreement no
such purported termination shall be effective).
For purposes of this Agreement, a "change in control of PhoneTel" shall mean
a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"); provided that, without
limitation, such a change in control shall be deemed to have occurred if (I)
any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than PhoneTel or any "person" who as of the date hereof is a
director or officer of PhoneTel, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of PhoneTel representing 20% or more of the combined voting power of
PhoneTel's then outstanding securities; provided, however, that with respect to
the beneficial ownership by Mr. George H. Henry of securities of Employer, the
foregoing percentage shall be 31% instead of the 20% set forth above; and
further provided, however, that a "change in control" shall not be deemed to
have occurred hereunder if the acquisition of securities referenced above was
approved by the affirmative vote of 80% of the existing directors; (II) during
any period of two consecutive years during the term of this Agreement,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election of
each director who was not a director at the beginning of such period has been
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<PAGE> 11
approved in advance by directors representing at least two-thirds of the
directors then in office who were directors at the beginning of the period; or
(III) The Board (aa) fails to appoint Executive as Senior Vice President, Chief
Financial Officer and Treasurer, (bb) removes Executive as Senior Vice
President, Chief Financial Officer and Treasurer, (cc) fails to vest Executive
with the powers and authority of Senior Vice President, Chief Financial Officer
and Treasurer, or (dd) in any way diminishes Executive's assigned
responsibilities, duties, power or authority during the term of this Agreement.
(e) Any termination of Executive's employment by PhoneTel or by Executive
(other than termination pursuant to subsection (a) above) shall be communicated
by written Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision
so indicated.
(f) "Date of Termination" shall mean (i) if Executive's employment is
terminated by his death, the date of his death, (ii) if Executive's employment
is terminated pursuant to subsection (b) above, sixty (60) days after Notice of
Termination is given (provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such sixty (60) day
period), (iii) if Executive's employment is terminated pursuant to subsection
(c) above, the date specified in the Notice of Termination, and (iv) if
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given; provided that if within thirty (30) days after
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<PAGE> 12
any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of
a court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
(g) The term of this Agreement shall automatically renew for an additional
two-year period unless, on or before May 1, 1997, the Company shall notify
Executive that this Agreement shall terminate at the end of the term provided
in Section 1 hereof. Any such extension of the term of this Agreement shall be
hereinafter referred to as the "Extended Term."
5. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
---------------------------------------------------
(a) During any period that Executive fails to perform duties hereunder as
a result of incapacity due to physical or mental illness ("disability period"),
Executive shall continue to receive his full salary (including any accrued
bonus or unused vacation time) at the rate then in effect for such period,
until his employment is terminated pursuant to Section 4(b) hereof, provided
that payments so made to Executive during the first 90 days of the disability
period shall be reduced by the sum of the amounts, if any, payable to Executive
at or prior to the time of any such payment under disability benefit plans of
PhoneTel and which were not previously applied to reduce any such payment.
(b) If Executive's employment is terminated by his death, PhoneTel shall
pay to Executive's spouse, or if he leaves no spouse, to his estate or such
other
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<PAGE> 13
beneficiaries as he shall designate on Exhibit A hereto, commencing with the
next regularly scheduled day upon which an installment of salary is due
hereunder, and upon each succeeding day upon which an installment of salary is
due hereunder, until total payments for six months have been made, an amount on
each payment date equal to the salary payment payable to Executive pursuant to
Section 2(a) hereof at the time of his death.
(c) If Executive' s employment shall be terminated for Cause, PhoneTel
shall pay Executive his full salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given and PhoneTel shall have no
further obligations to Executive under this Agreement.
(d) If (i) in breach of this Agreement, PhoneTel shall terminate
Executive's employment other than pursuant to Section 4(b) or 4(c) hereof (it
being understood that a purported termination pursuant to Section 4(b) or 4(c)
hereof which is disputed and finally determined not to have been proper shall
be deemed to be terminated by PhoneTel in breach of this Agreement) or (ii)
Executive shall terminate his employment for Good Reason, then
(A) PhoneTel shall pay Executive his full salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given;
(B) the Extended Term shall be deemed to be in effect, and in lieu of
any further salary payments to Executive for periods subsequent to the Date of
Termination, PhoneTel shall pay as severance pay to Executive an amount equal
to the sum of (i) one hundred fifty percent (150%) of the salary which would
have
13
<PAGE> 14
been payable for the next succeeding three (3) years of the unexpired portion
of the contract, including the amount of salary which would have been payable
during any portion of said three (3) year period which falls within the
Extended Term, and (ii) one hundred percent (100%) of the amount of salary
which would have been payable for the remainder, if any, of the Extended Term;
such payment to be made in a lump sum on or before the fifth day following the
Date of Termination, and Executive shall also receive a bonus for the year in
which said termination occurred, prorated with respect to the actual number of
days elapsed prior to the termination of the Agreement; provided, however,
that said bonus shall be no less than the bonus amount received by the
Executive for the prior year, after proration in accordance with the
foregoing; and, provided further, that all stock options granted to Executive
which were not vested at the time of any such termination shall immediately be
vested, including those options which would have vested during the Extended
Term.
(C) if termination of Executive's employment arises out of a breach by
PhoneTel of this Agreement, in addition to the amounts and benefits described
in (A) and (B) above, PhoneTel shall pay all other damages to which Executive
may be entitled as a result of such breach, including damages for any and all
loss of benefits to Executive under PhoneTel's employee benefit plans which
Executive would have received if PhoneTel had not breached this Agreement and
had Executive's employment continued for the full period provided in Section 1
hereof,
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<PAGE> 15
and including all legal fees and expenses incurred by him as a result of such
termination.
(e) If Executive shall terminate his employment under clause (ii) of Section
4(d) hereof, PhoneTel shall pay Executive his full salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given.
(f) Unless Executive's employment is terminated for Cause, PhoneTel shall
maintain in full force and effect, for the continued benefit of Executive for
the greater number of years (including partial years) remaining in the
Employment Period hereunder or the number three (3), all employee benefit plans
and programs in which Executive was entitled to participate immediately prior
to the Date of Termination provided that Executive's continued participation is
possible under the general terms and provisions of such plans and programs and
shall be entitled to reimbursement for all expenses provided in Subsections
2(b), (c) and (d) above. In the event that Executive's participation in any
such plan or program is barred, PhoneTel shall arrange to provide Executive
with benefits substantially similar to those which Executive would otherwise
have been entitled to receive under such plans and programs from which his
continued participation is barred.
(g) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 5 by seeking other employment or otherwise, nor
shall any compensation from any other such employment reduce any amounts
payable hereunder.
15
<PAGE> 16
6. SUCCESSORS: BINDING AGREEMENT.
-----------------------------
(a) As a condition precedent to the succession (whether direct or
indirect, and whether by purchase, merger, consolidation or otherwise) to any
person or entity (the "Successor") of all or substantially all of the business
and/or assets of PhoneTel, PhoneTel will require the Successor, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that PhoneTel
would be required to perform it if no such succession had taken place. For
purposes of this Agreement, PhoneTel shall mean PhoneTel as hereinbefore
defined and any Successor to its business and/or assets as aforesaid.
(b) This Agreement and all rights of Executive hereunder shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legatee, designee or, if there is no
such designee, to Executive's estate.
7. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Cleveland,
Ohio in accordance with the rules of the American Arbitration Association then
in effect; provided that all arbitration expenses shall be borne by PhoneTel.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction.
16
<PAGE> 17
8. INVENTIONS AND DISCOVERIES. Any inventions, discoveries, designs,
concepts, products and ideas, whether patentable or not, including but not
limited to processes, methods, formulas and techniques, as well as improvements
thereof or know-how related thereto relating to or used in the business of
PhoneTel (hereinafter referred to as "Inventions and Discoveries") and
conceived by or made by Executive during the Employment Period, and any patents
and applications for patents relating thereto, shall be the property of
PhoneTel; provided, however, that the Board, in its sole discretion, may assign
PhoneTel's rights in any such Inventions and Discoveries which PhoneTel does
not intend to use, develop or sell to Executive. Executive hereby assigns his
entire right, title and interest in such Inventions and Discoveries to PhoneTel
and agrees to execute such specific assignments and other documents and to take
such other action as PhoneTel may request to vest title to and obtain patents
for such Inventions and Discoveries in PhoneTel or its assigns. Executive
further agrees that any Inventions and Discoveries disclosed by Executive to a
third party or described in a patent application filed by or on behalf of
Executive within six (6) months after the termination of his employment with
PhoneTel shall be presumed to have been conceived or made by Executive during
the Employment Period unless Executive is able to prove that such Inventions
and Discoveries were in fact made or conceived after the termination of his
employment.
9. NON-DISCLOSURE. Executive recognizes and acknowledges that the list of
PhoneTel's Inventions and Discoveries, customers, procedures and equipment used
and to be used by PhoneTel in its business and any information concerning the
17
<PAGE> 18
personnel, financial status, commercial affairs or other business affairs of
PhoneTel, its employees or customers, are valuable, special and unique assets
of PhoneTel's business and will be treated by Executive in full confidence and
will not be disclosed by Executive to any person or entity during the
Employment Period and for one (1) year after termination, but only in the event
Executive is terminated for Cause.
10. NON-COMPETITION. Executive agrees that during the Employment Period and
for one (1) year from the date of the termination of Executive's employment
hereunder, but only in the event of termination by PhoneTel for Cause,
Executive shall not compete with PhoneTel in any manner, on behalf of himself
or any other person, firm, business or corporation, including, without
limitation, that he shall not (i) engage in the pay telephone or operator
services businesses or any other business conducted by PhoneTel during the
Employment Period with respect to which PhoneTel derived 25% or more of its
revenues at the time of such termination; (ii) request or instigate any account
or customer of PhoneTel to withdraw, diminish, curtail or cancel any of its
business with PhoneTel; or (iii) employ or solicit for employment any person
who is employed by PhoneTel or by any entity affiliated with PhoneTel. The
scope of this agreement not to compete shall include any and all customers of
the PhoneTel and any geographical area served by the PhoneTel at any time
during the Employment Period.
11. MISCELLANEOUS.
--------------
(a) FEES AND EXPENSES. If any dispute should arise under this Agreement
involving an effort by Executive to protect, enforce or secure rights or
benefits claimed by him hereunder, PhoneTel shall pay, promptly upon demand by
Executive
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<PAGE> 19
accompanied by evidence of incurrence and notwithstanding the pending or
outcome of such dispute, all expenses (including attorneys' fees) incurred by
Executive in connection with such dispute.
(b) NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing, and
shall be deemed to have been duly given when delivered (or unless otherwise
specified) mailed by U.S. registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Executive: Daniel J. Moos
________________________
________________________
If to PhoneTel: Phonetel Technologies, Inc.
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, Ohio 44115
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(c) AMENDMENT OR ALTERATION. No amendment or alteration of the terms of
this Agreement shall be valid unless made in writing and signed by both of the
parties hereto.
(d) GOVERNING LAW. This Agreement shall be governed by the law of the State
of Ohio.
(e) SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any
19
<PAGE> 20
respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein. If at any time it shall be
determined that any of the provisions of this Agreement are unreasonable as to
time or area, or both, by any court of competent jurisdiction, PhoneTel shall
be entitled to enforce such provision for such period of time and within such
area as may be determined to be reasonable by such court.
(f) WAIVER. No waiver of or failure to enforce any provisions of this
Agreement shall be deemed, or shall have constituted, a waiver of any other
provision of this Agreement, nor shall such waiver or failure to enforce
constitute a continuing waiver.
(g) NON-ASSIGNMENT. This Agreement is a personal services contract and it
is expressly agreed that the rights and interests of Executive and PhoneTel
hereunder may not be sold, transferred, assigned, pledged or hypothecated,
except as provided in Section 6 hereof.
(h) FURTHER ASSURANCES. The parties agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent
of this Agreement.
(i) HEADINGS. The section headings appearing in this Agreement are for
purposes of reference and shall not be considered a part of this Agreement or
in any way modify, amend or affect its provisions.
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<PAGE> 21
(j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(k) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and no other
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been make by either party which are
not set forth expressly in this Agreement.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of the
date first above written.
PHONETEL TECHNOLOGIES, INC.
By: /s/ Bernard Mandel
__________________________________
Its: President
_________________________________
EXECUTIVE:
/s/ Daniel J. Moos
_____________________________________
Daniel J. Moos
21
<PAGE> 1
EXHIBIT 10.157
PHONETEL TECHNOLOGIES, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") entered into as of the 1st
day of April, 1995 by and between PhoneTel Technologies, Inc. (the "Company")
and Daniel J. Moos ("Optionee").
R E C I T A L S:
WHEREAS, the Company has entered into an Employment Agreement (the
"Original Employment Agreement") dated of even date herewith, with the
Optionee, regarding the Optionee's employment as Treasurer and Chief Financial
Officer;
WHEREAS, the Employment Agreement provides for the granting to
Optionee of options to purchase 250,000 shares of the Common Stock of the
Company; and
WHEREAS, the Company and Optionee desire that all relevant terms and
conditions regarding the stock options referred to in the Employment Agreement
be set forth in a separate written stock option agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTIONS; VESTING SCHEDULE. The Company hereby
confirms its grant to Optionee pursuant to the Employment Agreement of even
date herewith of options (the "Options" to purchase 250,000 shares of the
Common Stock of the Company, par value $0.01 (the "Option Shares"), subject to
all of the terms and conditions contained in this Agreement. The Options shall
vest during the term of the Employment Agreement in accordance with the
following: 50,000 on May 1, 1995; 50,000
<PAGE> 2
on May 1, 1996; 50,000 on May 1, 1997; 50,000 on May 1, 1998; and 50,000 on May
1, 1999; provided, however, that in the event that the employment of Optionee
is terminated for reasons other than Cause (as such term is defined in the
Employment Agreement), or by Optionee's own volition, the Options which have
not vested will thereupon vest immediately; and provided further, however, that
the vesting of the new Options on May 1, 1998 and May 1, 1999 referred to above
shall occur only as specified in the Employment Agreement, the provisions of
which are hereby incorporated herein by this reference.
2. TIMING OF EXERCISE. Optionee may exercise those Options which
have vested (the "Vested Options") during the term hereof, in whole or in part,
at any time on or after the date hereof.
3. EXERCISE PRICE. The exercise price for the Options shall be
$1.00 per share, which shall be due and payable, by cash, certified check or
bank check, on the date of exercise (the "Exercise Price"). The Exercise Price
for the Options was the average of the closing bid and asked prices of the
Common Stock was the average closing bid price of the Common Stock for the five
(5) trading days immediately preceding May 1, 1995.
4. PROCEDURE FOR EXERCISE. In order to exercise the Vested
Options, Optionee shall deliver (i) the Exercise Price, and (ii) the completed
Exercise of Stock Option, in the form of Exhibit A hereto, to the President,
Secretary or Treasurer of the Company (not including Optionee), or such agent
as such officers may delegate in their stead. The Company shall cause
certificates for Option Shares purchased hereunder to be delivered to Optionee
as soon as practicable thereafter.
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<PAGE> 3
5. EXPIRATION OF UNEXERCISED OPTIONS. Notwithstanding any
provision of this Agreement or the Employment Agreement to the contrary, any
Options granted hereunder shall expire if not exercised prior to the date which
is two years after Optionee ceases to be an employee of the Company for any
reason whatsoever.
6. RESTRICTION ON TRANSFER OF OPTIONS. The holder of the
Options, by his acceptance hereof, covenants and agrees that the Options are
being acquired as an investment and not with a view to the distribution
thereof, and that the Options will not be sold, transferred, assigned,
hypothecated or otherwise disposed of without the written consent of the
Company, which consent shall not be unreasonably withheld.
7. REGISTRATION.
(a) REGISTRATION UNDER THE SECURITIES ACT OF 1933. The
Option Shares of Common Stock issuable upon exercise of the Options have not
been registered under the Securities Act of 1933 or under the laws of any
State. Upon exercise, in part or in whole, of the Options, the Option Shares
shall bear the following legend:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933, as
amended, (the "1933 Act") and may not be sold, transferred,
assigned or hypothecated unless pursuant to SEC Rule 144 or
there is an effective Registration Statement under the 1933
Act covering such securities or the Company receives an
opinion of counsel for the holder of these securities
reasonably satisfactory to the Company, stating that such
sale, transfer, assignment or hypothecation is exempt from the
registration and prospectus delivery requirements of the 1933
Act."
(b) REGISTRATION RIGHTS. Notwithstanding anything in the
Employment Agreement to the contrary, Optionee shall have the right to register
the Option Shares
3
<PAGE> 4
under the Securities Act of 1933, in the manner and under the terms and
conditions set forth in Exhibit "B" attached hereto.
8. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES.
--------------------------------------------------
(a) If at any time or from time to time the Company shall
by stock dividend, subdivision, combination, or reclassification of shares or
otherwise, change as a whole the outstanding shares of Common Stock into a
different number or class of shares, the Exercise Price in effect and the
number of shares purchasable under the Options immediately prior to the date
upon which such change shall become effective, shall be proportionately
adjusted. Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Common Stock actually purchasable hereunder, this
Option Agreement may continue to express the Exercise Price and the number of
shares purchasable as were expressed as of the date of this Agreement without
prejudice to the Optionee or the Company thereby. In the case of the issuance
of additional shares of Common Stock as a dividend, the aggregate number of
shares of Common Stock issued in payment of such dividend shall be deemed to
have been issued at the close of business on the record date fixed for the
determination of shareholders entitled to such dividend and shall be deemed to
have been issued without consideration; provided, however, that if the Company,
after fixing such record date, shall legally abandon its plan to so issue
Common Stock as a dividend, no adjustment of Exercise Price shall be required
by reason of the fixing of such record date.
(b) If at any time while the Options are outstanding the
Company effects any consolidation or merger with any other corporation or
entity, the Optionee shall
4
<PAGE> 5
thereafter be entitled upon such exercise of the Options to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior
to the date upon which such consolidation or merger shall become effective, the
securities or property to which a holder of one share of Common Stock would
have been entitled upon such consolidation or merger, without any change in, or
payment in addition to, the Exercise Price in effect immediately prior to such
merger or consolidation and the Company shall take such steps in connection
with such consolidation or merger as may be necessary to assure that all of the
provisions of these Options shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or property thereafter
deliverable upon the exercise of the Options. The Company shall not effect any
such consolidation or merger unless prior to the consummation thereof the
successor corporation, if other than the Company, resulting therefrom shall
assume by written agreement executed and mailed to each of the Optionees at the
address of each such holder shown on the books of the Company, the obligation
to deliver to such holder such securities or property as in accordance with the
foregoing provisions such holders shall be entitled to purchase. A sale of all
or substantially all of the assets of the Company for a consideration, apart
from the assumption of obligations, consisting primarily of securities shall be
deemed a consolidation or merger for the foregoing purposes.
(c) Except as hereinafter provided, in case the Company
shall at any time after the date hereof issue or sell any shares of Common
Stock (other than the issuances or sales referred to in Sections 8(a), 8(b) or
8(g) hereof), including shares held in the Company treasury, for a
consideration per share less than the Exercise Price in
5
<PAGE> 6
effect immediately prior to the issuance or sale of such shares, or without
consideration, then forthwith upon such issuance or sale the Exercise Price
shall (until another such issuance or sale) be reduced to a price (calculated
to the nearest full cent) determined by multiplying the Exercise Price in
effect immediately prior to such issuance or sale by a fraction, the numerator
of such which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such shares and the number of
shares of Common Stock which the aggregate consideration received for the
issuance of such shares would purchase at the Exercise Price in effect
immediately prior to such issuance or sale, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after the
issuance of such shares; provided, however, that in no event shall the Exercise
Price be adjusted pursuant to this computation to an amount in excess of the
Exercise Price in effect immediately prior to such computation. Such
adjustment shall be made whenever such an issuance is made.
For the purposes of any computation to be made in accordance with this
Section 3.03, the following provisions shall be applicable:
(1) In case of the issuance or sale of shares of
Common Stock for a consideration part or all of which shall be cash, the amount
of the cash consideration therefor shall be deemed to be an amount of cash
received by the Company for such shares (or, if shares of Common Stock are
offered by the Company for subscription, the subscription price, or, if either
of such securities shall be sold to underwriters or dealers, for the public
offering price) before deducting therefrom any compensation paid or discount
allowed in the sale, underwriting or purchase thereof by
6
<PAGE> 7
underwriters or dealers or others performing similar services, or any expenses
incurred in connection therewith.
(2) In case of the issuance or sale (otherwise
than as a dividend or other distribution on any stock of the Company, or on the
exercise of options, rights or warrants or on the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(3) The number of shares of Common Stock at any
one time outstanding shall include the aggregate number of shares issued or
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(d) With respect to the Options except as otherwise
herein provided, in case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Common Stock, or
issue any securities convertible into or exchangeable for shares of Common
Stock, for a consideration per share less than the Exercise Price with respect
to any Options in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or without
consideration, then the Exercise Price with respect to the Options in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible
7
<PAGE> 8
securities, as the case may be, shall be reduced to a price determined by
making a computation in accordance with the provisions of Section 8(c) hereof,
provided that:
(1) The aggregate maximum number of shares of
Common Stock, as the case may be, issuable under such options, rights or
warrants shall be deemed to be issued and outstanding at the time such options,
rights or warrants were issued, and for a consideration equal to the minimum
purchase price per share provided for in such options, rights or warrants at
the time of issuance, plus the consideration (determined in the same manner as
consideration received on the issue or sale of shares of Common Stock in
accordance with the terms of this Option Certificate), if any, received by the
Company for such options, rights or warrants. If any thereof shall not have
been exercised, the number of shares of Common Stock deemed to be issued and
outstanding pursuant to this subsection 8(d) (and for the purpose of subsection
(3) of Section 8(c) hereof) shall be reduced by such number of shares as to
which options, warrants and/or rights shall have expired or terminated
unexercised, and such number of shares shall no longer be issued and
outstanding, and the Exercise Price then in effect shall forthwith be
readjusted and thereafter be the price which it would have been had adjustment
been made on the basis of the issuance only of shares actually issued or
issuable upon the exercise of those options, rights or warrants as to which the
exercise rights shall not have expired or terminated unexercised.
(2) The aggregate maximum number of shares of
Common Stock issuable upon conversion or exchange of any convertible or
exchangeable securities shall be deemed to be issued and outstanding at the
time of issuance of such securities, and
8
<PAGE> 9
for a consideration equal to the consideration (determined in the same manner
as consideration received on the issue or sale of shares of Common Stock in
accordance with the terms of this Option Certificate) received by the Company
for such securities, plus the minimum consideration, if any, receivable by the
Company upon the conversion or exchange thereof; provided, however, that upon
the termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares deemed to be issued and outstanding pursuant to this
subsection (2) (and for the purpose of subsection (3) of Section 8(c) hereof)
shall be reduced by such number of shares as to which the conversion or
exchange rights shall have expired or terminated unexercised, and such number
of shares shall no longer be deemed to be issued and outstanding and the
Exercise Price then in effect shall forthwith be readjusted and thereafter be
the price which it would have been had the adjustment been made on the basis of
the issuance only of the shares actually issued or issuable upon the conversion
or exchange of those convertible or exchangeable securities as to which the
conversion or exchange right shall not have expired or terminated unexercised.
(3) If any change shall occur in the price per
share provided for in any of the options, rights or warrants referred to in
subsection (1) of this Section 8(d), or in the price per share at which the
securities referred to in subsection (2) of this Section 8(d) are convertible
or exchangeable, such options, rights or warrants or conversion or exchange
rights, as the case may be, shall be deemed to have expired or terminated on
the date when such price change became effective in respect of shares not
9
<PAGE> 10
theretofore issued pursuant to the exercise or conversion or exchange thereof,
and the Company shall be deemed to have issued upon such date new options,
rights or warrants or convertible or exchangeable securities at the new price
in respect of the number of shares issuable upon the exercise of such options,
rights, or warrants or convertible or exchangeable securities at the new price
in respect of the number of shares issuable upon the exercise of such options,
rights or warrants or the conversion or exchange of such convertible or
exchangeable securities.
(e) Upon each adjustment of the Exercise Price pursuant
to the provisions of Sections 8(c) and 8(d) hereof, the number of shares of
Common Stock issuable upon the exercise of each of the Options shall be
adjusted to the nearest full share by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of the Options immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(f) For the purpose of this Section 8, shares of Common
Stock owned or held by, or for the account of the Company shall not be deemed
outstanding.
(g) No adjustment of the Exercise Price shall be made:
(1) Upon the issuance or sale of shares of Common
Stock upon the exercise of options, rights or warrants, or Common Stock upon
the conversion or exchange of convertible or exchangeable securities, if any
such options, rights, warrants or convertible or exchangeable securities are
outstanding as of the date of this Agreement, and upon the issuance or sale of
Common Stock pursuant to any subscription
10
<PAGE> 11
agreement outstanding as of the date this Agreement or pursuant to the exercise
of options, rights, warrants or convertible or exchangeable securities which
are the subject of any subscription agreement outstanding as of the date of
this Agreement.
(2) Upon the issuance or sale of shares of Common
Stock pursuant to the exercise of any Options or rights held by the Optionee
other than the Options.
(3) Upon the issuance or sale of Common Stock or
options, rights or warrants to purchase Common Stock or securities convertible
into or exchangeable for shares of Common Stock, or upon the exercise of any
such options, rights or warrants or the conversion or exchange of any such
convertible or exchangeable securities, if any of the foregoing sales or
issuances is made pursuant to stock purchase, stock option, stock award,
warrant or similar incentive programs offered to employees of the Company or
other entities.
(4) Upon the issuance or sale of Common Stock or
options, rights or warrants to purchase Common Stock or securities convertible
into or exchangeable for shares of Common Stock, or upon the exercise of any
such options, rights or warrants or the conversion or exchange of any such
convertible or exchangeable securities; provided, that the proceeds of any such
issuance or sale are used in whole or in part to redeem the shares of the
Company's 7% Convertible Preferred Stock, Without Par Value, $100 Stated Value,
Cumulative and Redeemable.
(5) By reason of the operation of anti-dilution
provisions contained in any securities described in clauses (1) - (4) of this
Section 8(g).
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<PAGE> 12
(6) Upon the issuance or sale of shares of Common
Stock upon the exercise of options, rights or warrants, or Common Stock upon
the conversion or exchange of convertible or exchangeable securities, in any
case where the Warrant Price was adjusted at the time of issuance of such
options, rights or warrants, or convertible or exchangeable securities, as
contemplated by Section 8(d) hereof.
(7) If the amount of said adjustment shall be
less than twenty-five cents ($0.25) per share; provided, however, that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least twenty-five cents ($0.25) per share.
(h) Upon the happening of any event requiring an
adjustment of the Exercise Price hereunder and/or number of shares purchasable
under the Options, the Company shall forthwith give written notice thereof to
the Optionee stating the adjusted Exercise Price and/or the adjusted number of
shares of Common Stock purchasable upon exercise of the Options resulting from
that event and setting forth in reasonable detail the method of such
calculation. In the event of the dissolution, liquidation or winding up of the
Company, the Board of Directors of the Company shall give at least twenty (20)
days prior written notice thereof to the Optionee stating the date on which
that event is to take place and the date, which shall be at least twenty (20)
days after giving of that notice, as of which the holders of shares of Common
Stock for securities or other property deliverable upon such dissolution,
liquidation or winding up, on which date, in the event
12
<PAGE> 13
that dissolution, liquidation or winding up shall actually take place, the
Options and all rights with respect to the Options shall terminate.
9. EXCHANGE AND REPLACEMENT OF OPTIONS. The Options are
exchangeable without expense, upon the surrender hereof by the registered
holder at the principal executive office of the Company, for new Options of
like tenor and date representing in the aggregate the right to purchase the
same number of shares as are purchasable hereunder in such denominations as
shall be designated by the registered holder hereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of the
Options, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Options, if mutilated, the Company will make and deliver new Options of
like tenor, in lieu of the Options.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue stock certificates representing fractions of shares of Common
Stock, nor shall it be required to issue script or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated.
11. RESERVATION OF SHARES. The Company shall at all times reserve
and keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the exercise of the Options, such number of shares of
Common Stock as shall be issuable upon the exercise hereof. The Company
covenants and agrees that,
13
<PAGE> 14
upon exercise of these options and payment of the Purchase Price thereof, all
shares of Common Stock issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable, provided that the Exercise Price per
share shall be equal or exceed the par value of the Common Stock.
12. NOTICES TO OPTIONS HOLDERS. Nothing contained in the
Agreement shall be construed as conferring upon the holder hereof the right to
vote or to consent or to receive notice as a shareholder in respect of any
meetings of shareholders for the election of directors or any other matter, or
as having any rights whatsoever as a shareholder of the Company. If, however,
at any time prior to the expiration of the Options and prior to exercise
thereof, any of the following events shall occur:
(a) The Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or in a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) The Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) A dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an entirety
shall be proposed; then, in any one or more
14
<PAGE> 15
of said events, the Company shall give written notice of such event at least
fifteen (15) days prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the shareholders entitled
to such dividend, distributions, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give
such notice or any defect therein shall not affect the validity of any action
taken in connection with the declaration or payment of any such dividend, or
the issuance of any convertible or exchangeable securities, or subscription
rights, options or warrants, or any proposed dissolution, liquidation, winding
up or sale.
13. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered holder of the Options, to the
address of such holder as shown on the books of the Company; or
(b) If to the Company, to the following address:
PhoneTel Technologies, Inc.
Attention: Jerry H. Burger, Chairman and CEO
650 Statler Office Tower
1127 Euclid Avenue
Cleveland, Ohio 44115
14. SUCCESSORS. All the covenants, agreements, representations
and warranties contained in this Agreement shall bind the parties hereto and
their respective heirs, executors, administrators, distributees, successors and
permitted assigns.
15
<PAGE> 16
15. HEADINGS. The Section headings in this Agreement are inserted
for purposes of convenience only and shall have no substantive effect.
16. CONSTRUCTION. In the event of any inconsistency or conflict
between the provisions of this Agreement and the provisions of the Employment
Agreement regarding the Options, the provisions of this Agreement shall control
and shall be deemed to supersede the provisions of the Employment Agreement
with respect to the Options.
17. GOVERNING LAW. This Agreement is delivered in the State of
Ohio and shall be construed and enforced in accordance with, and governed by,
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have set their hands hereto as
of the date first written above.
PHONETEL TECHNOLOGIES, INC.
By:
/s/ Jerry H. Burger
______________________________
Jerry H. Burger, Chairman and
CEO
Optionee:
/s/ Daniel T. Moos
______________________________
Daniel T. Moos
16
<PAGE> 17
EXHIBIT A
SUBSCRIPTION FORM
(To be Executed by the Registered Holder
in order to Exercise the Option)
The undersigned hereby irrevocably elects to exercise the
right of purchase of ________________ shares of Common Stock covered by the
Options granted pursuant to a certain Stock Option Agreement between PhoneTel
Technologies, Inc. and Daniel T. Moos dated May 1, 1995, according to the
conditions thereof and herewith makes payment of the Exercise Price thereunder
of such shares in full.
________________________________________
Signature
________________________________________
Address
Dated: _______________________, 19___
17
<PAGE> 18
EXHIBIT B
REGISTRATION RIGHTS
-------------------
Unless the context otherwise requires, capitalized terms used herein
shall have the meanings set forth in that certain Stock Option Agreement dated
as of May 1, 1995 (the "Agreement") by and between Phonetel Technologies, Inc.
("Issuer") and Daniel J. Moos ("Optionee"), to which this Exhibit is attached
and into which this Exhibit is incorporated.
1. REGISTRABLE SECURITIES. The term "Registrable Securities"
shall mean the Shares issuable to Optionee pursuant to the Agreement as well as
the Common Stock or other securities of Issuer issued to Optionee in a stock
split or reclassification of, or a stock dividend or other distribution on, or
in substitution of, or exchange for, or otherwise in connection with such
Common Stock or in a merger or consolidation involving Issuer or in a sale of
all or substantially all of Issuer's assets.
2. INCIDENTAL REGISTRATION RIGHTS. Each time Issuer shall
determine to file a registration statement under the Act (on a form that can be
used for secondary distribution, other than on Forms S-4 and S-8) in connection
with the proposed offer and sale for money of any of its securities by it or by
any of its security holders, Issuer will give written notice of its
determination to Optionee. Within thirty (30) days after the effectiveness of
any such notice from Issuer, Optionee may request in writing that Issuer
include in such registration all or any portion of the Registrable Securities,
subject to the provisions of this paragraph. Issuer will cause all Registrable
Securities which are the subject of such request to be included in such
registration statement, all to the extent requisite to permit the sale or other
disposition by Optionee of the Registrable Securities for which request is
made. If a registration described in this paragraph is to involve an
<PAGE> 19
underwritten public offering, in whole or in part, Issuer may require that the
Registrable Securities requested for inclusion pursuant to this paragraph be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If, however, in the good faith
judgment of the managing underwriter of such public offering, the inclusion of
all the Registrable Securities covered by such request for registration would
prevent the successful marketing of the securities offered by Issuer (if Issuer
initiated the registration) or by any other selling security holder (if the
registration was initiated pursuant to such other security holder's
registration rights), the number of Registrable Securities and the number of
securities offered by persons or entities (including Issuer) other than the one
initiating the registration shall be reduced pro rata (or eliminated, if
necessary, in such managing underwriter's good faith opinion), and those
securities which are excluded from the underwritten public offering shall be
withheld from the market by Issuer or the holders thereof for a period, not to
exceed ninety (90) days, which the managing underwriter reasonably determines
is necessary in order to effect the underwritten public offering.
The rights provided in this paragraph shall expire four (4) years from
the date of the Agreement.
3. REGISTRATION PROCEDURES. If and whenever Issuer is required
by the provisions of paragraph 2 to effect the registration of Registrable
Securities under the Act, Issuer will:
(a) In accordance with the Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
prepare and file with the
-2-
<PAGE> 20
Commission a registration statement with respect to such Registrable Securities
and, subject to 3(b) below, use its best efforts to cause such registration
statement to become and remain effective until the Registrable Securities
covered by such registration statement have been sold;
(b) Prepare and file with the Commission such amendments
to such registration statement and supplements to any prospectus contained
therein as may be necessary to keep such registration statement effective and
prospectus accurate until the Registrable Securities covered by such
registration statement have been sold; provided, that Issuer shall have no
obligation to maintain the effectiveness of the registration statement for more
than 180 days from the effective date unless such registration statement
contemplates a delayed or continuous offering within the meaning of Rule 415 of
Regulation C promulgated under the Act;
(c) Furnish to Optionee and to the underwriters of the
securities such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as Optionee
or such underwriters may reasonably request in order to facilitate the public
offering of such Registrable Securities;
(d) Use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as Optionee or such
underwriters may reasonably request within twenty (20) days following the
original filing of such registration statement, except that Issuer shall not
for any purpose be required to execute a general consent to service of process
-3-
<PAGE> 21
or to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(e) Notify Optionee and the security holders
participating in such registration, promptly after it shall receive notice
thereof, of the date and time when such registration statement has become
effective and each post-effective amendment thereto has become effective or
when a supplement to any prospectus forming a part of such registration
statement has been filed;
(f) Notify Optionee and such security holders promptly of
any request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(g) Prepare and file with the Commission, promptly upon
the request of Optionee or any such security holders, any amendments or
supplements to such registration statement or prospectus which are required
under the Act or the rules and regulations thereunder in connection with the
distribution of the Registrable Securities and such other securities covered by
such registration statement by Optionee or such holders;
(h) Prepare and promptly file with the Commission and
promptly notify Optionee and such security holders of the filing of such
amendments or supplements to such registration statement or prospectus as may
be necessary to correct any statements or omissions if, at the time when a
prospectus is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus or
offering circular as then in effect would include an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary
-4-
<PAGE> 22
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(i) In case Optionee or any of such security holders or
any underwriters for Optionee or any such security holders is required to
deliver a prospectus at a time when the prospectus then in effect may no longer
be used under Act or the rules and regulations of the Commission, prepare
promptly upon request such amendments or supplements to such registration
statement and such prospectus or prospectus as may be necessary to permit
compliance with the requirements of the Act and such rules and regulations;
(j) Advise Optionee and such security holders, promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that purpose
and promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued;
(k) Enter into and perform such written underwriting
agreements (and other agreements reasonably requested and customarily used in
offerings of the type involved) in form and substance reasonably satisfactory
to the managing underwriter or underwriters of the public offering and to
Optionee and such security holders, if the offering is to be underwritten in
whole or in part;
(l) Not file any amendment or supplement to such
registration statement or prospectus to which Optionee has reasonably objected
on the grounds that such
-5-
<PAGE> 23
amendment or supplement does not comply in all material respects with the
requirements of the Act or the rules and regulations thereunder, after having
been furnished with a copy thereof at least five (5) business days prior to the
filing thereof; provided, however, that the failure of Optionee or its counsel
to review or object to any amendment or supplement to such registration
statement or prospectus shall not affect the rights of Optionee or any
controlling person or persons thereof or any underwriter or underwriters
therefor under paragraph 6 hereof; and
(m) At the request of Optionee (i) furnish to Optionee on
the effective date of the registration statement or, if such registration
includes an underwritten public offering, at the closing provided for in the
underwriting agreement, an opinion, dated such date, of the counsel
representing Issuer for the purposes of such registration, addressed to the
underwriters, if any, and to Optionee, covering such matters with respect to
the registration statement, the prospectus and each amendment or supplement
thereto, proceedings under state and federal securities laws, other matters
relating to Issuer, the securities being registered and the offer and sale of
such securities as are customarily the subject of opinions of issuer's counsel
provided to underwriters in underwritten public offerings, and such opinion of
counsel shall additionally cover such legal and factual matters with respect to
the registration as Optionee may reasonably request (except that such counsel
need express no opinion as to financial statements or financial data contained
therein), and (ii) use its best efforts to furnish to Optionee letters dated
each such effective date and such closing date, from the independent certified
public accountants of Issuer, addressed to the underwriters, if any, and to
Optionee, stating that
-6-
<PAGE> 24
they are independent certified public accountants within the underwriters may
request, or, if the offering is not underwritten, as Optionee may reasonably
request, that in the opinion of such accountants the financial statements and
other financial data of Issuer included in the registration statement or the
prospectus or any amendment or supplement thereto comply in all material
respects with the applicable accounting requirements of the Act, and
additionally covering such other financial matters, including information as to
the period ending not more than five (5) business days prior to the date of
such letter with respect to the registration statement and prospectus, as
Optionee may reasonably request.
4. OBLIGATION OF OPTIONEE. In connection with an offering of
Registrable Securities pursuant to paragraph 2 hereof, Optionee shall:
(a) Use its best efforts to comply with reasonable
requests of Issuer for information regarding Optionee which is required for
inclusion in the registration statement or prospectus and promptly advise
Issuer of any information relating to Optionee contained in the registration
statement or prospectus which is inaccurate in any material respect;
(b) Promptly upon receipt of written notice from Issuer
to the effect that a prospectus utilized in connection with the offering is
inaccurate or incomplete in any material respect, cease further sales of
Registrable Securities in reliance of such prospectus; and
(c) Enter into such agreements as may be reasonably
requested by a managing underwriter in connection with the offering.
-7-
<PAGE> 25
5. EXPENSES.
---------
(a) With respect to each inclusion of Registrable
Securities in a registration statement pursuant to paragraph 2 hereof, Issuer
shall bear all of the fees, costs and expenses of such registration except as
set forth in subparagraph (b) below.
(b) The fees, costs and expenses of registration to be
borne by Optionee shall be the following: Optionee's pro rata share of all
registration, filing and NASD fees, and disbursements of counsel and
accountants for Issuer, Optionee's pro rata share of fees incurred by the
underwriter or underwriters of such securities which Issuer, Optionee and any
other selling security holders are required to bear, and fees and disbursements
of counsel or accountants for Optionee, and any other incremental expenses of
such registration attributable solely to Optionee.
6. INDEMNIFICATION.
----------------
(a) Issuer will indemnify and hold harmless Optionee and
each holder of securities which are included in a registration statement
pursuant hereto and any underwriter (as defined in the Act) for Optionee or
such holder, and each person, if any, who controls such holder or such
underwriter within the meaning of the Act, from and against, and will reimburse
Optionee, such holder, such underwriter and such controlling person with
respect to, any and all claims, actions, demands, losses, damages, liabilities,
costs and expenses to which Optionee, such holder, such underwriter or such
controlling person may become subject under the Act, the Securities Exchange
Act of 1934 or state securities or blue sky laws, or otherwise, insofar as such
claims, actions, demands, losses, damages, liabilities, costs or expenses arise
out of or are based upon any untrue
-8-
<PAGE> 26
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; provided; however, that Issuer will not
be liable in any such case to the extent that any such claim, action, demand,
loss, damage, liability, cost or expense arose out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by Optionee, such holder, such
underwriter or such controlling person in writing specifically for use in the
preparation thereof, or out of transactions by Optionee after the receipt of
the notice and during the cessation period specified in Section 4(b) hereof.
(b) Optionee will indemnify and hold harmless Issuer (and
each of its directors, each of its officers who have signed any registration
statement, any underwriter of Issuer's Securities included in such
registration, and any controlling person of Issuer or any such underwriter)
from and against, and will reimburse Issuer or such controlling person with
respect to, any and all claims, actions, demands, losses, damages, liabilities,
cost and expense to which Issuer, any of its directors, such officers, such
underwriter or such controlling person may become subject under the Act or the
Securities Exchange Act of 1934 or state securities or blue sky laws, or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or based upon any untrue or alleged
untrue statement of any material fact contained relating to
-9-
<PAGE> 27
Optionee in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of the omission or the
alleged omission to state therein a material fact relating to Optionee required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that Optionee will be liable in any such case only to the extent that any such
claim, action, demand, loss, damage, liability, cost or expense arose out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by Optionee
in writing specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of subparagraphs (a) or (b) hereof notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
subparagraph (a) or (b), notify the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to an indemnified party otherwise than
under this paragraph and shall not relieve the indemnifying party from
liability under this paragraph unless such indemnifying party is prejudiced by
such omission. In case such action is brought against any indemnified party
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
-10-
<PAGE> 28
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provision of said subparagraphs (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof. No indemnifying party shall be liable to an indemnified party for any
settlement of any action or claim without the consent of the indemnifying
party, which consent may not be unreasonably withheld.
7. TERMINATION OF OFFERING. Upon the sale of all of the
Registrable Securities included in any offering pursuant hereto, Optionee shall
promptly notify Issuer that the offering has been completed.
-11-
<PAGE> 1
EXHIBIT 21
ITEM 16
SUBSIDIARIES
(Revised 03-08-96)
The following are wholly-owned subsidiaries of PhoneTel Technologies, Inc.
o Public Telephone Corporation
o World Communications, Inc.
o Northern Florida Telephone Corporation
o Paramount Communication Systems, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AS OF DECEMBER 31, 1995, AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE NOTES TO THE FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 713,462
<SECURITIES> 0
<RECEIVABLES> 901,508
<ALLOWANCES> (40,000)
<INVENTORY> 0
<CURRENT-ASSETS> 1,800,604
<PP&E> 17,607,753
<DEPRECIATION> (3,508,642)
<TOTAL-ASSETS> 28,917,256
<CURRENT-LIABILITIES> 6,644,128
<BONDS> 12,562,466
<COMMON> 28,554
0
6,486,425
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 28,917,256
<SALES> 0
<TOTAL-REVENUES> 18,717,983
<CGS> 0
<TOTAL-COSTS> (24,006,881)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (820,799)
<INCOME-PRETAX> (6,419,365)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,419,365)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,419,365)
<EPS-PRIMARY> (3.29)
<EPS-DILUTED> 0
</TABLE>
